AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON APRIL 18, 1997
1933 Act File No. 033-63493
1940 Act File No. 811-07367
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 3 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 4 [X]
(Check appropriate box or boxes)
BERGER INSTITUTIONAL PRODUCTS TRUST
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(Exact Name of Registrant as Specified in Charter)
210 University Boulevard, Suite 900, Denver, Colorado 80206
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (303) 329-0200
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Gerard M. Lavin, 210 University Boulevard, Suite 900, Denver, CO 80206
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable
after this post-effective amendment becomes effective.
It is proposed that this filing will become effective: (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 1997, pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
Registrant has registered an indefinite number of shares of beneficial
interest under the Securities Act of 1933 pursuant to Rule 24f-2(a)
and filed its Rule 24f-2 Notice on or about February 21, 1997, for the
fiscal year ended December 31, 1996.
<PAGE>
BERGER INSTITUTIONAL PRODUCTS TRUST
SHARES OF BENEFICIAL INTEREST
($.01 Par Value)
Cross-Reference Sheet Pursuant to Rule 481
Item No. and Caption in Form N-1A Number of Section
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A. Prospectus
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1. Cover Page Cover Page
2. Synopsis Section 1
3. Condensed Financial Information Section 2
4. General Description of Registrant Sections 3, 4, 5 and
11
5. Management of the Fund Sections 6 and 7
5A. Management's Discussion of Fund
Performance In Annual Report
6. Capital Stock and Other Securities Sections 10, 11 and 12
7. Purchase of Securities Being Offered Sections 8 and 9
8. Redemption or Repurchase Section 8
9. Pending Legal Proceedings Not Applicable
B. Statement of Additional Information
-----------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Section 12
13. Investment Objectives and Policies Sections 1 and 2
14. Management of the Funds Section 3
15. Control Persons and Principal
Holders of Securities Sections 3 and 12
16. Investment Advisory and Other Services Sections 3, 4, 5 and
12
17. Brokerage Allocation and
Other Practices Sections 1 and 6
18. Capital Stock and Other Securities Section 12
19. Purchase, Redemption and
Pricing of Securities Being Offered Sections 7, 8 and 9
20. Tax Status Section 10
21. Underwriters Sections 5 and 12
22. Calculations of Performance Data Section 11
23. Financial Statements Financial Statements
<PAGE>
PROSPECTUS
Berger Institutional Products Trust (the "Trust") is an open-end
management investment company. The Trust currently consists of the
four diversified series or portfolios named below (individually
referred to as a "Fund"). Each Fund has its own investment objective
and policies. Shares of the Funds are not offered directly to the
public, but are sold only in connection with investment in and
payments under variable annuity contracts and variable life insurance
contracts (collectively "variable insurance contracts") issued by life
insurance companies ("Participating Insurance Companies"), as well as
to certain qualified retirement plans.
BERGER IPT - 100 FUND - The investment objective of the Berger IPT -
100 Fund is long-term capital appreciation. The Berger IPT - 100 Fund
seeks to achieve this objective by investing primarily in common
stocks of established companies which the Fund's advisor believes
offer favorable growth prospects.
BERGER IPT - GROWTH AND INCOME FUND - The primary investment objective
of the Berger IPT - Growth and Income Fund is capital appreciation. A
secondary objective is to provide a moderate level of current income.
The Berger IPT - Growth and Income Fund seeks to achieve these
objectives by investing primarily in common stocks and other
securities, such as convertible securities or preferred stocks, which
the Fund's advisor believes offer favorable growth prospects and are
expected to also provide current income.
BERGER IPT - SMALL COMPANY GROWTH FUND - The investment objective of
the Berger IPT - Small Company Growth Fund is capital appreciation.
The Berger IPT - Small Company Growth Fund seeks to achieve this
objective by investing primarily in equity securities (including
common and preferred stocks, convertible debt securities and other
securities having equity features) of small growth companies with
market capitalization of less than $1 billion at the time of initial
purchase.
BERGER/BIAM IPT - INTERNATIONAL FUND - The investment objective of the
Berger/BIAM IPT - International Fund is long-term capital
appreciation. The Berger/BIAM IPT - International Fund seeks to
achieve this objective by investing primarily in common stocks of well
established companies located outside the United States. The Fund
intends to diversify its holdings among several countries and to have,
under normal market conditions, at least 65% of the Fund's total
assets invested in the securities of companies located in at least
five countries, not including the United States.
This Prospectus concisely sets forth information about each of the
Funds that a prospective purchaser of a variable insurance contract or
plan participant should consider before purchasing a variable
contract, allocating contract values to one or more of the Funds or
selecting one of the Funds as an investment option under a qualified
plan. It should be read carefully in conjunction with any separate
account prospectus of the specific insurance product ("Separate
Account Prospectus") or qualified plan documents that accompany this
Prospectus and retained for future reference. Additional information
about the Funds has been filed with the Securities and Exchange
Commission. A copy of the Statement of Additional Information, dated
May 1, 1997, is incorporated by reference into this Prospectus in its
entirety and is available upon request without charge by writing the
Berger Funds, c/o Berger Associates, Inc., P.O. Box 5005, Denver, CO
80217, or call 1-303-329-0200 or 1-800-706-0539 or by writing or
calling a Participating Insurance Company.
INVESTMENTS IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK (INCLUDING BANK OF IRELAND).
SHARES OF THE FUNDS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUNDS IS SUBJECT TO
INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Dated May 1, 1997
<PAGE>
Table of Contents
Section Page
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1. Fee Tables ........................................... 1
2. Condensed Financial Information....................... 2
3. Introduction.......................................... 4
4. Investment Objectives and Policies and Risk Factors... 4
5. Portfolio Turnover.................................... 10
6. Management and Investment Advice...................... 11
7. Expenses of the Funds................................. 13
8. How to Purchase and Redeem Shares in the Funds........ 13
9. How the Net Asset Value Is Determined................. 14
10. Income Dividends, Capital Gains Distributions and Tax
Treatment............................................ 14
11. Additional Information............................... 15
12. Performance.......................................... 16
13. Shareholder Inquiries................................ 17
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1. FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES (APPLICABLE TO ALL FOUR FUNDS)
Maximum Sales Load Imposed on Purchases 0%
Maximum Sales Load Imposed on Reinvested Dividends 0%
Deferred Sales Load 0%
Redemption Fees 0%
Exchange Fee 0%
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Investment Other Total Fund
Advisory Expenses* Operating
Fee Expenses
Berger IPT - 100 Fund .00%^ 1.00%^ 1.00%^
Berger IPT - Growth and
Income Fund .00%^ 1.00%^ 1.00%^
Berger IPT - Small Company
Growth Fund .00%^ 1.15%^ 1.15%^
Berger/BIAM IPT -
International Fund .00%~ 1.20%~ 1.20%~
* Other Expenses primarily include transfer agency fees, shareholder
report expenses, registration fees and custodian fees.
^ After fee waivers and expense reimbursements. The Funds'
investment advisor has voluntarily agreed to waive its advisory fee
and has voluntarily reimbursed the Funds for additional expenses to
the extent that normal operating expenses in any fiscal year,
including the investment advisory fee but excluding brokerage
commissions, interest, taxes and extraordinary expenses, of each of
the Berger IPT - 100 Fund and the Berger IPT - Growth and Income
Fund exceed 1.00%, and the normal operating expenses in any fiscal
year of the Berger IPT - Small Company Growth Fund exceed 1.15%, of
the respective Fund's average daily net assets. Absent the
voluntary waiver and reimbursement, the Investment Advisory Fee for
the Berger IPT - 100 Fund, Berger IPT - Growth and Income Fund and
the Berger IPT - Small Company Growth Fund would have been 0.75%,
0.75% and 0.90%, respectively, and their Total Fund Operating
Expenses would have been 7.69%, 7.70% and 8.57%, respectively.
~ Based on estimated expenses for the first year of operations of the
Berger/BIAM IPT - International Fund, after fee waivers and expense
reimbursements. The Fund's investment advisor has voluntarily
agreed to waive its advisory fee and expects to voluntarily
reimburse the Fund for additional expenses to the extent that
normal operating expenses in any fiscal year, including the
investment advisory fee but excluding brokerage commissions,
interest, taxes and extraordinary expenses, of the Berger/BIAM IPT
- International Fund exceed 1.20%, of the Fund's average daily net
assets. Absent the voluntary waiver and reimbursement, the
Investment Advisory Fee for the Berger/BIAM IPT - International
Fund would be 0.90%, and its Total Fund Operating Expenses would be
estimated to be 8.96% .
-1-<PAGE>
EXAMPLES
You would pay the following expenses on a $1,000 investment,
assuming 5% annual return, and assuming redemption at the end of each
time period:
1 Year 3 Years 5 Years 10 Years
Berger IPT - 100 Fund $10 $32 $55 $122
Berger IPT - Growth
and Income Fund $10 $32 $55 $122
Berger IPT - Small
Company Growth Fund $12 $37 $63 $140
Berger/BIAM IPT -
International Fund $12* $38* N/A N/A
* Based on estimated expenses for the Fund's first year of
operations.
THE EXPENSES SET FORTH IN THE PRECEDING TABLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES, AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE ASSUMED 5%
ANNUAL RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE GREATER
OR LESS THAN THE ASSUMED AMOUNT.
The purpose of the preceding tables is to assist the
investor in understanding the various costs and expenses that an
investor in any of the Funds will bear directly or indirectly. THE
TABLES AND EXAMPLE ABOVE DO NOT REFLECT THE DEDUCTION OF ANY
APPLICABLE CHARGES OR EXPENSES ATTRIBUTABLE TO VARIABLE INSURANCE
CONTRACTS OR QUALIFIED PLANS INVESTED IN THE FUNDS. PROSPECTIVE
INVESTORS SHOULD REFER TO THE APPLICABLE SEPARATE ACCOUNT PROSPECTUS
OR QUALIFIED PLAN DOCUMENTS THAT ACCOMPANY THIS PROSPECTUS FOR
INFORMATION PERTAINING TO SUCH CONTRACT CHARGES AND EXPENSES.
Each of the investment advisors for their respective Funds
has voluntarily agreed to waive its advisory fee and expects to
voluntarily reimburse the Funds for additional expenses to the extent
that normal operating expenses in any fiscal year, including the
investment advisory fee but excluding brokerage commissions, interest,
taxes and extraordinary expenses, exceed 1.00% for each of the Berger
IPT - 100 Fund and the Berger IPT - Growth and Income Fund, exceed
1.15% for the Berger IPT - Small Company Growth Fund and exceed 1.20%
for the Berger/BIAM IPT - International Fund, of the respective Fund's
average daily net assets. The Funds' expenses are described in
greater detail under "Management and Investment Advice" and "Expenses
of the Funds."
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2. CONDENSED FINANCIAL INFORMATION
On the following page is a table setting forth certain
financial highlights of the Funds in existence at December 31, 1996,
for the period May 1, 1996 (date operations commenced) to the end of
their first fiscal year on December 31, 1996. The information has
been audited by Price Waterhouse LLP, whose report thereon is
incorporated by reference from the Funds' 1996 Annual Report into the
Statement of Additional Information. Additional performance
information is contained in the Funds' most recent Annual Report dated
December 31, 1996, which may be obtained upon request and without
charge by calling the Funds at 1-800-706-0539 or by calling a
Participating Insurance Company.
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<TABLE>
<CAPTION>
BERGER IPT - 100 FUND
BERGER IPT - GROWTH AND INCOME FUND
BERGER IPT - SMALL COMPANY GROWTH FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
MAY 1, 1996 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1996
<S> <C> <C> <C>
Berger IPT - Berger IPT - Berger IPT
100 Fund Growth and Small
Income Company
Fund Growth
Fund
Net Asset Value, Beginning of Period. . . . . . .$10.00$10.00 $10.00
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Income From Investment Operations:
Net Investment Income (Loss). . . . . . . . . . .03 .10 .01
Net Realized and Unrealized Gains
(Losses) on Securities. . . . . . . . . . . . . .36 1.04 (.06)
--- ---- -----
Total From Investment Operations. . . . . . . . .39 1.14 (.05)
--- ---- -----
Less Distributions:
Dividends (from net investment income). . . . . .00 .00 .00
Distributions (from capital gains). . . . . . . .00 .00 .00
--- --- ---
Total Distributions. . . . . . . . . . . . . . . .00 .00 .00
--- --- ---
Net Asset Value, End of Period. . . . . . . . .$10.39$11.14 $ 9.95
----- ----- ----
Total Return^*. . . . . . . . . . . . . . . . . 3.90% 11.40 (.50)%
==== ===== =====
Ratios/Supplemental Data:
Net Assets, End of Period. . . . . . . . . . . .$331,296$344,373$291,362
Ratios of Expenses to Average Net Assets:~
Net expenses+. . . . . . . . . . . . . . . .93% .94% .95%
Gross expenses+. . . . . . . . . . . . . . 7.69% 7.70% 8.57%
Ratio of Net Income (Loss) to Average
Net Assets~. . . . . . . . . . . . . . . . . . .50% 1.80% .14%
Portfolio Turnover Rate*. . . . . . . . . . . . 56% 60% 80%
Average Commission Rate. . . . . . . . . . . . . $.0590 $.0756 $.0392
_______________
^ Total return reflects the effect of fees offset by earnings credits, fee waivers and expense reimbursements, and
does not reflect expenses that apply to related variable insurance contracts. Had the fee offsets, waivers and
reimbursements not been made, and had variable contract charges been included, total return would have been lower
for the period shown.
* Based on operations for the period shown and, accordingly, are not representative of a full year.
~ Annualized.
+ Net expenses reflect the Fund's gross (total) expenses, reduced by fees offset by earnings credits, fee waivers
and expense reimbursements. Gross expenses and net expenses do not include the deduction of any charges or expenses
attributable to any particular variable insurance contract.
</TABLE>
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3. INTRODUCTION
The Funds are all diversified portfolios or series of the
Berger Institutional Products Trust, a management investment company.
The Funds sell and redeem their shares at net asset value without any
sales charges, commissions or redemption fees. Sales charges for
variable insurance contracts are described in the accompanying
Separate Account Prospectuses relating to those contracts. Each
variable insurance contract involves fees and expenses not described
in this Prospectus. Certain Funds may not be available in connection
with a particular contract or plan and certain contracts or plans may
limit allocations among the Funds. See the accompanying Separate
Account Prospectuses or qualified retirement plan documents for
information regarding contract fees and expenses and any restrictions
on purchases or allocations.
This Prospectus describes the securities offered by each of
the Funds. Because the Funds have many of the same officers and
trustees and have similar investment restrictions and investment
privileges, the Funds believe you will find this combined Prospectus
useful and informative in understanding the important features of the
Funds and their similarities and differences.
4. INVESTMENT OBJECTIVES AND POLICIES AND RISK FACTORS
Each of the Funds is a separate series of the Berger
Institutional Products Trust, with its own portfolio of securities
selected to achieve its particular investment objective. Since the
shares of the Funds primarily represent an investment in common
stocks, the net asset value of each Fund will reflect changes in the
market value of the securities held in that Fund's portfolio, and the
value of a Fund share will therefore go up and down.
The Funds have the same investment objectives and follow
substantially the same investment strategies and policies as those of
certain publicly-offered investment companies managed by the same
investment advisors (the "Berger retail funds"). The Berger IPT - 100
Fund corresponds to the Berger 100 Fund[R]. The Berger IPT - Growth
and Income Fund corresponds to the Berger Growth and Income Fund. The
Berger IPT - Small Company Growth Fund corresponds to the Berger Small
Company Growth Fund[R]. The Berger/BIAM IPT - International Fund
corresponds to the Berger/BIAM International Institutional Fund. As
described below under "Management and Investment Advice," the same
persons who serve as portfolio managers of the Funds also serve as
portfolio managers of the corresponding Berger retail funds.
Although it is anticipated that each Fund and its
corresponding retail fund will hold similar securities selections,
their investment results are expected to differ. In particular,
differences in asset size and in cash flow resulting from purchases
and redemption of Fund shares may result in different security
selections, differences in the relative weightings of securities or
differences in the prices paid for particular portfolio holdings.
Expenses and expense limitations of each Fund and its corresponding
retail fund are expected to differ. The variable insurance contract
owner will also bear various insurance related costs at the insurance
company level and should refer to the accompanying Separate Account
Prospectus for a summary of contract fees and expenses.
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BERGER IPT - 100 FUND. The investment objective of the
Berger IPT - 100 Fund is long-term capital appreciation. Current
income is not an investment objective of the Berger IPT - 100 Fund,
and any income produced will be a by-product of the effort to achieve
the Fund's objective.
In selecting its portfolio securities, the Berger IPT - 100
Fund places primary emphasis on established companies which it
believes to have favorable growth prospects, regardless of the
company's size. Common stocks usually constitute all or most of the
Fund's investment portfolio, but the Fund remains free to invest in
securities other than common stocks, and may do so when deemed
appropriate by the investment advisor to achieve the objective of the
Fund. The Fund may, from time to time, take substantial positions in
securities convertible into common stocks, and it may also purchase
government securities, preferred stocks and other senior securities if
its advisor believes these are likely to be the best suited at that
time to achieve the Fund's objective. The Fund's policy of investing
in securities believed to have a potential for capital growth means
that a Fund share may be subject to greater fluctuations in value than
if the Fund invested in other securities.
BERGER IPT - GROWTH AND INCOME FUND. The primary investment
objective of the Berger IPT - Growth and Income Fund is capital
appreciation. A secondary objective is to provide a moderate level of
current income. However, neither capital appreciation nor a fixed or
moderate rate of current income can be assured, and in periods of low
interest rates and yields on securities, the income available for
distribution to the Fund shareholders will likely be substantially
reduced or eliminated.
In selecting its portfolio securities, the Berger IPT -
Growth and Income Fund places primary emphasis on securities which it
believes offer favorable growth prospects and are expected to also
provide current income. Common stocks of companies with mid-sized to
large market capitalizations usually constitute the majority of the
Fund's investment portfolio. Market capitalization is defined as
total current market value of a company's outstanding common stock.
The Fund also invests in senior securities such as convertible
securities, preferred stocks, government securities and corporate
bonds, as seems appropriate from time to time. Attention is given to
the anticipated reliability of income as well as to its indicated
current level.
BERGER IPT - SMALL COMPANY GROWTH FUND. The investment
objective of the Berger IPT - Small Company Growth Fund is capital
appreciation. The Fund seeks to achieve its investment objective by
investing its assets principally in a diversified group of equity
securities of small growth companies with market capitalization of
less than $1 billion at the time of initial purchase. Market
capitalization is defined as total current market value of a company's
outstanding common stock. Under normal circumstances, the Berger IPT
- - Small Company Growth Fund will invest at least 65% of its assets in
equity securities of such companies, consisting of common and
preferred stock and other securities having equity features such as
convertible bonds, warrants and rights (subject to certain
restrictions). The balance of the Fund may be invested in equity
securities of companies with market capitalization in excess of $1
billion, government securities, short-term investments or other
securities as described on the following pages. Because income is not
an objective of the Berger IPT - Small Company Growth Fund, any income
produced will be a by-product of the effort to achieve the Fund's
objective of capital appreciation.
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In selecting its portfolio securities, the Berger IPT -
Small Company Growth Fund places primary emphasis on companies which
it believes have favorable growth prospects. The Fund seeks to
identify small growth companies that either occupy a dominant position
in an emerging industry or a growing market share in larger fragmented
industries. While these companies may present above average risk,
management believes they may have the potential to achieve long-term
earnings growth rates substantially in excess of the growth of
earnings of other companies.
Investments in small growth companies may involve greater
risks and volatility than more traditional equity investments due to
some of these companies potentially having limited product lines,
reduced market liquidity for the trading of their shares and less
depth in management than more established companies. For this reason,
the Berger IPT - Small Company Growth Fund is not intended as a
complete investment vehicle but rather as an investment for persons
who are in a financial position to assume above average risk and share
price volatility over time. Realizing the full potential of small
growth companies frequently takes time. As a result, the Berger IPT -
Small Company Growth Fund should be considered as a long-term
investment vehicle.
In general, investment decisions for the Berger IPT - 100
Fund, the Berger IPT - Growth and Income Fund and the Berger IPT -
Small Company Growth Fund are based on an approach which seeks out
successful companies because they are believed to be more apt to
become profitable investments. To evaluate a prospective investment,
the investment advisor analyzes information from various sources,
including industry economic trends, earnings expectations and
fundamental securities valuation factors to identify companies which
in management's opinion are more likely to have predictable, above
average earnings growth, regardless of the company's geographic
location. The advisor also takes into account a company's management
and its innovations in products and services in evaluating its
prospects for continued or future earnings growth.
BERGER/BIAM IPT - INTERNATIONAL FUND. The investment
objective of the Berger/BIAM IPT - International Fund is long-term
capital appreciation. The Fund seeks to achieve this objective by
investing primarily in common stocks of well established companies
located outside the United States. A company will be considered to be
located outside the United States if the principal securities trading
market for its equity securities is located outside the U.S. or it is
organized under the laws of, and has a principal office in, a country
other than the U.S. The Fund may also invest in securities other than
common stock if the Fund's sub-advisor believes these are likely to be
the best suited at that time to achieve the Fund's objective. These
include equity-related securities (such as preferred stocks and
convertible securities), debt securities issued by foreign governments
or foreign corporations, U.S. or foreign short-term investments or
other securities described on the following pages. The Fund intends
to diversify its holdings among several countries and to have, under
normal market conditions, at least 65% of the Fund's total assets
invested in the securities of companies located in at least five
countries, not including the United States. Current income is not an
investment objective of the Fund and any income produced will be only
of secondary importance as a by-product of the investment selection
process used to achieve the Fund's objective.
-7-<PAGE>
In selecting its portfolio securities, the Fund places
primary emphasis on fundamentally undervalued stocks as determined by
a range of characteristics, including relatively low price/earnings
multiples, dividend yield, consistency of earnings growth and cash
flow, financial strength, realizable asset value and liquidity.
Securities of companies with medium to large market capitalizations
usually constitute the majority of the Fund's investments. The Fund
currently considers medium to large market capitalizations to be those
in excess of $1 billion. Market capitalization is defined as total
current market value of a company's outstanding common stock. In
addition, the Fund is presently anticipated to be weighted largely
toward companies located in Western Europe (for example, the United
Kingdom, Germany, France, Italy, Spain, Switzerland, the Netherlands,
Sweden, Ireland and Finland), Australia and the Far East (for example,
Japan, Hong Kong, Singapore, Malaysia, Thailand, Indonesia and the
Philippines). However, the Fund is free to invest in companies of any
size and in companies located in other foreign countries, including
developing countries.
The investment approach of the sub-advisor for the
Berger/BIAM IPT - International Fund is based on "bottom-up"
fundamental analysis of individual companies within a framework of
dynamic economic and business themes that are believed to provide the
best opportunities for effective stock selection. Stock selection
decisions are guided by:
* GLOBAL ECONOMIC AND BUSINESS THEMES. The sub-advisor
identifies economic and business themes and trends that have
the potential to support the long-term growth prospects of
companies best positioned to take advantage of them. These
themes and trends may transcend political and geographic
boundaries and may be global or regional in nature. Current
themes and trends include, for example, worldwide growth in
telecommunications and multimedia, positive banking
environment, rapid economic development in the Pacific
Basin, global healthcare trends and unique consumer
franchises.
* FUNDAMENTAL ANALYSIS. The sub-advisor seeks to identify
companies that it believes are best positioned to benefit
from the identified themes and trends. It conducts an
extensive "bottom-up" analysis seeking individual quality
companies with stocks that are fundamentally undervalued
relative to their long-term prospective earnings growth
rate, their historic valuation levels and their peer group.
This process includes examining financial statements,
evaluating management and products, assessing competitive
position and strengths, as well as analyzing the economic
variables affecting the company's operating environment.
This in-depth, fundamental analysis is believed to be the
most important step in identifying stock selections for the
Fund.
Actual country weightings are a by-product of the bottom-up
stock selection approach. Accordingly, the country in which a company
is located is considered by the sub-advisor to be less important than
the diversity of its sources of earnings and earnings growth.
Investors should also be aware that investment in foreign
securities carries additional risks not present when investing in
domestic securities. See "Foreign Securities" below. The Berger/BIAM
IPT - International Fund is not intended as a complete or balanced
investment vehicle, but rather as an investment for persons who are in
a financial position to
-8-<PAGE>
assume the risk and share price volatility associated with foreign
investments. As a result, the Fund should be considered as a long-
term investment vehicle.
* * *
The investment objective of each of the Berger IPT - 100
Fund, the Berger IPT - Small Company Growth Fund and the Berger/BIAM
IPT - International Fund, and the primary investment objective of the
Berger IPT - Growth and Income Fund, is considered fundamental,
meaning that it cannot be changed without a shareholders' vote. The
secondary investment objective of the Berger IPT - Growth and Income
Fund is not considered fundamental, and therefore may be changed in
the future by action of the directors without shareholder vote.
However, the Berger IPT - Growth and Income Fund will not change its
secondary investment objective without giving its shareholders such
notice as may be required by law. If the Berger IPT - Growth and
Income Fund changes its secondary investment objective, shareholders
should consider whether the Fund remains an appropriate investment in
light of their then current financial position and needs. There can
be no assurance that any of the Funds' investment objectives will be
realized.
The Berger IPT - 100 Fund, the Berger IPT - Growth and
Income Fund and the Berger IPT - Small Company Growth Fund may each
increase its investment in government securities and other short-term
interest-bearing securities without limit when its advisor believes
market conditions warrant a temporary defensive position, during which
period it may be more difficult for the Fund to achieve its investment
objective. Following is additional information about some of the
other specific types of securities and other instruments in which the
Funds may invest.
FOREIGN SECURITIES. Investments in foreign securities
involve some risks that are different from the risks of investing in
securities of U.S. issuers, such as the risk of adverse political,
social, diplomatic and economic developments and, with respect to
certain countries, the possibility of expropriation, taxes imposed by
foreign countries or limitations on the removal of monies or other
assets of a Fund. Moreover, the economies of individual foreign
countries will vary in comparison to the U.S. economy in such respects
as growth of gross domestic product, rate of inflation, capital
reinvestment, resources, self-sufficiency and balance of payments
position. Securities of some foreign companies, particularly those in
developing countries, are less liquid and more volatile than
securities of comparable domestic companies. Investing in the
securities of developing countries may involve exposure to economic
structures that are less diverse and mature, and to political systems
that can be expected to have less stability than developed countries.
A Fund's investments may include American Depositary Receipts (ADRs).
The Funds may also invest in European Depositary Receipts (EDRs) which
are similar to ADRs, in bearer form, designed for use in the European
securities markets, and in Global Depositary Receipts (GDRs). Some of
the companies in which a Fund may invest may be considered passive
foreign investment companies (PFICs), which are described in greater
detail in the Statement of Additional Information.
There also may be less publicly available information about
foreign issuers and securities than domestic issuers and securities,
and foreign issuers generally are not subject to accounting, auditing
and financial reporting standards, requirements and practices
comparable
-9-<PAGE>
to those applicable to domestic issuers. Also, there is generally
less government supervision and regulation of exchanges, brokers,
financial institutions and issuers in foreign countries than there is
in the U.S. Foreign financial markets typically have substantially
less volume than U.S. markets. Foreign markets also have different
clearance and settlement procedures and, in certain markets, delays or
other factors could make it difficult to effect transactions,
potentially causing a Fund to experience losses or miss investment
opportunities.
Costs associated with transactions in foreign securities are
generally higher than with transactions in U.S. securities. A Fund
will incur greater costs in maintaining assets in foreign
jurisdictions and in buying and selling foreign securities generally,
resulting in part from converting foreign currencies into U.S.
dollars. In addition, a Fund might have greater difficulty taking
appropriate legal action with respect to foreign investments in non-
U.S. courts than with respect to domestic issuers in U.S. courts,
which may heighten the risk of possible losses through the holding of
securities by custodians and securities depositories in foreign
countries.
Since the Funds may invest in securities denominated or
quoted in currencies other than the U.S. dollar, changes in foreign
currency exchange rates will affect the value of the investments in
its portfolio and the unrealized appreciation or depreciation of
investments insofar as U.S. investors are concerned. If the foreign
currency in which a security is denominated appreciates against the
U.S. dollar, the dollar value of the security will increase.
Conversely, a decline in the exchange rate of the foreign currency
against the U.S. dollar would adversely affect the dollar value of the
foreign securities. Foreign currency exchange rates are determined by
forces of supply and demand on the foreign exchange markets, which are
in turn affected by the international balance of payments and other
economic and financial conditions, government intervention,
speculation and other factors.
CONVERTIBLE SECURITIES. Each Fund may purchase securities
which are convertible into common stock when the Fund's advisor or
sub-advisor believes they offer the potential for a higher total
return than nonconvertible securities. While fixed income securities
generally have a priority claim on a corporation's assets over that of
common stock, some of the convertible securities which the Funds may
hold are high-yield/high-risk securities that are subject to special
risks, including the risk of default in interest or principal payments
which could result in a loss of income to the Funds or a decline in
the market value of the securities. Convertible securities often
display a degree of market price volatility that is comparable to
common stocks. The credit risk associated with convertible securities
generally is reflected by their being rated below investment grade by
organizations such as Moody's Investors Service, Inc., or Standard &
Poor's Corporation, or being of similar creditworthiness in the
determination of the advisor or sub-advisor. The Funds have no pre-
established minimum quality standards for convertible securities and
may invest in convertible securities of any quality, including lower
rated or unrated securities. However, none of the Funds will invest
in any security in default at the time of purchase or in any
nonconvertible debt securities rated below investment grade, and each
Fund will invest less than 20% of the market value of its assets at
the time of purchase in convertible securities rated below investment
grade. If convertible securities purchased by a Fund are downgraded
following purchase, or if other circumstances cause 20% or more of a
Fund's assets to be invested in convertible securities rated below
investment grade, the trustees of the Trust, in consultation with the
advisor or sub-advisor will determine what action, if any,
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is appropriate in light of all relevant circumstances. For a further
discussion of debt security ratings, see Appendix A to the Statement
of Additional Information.
SECURITIES OF SMALLER COMPANIES. All of the Funds may
invest in, and the portfolio of the Berger IPT - Small Company Growth
Fund will be weighted toward, securities of companies with small- or
mid-sized market capitalizations. Market capitalization is defined as
total current market value of a company's outstanding common stock.
Investments in companies with smaller market capitalizations may
involve greater risks and price volatility (that is, more abrupt or
erratic price movements) than investments in larger, more mature
companies since smaller companies may be at an earlier stage of
development and may have limited product lines, reduced market
liquidity for their shares, limited financial resources or less depth
in management than larger or more established companies. Smaller
companies also may be less significant factors within their industries
and may have difficulty withstanding competition from larger
companies. While smaller companies may be subject to these additional
risks, they may also realize more substantial growth than larger or
more established companies.
UNSEASONED ISSUERS. The Funds may invest to a limited
degree in securities of unseasoned issuers. Unseasoned issuers are
companies with a record of less than three years' continuous
operation, even including the operations of any predecessors and
parents. Unseasoned issuers by their nature have only a limited
operating history which can be used for evaluating the company's
growth prospects. As a result, investment decisions for these
securities may place a greater emphasis on current or planned product
lines and the reputation and experience of the company's management
and less emphasis on fundamental valuation factors than would be the
case for more mature growth companies. In addition, many unseasoned
issuers may also be small companies and involve the risks and price
volatility associated with smaller companies. The Berger IPT - Small
Company Growth Fund may invest up to 10% of its total assets in
securities of unseasoned issuers, and each of the Berger IPT - 100
Fund, the Berger IPT - Growth and Income Fund and the Berger/BIAM IPT
- - International Fund may invest up to 5% of its total assets in such
securities.
ZEROS/STRIPS. The Berger IPT - 100 Fund and the Berger IPT
- - Growth and Income Fund may each invest in zero coupon bonds or in
"strips." Zero coupon bonds do not make regular interest payments;
rather, they are sold at a discount from face value. Principal and
accreted discount (representing interest accrued but not paid) are
paid at maturity. "Strips" are debt securities that are stripped of
their interest coupon after the securities are issued, but otherwise
are comparable to zero coupon bonds. The market values of "strips"
and zero coupon bonds generally fluctuate in response to changes in
interest rates to a greater degree than do interest-paying securities
of comparable term and quality. None of the Funds will invest in
mortgage-backed or other asset-backed securities.
REPURCHASE AGREEMENTS. Each Fund is authorized to invest in
repurchase agreements. A repurchase agreement is a means of investing
cash for a short period. In a repurchase agreement, a seller
(typically a U.S. commercial bank or recognized U.S. securities
dealer) sells securities to the Fund and agrees to repurchase the
securities at the Fund's cost plus interest within a specified period
(normally one day). In these transactions, the securities purchased
by the Fund will have a total value equal to, or in excess of, the
value of the repurchase agreement, and will be held by the Fund's
custodian bank until repurchased. These
-11-<PAGE>
transactions must be fully collateralized at all times by debt
securities (generally a security issued or guaranteed by the U.S.
Government or an agency thereof, a banker's acceptance or a
certificate of deposit), but involve some credit risk to the Fund if
the other party defaults on its obligation and the Fund is delayed or
prevented from liquidating the collateral. Repurchase agreements
maturing in more than seven days will be considered illiquid for
purposes of the restriction on each Fund's investment in illiquid and
restricted securities.
LENDING PORTFOLIO SECURITIES. Each Fund may lend its
portfolio securities to qualified institutional investors such as
brokers, dealers or other financial organizations. This practice
permits a Fund to earn income, which, in turn, can be invested in
additional securities to pursue the Fund's investment objective.
Loans of securities by a Fund will be collateralized by cash, letters
of credit, or securities issued or guaranteed by the U.S. Government
or its agencies. The collateral will equal at least 100% of the
current market value of the loaned securities, marked-to-market on a
daily basis. A Fund bears a risk of loss in the event that the other
party to a securities lending transaction defaults on its obligations
and the Fund is delayed in or prevented from exercising its rights to
dispose of the collateral, including the risk of a possible decline in
the value of the collateral securities during the period in which the
Fund seeks to assert these rights, the risk of incurring expenses
associated with asserting these rights, and the risk of losing all or
a part of the income from the transaction. None of the Funds will
lend any security if, as a result of such loan, the aggregate value of
securities then on loan would exceed 33-1/3% of the market value of
the Fund's total assets.
HEDGING TRANSACTIONS. Each Fund except the Berger/BIAM IPT
- - International Fund is authorized to make limited use of certain
types of futures, forwards and options, but only for the purpose of
hedging, that is, protecting against the risk of market movements that
may adversely affect the value of a Fund's securities or the price of
securities that a Fund is considering purchasing. The Berger/BIAM IPT
- - International Fund is authorized to make limited use only of forward
contracts for the same purpose. Although a hedging transaction may,
for example, partially protect a Fund from a decline in the value of a
particular security or its portfolio generally, hedging may also limit
the Fund's opportunity to profit from favorable price movements, and
the cost of the transaction will reduce the potential return on the
security or the portfolio. Following is a summary of the futures,
forwards and options which the Funds may utilize, provided that no
more than 5% of a Fund's net assets at the time of purchase may be
utilized as initial margins for financial futures transactions and
premiums for options.
Financial futures and forwards are contracts on financial
instruments (such as securities, securities indices and foreign
currencies) that obligate the holder to take or make future delivery
of a specified quantity of the underlying financial instrument.
Futures are exchange traded instruments that may be physically settled
or settled with cash or by entering into an offsetting transaction,
while forwards are privately negotiated and contemplate actual
delivery of the underlying financial instrument (usually a foreign
currency). An option gives the holder the right, but not the
obligation, to purchase or sell something (such as a security or a
futures contract) at a specified price at any time until the
expiration date. An option on a securities index is similar, except
that upon exercise, settlement is made in cash rather than in specific
securities. Securities options may be either exchange-traded or
privately negotiated, whereas options on futures contracts are always
exchange-traded. Each Fund may only write call options (that is,
issue options that obligate the Fund to deliver if the option is
exercised by
-12-<PAGE>
the holder) that are "covered" and only up to 25% of a Fund's total
assets. A call option is considered "covered" if a Fund already owns
the security on which the option is written or, in the case of an
option written on a securities index, if a Fund owns a portfolio of
securities believed likely to substantially replicate movement of the
index.
Use of these instruments by a Fund involves the potential
for a loss that may exceed the amount of initial margin the Fund would
be permitted to commit to the contracts under its investment
limitation, or in the case of a call option written by a Fund, may
exceed the premium received for the option. However, each Fund will
be permitted to use such instruments for hedging purposes only, and
only if the aggregate amount of its obligations under these contracts
does not exceed the total market value of the assets the Fund is
attempting to hedge, such as a portion or all of its exposure to
equity securities or its holding in a specific foreign currency. To
help ensure that each Fund will be able to meet its obligations under
its futures and forward contracts and its obligations under options
written by that Fund, each Fund will be required to maintain liquid
assets in a segregated account with its custodian bank or to set aside
portfolio securities to "cover" its position in these contracts.
The principal risks of the Funds utilizing futures
transactions, forward contracts and/or options are: (a) losses
resulting from market movements not anticipated by the Funds;
(b) possible imperfect correlation between movements in the prices of
futures, forwards and options and movements in the prices of the
securities or currencies hedged or used to cover such positions;
(c) lack of assurance that a liquid secondary market will exist for
any particular futures or options at any particular time, and possible
exchange-imposed price fluctuation limits, either of which may make it
difficult or impossible to close a position when so desired; (d) lack
of assurance that the counterparty to a forward contract would be
willing to negotiate an offset or termination of the contract when so
desired; (e) the need for additional information and skills beyond
those required for the management of a portfolio of traditional
securities; and (f) possible need to defer closing out certain futures
or options contracts in order to continue to qualify for beneficial
tax treatment afforded "regulated investment companies" under the
Internal Revenue Code of 1986, as amended. In addition, when a Fund
enters into an over-the-counter contract with a counterparty, the Fund
will assume counterparty credit risk, that is, the risk that the
counterparty will fail to perform its obligations, in which case the
Fund could be worse off than if the contract had not been entered
into. Additional detail concerning the Funds' use of futures,
forwards and options and the risks of such investments can be found in
the Statement of Additional Information.
ILLIQUID SECURITIES. Each Fund is authorized to invest in
securities which are illiquid or not readily marketable because they
are subject to restrictions on their resale ("restricted securities")
or because, based upon their nature or the market for such securities,
no ready market is available. However, none of the Funds may purchase
any security, the purchase of which would cause the Fund to invest
more than 15% of its net assets, measured at the time of purchase, in
illiquid securities. If securities become illiquid following purchase
or other circumstances cause more than 15% of a Fund's net assets to
be invested in illiquid securities, the trustees of the Trust, in
consultation with the advisor or sub-advisor, will determine what
action, if any, is appropriate in light of all relevant circumstances.
Repurchase agreements maturing in more than seven days will be
considered as illiquid for purposes of this restriction. Certain
restricted securities, such as Rule 144A securities, may be treated as
liquid
-13-<PAGE>
under this restriction if a determination is made that such securities
are readily marketable. Investments in illiquid securities involve
certain risks to the extent that a Fund may be unable to dispose of
such a security at the time desired or at a reasonable price or, in
some cases, may be unable to dispose of it at all. In addition, in
order to resell a restricted security, a Fund might have to incur the
potentially substantial expense and delay associated with effecting
registration.
INVESTMENT RESTRICTIONS
In addition to its investment objective, each Fund has
adopted a number of restrictions on its investments and other
activities that may not be changed without shareholder approval. For
example, neither the Berger IPT - 100 Fund nor the Berger IPT - Growth
and Income Fund may purchase securities of any issuer (except U.S.
Government securities) if, immediately after and as a result of such
purchase, the value of such Fund's holdings in the securities of that
issuer exceeds 5% of the value of its total assets or it owns more
than 10% of the outstanding voting securities or of any class of
securities of such issuer. The Berger/BIAM IPT - International Fund
is similarly restricted with respect to 100% of its total assets,
although this restriction may be reduced to apply to 75% or more of
its total assets without a shareholder vote. The Berger IPT - Small
Company Growth Fund is similarly restricted with respect to 75% of its
total assets.
Further, neither the Berger IPT - 100 Fund nor the Berger
IPT - Growth and Income Fund may borrow in excess of 5% of its total
assets or pledge assets taken at market value to an extent greater
than 10% of its total assets taken at cost (and no borrowing may be
undertaken except from banks as a temporary measure for extraordinary
or emergency purposes), subject to certain exclusions, and neither may
make loans (except that each Fund may enter into repurchase agreements
and may lend portfolio securities in accordance with the Fund's
investment policies). Neither of the Berger IPT - Small Company
Growth Fund or the Berger/BIAM IPT - International Fund may borrow
money, except borrowing undertaken from banks for temporary or
emergency purposes in amounts not to exceed 25% of the market value of
its total assets (including the amount borrowed), and none may make
loans (except that a Fund may enter into repurchase agreements and may
lend portfolio securities in accordance with the Fund's investment
policies). None of the Funds may invest in any one industry more than
25% of the value of its total assets at the time of investment, nor
invest in commodities, except, only for the purpose of hedging, in
certain futures, forwards and/or options as specified in greater
detail above and in the Statement of Additional Information.
Also, none of the Funds currently intends to make short
sales of securities, except that each of the Funds other than the
Berger/BIAM IPT - International Fund may make short sales of
securities which the Fund owns or has the right to acquire at no
additional cost (i.e., short sales "against the box"), and none of the
Funds intends to purchase or sell securities on a when-issued or
delayed delivery basis if as a result, more than 5% of its assets are
invested in such securities, although these restrictions may be
changed without shareholder approval. For more detail about the
Funds' investment restrictions, see the Statement of Additional
Information.
-14-<PAGE>
5. PORTFOLIO TURNOVER
In pursuit of each Fund's investment objective, management
continuously monitors the Fund's investments and makes portfolio
changes whenever changes in the markets, industry trends or the
outlook for any portfolio security indicate to them that the objective
could be better achieved by investment in another security, regardless
of portfolio turnover. In addition, portfolio turnover may increase
as a result of large amounts of purchases and redemptions of shares of
a Fund due to economic, market or other factors that are not within
the control of management. The annual portfolio turnover rates of the
Funds may at times exceed 100%. Increased portfolio turnover would
necessarily result in correspondingly higher brokerage costs for the
Funds. The portfolio turnover rates are shown in the tables in
Section 2 beginning on page 2.
6. MANAGEMENT AND INVESTMENT ADVICE
The trustees of the Trust are responsible for major
decisions relating to each Fund's policies and objectives. They also
oversee the operation of each Fund by its officers and review the
investment performance of the Funds on a regular basis.
The investment advisor to each of the Funds except the
Berger/BIAM IPT - International Fund is Berger Associates,
210 University Boulevard, Suite 900, Denver, CO 80206. Berger
Associates furnishes continuous advice and recommendations to each of
those Funds regarding securities to be purchased and sold by the Fund.
Berger Associates, therefore, formulates a continuing program for
management of the assets of each Fund consistent with the investment
objectives and policies established by the trustees of the Trust.
Berger Associates also provides office space for each Fund and pays
the salaries, fees and expenses of all Fund officers and trustees of
the Funds who are interested persons of Berger Associates. Berger
Associates serves as investment advisor or sub-advisor to mutual
funds, pension and profit-sharing plans, and institutional and private
investors, and had assets under management of more than $3.5 billion
as of December 31, 1996. Kansas City Southern Industries, Inc.
("KCSI") owns approximately 87% of the outstanding shares of Berger
Associates. KCSI is a publicly traded holding company with principal
operations in rail transportation, through its subsidiary The Kansas
City Southern Railway Company, and financial asset management
businesses. KCSI also owns approximately 41% of the outstanding
shares of DST Systems, Inc. ("DST"), a publicly traded information and
transaction processing company which also acts as the Funds' sub-
transfer agent.
Patrick S. Adams, Senior Vice President of Berger
Associates, is the portfolio manager for the Berger IPT - 100 Fund.
Mr. Adams also co-manages the Berger IPT - Growth and Income Fund,
along with Berger Associates Senior Analyst Mark R. McKinney. The
portfolio managers are responsible for the investments of their Funds,
including the day-to-day investment decisions for these Funds. Mr.
Adams is also President of the Berger IPT - 100 Fund and the Berger
IPT - Growth and Income Fund, and Mr. McKinney is Vice President of
the Berger IPT - Growth and Income Fund.
-15-<PAGE>
Mr. Adams joined Berger Associates in February 1997, where
he serves as portfolio manager for the Berger IPT - 100 Fund and the
retail Berger 100 Fund, co-manager for the Berger IPT - Growth and
Income Fund and the retail Berger Growth and Income Fund, and
portfolio manager for retirement plans and institutional and private
investors. Mr. Adams previously served as Senior Vice President with
Zurich Kemper Investments, Inc., from June 1996 to January 1997, where
he was portfolio manager of the Kemper Growth Fund. Mr. Adams served
as Portfolio Manager with Founders Asset Management, Inc., from March
1993 to May 1996, where he managed the Founders Blue Chip Growth Fund
and the Founders Balanced Fund. Prior to that, Mr. Adams served in
various positions with First of America Investment Corp. for over
three years, including as Senior Portfolio Manager/Senior Analyst from
January 1992 to February 1993, during which time he managed the
Parkstone Equity Fund.
Mr. McKinney joined Berger Associates in January 1996, where
he serves as Senior Analyst and co-portfolio manager, along with
Patrick Adams, for the Berger IPT - Growth and Income Fund and the
retail Berger Growth and Income Fund. Mr. McKinney previously served
as Analyst/Portfolio Manager with Farmers Insurance Co. from April
1992 to January 1996.
William R. Keithler is the President and portfolio manager
of the Berger IPT - Small Company Growth Fund and is primarily
responsible for the investments of the Fund, including the day-to-day
investment decisions for the Fund. Mr. Keithler also serves as
President and portfolio manager for the Berger Small Company Growth
Fund and the Berger New Generation Fund.
Mr. Keithler joined Berger Associates in December 1993 and
serves as Senior Vice President-Investment Management. Previously, he
was employed by INVESCO Trust Company, Denver, Colorado, as Senior
Vice President (January 1993 to December 1993), Vice President
(January 1991 to January 1993) and Portfolio Manager (January 1988 to
January 1991). During his seven years with INVESCO, Mr. Keithler was
portfolio manager of several mutual funds, including the INVESCO
Dynamics Fund and INVESCO Emerging Growth Fund. From 1982 to 1986,
Mr. Keithler was Vice President and portfolio manager with First Trust
St. Paul, in St. Paul, Minnesota.
The investment advisor to the Berger/BIAM IPT -
International Fund is BBOI Worldwide LLC ("BBOI Worldwide"),
210 University Boulevard, Denver, CO 80206. BBOI Worldwide oversees,
evaluates and monitors the investment advisory services provided to
the Fund by the Fund's sub-advisor and is responsible for furnishing
administrative services to the Fund, such as coordinating certain
matters relating to the operations of the Fund and monitoring the
Fund's compliance with all applicable federal and state securities
laws.
BBOI Worldwide is a Delaware limited liability company
formed in 1996. Since BBOI Worldwide was only recently formed, it has
only limited prior experience as an investment advisor. However, BBOI
Worldwide is a joint venture between Berger Associates and Bank of
Ireland Asset Management (U.S.) Limited ("BIAM"), the sub-advisor to
the Fund, which have both been in the investment advisory business for
many years.
-16-<PAGE>
Berger Associates and BIAM each own a 50% membership
interest in BBOI Worldwide and each have an equal number of
representatives on BBOI Worldwide's Board of Managers. Berger
Associates' role in the joint venture is to provide administrative
services and BIAM's role is to provide international and global
investment management expertise. Agreement of representatives of both
Berger Associates and BIAM is required for all significant management
decisions for BBOI Worldwide.
Since its founding in 1966, Bank of Ireland's investment
management group has become recognized among international and global
investment managers, serving clients in Europe, the United States,
Canada, Australia and South Africa. BIAM, the sub-advisor to the
Berger/BIAM IPT - International Fund, is an indirect wholly-owned
subsidiary of Bank of Ireland. Bank of Ireland, founded in 1783, is a
publicly traded, diversified financial services group with business
operations worldwide. Bank of Ireland provides investment management
services through a network of related companies, including BIAM which
serves primarily institutional clients in the United States and
Canada. Bank of Ireland and its affiliates managed assets for clients
worldwide in excess of $21 billion as of December 31, 1996.
As permitted in its Investment Advisory Agreement with the
Berger/BIAM IPT - International Fund, BBOI Worldwide has delegated
day-to-day portfolio management responsibility to BIAM, as the sub-
advisor. As sub-advisor, BIAM manages the investments in the Fund and
determines what securities and other investments will be purchased,
retained, sold or loaned, consistent with the investment objective and
policies established by the trustees of the Trust. BIAM serves as
investment advisor or sub-advisor to pension and profit-sharing plans
and other institutional investors and mutual funds. BIAM also acts as
sub-advisor for and is responsible for the day-to-day portfolio
management of the Berger/BIAM International Portfolio. BIAM's main
offices are at 26 Fitzwilliam Place, Dublin 2, Ireland. BIAM
maintains a representative office at 2 Greenwich Plaza, Greenwich, CT
06830.
All investment decisions made for the Berger/BIAM IPT -
International Fund by its sub-advisor are made by a team of BIAM
investment personnel. No one individual is primarily responsible for
making the day-to-day investment decisions for the Fund. Most of the
investment professionals at BIAM have been with BIAM at least 10
years.
Bank of Ireland or its affiliates may have deposit, loan or
other commercial or investment banking relationships with the issuers
of securities which may be purchased by the Berger/BIAM IPT -
International Fund, including outstanding loans to such issuers which
could be repaid in whole or in part with the proceeds of securities
purchased by the Fund. Federal law prohibits the sub-advisor, in
making investment decisions, from using material non-public
information in its possession or in the possession of any of its
affiliates. In addition, in making investment decisions for the Fund,
BIAM will not take into consideration whether an issuer of securities
proposed for purchase or sale by the Fund is a customer of Bank of
Ireland or its affiliates.
Under their Investment Advisory Agreements, the Berger IPT -
100 Fund and the Berger IPT - Growth and Income Fund each have agreed
to compensate Berger Associates for its investment advisory services
to the Fund by the payment of a fee at the annual rate of .75 of 1%
(0.75%) of the average daily net assets of the Fund. Under the
Investment Advisory
-17-<PAGE>
Agreement for the Berger IPT - Small Company Growth Fund, Berger
Associates is compensated for its investment advisory services to that
Fund by the payment of a fee at the annual rate of .9 of 1% (0.90%) of
the average daily net assets of the Fund. Under its Investment
Advisory Agreement with BBOI Worldwide, the Berger/BIAM IPT -
International Fund compensates BBOI Worldwide for its investment
advisory services by the payment of a fee at the annual rate of .9 of
1% (0.90%) of the average daily net assets of the Fund. The
Berger/BIAM IPT - International Fund pays no fees directly to BIAM,
the sub-advisor. Under a Sub-Advisory Agreement with BBOI Worldwide,
BIAM receives from BBOI Worldwide a fee at the annual rate of .4 of 1%
(0.40%) of the average daily net assets of the Berger/BIAM IPT -
International Fund. During certain periods, BIAM may voluntarily
waive all or a portion of its fee under the Sub-Advisory Agreement,
which will not affect the fee paid by the Fund to the BBOI Worldwide.
From time to time, Berger Associates or BBOI Worldwide may
compensate Participating Insurance Companies or their affiliates whose
customers hold shares of the Funds for providing a variety of
administrative services (such as recordkeeping and accounting) and
investor support services (such as responding to inquiries and
preparing mailings to shareholders). This compensation, which may be
paid as a per account fee or as a percentage of the average daily net
assets invested in the Funds by the compensated Participating
Insurance Company, depending on the nature, extent and quality of the
services provided, will be paid from Berger Associates' or BBOI's own
resources and not from the assets of the Funds.
7. EXPENSES OF THE FUNDS
Each of the Funds has appointed Investors Fiduciary Trust
Company ("IFTC") as its recordkeeping and pricing agent to calculate
the daily net asset value of such Fund and to perform certain
accounting and recordkeeping functions required by the Fund. In
addition, IFTC also serves as the Funds' custodian, transfer agent and
dividend disbursing agent. IFTC has engaged DST as sub-agent to
provide transfer agency and dividend disbursing services for the
Funds. As noted in the preceding section, approximately 41% of the
outstanding shares of DST are owned by KCSI.
For custodian, recordkeeping and pricing services, each Fund
pays fees to IFTC based on a percentage of its assets, subject to
certain minimums. Each Fund also pays a monthly fee based primarily
on the number of accounts maintained on behalf of the Fund for
transfer agency and dividend disbursing services, which fees are paid
by the Funds to IFTC and in turn passed through to DST as sub-agent.
In addition, the Funds reimburse IFTC and DST for certain out-of-
pocket expenses.
The trustees of each of the Funds have authorized portfolio
transactions to be placed on an agency basis through DST Securities,
Inc. ("DSTS"), a wholly-owned broker-dealer subsidiary of DST. When
transactions for a Fund are effected through DSTS, the commission
received by DSTS is credited against, and thereby reduces, certain
operating expenses that the Fund would otherwise be obligated to pay.
No portion of the commission is retained by DSTS.
In addition, under a separate Administrative Services
Agreement with each Fund except the Berger/BIAM IPT - International
Fund, Berger Associates performs certain
-18-<PAGE>
administrative and recordkeeping services not otherwise performed by
IFTC, including the preparation of financial statements and reports to
be filed with regulatory authorities. Each of those Funds pays Berger
Associates a fee at the annual rate of 1/100 of 1% (0.01%) of its
average daily net assets for such services. Under a separate
Administrative Services Agreement with the Berger/BIAM IPT -
International Fund, BBOI Worldwide performs administrative and
recordkeeping services for the Fund and the Fund pays BBOI Worldwide a
fee at the annual rate of 1/100 of 1% (0.01%) of its average daily net
assets. Under a Sub-Administration Agreement between the BBOI
Worldwide and Berger Associates, Berger Associates has been delegated
all of BBOI Worldwide's duties under the Administrative Services
Agreement and BBOI Worldwide's administrative duties under the
Investment Advisory Agreement for the Berger/BIAM IPT - International
Fund. For its services under the Sub-Administration Agreement, BBOI
Worldwide pays Berger Associates a fee of .2 of 1% (0.20%) of the
average daily net assets of the Berger/BIAM IPT - International Fund.
During certain periods, Berger Associates may voluntarily waive all or
a portion of its fee from BBOI Worldwide, which will not affect the
fee paid by the Fund to BBOI Worldwide under the Administrative
Services Agreement or the advisory fee paid to BBOI Worldwide under
the Investment Advisory Agreement. Each of the Funds also incurs
other expenses, including accounting, administrative and legal
expenses.
Berger Associates has voluntarily agreed to waive its
advisory fee and expects to voluntarily reimburse the Funds for
additional expenses to the extent that normal operating expenses in
any fiscal year, including the investment advisory fee but excluding
brokerage commissions, interest, taxes and extraordinary expenses, of
each of the Berger IPT - 100 Fund and the Berger IPT - Growth and
Income Fund exceed 1.00%, and the normal operating expenses in any
fiscal year of the Berger IPT - Small Company Growth Fund exceed
1.15%, of the respective Fund's average daily net assets. BBOI
Worldwide has voluntarily agreed to waive its advisory fee and expects
to voluntarily reimburse the Fund for additional expenses to the
extent that normal operating expenses in any fiscal year, including
the investment advisory fee but excluding brokerage commissions,
interest, taxes and extraordinary expenses, of the Berger/BIAM IPT -
International Fund exceed 1.20% of that Fund's average daily net
assets.
DISTRIBUTOR
The distributor (principal underwriter) of each Fund's
shares is Berger Distributors, Inc. (the "Distributor"), 210
University Boulevard, Suite 900, Denver, CO 80206. The Distributor
may be reimbursed by Berger Associates for its costs in distributing
the Funds' shares. The Distributor is a wholly-owned subsidiary of
Berger Associates, and certain officers of the Trust are officers or
directors of the Distributor.
8. HOW TO PURCHASE AND REDEEM SHARES IN THE FUNDS
Shares of the Funds are sold by the Funds on a continuous
basis to separate accounts of Participating Insurance Companies or to
qualified plans. Investors may not purchase or redeem shares of the
Funds directly, but only through variable insurance contracts offered
through the separate accounts of Participating Insurance Companies or
through qualified retirement plans. You should refer to the
applicable Separate Account Prospectus or your plan documents for
information on how to purchase or surrender a contract, make partial
withdrawals
-19-<PAGE>
of contract values, allocate contract values to one or more of the
Funds, change existing allocation among investment alternatives,
including the Funds, or select specific Funds as investment options
for a qualified plan. No sales charge is imposed upon the purchase or
redemption of shares of the Funds. Sales charges for the variable
insurance contracts or qualified plans are described in the relevant
Separate Account Prospectuses or plan documents.
Fund shares are purchased or redeemed at the net asset value
per share next computed after receipt of a purchase or redemption
order by a Fund, its agent or its designee. Payment for redeemed
shares generally will be made within three business days following the
date of the request for redemption. However, payment may be postponed
under unusual circumstances, such as when normal trading is not taking
place on the New York Stock Exchange, an emergency as defined by the
Securities and Exchange Commission exists, or as permitted by the
Securities and Exchange Commission.
9. HOW THE NET ASSET VALUE IS DETERMINED
The price of each Fund's shares is based on the net asset
value of that Fund, which is determined at the close of the regular
trading session of the New York Stock Exchange (the "Exchange")
(normally 4:00 p.m., New York time) each day that the Exchange is
open.
The per share net asset value of each Fund is determined by
dividing the total value of its securities and other assets, less
liabilities, by the total number of shares outstanding. In
determining net asset value, securities are valued at market value or,
if market quotations are not readily available, at their fair value
determined in good faith pursuant to consistently applied procedures
established by the trustees. Money market instruments maturing within
60 days are valued at amortized cost, which approximates market value.
All assets and liabilities initially expressed in terms of non-U.S.
dollar currencies are translated into U.S. dollars at the prevailing
market rates as quoted by one or more banks or dealers shortly before
the close of the Exchange. See the Statement of Additional
Information for more detailed information.
Generally, trading in foreign securities markets is
substantially completed each day at various times prior to the close
of the Exchange. The values of foreign securities used in computing
the net asset value of the shares of the Fund are determined as of the
earlier of such market close or the closing time of the Exchange.
Occasionally, events affecting the value of such securities may occur
between the times at which they are determined and the close of the
Exchange, or when the foreign market on which such securities trade is
closed but the Exchange is open, which will not be reflected in the
computation of net asset value. If during such periods, events occur
which materially affect the value of such securities, the securities
will be valued at their fair market value as determined in good faith
pursuant to consistently applied procedures established by the
trustees.
A Fund's securities may be listed primarily on foreign
exchanges or over-the-counter dealer markets which may trade on days
when the Exchange is closed (such as customary U.S. holidays) and the
Fund's net asset value is not calculated. As a result, the net asset
value of a Fund may be significantly affected by such trading on days
when shareholders cannot purchase or redeem shares of the Fund.
-20-<PAGE>
Since none of the Funds imposes any front end sales load or
redemption fee, both the purchase price and the redemption price of a
Fund share are the same and will be equal to the next calculated net
asset value of a share of that Fund.
10. INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT
Each of the Funds intends to declare dividends representing
the Fund's net investment income annually, normally in December. It
is also the present policy of each Fund to distribute annually all of
its net realized capital gains.
All dividends and capital gains distributions paid by a Fund
will be automatically reinvested in shares of that Fund at the net
asset value on the ex-dividend date unless an election is made on
behalf of a separate account or qualified plan to receive
distributions in cash.
Each of the Funds intends to qualify to be treated as a
separate regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). If they so
qualify and meet certain minimum distribution requirements, the Funds
generally will not be liable for Federal income tax on the amount of
their earnings that are timely distributed. In addition, each Fund
intends to qualify under the diversification requirements of Code
Section 817(h) relating to insurance company separate accounts. By
meeting these and other requirements, the Participating Insurance
Companies, rather than the owners of the variable insurance contracts,
should be subject to tax on distributions received with respect to
Fund shares. The tax treatment of distributions made to a
Participating Insurance Company will depend on the Participating
Insurance Company's tax status. Participating Insurance Companies
should consult their own tax advisors concerning whether such
distributions are subject to Federal income tax if retained as part of
contract reserves. For further information concerning Federal income
tax consequences for the owners of variable insurance contracts and
qualified plan participants, consult the appropriate Separate Account
Prospectus or plan documents.
11. ADDITIONAL INFORMATION
The Funds are each separate series or portfolios established
under the Trust, a Delaware business trust organized on October 17,
1995. The Trust is authorized to issue an unlimited number of shares
of beneficial interest in series or portfolios. The series comprising
the Berger IPT - 100 Fund, the Berger IPT - Growth and Income Fund and
the Berger IPT - Small Company Growth Fund were established under the
Trust in October 1995. The series comprising the Berger/BIAM IPT -
International Fund was established under the Trust in March 1997.
Currently, these four series are the only series established under the
Trust, although others may be added in the future. Shares of each
Fund are fully paid and non-assessable when issued. Each share has a
par value of $.01. All shares issued by a Fund participate equally in
dividends and other distributions by the Fund, and in the residual
assets of the Fund in the event of its liquidation.
The separate accounts of the Participating Insurance
Companies and the trustees of the qualified plans invested in the
Funds, rather than individual contract owners or plan participants,
are the shareholders of the Funds. However, each Participating
Insurance Company
-21-<PAGE>
or qualified plan will vote such shares as required by law and
interpretations thereof, as amended or changed from time to time.
Under current law, a Participating Insurance Company is required to
request voting instructions from its contract owners and must vote
Fund shares held by each of its separate accounts in proportion to the
voting instructions received. Additional information about voting
procedures is contained in the applicable Separate Account
Prospectuses.
Shareholders of each Fund generally vote separately on
matters relating to that Fund, although they will vote together with
the holders of all other series of the Trust in the election of
trustees of the Trust and on all matters relating to the Trust as a
whole. Each full share of each Fund has one vote. Shares of each
Fund have non-cumulative voting rights, which means that the holders
of more than 50% of the shares voting for the election of trustees can
elect 100% of the trustees if they choose to do so and, in such event,
the holders of the remaining less than 50% of the shares voting for
the election of trustees will not be able to elect any person or
persons as trustees. None of the Funds is required to hold annual
shareholder meetings unless required by the Investment Company Act of
1940 or other applicable law or unless called by the trustees.
If shareholders owning at least 10% of the outstanding
shares of the Trust so request, a special shareholders' meeting will
be held for the purpose of considering the removal of a trustee of the
Trust. Special meetings will be held for other purposes if the
holders of at least 25% of the outstanding shares of the Trust so
request. Subject to certain limitations, the Funds will facilitate
appropriate communications by shareholders desiring to call a special
meeting for the purpose of considering the removal of a trustee.
Each Fund sells its shares only to certain qualified
retirement plans and to variable annuity and variable life insurance
separate accounts of insurance companies that are unaffiliated with
Berger Associates and BBOI Worldwide and that may be unaffiliated with
one another. The Funds currently do not foresee any disadvantages to
policyowners arising out of the fact that each Fund offers its shares
to such entities. Nevertheless, the trustees intend to monitor events
in order to identify any material irreconcilable conflicts that may
arise and to determine what action, if any, should be taken in
response to such conflicts. If a conflict occurs, the trustees may
require one or more insurance company separate accounts or plans to
withdraw its investments in one or more of the Funds and to substitute
shares of another Fund. As a result, a Fund may be forced to sell
securities at disadvantageous prices. In addition, the trustees may
refuse to sell shares of any Fund to any separate account or qualified
plan or may suspend or terminate the offering of shares of any Fund if
such action is required by law or regulatory authority or is deemed by
the Fund to be in the best interests of the shareholders of the Fund.
The Funds' transfer agent and dividend disbursing agent is
Investors Fiduciary Trust Company ("IFTC"), 127 West 10th Street,
Kansas City, MO 64105. IFTC has engaged DST Systems, Inc. ("DST"),
P.O. Box 419958, Kansas City, MO 64141, as sub-agent to provide
transfer agency and dividend disbursing services for the Funds.
Owners of variable insurance contracts and qualified plan
administrators will receive annual and semiannual reports including
the financial statements of the Funds in which contract values or
qualified plan assets are invested. Each report will show the
investments
-22-<PAGE>
owned by each Fund and the market values thereof, as well as other
information about the Funds and their operations.
The Glass-Steagall Act prohibits a depository institution
and certain affiliates from underwriting or distributing most
securities and from affiliating with businesses engaged in certain
similar activities. BIAM believes, based on advice of its counsel,
that it may perform the services for the Berger/BIAM IPT -
International Fund contemplated by this Prospectus consistent with the
Glass-Steagall Act and other applicable banking laws and regulations.
However, future changes in either Federal or state statutes and
regulations concerning the permissible activities of banks and their
affiliates, as well as future judicial or administrative decisions or
interpretations of present and future statutes and regulations, might
prevent BIAM from continuing to perform those services for that Fund.
If the circumstances described above should change, the trustees of
the Trust would review the relationships with BIAM and consider taking
all actions appropriate under the circumstances.
12. PERFORMANCE
From time to time in advertisements, the Funds may discuss
their performance ratings as published by recognized mutual fund
statistical services, such as Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., or Morningstar, Inc., or Value Line
Investment Survey or by publications of general interest such as THE
WALL STREET JOURNAL, INVESTOR'S BUSINESS DAILY, BARRON'S, FINANCIAL
WORLD or KIPLINGER'S PERSONAL FINANCE MAGAZINE. In addition, the
Funds may compare their performance to that of recognized broad-based
securities market indices, including the Standard & Poor's 500 Stock
Index, the Dow Jones Industrial Average, the Russell 2000 Stock Index,
the Standard & Poor's 600 Small Cap Index, the Morgan Stanley Capital
International EAFE (Europe, Australasia, Far East) Index, the Dow
Jones World Index or the Nasdaq Composite Index, or more narrowly-
based indices which reflect the market sectors in which that Fund
invests.
The total return of each Fund is calculated for any
specified period of time by assuming the purchase of shares of the
Fund at the net asset value at the beginning of the period. Each
dividend or other distribution paid by the Fund is assumed to have
been reinvested at the net asset value on the reinvestment date. The
total number of shares then owned as a result of this process is
valued at the net asset value at the end of the period. The
percentage increase is determined by subtracting the initial value of
the investment from the ending value and dividing the remainder by the
initial value.
Each Fund's total return reflects the Fund's performance
over a stated period of time. An average annual total return reflects
the hypothetical annually compounded return that would have produced
the same total return if the Fund's performance had been constant over
the entire period. Total return figures are based on the overall
change in value of a hypothetical investment in each Fund. Because
average annual total returns for more than one year tend to smooth out
variations in a Fund's return, investors should recognize that such
figures are not the same as actual year-by-year results.
A Fund's total return includes the effect of deducting that
Fund's expenses, but does not include any charges and expenses
attributable to a particular variable insurance contract
-23-<PAGE>
or qualified plan. Because shares of the Funds can be purchased only
through a variable insurance contract or qualified plan, the Funds'
total return data should be reviewed along with the description of
charges and expenses contained in the applicable Separate Account
Prospectus or plan documents. Total return for a Fund must always be
accompanied by, and reviewed with, comparable total return data for an
associated separate account, or data that would permit evaluation of
the magnitude of charges and expenses attributable to the contract or
plan that are not reflected in the Fund's total return.
Any performance figures for the Funds are based upon
historical results and do not assure future performance. The
investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
Each Fund has the same investment objective and follows
similar investment strategies as a Berger retail fund. The Berger
retail funds have the same investment advisor (and, as to the
Berger/BIAM IPT - International Fund, the same sub-advisor) as the
corresponding Funds offered under this Prospectus. As described under
"Management and Investment Advice," the same persons who serve as
portfolio managers of the Funds also serve as portfolio managers of
the corresponding Berger retail funds.
Set forth in the tables below is total return data for each
of the Funds, where available. Also set forth is total return
information for each of the corresponding Berger retail funds,
calculated as described above. Investors should not consider the
performance data for the corresponding Berger retail funds as a
substitute for the performance of the Funds offered under this
Prospectus, nor as an indication of the past or future performance of
the Funds. The performance figures below reflect the deduction of the
historical fees and expenses paid by the Berger retail funds, and not
those paid or to be paid by these Funds. The figures also do not
reflect the deduction of charges or expenses attributable to variable
insurance contracts or qualified plans invested in the Funds. As
discussed above, investors should refer to the applicable Separate
Account Prospectus or qualified plan documents accompanying this
Prospectus for information pertaining to such contract charges and
expenses and, in the case of a Separate Account Prospectus for a
variable annuity contract, to the hypothetical performance data in
that prospectus that illustrate the impact of contract charges and
loads on the returns shown below. Each Fund and its corresponding
Berger retail fund will be managed separately and the investments and
investment results are expected to differ. In particular, differences
in asset size and in cash flow resulting from purchases and redemption
of Fund shares may result in different security selections,
differences in the relative weightings of securities or differences in
the prices paid for particular portfolio holdings.
The following tables show, where available, the average
annualized total returns for each Fund and for its corresponding
Berger retail fund for the one-, five- and ten-year periods ended
December 31, 1996, and, for the period from inception (or for the
relevant Funds, immediately prior to Berger Associates assuming the
duties as the investment advisor on September 30, 1974) through
December 31, 1996. Performance data for the Funds reflect fee waivers
and expense reimbursements by the Funds' advisor, without which
performance would be lower.
-24-<PAGE>
BERGER IPT - 100 FUND
Berger IPT - Berger
100 Fund 100 Fund^
Since Inception of the Berger
IPT - 100 Fund (5/1/96) 3.90%* 2.77%*
1-year N/A 13.73%
5-year N/A 11.12%
10-year N/A 18.08%**
Since Inception of the Berger
100 Fund (9/30/74) N/A 15.08%**
^ As of December 31, 1996, the retail Berger 100 Fund had assets of
approximately $2,004,000,000.
* Not annualized.
** Since the 12b-1 fees applicable to the Berger 100 Fund did not take
effect until June 19, 1990, the performance figures do not reflect the
deduction of the 12b-1 fees for the full length of the ten-year and
longer periods shown.
BERGER IPT - GROWTH AND INCOME FUND
Berger IPT - Berger
Growth and Income Fund Growth and Income Fund^
Since Inception of
the Berger IPT -
Growth and
Income Fund (5/1/96) 11.40%* 9.22%*
1-year N/A 15.61%
5-year N/A 11.03%
10-year N/A 11.89%**
Since Inception of
the Berger Growth and
Income Fund (9/30/74) N/A 13.70%**
^ As of December 31, 1996, the retail Berger Growth and Income Fund
had assets of approximately $321,000,000.
* Not annualized.
** Since the 12b-1 fees applicable to the Berger Growth and Income
Fund did not take effect until June 19, 1990, the performance figures
do not reflect the deduction of the 12b-1 fees for the full length of
the ten-year and longer periods shown.
-25-
<PAGE>
BERGER IPT - SMALL COMPANY GROWTH FUND
Berger IPT - Berger
Small Company Small Company
Growth Fund Growth Fund^
Since Inception of the
Berger IPT -
Small Company
Growth Fund (5/1/96) (0.50)%* (1.39)%*
1-year N/A 16.77%
3-year N/A 21.12%
Since Inception of the
Berger Small Company
Growth Fund (12/30/93) N/A 21.05%
^ As of December 31, 1996, the retail Berger Small Company Growth Fund
had assets of approximately $782,000,000.
* Not annualized.
BERGER/BIAM IPT - INTERNATIONAL FUND
Berger/BIAM IPT - Berger/BIAM
International Fund* International
Institutional
Fund^+
1-year N/A 18.87%
5-year N/A 14.72%
Since Inception of
the Berger/BIAM
International
Institutional Fund (7/31/89) N/A 14.05%
* Since the Berger/BIAM IPT - International Fund is a new fund first
offered on May 1, 1997, it had no performance history of its own as of
the date of this Prospectus.
^ As of December 31, 1996, the retail Berger/BIAM International
Institutional Fund had assets of approximately $5,000,000.
+ Total returns for the Berger/BIAM International Institutional Fund
in part reflect the performance of a similarly managed, unregistered
pool of assets transferred into the Fund before the Fund commenced
operations on October 11, 1996, adjusted to reflect any increased
expenses associated with operating the Fund. If the pool had been
registered as an investment company under the Investment Company Act
of 1940, its performance might have been adversely affected.
13. SHAREHOLDER INQUIRIES
Shareholders with questions should write to the Berger
Funds, c/o Berger Associates, Inc., P.O. Box 5005, Denver, CO 80217,
or call 1-303-329-0200 or 1-800-706-0539, or contact a Participating
Insurance Company.
-26-<PAGE>
BERGER INSTITUTIONAL PRODUCTS TRUST
STATEMENT OF ADDITIONAL INFORMATION
Berger Institutional Products Trust (the "Trust") is an open-end
management investment company. The Trust currently consists of the
four diversified series or portfolios named below (individually
referred to as a "Fund"). Each Fund has its own investment objective
and policies. Shares of the Funds are not offered directly to the
public, but are sold only in connection with investment in and
payments under variable annuity contracts and variable life insurance
contracts (collectively "variable insurance contracts") issued by life
insurance companies ("Participating Insurance Companies"), as well as
to certain qualified retirement plans.
BERGER IPT - 100 FUND - The Berger IPT - 100 Fund's investment
objective is long-term capital appreciation. The Berger IPT - 100
Fund seeks to achieve this objective by investing primarily in common
stocks of established companies which the Fund believes offer
favorable growth prospects.
BERGER IPT - GROWTH AND INCOME FUND - The primary investment objective
of the Berger IPT - Growth and Income Fund is capital appreciation. A
secondary objective is to provide a moderate level of current income.
The Fund seeks to achieve these objectives by investing primarily in
common stocks and other securities, such as convertible securities or
preferred stocks, which the Fund believes offer favorable growth
prospects and are expected to also provide current income.
BERGER IPT - SMALL COMPANY GROWTH FUND - The investment objective of
the Berger IPT - Small Company Growth Fund is capital appreciation.
The Fund seeks to achieve this objective by investing primarily in
equity securities (including common and preferred stocks, convertible
debt securities and other securities having equity features) of small
growth companies with market capitalization of less than $1 billion at
the time of initial purchase.
BERGER/BIAM IPT - INTERNATIONAL FUND - The investment objective of the
Berger/BIAM IPT - International Fund is long-term capital
appreciation. The Berger/BIAM IPT - International Fund seeks to
achieve this objective by investing primarily in common stocks of well
established companies located outside the United States. The Fund
intends to diversify its holdings among several countries and to have,
under normal market conditions, at least 65% of the Fund's total
assets invested in the securities of companies located in at least
five countries, not including the United States.
This Statement of Additional Information is not a prospectus. It
should be read in conjunction with the Prospectus describing the
Funds, dated May 1, 1997, which may be obtained by writing the Funds
at P.O. Box 5005, Denver, Colorado 80217, calling 1-800-706-0539, or
by contacting a Participating Insurance Company.
MAY 1, 1997
<PAGE>
TABLE OF CONTENTS
&
CROSS-REFERENCES TO PROSPECTUS
Cross-References to
Related Disclosures
Table of Contents in Prospectus
----------------- -------------------
Introduction Section 3
1. Portfolio Policies of the Funds Section 3, 4, 5
2. Investment Restrictions Section 4
3. Management of the Funds Section 6
4. Investment Advisors and Sub-Advisor Section 6
5. Expenses of the Funds Section 7
6. Brokerage Policy Section 7
7. How to Purchase and Redeem Shares in Section 8
the Funds
8. Suspension of Redemption Rights Section 8
9. How the Net Asset Value is Section 9
Determined
10. Income Dividends, Capital Gains Section 10
Distributions and Tax Treatment
11. Performance Information Section 12
12. Additional Information Section 11
Financial Statements
-i-<PAGE>
INTRODUCTION
------------
The Funds are diversified portfolios or series of the Berger
Institutional Products Trust, a management investment company. The
investment objective of both the Berger IPT - 100 Fund and the
Berger/BIAM IPT - International Fund is long-term capital apprecia-
tion. The primary investment objective of the Berger IPT - Growth and
Income Fund is capital appreciation, and its secondary objective is to
provide a moderate level of current income. The investment objective
of the Berger IPT - Small Company Growth Fund is capital appreciation.
1. Portfolio Policies of the Funds
-------------------------------
The Prospectus discusses the investment objective of each of the
Funds and the policies to be employed to achieve that objective. This
section contains supplemental information concerning the types of
securities and other instruments in which the Funds may invest, the
investment policies and portfolio strategies that the Funds may
utilize and certain risks attendant to those investments, policies and
strategies.
ILLIQUID AND RESTRICTED SECURITIES. Each of the Funds is
authorized to invest in securities which are illiquid or not readily
marketable because they are subject to restrictions on their resale
("restricted securities") or because, based upon their nature or the
market for such securities, no ready market is available. However,
none of the Funds will purchase any such security, the purchase of
which would cause the Fund to invest more than 15% of its net assets,
measured at the time of purchase, in illiquid securities. Investments
in illiquid securities involve certain risks to the extent that a Fund
may be unable to dispose of such a security at the time desired or at
a reasonable price or, in some cases, may be unable to dispose of it
at all. In addition, in order to resell a restricted security, a Fund
might have to incur the potentially substantial expense and delay
associated with effecting registration. If securities become illiquid
following purchase or other circumstances cause more than 15% of a
Fund's net assets to be invested in illiquid securities, the directors
or trustees of that Fund, in consultation with the Fund's advisor or
sub-advisor, will determine what action, if any, is appropriate in
light of all relevant circumstances.
Repurchase agreements maturing in more than seven days will be
considered as illiquid for purposes of this restriction. Pursuant to
guidelines established by the trustees, the Funds' advisor or sub-
advisor will determine whether securities eligible for resale to
qualified institutional buyers pursuant to SEC Rule 144A under the
Securities Act of 1933 should be treated as illiquid investments
considering, among other things, the following factors: (1) the
frequency of trades and quotes for the security; (2) the number of
dealers wanting to purchase or sell the security and the number of
other potential purchasers; (3) dealer undertakings to make a market
in the security; and (4) the nature
-1-<PAGE>
of the security and the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers, and the
mechanics of the transfer). The liquidity of a Fund's investments in
Rule 144A securities could be impaired if qualified institutional
buyers become uninterested in purchasing these securities.
REPURCHASE AGREEMENTS. As discussed in the Prospectus, each Fund
may invest in repurchase agreements with various financial
organizations, including commercial banks, registered broker-dealers
and registered government securities dealers. A repurchase agreement
is an agreement under which a Fund acquires a debt security (generally
a security issued or guaranteed by the U.S. government or an agency
thereof, a banker's acceptance or a certificate of deposit) from a
commercial bank, broker or dealer, subject to resale to the seller at
an agreed upon price and date (normally, the next business day). A
repurchase agreement may be considered a loan collateralized by
securities. The resale price reflects an agreed upon interest rate
effective for the period the instrument is held by a Fund and is
unrelated to the interest rate on the underlying instrument. In these
transactions, the securities acquired by a Fund (including accrued
interest earned thereon) must have a total value equal to or in excess
of the value of the repurchase agreement and are held by the Fund's
custodian bank until repurchased. In addition, the trustees will
establish guidelines and standards for review by the investment
advisor or sub-advisor of the creditworthiness of any bank, broker or
dealer party to a repurchase agreement with a Fund. None of the Funds
will enter into a repurchase agreement maturing in more than seven
days if as a result more than 15% of the Fund's total assets would be
invested in such repurchase agreements and other illiquid securities.
The use of repurchase agreements involves certain risks. For
example, if the other party to the agreement defaults on its
obligation to repurchase the underlying security at a time when the
value of the security has declined, a Fund may incur a loss upon
disposition of the security. If the other party to the agreement
becomes insolvent and subject to liquidation or reorganization under
the Bankruptcy Code or other laws, a court may determine that the
underlying security is collateral for a loan by a Fund not within the
control of the Fund and therefore the realization by the Fund on such
collateral may automatically be stayed. Finally, it is possible that
a Fund may not be able to substantiate its interest in the underlying
security and may be deemed an unsecured creditor of the other party to
the agreement. Although these risks are acknowledged, it is expected
that they can be controlled through careful monitoring procedures.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each Fund may
purchase and sell securities on a when-issued or delayed delivery
basis. However, none of the Funds currently intends to purchase or
sell securities on a when-issued or delayed delivery basis, if as a
result more than 5% of its total assets taken at
-2-<PAGE>
market value at the time of purchase would be invested in such
securities. When-issued or delayed delivery transactions arise when
securities (normally, equity obligations of issuers eligible for
investment by a Fund) are purchased or sold by the Fund with payment
and delivery taking place in the future in order to secure what is
considered to be an advantageous price or yield. However, the yield
on a comparable security available when delivery takes place may vary
from the yield on the security at the time that the when-issued or
delayed delivery transaction was entered into. Any failure to
consummate a when-issued or delayed delivery transaction may result in
a Fund missing the opportunity of obtaining a price or yield
considered to be advantageous. When-issued and delayed delivery
transactions may generally be expected to settle within one month from
the date the transactions are entered into, but in no event later than
90 days. However, no payment or delivery is made by a Fund until it
receives delivery or payment from the other party to the transaction.
When a Fund purchases securities on a when-issued basis, it will
maintain in a segregated account with its custodian cash, U.S.
government securities or other liquid assets having an aggregate value
equal to the amount of such purchase commitments, until payment is
made. If necessary, additional assets will be placed in the account
daily so that the value of the account will equal or exceed the amount
of the Fund's purchase commitments.
LENDING OF SECURITIES. As discussed in the Prospectus, each Fund
may lend its securities to qualified institutional investors who need
to borrow securities in order to complete certain transactions, such
as covering short sales, avoiding failures to deliver securities, or
completing arbitrage operations. By lending its securities, a Fund
will be attempting to generate income through the receipt of interest
on the loan which, in turn, can be invested in additional securities
to pursue the Fund's investment objective. Any gain or loss in the
market price of the securities loaned that might occur during the term
of the loan would be for the account of a Fund. A Fund may lend its
portfolio securities to qualified brokers, dealers, banks or other
financial institutions, so long as the terms, the structure and the
aggregate amount of such loans are not inconsistent with the
Investment Company Act of 1940, or the Rules and Regulations or
interpretations of the Securities and Exchange Commission (the
"Commission") thereunder, which currently require that (a) the
borrower pledge and maintain with the Fund collateral consisting of
cash, an irrevocable letter of credit or securities issued or
guaranteed by the United States government having a value at all times
not less than 100% of the value of the securities loaned, (b) the
borrower add to such collateral whenever the price of the securities
loaned rises (i.e., the borrower "marks to the market" on a daily
basis), (c) the loan be made subject to termination by the Fund at any
time and (d) the Fund receive reasonable interest on the loan, which
interest may include the Fund's investing cash collateral in interest
bearing short-term investments, and (e) the Fund receive all dividends
and distributions on the loaned
-3-<PAGE>
securities and any increase in the market value of the loaned
securities.
A Fund bears a risk of loss in the event that the other party to
a securities lending transaction defaults on its obligations and the
Fund is delayed in or prevented from exercising its rights to dispose
of the collateral, including the risk of a possible decline in the
value of the collateral securities during the period in which the Fund
seeks to assert these rights, the risk of incurring expenses
associated with asserting these rights and the risk of losing all or a
part of the income from the transaction. None of the Funds will lend
its portfolio securities if, as a result, the aggregate value of such
loans would exceed 33-1/3% of the value of the Fund's total assets.
Loan arrangements made by a Fund will comply with all other applicable
regulatory requirements, including the rules of the New York Stock
Exchange, which rules presently require the borrower, after notice, to
redeliver the securities within the normal settlement time of three
business days. All relevant facts and circumstances, including
creditworthiness of the broker, dealer or institution, will be
considered in making decisions with respect to the lending of
securities, subject to review by the Fund's trustees.
SHORT SALES. Each Fund other than the Berger/BIAM IPT -
International Fund currently only intends to engage in short sales if,
at the time of the short sale, the Fund owns or has the right to
acquire an equivalent kind and amount of the security being sold short
at no additional cost (i.e., short sales "against the box"). The
Berger/BIAM IPT - International Fund currently does not intend to make
any short sales of securities.
In a short sale, the seller does not immediately deliver the
securities sold and is said to have a short position in those
securities until delivery occurs. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf
of the seller. While the short position is maintained, the seller
collateralizes its obligation to deliver the securities sold short in
an amount equal to the proceeds of the short sale plus an additional
margin amount established by the Board of Governors of the Federal
Reserve. If a Fund engages in a short sale, the collateral account
will be maintained by the Fund's custodian. While the short sale is
open, the Fund will maintain in a segregated custodial account an
amount of securities convertible into or exchangeable for such
equivalent securities at no additional cost. These securities would
constitute the Fund's long position.
A Fund may make a short sale, as described above, when it wants
to sell the security it owns at a current attractive price, but also
wishes to defer recognition of gain or loss for Federal income tax
purposes and for purposes of satisfying certain tests applicable to
regulated investment companies under the Internal Revenue Code. In
such a case, any future losses in the Fund's long position should be
reduced by a gain in the short position. The
-4-<PAGE>
extent to which such gains or losses are reduced would depend upon the
amount of the security sold short relative to the amount the Fund
owns. There will be certain additional transaction costs associated
with short sales, but the Fund will endeavor to offset these costs
with income from the investment of the cash proceeds of short sales.
HEDGING TRANSACTIONS. As described in the Prospectus, each Fund
except the Berger/BIAM IPT - International Fund is authorized to make
limited use of certain types of futures, forwards and options, but
only for the purpose of hedging, that is, protecting against market
risk due to market movements that may adversely affect the value of a
Fund's securities or the price of securities that a Fund is
considering purchasing. Currently, the Berger IPT -International Fund
is authorized to invest only in forward contracts for hedging purposes
and is not permitted to invest in futures or options. If the trustees
ever authorize the Berger/BIAM IPT - International Fund to invest in
futures or options, such investments would be permitted solely for
hedging purposes, and the Fund would not be permitted to invest more
than 5% of its net assets at the time of purchase in initial margins
for financial futures transactions and premiums for options. In
addition, the advisor or sub-advisor for the Berger/BIAM IPT -
International Fund may be required to obtain bank regulatory approval
before the Fund engages in futures and options transactions. The
following information about the Funds' hedging transactions using
futures, forwards and options should be read to exclude the
Berger/BIAM IPT - International Fund, except to the extent the
information relates to forward contracts.
The utilization of futures, forwards and options is also subject
to policies and procedures which may be established by the trustees
from time to time. A hedging transaction may partially protect a Fund
from a decline in the value of a particular security or its portfolio
generally, although hedging may also limit a Fund's opportunity to
profit from favorable price movements, and the cost of the transaction
will reduce the potential return on the security or the portfolio.
Following is additional information concerning the futures, forwards
and options which the Funds may utilize, provided that no more than 5%
of the Fund's net assets at the time the contract is entered into may
be used for initial margins for financial futures transactions and
premiums paid for the purchase of options. In addition, a Fund may
only write call options that are covered and only up to 25% of the
Fund's total assets. The following information should be read in
conjunction with the information concerning the Funds' use of futures,
forwards and options and the risks of such instruments contained in
the Prospectus.
Futures Contracts. Financial futures contracts are exchange-
traded contracts on financial instruments (such as securities and
foreign currencies) and securities indices that obligate the holder to
take or make delivery of a specified quantity of the underlying
financial instrument, or the cash value
-5-<PAGE>
of an index, at a future date. Although futures contracts by their
terms call for the delivery or acquisition of the underlying
instruments or a cash payment based on the mark-to-market value of the
underlying instruments, in most cases the contractual obligation will
be offset before the delivery date by buying (in the case of an
obligation to sell) or selling (in the case of an obligation to buy)
an identical futures contract. Such a transaction cancels the
original obligation to make or take delivery of the instruments.
Each Fund may enter into contracts for the purchase or sale for
future delivery of financial instruments, such as securities and
foreign currencies, or contracts based on financial indices including
indices of U.S. Government securities, foreign government securities
or equity securities. U.S. futures contracts are traded on exchanges
which have been designated "contract markets" by the Commodity Futures
Trading Commission ("CFTC") and must be executed through a futures
commission merchant (an "FCM"), or brokerage firm, which is a member
of the relevant contract market. Through their clearing corporations,
the exchanges guarantee performance of the contracts as between the
clearing members of the exchange.
Both the buyer and seller are required to deposit "initial
margin" for the benefit of the FCM when a futures contract is entered
into. Initial margin deposits are equal to a percentage of the
contract's value, as set by the exchange on which the contract is
traded, and may be maintained in cash or other liquid assets. If the
value of either party's position declines, that party will be required
to make additional "variation margin" payments to the other party to
settle the change in value on a daily basis. Initial and variation
margin payments are similar to good faith deposits or performance
bonds or party-to-party payments resulting from daily changes in the
value of the contract, unlike margin extended by a securities broker,
and would be released or credited to the Funds upon termination of the
futures contract, assuming all contractual obligations have been
satisfied. Unlike margin extended by a securities broker, initial and
variation margin payments do not constitute purchasing securities on
margin for purposes of each Fund's investment limitations. The Funds
will incur brokerage fees when they buy or sell futures contracts.
In the event of the bankruptcy of the FCM that holds margin on
behalf of a Fund, the Fund may be entitled to return of margin owed to
the Fund only in proportion to the amount received by the FCM's other
customers. Each Fund will attempt to minimize the risk by careful
monitoring of the creditworthiness of the FCMs with which the Fund
does business and by depositing margin payments in a segregated
account with the Fund's custodian for the benefit of the FCM when
practical or otherwise required by law.
Each Fund intends to comply with guidelines of eligibility for
exclusion from the definition of the term "commodity pool operator"
with the CFTC and the National Futures
-6-<PAGE>
Association, which regulate trading in the futures markets.
Accordingly, the Fund will not enter into any futures contract or
option on a futures contract if, as a result, the aggregate initial
margin and premiums required to establish such positions would exceed
5% of the Fund's net assets.
Although each Fund would hold cash and liquid assets in a
segregated account with a mark-to-market value sufficient to cover the
Fund's open futures obligations, the segregated assets would be
available to the Fund immediately upon closing out the futures
position.
The acquisition or sale of a futures contract may occur, for
example, when a Fund is considering purchasing or holds equity
securities and seeks to protect itself from fluctuations in prices
without buying or selling those securities. For example, if prices
were expected to decrease, the Fund might sell equity index futures
contracts, thereby hoping to offset a potential decline in the value
of equity securities in the portfolio by a corresponding increase in
the value of the futures contract position held by the Fund and
thereby preventing the Fund's net asset value from declining as much
as it otherwise would have. A Fund also could protect against
potential price declines by selling portfolio securities and investing
in money market instruments. However, the use of futures contracts as
a hedging technique allows the Funds to maintain a defensive position
without having to sell portfolio securities.
Similarly, when prices of equity securities are expected to
increase, futures contracts may be bought to attempt to hedge against
the possibility of having to buy equity securities at higher prices.
This technique is sometimes known as an anticipatory hedge. Since the
fluctuations in the value of futures contracts should be similar to
those of equity securities, a Fund could take advantage of the
potential rise in the value of equity securities without buying them
until the market has stabilized. At that time, the futures contracts
could be liquidated and the Fund could buy equity securities on the
cash market.
The ordinary spreads between prices in the cash and futures
markets, due to differences in the nature of those markets, are
subject to distortions. First, all participants in the futures market
are subject to initial margin and variation margin requirements.
Rather than meeting additional variation margin requirements,
investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between
the cash and futures markets. Second, the liquidity of the futures
market depends on participants entering into offsetting transactions
rather than making or taking delivery. To the extent participants
decide to make or take delivery, liquidity in the futures market could
be reduced and prices in the futures market distorted. Third, from
the point of view of speculators, the margin deposit requirements in
the futures market are less than margin requirements in the securities
market.
-7-<PAGE>
Therefore, increased participation by speculators in the futures
market may cause temporary price distortions. Due to the possibility
of the foregoing distortions, a correct forecast of general price
trends by the Funds still may not result in a successful use of
futures.
Futures contracts entail additional risks. Although each Fund
believes that use of such contracts will benefit the Fund, if the
Fund's investment judgment is incorrect, the Fund's overall
performance could be worse than if the Fund had not entered into
futures contracts. For example, if the Fund has hedged against the
effects of a possible decrease in prices of securities held in the
Fund's portfolio and prices increase instead, the Fund will lose part
or all of the benefit of the increased value of these securities
because of offsetting losses in the Fund's futures positions. In
addition, if the Fund has insufficient cash, it may have to sell
securities from its portfolio to meet daily variation margin
requirements. Those sales may be, but will not necessarily be, at
increased prices which reflect the rising market and may occur at a
time when the sales are disadvantageous to the Fund. Although the
buyer of an option cannot lose more than the amount of the premium
plus related transaction costs, a buyer or seller of futures contracts
could lose amounts substantially in excess of any initial margin
deposits made, due to the potential for adverse price movements
resulting in additional variation margin being required by such
positions. However, each Fund intends to monitor its investments
closely and will attempt to close its positions when the risk of loss
to the Fund becomes unacceptably high.
The prices of futures contracts depend primarily on the value of
their underlying instruments. Because there are a limited number of
types of futures contracts, it is possible that the standardized
futures contracts available to a Fund will not match exactly the
Fund's current or potential investments. A Fund may buy and sell
futures contracts based on underlying instruments with different
characteristics from the securities in which it typically invests --
for example, by hedging investments in portfolio securities with a
futures contract based on a broad index of securities -- which
involves a risk that the futures position will not correlate precisely
with the performance of the Fund's investments.
Futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments closely
correlate with a Fund's investments. Futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instruments and the time
remaining until expiration of the contract. Those factors may affect
securities prices differently from futures prices. Imperfect
correlations between a Fund's investments and its futures positions
may also result from differing levels of demand in the futures markets
and the securities markets, from structural differences in how futures
and securities are traded, and from imposition of daily price
fluctuation limits for futures contracts.
-8-<PAGE>
A Fund may buy or sell futures contracts with a greater or lesser
value than the securities it wishes to hedge or is considering
purchasing in order to attempt to compensate for differences in
historical volatility between the futures contract and the securities,
although this may not be successful in all cases. If price changes in
a Fund's futures positions are poorly correlated with its other
investments, its futures positions may fail to produce desired gains
or result in losses that are not offset by the gains in the Fund's
other investments.
Because futures contracts are generally settled within a day from
the date they are closed out, compared with a longer settlement period
for most types of securities, the futures markets can provide superior
liquidity to the securities markets. Nevertheless, there is no
assurance a liquid secondary market will exist for any particular
futures contract at any particular time. In addition, futures
exchanges may establish daily price fluctuation limits for futures
contracts and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached, it may be impossible for
a Fund to enter into new positions or close out existing positions.
If the secondary market for a futures contract is not liquid because
of price fluctuation limits or otherwise, a Fund may not be able to
promptly liquidate unfavorable futures positions and potentially could
be required to continue to hold a futures position until the delivery
date, regardless of changes in its value. As a result, a Fund's
access to other assets held to cover its futures positions also could
be impaired.
Options on Futures Contracts. Each Fund may buy and write
options on futures contracts for hedging purposes. An option on a
futures contract gives the Funds the right (but not the obligation) to
buy or sell a futures contract at a specified price on or before a
specified date. The purchase of a call option on a futures contract
is similar in some respects to the purchase of a call option on an
individual security. Depending on the pricing of the option compared
to either the price of the futures contract upon which it is based or
the price of the underlying instrument, ownership of the option may or
may not be less risky than ownership of the futures contract or the
underlying instrument. As with the purchase of futures contracts, a
Fund may buy a call option on a futures contract to hedge against a
market advance, and a Fund might buy a put option on a futures
contract to hedge against a market decline.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security or foreign
currency which is deliverable under, or of the index comprising, the
futures contract. If the futures price at the expiration of the call
option is below the exercise price, a Fund will retain the full amount
of the option premium which provides a partial hedge against any
decline that may have occurred in the Fund's portfolio holdings. If a
call option a Fund has
-9-<PAGE>
written is exercised, the Fund will incur a loss which will be reduced
by the amount of the premium it received. Depending on the degree of
correlation between change in the value of its portfolio securities
and changes in the value of the futures positions, a Fund's losses
from existing options on futures may to some extent be reduced or
increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in
some respects to the purchase of protective put options on portfolio
securities. For example, a Fund may buy a put option on a futures
contract to hedge the Fund's portfolio against the risk of falling
prices.
The amount of risk a Fund assumes when it buys an option on a
futures contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed
above, the purchase of an option also entails the risk that changes in
the value of the underlying futures contract will not be fully
reflected in the value of the options bought.
Forward Foreign Currency Exchange Contracts. A forward contract
is a privately negotiated agreement between two parties in which one
party is obligated to deliver a stated amount of a stated asset at a
specified time in the future and the other party is obligated to pay a
specified invoice amount for the assets at the time of delivery. The
Funds currently intend that they will only use forward contracts or
commitments for hedging purposes and will only use forward foreign
currency exchange contracts, although the Funds may enter into
additional forms of forward contracts or commitments in the future if
they become available and advisable in light of the Funds' objectives
and investment policies. Forward contracts generally are negotiated
in an interbank market conducted directly between traders (usually
large commercial banks) and their customers. Unlike futures
contracts, which are standardized exchange-traded contracts, forward
contracts can be specifically drawn to meet the needs of the parties
that enter into them. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold the
contract to maturity and complete the contemplated exchange.
The following discussion summarizes the Funds' principal uses of
forward foreign currency exchange contracts ("forward currency
contracts"). A Fund may enter into forward currency contracts with
stated contract values of up to the value of the Fund's assets. A
forward currency contract is an obligation to buy or sell an amount of
a specified currency for an agreed price (which may be in U.S. dollars
or a foreign currency) on a specified date. A Fund will exchange
foreign currencies for U.S. dollars and for other foreign currencies
in the normal course of business and may buy and sell currencies
through forward currency contracts in order to fix a price (in terms
of a specified currency) for securities it has agreed to buy or sell
("transaction hedge"). A Fund also may hedge some or all of its
investments denominated in
-10-<PAGE>
foreign currency against a decline in the value of that currency (or a
proxy currency whose price movements are expected to have a high
degree of correlation with the currency being hedged) relative to the
U.S. dollar by entering into forward currency contracts to sell an
amount of that currency approximating the value of some or all of its
portfolio securities denominated in that currency ("position hedge")
or by participating in futures contracts (or options on such futures)
with respect to the currency. A Fund also may enter into a forward
currency contract with respect to a currency where the Fund is
considering the purchase or sale of investments denominated in that
currency but has not yet selected the specific investments
("anticipatory hedge").
These types of hedging minimize the effect of currency
appreciation as well as depreciation, but do not eliminate
fluctuations in the underlying U.S. dollar equivalent value of the
proceeds of or rates of return on a Fund's foreign currency
denominated portfolio securities. The matching of the increase in
value of a forward contract and the decline in the U.S. dollar
equivalent value of the foreign currency denominated asset that is the
subject of the hedge generally will not be precise. Shifting a Fund's
currency exposure from one foreign currency to another limits that
Fund's opportunity to profit from increases in the value of the
original currency and involves a risk of increased losses to such Fund
if its portfolio manager's projection of future exchange rates is
inaccurate. Unforeseen changes in currency prices may result in
poorer overall performance for a Fund than if it had not entered into
such contracts.
The Funds will cover outstanding forward currency contracts by
maintaining liquid portfolio securities denominated in the currency
underlying the forward contract or the currency being hedged. To the
extent that a Fund is not able to cover its forward currency positions
with underlying portfolio securities, the Funds' custodian will
segregate cash or liquid assets having a value equal to the aggregate
amount of such Fund's commitments under forward contracts entered
into. If the value of the securities used to cover a position or the
value of segregated assets declines, the Fund must find alternative
cover or segregate additional cash or liquid assets on a daily basis
so that the value of the covered and segregated assets will be equal
to the amount of a Fund's commitments with respect to such contracts.
While forward contracts are not currently regulated by the CFTC,
the CFTC may in the future assert authority to regulate forward
contracts. In such event, the Funds' ability to utilize forward
contracts may be restricted. A Fund may not always be able to enter
into forward contracts at attractive prices and may be limited in its
ability to use these contracts to hedge Fund assets. In addition,
when a Fund enters into a privately negotiated forward contract with a
counterparty, the Fund assumes counterparty credit risk, that is, the
risk that the counterparty will fail to perform its obligations, in
which case the Fund could be worse off than if the contract had not
been entered into. Unlike many exchange-
-11-<PAGE>
traded futures contracts and options on futures, there are no daily
price fluctuation limits with respect to forward contracts and other
negotiated or over-the-counter instruments, and with respect to those
contracts, adverse market movements could therefore continue to an
unlimited extent over a period of time. However, each Fund intends to
monitor its investments closely and will attempt to renegotiate or
close its positions when the risk of loss to the Fund becomes
unacceptably high.
Options on Securities and Securities Indices. A Fund may buy or
sell put or call options and write covered call options on securities
that are traded on United States or foreign securities exchanges or
over-the-counter. Buying an option involves the risk that, during the
option period, the price of the underlying security will not increase
(in the case of a call) to above the exercise price, or will not
decrease (in the case of a put) to below the exercise price, in which
case the option will expire without being exercised and the holder
would lose the amount of the premium. Writing a call option involves
the risk of an increase in the market value of the underlying
security, in which case the option could be exercised and the
underlying security would then be sold by a Fund to the option holder
at a lower price than its current market value and the Fund's
potential for capital appreciation on the security would be limited to
the exercise price. Moreover, when a Fund writes a call option on a
securities index, the Fund bears the risk of loss resulting from
imperfect correlation between movements in the price of the index and
the price of the securities set aside to cover such position.
Although they entitle the holder to buy equity securities, call
options to purchase equity securities do not entitle the holder to
dividends or voting rights with respect to the underlying securities,
nor do they represent any rights in the assets of the issuer of those
securities.
A call option written by a Fund is "covered" if the Fund owns the
underlying security covered by the call or has an absolute and
immediate right to acquire that security without additional cash
consideration (or for additional cash consideration held in a
segregated account by its custodian) upon conversion or exchange of
other securities held in its portfolio. A call option is also deemed
to be covered if a Fund holds a call on the same security and in the
same principal amount as the call written and the exercise price of
the call held (i) is equal to or less than the exercise price of the
call written or (ii) is greater than the exercise price of the call
written if the difference is maintained by the Fund in liquid assets
in a segregated account with its custodian.
The writer of a call option may have no control when the
underlying securities must be sold. Whether or not an option expires
unexercised, the writer retains the amount of the premium. This
amount, of course, may, in the case of a covered call option, be
offset by a decline in the market value of the underlying security
during the option period.
-12-<PAGE>
The writer of an exchange-traded call option that wishes to
terminate its obligation may effect a "closing purchase transaction."
This is accomplished by buying an option of the same series as the
option previously written. The effect of the purchase is that the
writer's position will be cancelled by the clearing corporation. If a
Fund desires to sell a particular security from the Fund's portfolio
on which the Fund has written a call option, the Fund will effect a
closing transaction prior to or concurrent with the sale of the
security. However, a writer may not effect a closing purchase
transaction after being notified of the exercise of an option. An
investor who is the holder of an exchange-traded option may liquidate
its position by effecting a "closing sale transaction." This is
accomplished by selling an option of the same series as the option
previously bought. There is no guarantee that either a closing
purchase or a closing sale transaction can be effected.
A Fund will realize a profit from a closing transaction if the
price of the purchase transaction is less than the premium received
from writing the option or the price received from a sale transaction
is more than the premium paid to buy the option; the Fund will realize
a loss from a closing transaction if the price of the purchase
transaction is more than the premium received from writing the option
or the price received from a sale transaction is less than the premium
paid to buy the option. Because increases in the market price of a
call option will generally reflect increases in the market price of
the underlying security, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation
of the underlying security owned by the Fund.
An option position may be closed out only where there exists a
secondary market for an option of the same series. If a secondary
market does not exist, it might not be possible to effect closing
transactions in particular options with the result that a Fund would
have to exercise the options in order to realize any profit. If a
Fund is unable to effect a closing purchase transaction in a secondary
market, it will not be able to sell the underlying security until the
option expires or the Fund delivers the underlying security upon
exercise. Reasons for the absence of a liquid secondary market may
include the following: (i) there may be insufficient trading interest
in certain options, (ii) restrictions may be imposed by a national
securities exchange on which the option is traded ("Exchange") on
opening or closing transactions or both, (iii) trading halts,
suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances may interrupt normal
operations on an Exchange, (v) the facilities of an Exchange or of the
Options Clearing Corporation ("OCC") may not at all times be adequate
to handle current trading volume, or (vi) one or more Exchanges could,
for economic or other reasons, decide or be compelled at some future
date to discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on
-13-<PAGE>
that Exchange (or in that class or series of options) would cease to
exist, although outstanding options on that Exchange that had been
issued by the OCC as a result of trades on that Exchange would
continue to be exercisable in accordance with their terms.
In addition, when a Fund enters into an over-the-counter option
contract with a counterparty, the Fund assumes counterparty credit
risk, that is, the risk that the counterparty will fail to perform its
obligations, in which case the Fund could be worse off than if the
contract had not been entered into.
An option on a securities index is similar to an option on a
security except that, rather than the right to take or make delivery
of a security at a specified price, an option on a securities index
gives the holder the right to receive, on exercise of the option, an
amount of cash if the closing level of the securities index on which
the option is based is greater than, in the case of a call, or less
than, in the case of a put, the exercise price of the option.
A Fund may buy call options on securities or securities indices
to hedge against an increase in the price of a security or securities
that the Fund may buy in the future. The premium paid for the call
option plus any transaction costs will reduce the benefit, if any,
realized by a Fund upon exercise of the option, and, unless the price
of the underlying security or index rises sufficiently, the option may
expire and become worthless to the Fund. A Fund may buy put options
to hedge against a decline in the value of a security or its
portfolio. The premium paid for the put option plus any transaction
costs will reduce the benefit, if any, realized by a Fund upon
exercise of the option, and, unless the price of the underlying
security or index declines sufficiently, the option may expire and
become worthless to the Fund.
An example of a hedging transaction using an index option would
be if a Fund were to purchase a put on a stock index, in order to
protect the Fund against a decline in the value of all securities held
by it to the extent that the stock index moves in a similar pattern to
the prices of the securities held. While the correlation between
stock indices and price movements of the stocks in which the Funds
will generally invest may be imperfect, the Funds expect, nonetheless,
that the use of put options that relate to such indices will, in
certain circumstances, protect against declines in values of specific
portfolio securities or a Fund's portfolio generally. Although the
purchase of a put option may partially protect a Fund from a decline
in the value of a particular security or its portfolio generally, the
cost of a put will reduce the potential return on the security or the
portfolio.
PORTFOLIO TURNOVER. The portfolio turnover rates of each of the
Funds in existence at December 31, 1996, are shown in the tables under
Financial Highlights in Section 2 of the Prospectus. The annual
portfolio turnover rates of the Funds may at times exceed 100%. A
100% annual turnover rate results, for example, if
-14-<PAGE>
the equivalent of all of the securities in the Fund's portfolio are
replaced in a period of one year. The Funds anticipate that their
portfolio turnover rates in future years may exceed 100%, and
investment changes will be made whenever management deems them
appropriate even if this results in a higher portfolio turnover rate.
In addition, portfolio turnover may increase as a result of large
amounts of purchases and redemptions of shares of the Funds due to
economic, market or other factors that are not within the control of
management.
Increased portfolio turnover would necessarily result in
correspondingly higher brokerage costs for the Funds. The existence
of a high portfolio turnover rate has no direct relationship to the
tax liability of a Fund, although sales of certain stocks will lead to
realization of gains, and, possibly, increased taxable distributions.
The Funds' brokerage policy is discussed further under Section 6
Brokerage Policy, and additional information concerning income taxes
is located under Section 10 Income Dividends, Capital Gains
Distributions and Tax Treatment.
2. Investment Restrictions
-----------------------
Each Fund has adopted certain fundamental restrictions on its
investments and other activities, and none of these restrictions may
be changed without the approval of (i) 67% or more of the voting
securities of the Fund present at a meeting of shareholders thereof if
the holders of more than 50% of the outstanding voting securities are
present or represented by proxy, or (ii) more than 50% of the
outstanding voting securities of the Fund.
BERGER IPT - 100 FUND AND BERGER IPT - GROWTH AND INCOME FUND
The following fundamental restrictions apply to each of the
Berger IPT - 100 Fund and the Berger IPT - Growth and Income Fund. A
Fund may not:
1. Purchase the securities of any one issuer (except U.S.
Government securities) if immediately after and as a result of such
purchase (a) the value of the holdings of the Fund in the securities
of such issuer exceeds 5% of the value of the Fund's total assets or
(b) the Fund owns more than 10% of the outstanding voting securities
or of any class of securities of such issuer.
2. Purchase securities of any company with a record of less
than three years' continuous operation (including that of
predecessors) if such purchase would cause the Fund's investments in
all such companies taken at cost to exceed 5% of the value of the
Fund's total assets.
3. Invest in any one industry more than 25% of the value of its
total assets at the time of such investment.
-15-<PAGE>
4. Make loans, except that the Fund may enter into repurchase
agreements and may lend portfolio securities in accordance with the
Fund's investment policies. The Fund does not, for this purpose,
consider the purchase of all or a portion of an issue of publicly
distributed bonds, bank loan participation agreements, bank
certificates of deposit, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original
issuance of the securities, to be the making of a loan.
5. Borrow in excess of 5% of the value of its total assets, or
pledge, mortgage, or hypothecate its assets taken at market value to
an extent greater than 10% of the Fund's total assets taken at cost
(and no borrowing may be undertaken except from banks as a temporary
measure for extraordinary or emergency purposes). This limitation
shall not prohibit or restrict short sales or deposits of assets to
margin or guarantee positions in futures, options or forward
contracts, or the segregation of assets in connection with any of such
transactions.
6. Purchase or retain the securities of any issuer if those
officers and trustees of the Fund or its investment advisor owning
individually more than 1/2 of 1% of the securities of such issuer
together own more than 5% of the securities of such issuer.
7. Purchase the securities of any other investment company,
except by purchase in the open market involving no commission or
profit to a sponsor or dealer (other than the customary broker's
commission).
8. Act as a securities underwriter (except to the extent the
Fund may be deemed an underwriter under the Securities Act of 1933 in
disposing of a security) or invest in real estate (although it may
purchase shares of a real estate investment trust), or invest in
commodities or commodity contracts except, only for the purpose of
hedging, (i) financial futures transactions, including futures
contracts on securities, securities indices and foreign currencies,
and options on any such futures, (ii) forward foreign currency
exchange contracts and other forward commitments and (iii) securities
index put or call options.
9. Participate on a joint or joint and several basis in any
securities trading account.
10. Invest in companies for the purposes of exercising control
of management.
In applying the industry concentration investment restriction
(no. 3 above), the Funds use the industry groups used in the Data
Monitor Portfolio Monitoring System of William O'Neil & Co.
Incorporated. Further, in implementing that restriction, each Fund
intends not to invest in any one industry 25% or more of the value of
its total assets at the time of such investment.
-16-<PAGE>
The trustees have adopted additional non-fundamental investment
restrictions for each of the Berger IPT - 100 Fund and the Berger IPT
- - Growth and Income Fund. These limitations may be changed by the
trustees without a shareholder vote. The non-fundamental investment
restrictions include the following:
1. Only for the purpose of hedging, the Fund may purchase and
sell financial futures, forward foreign currency exchange contracts
and put and call options, but no more than 5% of the Fund's net assets
at the time of purchase may be invested in initial margins for
financial futures transactions and premiums for options. The Fund may
only write call options that are covered and only up to 25% of the
Fund's total assets.
2. The Fund may not purchase or sell securities on a when-
issued or delayed delivery basis, if as a result more than 5% of its
total assets taken at market value at the time of purchase would be
invested in such securities.
3. The Fund may not purchase or sell any interest in an oil,
gas or mineral development or exploration program, including
investments in oil, gas or other mineral leases, rights or royalty
contracts (except that the Fund may invest in the securities of
issuers engaged in the foregoing activities).
4. The Fund may not purchase any security, including any
repurchase agreement maturing in more than seven days, which is not
readily marketable, if more than 15% of the net assets of the Fund,
taken at market value at the time of purchase would be invested in
such securities.
5. The Fund may not purchase securities on margin from a broker
or dealer, except that the Fund may obtain such short-term credits as
may be necessary for the clearance of transactions, and may not make
short sales of securities, except that the Fund may make short sales
if, at the time of the short sale, the Fund owns or has the right to
acquire an equivalent kind and amount of the security being sold short
at no additional cost (i.e., short sales "against the box"). This
limitation shall not prohibit or restrict the Fund from entering into
futures, forwards and options contracts or from making margin payments
and other deposits in connection therewith.
6. The Fund's investments in warrants valued at the lower of
cost or market, may not exceed 5% of the value of the Fund's net
assets. Included within that amount, but not to exceed 2% of the
value of the Fund's net assets, may be warrants that are not listed on
the New York Stock Exchange or American Stock Exchange. Warrants
acquired by the Fund in units or attached to securities are not
subject to these limits.
-17-<PAGE>
BERGER IPT - SMALL COMPANY GROWTH FUND
The following fundamental restrictions apply to the Berger IPT -
Small Company Growth Fund. The Fund may not:
1. With respect to 75% of the Fund's total assets, purchase the
securities of any one issuer (except U.S. government securities) if
immediately after and as a result of such purchase (a) the value of
the holdings of the Fund in the securities of such issuer exceeds 5%
of the value of the Fund's total assets or (b) the Fund owns more than
10% of the outstanding voting securities of such issuer.
2. Invest in any one industry (other than U.S. government
securities) more than 25% of the value of its total assets at the time
of such investment.
3. Borrow money, except from banks for temporary or emergency
purposes in amounts not to exceed 25% of the Fund's total assets
(including the amount borrowed) taken at market value, nor pledge,
mortgage or hypothecate its assets, except to secure permitted
indebtedness and then only if such pledging, mortgaging or
hypothecating does not exceed 25% of the Fund's total assets taken at
market value. When borrowings exceed 5% of the Fund's total assets,
the Fund will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent the
Fund may be deemed an underwriter under the Securities Act of 1933 in
disposing of a security), issue senior securities (except to the
extent permitted under the Investment Company Act of 1940), invest in
real estate (although it may purchase shares of a real estate
investment trust), or invest in commodities or commodity contracts
except financial futures transactions, futures contracts on securities
and securities indices and options on such futures, forward foreign
currency exchange contracts, forward commitments or securities index
put or call options.
5. Make loans, except that the Fund may enter into repurchase
agreements and may lend portfolio securities in accordance with the
Fund's investment policies. The Fund does not, for this purpose,
consider the purchase of all or a portion of an issue of publicly
distributed bonds, bank loan participation agreements, bank
certificates of deposit, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original
issuance of the securities, to be the making of a loan.
In applying the industry concentration investment restriction
(no. 2 above), the Fund uses the industry groups used in the Data
Monitor Portfolio Monitoring System of William O'Neil & Co.
Incorporated. Further, in implementing that restriction, the Fund
intends not to invest in any one industry 25% or more of the value of
its total assets at the time of such investment.
-18-<PAGE>
The trustees have adopted additional non-fundamental investment
restrictions for the Berger IPT - Small Company Growth Fund. These
limitations may be changed by the trustees without a shareholder vote.
The non-fundamental investment restrictions include the following:
1. The Fund may not purchase securities of any company which,
including its predecessors and parents, has a record of less than
three years' continuous operation, if such purchase would cause the
Fund's investments in all such companies taken at cost to exceed 10%
of the value of the Fund's total assets.
2. The Fund may not purchase securities on margin from a broker
or dealer, except that the Fund may obtain such short-term credits as
may be necessary for the clearance of transactions, and may not make
short sales of securities, except that the Fund may make short sales
if, at the time of the short sale, the Fund owns or has the right to
acquire an equivalent kind and amount of the security being sold short
at no additional cost (i.e., short sales "against the box"). This
limitation shall not prohibit or restrict the Fund from entering into
futures, forwards and options contracts or from making margin payments
and other deposits in connection therewith.
3. The Fund may not purchase the securities of any other
investment company, except by purchase in the open market involving no
commission or profit to a sponsor or dealer (other than the customary
broker's commission).
4. The Fund may not invest in companies for the purposes of
exercising control of management.
5. The Fund may not purchase any security, including any
repurchase agreement maturing in more than seven days, which is not
readily marketable, if more than 15% of the net assets of the Fund,
taken at market value at the time of purchase would be invested in
such securities.
6. Only for the purpose of hedging, the Fund may purchase and
sell financial futures, forward foreign currency exchange contracts
and put and call options, but no more than 5% of the Fund's net assets
at the time of purchase may be invested in initial margins for
financial futures transactions and premiums for options. The Fund may
only write call options that are covered and only up to 25% of the
Fund's total assets.
7. The Fund may not purchase or sell securities on a when-
issued or delayed delivery basis, if as a result more than 5% of its
total assets taken at market value at the time of purchase would be
invested in such securities.
8. The Fund may not purchase or sell any interest in an oil,
gas or mineral development or exploration program, including
investments in oil, gas or other mineral leases, rights or royalty
-19-<PAGE>
contracts (except that the Fund may invest in the securities of
issuers engaged in the foregoing activities).
9. The Fund's investments in warrants valued at the lower of
cost or market may not exceed 5% of the value of the Fund's net
assets. Included within that amount, but not to exceed 2% of the
value of the Fund's net assets, may be warrants that are not listed on
the New York Stock Exchange or American Stock Exchange. Warrants
acquired by the Fund in units or attached to securities are not
subject to these limits.
BERGER/BIAM IPT - INTERNATIONAL FUND
The following fundamental restrictions apply to the Berger/BIAM
IPT - International Fund. The Fund may not:
1. With respect to 75% of the Fund's total assets, purchase the
securities of any one issuer (except U.S. government securities) if
immediately after and as a result of such purchase (a) the value of
the holdings of the Fund in the securities of such issuer exceeds 5%
of the value of the Fund's total assets or (b) the Fund owns more than
10% of the outstanding voting securities of such issuer.
2. Invest in any one industry (other than U.S. government
securities) 25% or more of the value of its total assets at the time
of such investment.
3. Borrow money, except from banks for temporary or emergency
purposes in amounts not to exceed 25% of the Fund's total assets
(including the amount borrowed) taken at market value, nor pledge,
mortgage or hypothecate its assets, except to secure permitted
indebtedness and then only if such pledging, mortgaging or
hypothecating does not exceed 25% of the Fund's total assets taken at
market value. When borrowings exceed 5% of the Fund's total assets,
the Fund will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent the
Fund may be deemed an underwriter under the Securities Act of 1933 in
disposing of a security), issue senior securities (except to the
extent permitted under the Investment Company Act of 1940), invest in
real estate (although it may purchase shares of a real estate
investment trust), or invest in commodities or commodity contracts
except financial futures transactions, futures contracts on securities
and securities indices and options on such futures, forward foreign
currency exchange contracts, forward commitments or securities index
put or call options.
5. Make loans, except that the Fund may enter into repurchase
agreements and may lend portfolio securities in accordance with the
Fund's investment policies. The Fund does not, for this purpose,
consider the purchase of all or a portion of an issue of publicly
distributed bonds, bank loan participation agreements, bank
certificates of deposit, bankers' acceptances,
-20-<PAGE>
debentures or other securities, whether or not the purchase is made
upon the original issuance of the securities, to be the making of a
loan.
In applying the industry concentration investment restriction
(no. 2 above), the Fund uses the industry groups designated by the
Financial Times World Index Service.
The trustees have adopted additional non-fundamental investment
restrictions for the Berger/BIAM IPT - International Fund. These
limitations may be changed by the trustees without a shareholder vote.
The non-fundamental investment restrictions include the following:
1. With respect to 100% of the Fund's total assets, the Fund
may not purchase the securities of any one issuer (except U.S.
government securities) if immediately after and as a result of such
purchase (a) the value of the holdings of the Fund in the securities
of such issuer exceeds 5% of the value of the Fund's total assets or
(b) the Fund owns more than 10% of the outstanding voting securities
of such issuer.
2. The Fund may not purchase securities of any company which,
including its predecessors and parents, has a record of less than
three years' continuous operation, if such purchase would cause the
Fund's investments in all such companies taken at cost to exceed 5% of
the value of the Fund's total assets.
3. The Fund may not purchase securities on margin from a broker
or dealer, except that the Fund may obtain such short-term credits as
may be necessary for the clearance of transactions, and may not make
short sales of securities. This limitation shall not prohibit or
restrict the Fund from entering into futures, forwards and options
contracts or from making margin payments and other deposits in
connection therewith.
4. The Fund may not purchase the securities of any other
investment company, except by purchase in the open market involving no
commission or profit to a sponsor or dealer (other than the customary
broker's commission).
5. The Fund may not invest in companies for the purposes of
exercising control of management.
6. The Fund may not purchase any security, including any
repurchase agreement maturing in more than seven days, which is not
readily marketable, if more than 15% of the net assets of the Fund,
taken at market value at the time of purchase would be invested in
such securities.
7. The Fund may not enter into any futures, forwards or
options, except that only for the purpose of hedging, the Fund may
enter into forward foreign currency exchange contracts with stated
contract values of up to the value of the Fund's assets.
-21-<PAGE>
8. The Fund may not purchase or sell securities on a when-
issued or delayed delivery basis, if as a result more than 5% of its
net assets taken at market value at the time of purchase would be
invested in such securities.
9. The Fund may not purchase or sell any interest in an oil,
gas or mineral development or exploration program, including
investments in oil, gas or other mineral leases, rights or royalty
contracts (except that the Fund may invest in the securities of
issuers engaged in the foregoing activities).
10. The Fund may not invest more than 5% of its net assets in
warrants. Included in that amount, but not to exceed 2% of net
assets, are warrants whose underlying securities are not traded on
principal domestic or foreign exchanges. Warrants acquired by the
Fund in units or attached to securities are not subject to these
limits.
On behalf of the Trust, an undertaking has been given to the
State of California Department of Insurance that limits borrowings of
each Fund (to the extent such borrowings are allowed by the Fund's
investment policies) to 10% of the Fund's total assets, except that a
Fund may borrow up to 25% of its total assets when such borrowing is
necessary to meet Fund redemptions.
In addition, the undertaking to the State of California
Department of Insurance requires each Fund when investing in foreign
securities (to the extent consistent with the Fund's investment
policies) to invest in a minimum of five different foreign countries,
provided that this minimum may be reduced to four when foreign country
investments comprise less than 80% of the Fund's assets, to three when
less than 60% of such assets, to two when less than 40% of such
assets, or to one when less than 20% of such assets. Additionally, no
more than 20% of a Fund's assets may be invested in securities of
issuers located in any one foreign country, except that a Fund may
have an additional 15% of its assets in securities of issuers located
in any one of the following countries: Australia, Canada, France,
Japan, the United Kingdom or Germany.
3. Management of the Funds
-----------------------
The same trustees and most of the same executive officers serve
each of the Funds. They are listed below, together with information
which includes their principal occupations during the past five years
and other principal business affiliations.
* GERARD M. LAVIN, 210 University Boulevard, Suite 900, Denver, CO
80206, age 54. President and a Trustee of Berger
Institutional Products Trust since its inception in October
1995. President and a director of the Berger 100 Fund and
the Berger Growth and Income Fund since February 1997.
President and a trustee of Berger/BIAM Worldwide Portfolios
Trust and Berger/BIAM Worldwide Funds Trust since their
inception in May 1996. President and a trustee of Berger
-22-<PAGE>
Investment Portfolio Trust and Berger Omni Investment Trust
since February 1997. President and a director since April
1995 of Berger Associates. Member and Chairman of the Board
of Managers and Chief Executive Officer on the Management
Committee of BBOI Worldwide LLC since November 1996. A Vice
President of DST Systems, Inc. (data processing) since July
1995. Director of First of Michigan Capital Corp. (holding
company) and First of Michigan Corp. (broker-dealer) since
March 1995. Formerly President and Chief Executive Officer
of Investors Fiduciary Trust Company (banking) from February
1992 to March 1995 and Chief Operating Officer of SunAmerica
Asset Management Co. (money management) from January 1990 to
February 1992.
* PATRICK S. ADAMS, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 36. President and Portfolio Manager of the
Berger IPT - 100 Fund and President and Co-Portfolio Manager of
the Berger IPT - Growth and Income Fund since February 1997.
Executive Vice President and Portfolio Manager of the Berger 100
Fund and Executive Vice President and Co-Portfolio Manager of
the Berger Growth and Income Fund since February 1997. Senior
Vice President of Berger Associates since February 1997.
Formerly, Senior Vice President from June 1996 to January 1997
with Zurich Kemper Investments, Inc., Portfolio Manager from
March 1993 to May 1996 with Founders Asset Management, Inc., and
Senior Portfolio Manager/Senior Analyst from January 1992 to
February 1993 with First of America Investment Corp.
* WILLIAM R. KEITHLER, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 43. President and Portfolio Manager of the
Berger IPT - Small Company Growth Fund since its inception in
October 1995. President since November 1994 (formerly, Vice
President from December 1993 to November 1994) and Portfolio
Manager since its inception in December 1993 of the Berger Small
Company Growth Fund. President and Portfolio Manager of the
Berger New Generation Fund since its inception in December 1995.
Senior Vice President-Investment Management (since January 1997)
and Vice President-Investment Management (December 1993 to
January 1997) of Berger Associates. Formerly, Senior Vice
President (January 1993 to December 1993), Vice President
(January 1991 to January 1993) and Portfolio Manager (January
1988 to January 1991) of INVESCO Trust Company (investment
management).
* MARK R. MCKINNEY, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 29. Vice President and Co-Portfolio Manager of
the Berger IPT - Growth and Income Fund since February 1997.
Vice President and Co-Portfolio Manager of the Berger Growth and
Income Fund since February 1997. Senior Analyst with Berger
Associates since January 1996. Formerly, Analyst/Portfolio
Manager with Farmers Insurance Co. from April 1992 to January
1996.
-23-<PAGE>
DENNIS E. BALDWIN, 3481 South Race Street, Englewood, CO 80110,
age 68. President, Baldwin Financial Counseling. Formerly
(1978-1990), Vice President and Denver Office Manager of Merrill
Lynch Capital Markets. Director of Berger 100 Fund and Berger
Growth and Income Fund. Trustee of Berger Investment Portfolio
Trust, Berger Institutional Products Trust, Berger/BIAM
Worldwide Funds Trust, Berger/BIAM Worldwide Portfolios Trust
and Berger Omni Investment Trust.
* WILLIAM M. B. BERGER, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 71. Trustee of Berger Institutional Products
Trust since its inception in October 1995. Director and,
formerly, President (1974-1994) of Berger 100 Fund and Berger
Growth and Income Fund. Trustee of Berger Investment Portfolio
Trust since its inception in August 1993 (Chairman of the
Trustees through November 1994). Trustee of Berger/BIAM
Worldwide Funds Trust and Berger/BIAM Worldwide Portfolios Trust
since their inception in May 1996. Trustee of Berger Omni
Investment Trust since February 1997. Chairman (since 1994) and
a Director (since 1973) and, formerly, President (1973-1994) of
Berger Associates. From 1960 to 1973, principal shareholder and
executive officer of predecessor investment advisory firms which
served as investment advisors to mutual funds and other
investors, and from 1950 to 1960, investment officer in the
trust department of The Colorado National Bank of Denver in
charge of common stock investments.
LOUIS R. BINDNER, 1075 South Fox, Denver, CO 80223, age 71.
President, Climate Engineering, Inc. (building environmental
systems). Director of Berger 100 Fund and Berger Growth and
Income Fund. Trustee of Berger Investment Portfolio Trust,
Berger Institutional Products Trust, Berger/BIAM Worldwide Funds
Trust, Berger/BIAM Worldwide Portfolios Trust and Berger Omni
Investment Trust.
KATHERINE A. CATTANACH, 384 South Ogden, Denver, CO 80209, age 51.
Managing Principal, Sovereign Financial Services, L.L.C.
(investment consulting firm). Formerly (1981-1988), Executive
Vice President, Captiva Corporation, Denver, Colorado (private
investment management firm). Ph.D. in Finance (Arizona State
University); Chartered Financial Analyst (CFA). Director of
Berger 100 Fund and Berger Growth and Income Fund. Trustee of
Berger Investment Portfolio Trust, Berger Institutional Products
Trust, Berger/BIAM Worldwide Funds Trust, Berger/BIAM Worldwide
Portfolios Trust and Berger Omni Investment Trust.
LUCY BLACK CREIGHTON, 1917 Leyden Street, Denver, CO 80220, age 69.
Associate, University College, University of Denver. Formerly,
President of the Colorado State Board of Land Commissioners
(1989-1995), and Vice President and Economist (1983-1988) and
Consulting Economist (1989) for First Interstate Bank of Denver.
Ph.D. in Economics (Harvard University). Director of Berger 100
Fund and Berger Growth
-24-<PAGE>
and Income Fund. Trustee of Berger Investment Portfolio Trust,
Berger Institutional Products Trust, Berger/BIAM Worldwide Funds
Trust, Berger/BIAM Worldwide Portfolios Trust and Berger Omni
Investment Trust.
PAUL R. KNAPP, 33 North LaSalle Street, Suite 1920, Chicago, IL
60602, age 51. Since 1991, Director, Chairman, President and
Chief Executive Officer of Catalyst Institute (international
public policy research organization focused primarily on
financial markets and institutions) and Catalyst Consulting
(international financial institutions business consulting firm).
Formerly (1988-1991), Director, President and Chief Executive
Officer of Kessler Asher Group (brokerage, clearing and trading
firm). Director of Berger 100 Fund and Berger Growth and Income
Fund. Trustee of Berger Investment Portfolio Trust, Berger
Institutional Products Trust, Berger/BIAM Worldwide Funds Trust,
Berger/BIAM Worldwide Portfolios Trust and Berger Omni
Investment Trust.
HARRY T. LEWIS, JR., 370 17th Street, Suite 3560, Denver, CO
80202, age 63. Self-employed as a private investor. Formerly
(1981-1988), Senior Vice President, Rocky Mountain Region, of
Dain Bosworth Incorporated and member of that firm's Management
Committee. Director of Berger 100 Fund and Berger Growth and
Income Fund. Trustee of Berger Investment Portfolio Trust,
Berger Institutional Products Trust, Berger/BIAM Worldwide Funds
Trust, Berger/BIAM Worldwide Portfolios Trust and Berger Omni
Investment Trust.
MICHAEL OWEN, 412 Reid Hall, Montana State University, Bozeman, MT
59717, age 59. Since 1994, Dean, and from 1989 to 1994, a
member of the Finance faculty, of the College of Business,
Montana State University. Self-employed as a financial and
management consultant, and in real estate development. Formerly
(1976-1989), Chairman and Chief Executive Officer of Royal Gold,
Inc. (mining). Chairman of the Board of Berger 100 Fund and
Berger Growth and Income Fund. Chairman of the Trustees of
Berger Investment Portfolio Trust, Berger Institutional Products
Trust, Berger/BIAM Worldwide Funds Trust, Berger/BIAM Worldwide
Portfolios Trust and Berger Omni Investment Trust.
WILLIAM SINCLAIRE, 3049 S. Perry Park Road, Sedalia, CO 80135, age
68. President, Sinclaire Cattle Co., and private investor.
Director of Berger 100 Fund and Berger Growth and Income Fund.
Trustee of Berger Investment Portfolio Trust, Berger
Institutional Products Trust, Berger/BIAM Worldwide Funds Trust,
Berger/BIAM Worldwide Portfolios Trust and Berger Omni
Investment Trust.
* KEVIN R. FAY, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 41. Vice President, Secretary and Treasurer of
Berger Institutional Products Trust since its inception in
October 1995, of Berger 100 Fund and Berger Growth and Income
Fund since October 1991, of Berger Investment Portfolio Trust
-25-<PAGE>
since its inception in August 1993, of Berger/BIAM Worldwide
Funds Trust and Berger/BIAM Worldwide Portfolios Trust since
their inception in May 1996, and of Berger Omni Investment Trust
since February 1997. Also, Senior Vice President-Finance and
Administration (since January 1997), Vice President-Finance and
Administration (September 1991 to January 1997), Secretary and
Treasurer (since September 1991) of Berger Associates, and a
director of Berger Distributors, Inc., since its inception in
May 1996. Formerly, Financial Consultant (registered
representative) with Neidiger Tucker Bruner, Inc. (broker-
dealer) (October 1989 to September 1991)and Financial Consultant
with Merrill Lynch, Pierce, Fenner & Smith, Inc. (October 1985
to October 1989).
________________
* Interested person (as defined in the Investment Company Act of
1940) of each Fund and of its advisor or sub-advisor.
The trustees of the Trust have adopted a trustee retirement
age of 75 years.
TRUSTEE COMPENSATION
The officers of the Funds receive no compensation from the
Funds. However, trustees of the Funds who are not interested persons
of Berger Associates are compensated for their services according to a
fee schedule, allocated among the Funds, which includes an annual fee
component and a per meeting fee component. Neither the officers of
the Funds nor the trustees receive any form of pension or retirement
benefit compensation from the Funds.
Set forth below is information regarding compensation paid
or accrued during the period May 1, 1996 (date operations commenced)
through December 31, 1996, for each trustee of the Trust, for their
service as a director or trustee of each of the Funds and of some or
all of the other Berger Funds. Since the Berger/BIAM IPT -
International Fund was not organized until after the period covered by
the table, it is not listed separately in the table.
NAME AND POSITION WITH AGGREGATE COMPENSATION FROM
BERGER FUNDS
- ----------------------------------------------------------------------
Berger Berger Berger All
IPT - IPT - IPT Berger
100 Growth Small Funds/1/
Fund and Company
Income Growth
Fund Fund
- ----------------------------------------------------------------------
Dennis E. Baldwin/2/ -0- -0- -0- $30,000
William M.B. Berger/2/,/4/ -0- -0- -0- -0-
-26-<PAGE>
Louis R. Bindner/2/ -0- -0- -0- 24,000
Katherine A. Cattanach/2/ -0- -0- -0- 30,000
Lucy Black Creighton/2/ -0- -0- -0- 29,000
Paul R. Knapp/2/ -0- -0- -0- 30,000
Gerard M. Lavin/2/,/3/,/4/ -0- -0- -0- -0-
Harry T. Lewis/2/ -0- -0- -0- 30,000
Rodney L. Linafelter/5/ -0- -0- -0- -0-
Michael Owen/2/ -0- -0- -0- 36,667
William Sinclaire/2/ -0- -0- -0- 22,500
____________________
/1/ For the period covered by this table, the Berger Funds included
the Berger 100 Fund, the Berger Growth and Income Fund, the Berger
Investment Portfolio Trust (two series), the Berger Institutional
Products Trust (three series), the Berger/BIAM Worldwide Portfolios
Trust and the Berger/BIAM Worldwide Funds Trust (three series). After
December 31, 1996, one additional series was added to the Berger
Institutional Products Trust and the Berger Omni Investment Trust was
added to the Berger Funds complex. Of the aggregate amounts shown for
each trustee, the following amounts were deferred under applicable
deferred compensation plans: Dennis E. Baldwin $2,700; Louis R.
Bindner $18,000; Katherine A. Cattanach $30,000; Lucy Black Creighton
$17,981; Michael Owen $7,326; William Sinclaire $11,250.
/2/ Director of Berger 100 Fund and Berger Growth and Income Fund.
Trustee of Berger Investment Portfolio Trust, Berger Institutional
Products Trust, Berger/BIAM Worldwide Fund Trust, Berger/BIAM
Worldwide Portfolios Trust and Berger Omni Investment Trust.
/3/ President of Berger 100 Fund, Berger Growth and Income Fund,
Berger Investment Portfolio Trust, Berger Institutional Products
Trust, Berger/BIAM Worldwide Funds Trust, Berger/BIAM Worldwide
Portfolios Trust and Berger Omni Investment Trust.
/4/ Interested person of Berger Associates.
/5/ Formerly, officer and director of Berger Associates and certain
of the Berger Funds through January 1997.
Trustees may elect to defer receipt of all or a portion of their
fees pursuant to a fee deferral plan adopted by the Berger
Institutional Products Trust. Under the plan, deferred fees are
credited to an account and adjusted thereafter to reflect the
investment experience of whichever of the Berger Funds (or approved
money market funds) is designated by the trustees for this purpose.
Pursuant to an SEC exemptive order, the Trust is permitted to purchase
shares of the designated funds in order to offset its obligation to
the trustees participating in the plan. Purchases made pursuant to
the plan are excepted from any otherwise applicable investment
restriction limiting the purchase of securities of any other
investment company. The Trust's obligation to make payments of
deferred fees under the plan is a general obligation of the Trust.
-27-<PAGE>
As of the date of this Statement of Additional Information, the
officers and trustees of the Trust as a group did not own of record or
beneficially any shares of any of the Funds of the Berger
Institutional Products Trust.
4. Investment Advisors and Sub-Advisor
-----------------------------------
Berger Associates is the investment advisor to each Fund except
the Berger/BIAM IPT - International Fund, to which BBOI Worldwide LLC
("BBOI Worldwide") is the investment advisor and Bank of Ireland Asset
Management (U.S.) Limited ("BIAM") is the sub-advisor.
Kansas City Southern Industries, Inc. ("KCSI") owns approximately
87% of the outstanding shares of Berger Associates. KCSI is a
publicly traded holding company with principal operations in rail
transportation, through its subsidiary The Kansas City Southern
Railway Company, and financial asset management businesses. KCSI also
owns approximately 41% of the outstanding shares of DST Systems, Inc.
("DST"), a publicly traded information and transaction processing
company which also acts as the Funds' sub-transfer agent.
BBOI Worldwide is a Delaware limited liability company formed in
1996. Berger Associates and BIAM each own a 50% membership interest
in BBOI Worldwide and each have an equal number of representatives on
its Board of Managers. Berger Associates' role in the joint venture
is to provide administrative services, and BIAM's role is to provide
international and global investment management expertise. Agreement
of representatives of both Berger Associates and BIAM is required for
all significant management decisions for BBOI Worldwide. BIAM is an
indirect wholly-owned subsidiary of Bank of Ireland, a publicly
traded, diversified financial services group with business operations
worldwide.
INVESTMENT ADVISORY AGREEMENTS AND SUB-ADVISORY AGREEMENT
The current Investment Advisory Agreements for the Berger IPT -
100 Fund, the Berger IPT - Growth and Income Fund and the Berger IPT -
Small Company Growth Fund will continue in effect until the last day
of April, 1998, and thereafter from year to year if such continuation
is specifically approved at least annually by the trustees or by vote
of a majority of the outstanding shares of the Fund and in either case
by vote of a majority of the trustees who are not "interested persons"
(as that term is defined in the 1940 Act) of the Fund or Berger
Associates. The current Investment Advisory Agreement for the
Berger)BIAM IPT - International Fund will continue in effect until the
last day of April, 1999, and thereafter from year to year if
continuation is approved as set out above. Each Agreement is subject
to termination by the Fund or the advisor on 60 days' written notice,
and terminates automatically in the event of its assignment.
The Sub-Advisory Agreement between BBOI Worldwide and BIAM with
respect to the Berger/BIAM IPT - International Fund will
-28-<PAGE>
continue in effect until April 1999, and thereafter from year to year
if such continuation is specifically approved at least annually by the
trustees or by vote of a majority of the outstanding shares of the
Fund and in either case by vote of a majority of the trustees of the
Trust who are not "interested persons" (as that term is defined in the
Investment Company Act of 1940) of the Fund or BBOI Worldwide or BIAM.
The Sub-Advisory Agreement is subject to termination by the Fund, BBOI
Worldwide or BIAM on 60 days' written notice, and terminates
automatically in the event of its assignment and in the event of
termination of the Investment Advisory Agreement between the Trust and
BBOI Worldwide with respect to the Berger/BIAM IPT - International
Fund.
TRADE ALLOCATIONS
Investment decisions for the Funds and other accounts advised by
Berger Associates and BIAM are made independently with a view to
achieving each of their respective investment objectives and after
consideration of such factors as their current holdings, availability
of cash for investment and the size of their investments generally.
However, certain investments may be appropriate for a Fund and one or
more such accounts. If a Fund and other accounts advised by Berger
Associates or BIAM are contemporaneously engaged in the purchase or
sale of the same security, the orders may be aggregated and/or the
transactions averaged as to price and allocated equitably to the Fund
and each participating account. While in some cases, this policy
might adversely affect the price paid or received by a Fund or other
participating accounts, or the size of the position obtained or
liquidated, Berger Associates and BIAM will aggregate orders if it
believes that coordination of orders and the ability to participate in
volume transactions will result in the best overall combination of net
price and execution.
RESTRICTIONS ON PERSONAL TRADING
Berger Associates permits its directors, officers, employees and
other access persons (as defined below) of Berger Associates ("covered
persons") to purchase and sell securities for their own accounts in
accordance with provisions governing personal investing in Berger
Associates' Code of Ethics. The Code requires all covered persons to
conduct their personal securities transactions in a manner which does
not operate adversely to the interests of the Funds or Berger
Associates' other advisory clients. Directors and officers of Berger
Associates (including those who also serve as directors or trustees of
the Berger Funds), investment personnel and other designated covered
persons deemed to have access to current trading information ("access
persons") are required to pre-clear all transactions in securities not
otherwise exempt under the Code. Requests for authority to trade will
be denied pre-clearance when, among other reasons, the proposed
personal transaction would be contrary to the provisions of the Code
or would be deemed to adversely affect any transaction then known to
be under consideration for or currently being effected on behalf of
any client account, including the Funds.
-29-<PAGE>
In addition to the pre-clearance requirements described above,
the Code subjects those covered persons deemed to be access persons to
various trading restrictions and reporting obligations. All
reportable transactions are reviewed for compliance with Berger
Associates' Code. Those covered persons also may be required under
certain circumstances to forfeit their profits made from personal
trading. The Code is administered by Berger Associates and the
provisions of the Code are subject to interpretation by and exceptions
authorized by its board of directors.
BBOI Worldwide has adopted a Code of Ethics covering all board
members, officers, employees and other access persons of BBOI
Worldwide who are not also covered by an approved Code of Ethics of an
affiliated person who is an investment advisor. At present, there are
no persons who would be covered by BBOI Worldwide's Code of Ethics who
are not also covered by the Code of Ethics of Berger Associates or
BIAM, which are both investment advisors affiliated with BBOI
Worldwide. BBOI Worldwide's Code is substantially similar to the Code
of Ethics adopted by Berger Associates (described above).
BIAM has also adopted a Code of Ethics which restricts its
officers, employees and other staff from personal trading in specified
circumstances, including among others prohibiting participation in
initial public offerings, prohibiting dealing in a security for the
seven days before and after any trade in that security on behalf of
clients, prohibiting trading in a security while an order is pending
for any client on that same security, and requiring profits from
short-term trading in securities (purchase and sale within a 60-day
period) to be forfeited. In addition, staff of BIAM must report all
of their personal holdings in securities annually and must disclose
their holdings in any private company if an investment in that same
company is being considered for clients. Staff of BIAM are required
to pre-clear all transactions in securities not otherwise exempt under
the Code of Ethics and must instruct their broker to provide BIAM with
duplicate confirmations of all such personal trades.
5. Expenses of the Funds
---------------------
Under their Investment Advisory Agreements, the Berger IPT - 100
Fund and the Berger IPT - Growth and Income Fund have each agreed to
compensate Berger Associates for its investment advisory services to
the Fund by the payment of a fee at the annual rate of .75 of 1%
(0.75%) of the average daily net assets of the Fund. The fee is
accrued daily and payable monthly.
Under the Investment Advisory Agreement for the Berger IPT -
Small Company Growth Fund, Berger Associates is compensated for its
investment advisory services to the Fund by the payment of a fee at
the annual rate of .9 of 1% (0.90%) of the average daily net assets of
the Fund. The fee is accrued daily and payable monthly.
-30-<PAGE>
Under the Investment Advisory Agreement for the Berger/BIAM IPT -
International Fund, BBOI Worldwide is compensated for its investment
advisory services to the Fund by the payment of a fee at the annual
rate of .9 of 1% (0.90%) of the average daily net assets of the Fund.
The fee is accrued daily and payable monthly.
Under the Sub-Advisory Agreement between BBOI Worldwide and BIAM
for the Berger/BIAM IPT - International Fund, BBOI Worldwide has
delegated day-to-day portfolio management responsibility for the Fund
to BIAM. The Fund pays no fees directly to BIAM. BIAM receives from
BBOI Worldwide a fee at the annual rate of .4 of 1% (0.40%) of the
average daily net assets of the Fund. During certain periods, BIAM
may voluntarily waive all or a portion of its fee under the Sub-
Advisory Agreement, which will not affect the fee paid by the Fund to
BBOI Worldwide.
Each Fund pays all of its expenses not assumed by its advisor,
including, but not limited to, investment advisory fees, custodian and
transfer agent fees, legal and accounting expenses, administrative and
record keeping expenses, interest charges, federal and state taxes,
costs of share certificates, expenses of shareholders' meetings,
compensation of trustees who are not interested persons of the advisor
or sub-advisor, expenses of printing and distributing reports to
shareholders and federal and state administrative agencies, and all
expenses incurred in connection with the execution of its portfolio
transactions, including brokerage commissions on purchases and sales
of portfolio securities, which are considered a cost of securities of
each Fund. Each Fund also pays all expenses incurred in complying
with all federal and state laws and the laws of any foreign country
applicable to the issue, offer or sale of shares of the Fund,
including, but not limited to, all costs involved in preparing and
printing prospectuses for shareholders of the Funds.
Each of the Funds has appointed Investors Fiduciary Trust Company
("IFTC") as its recordkeeping and pricing agent. In addition, IFTC
also serves as the Funds' custodian, transfer agent and dividend
disbursing agent. IFTC has engaged DST as sub-agent to provide
transfer agency and dividend disbursing services for the Funds. As
noted in the previous section, approximately 41% of the outstanding
shares of DST are owned by KCSI. The addresses and telephone numbers
for DST set forth in the Prospectus and this Statement of Additional
Information should be used for correspondence with the transfer agent.
As recordkeeping and pricing agent, IFTC calculates the daily net
asset value of each of the Funds and performs certain accounting and
recordkeeping functions required by the Funds. Each Fund pays IFTC a
monthly base fee plus an asset-based fee. IFTC is also reimbursed for
certain out-of-pocket expenses.
IFTC, as custodian, and its subcustodians have custody and
provide for the safekeeping of the Funds' securities and cash, and
receive and remit the income thereon as directed by the
-31-<PAGE>
management of the Funds. The custodian and subcustodians do not
perform any managerial or policy-making functions for the Funds. For
its services as custodian, IFTC receives an asset-based fee plus
certain transaction fees and out-of-pocket expenses.
As transfer agent and dividend disbursing agent, IFTC (through
DST, as sub-agent) maintains all shareholder accounts of record;
assists in mailing all reports, proxies and other information to the
Funds' shareholders; calculates the amount of, and delivers to the
Funds' shareholders, proceeds representing all dividends and
distributions; and performs other related services. For these
services, IFTC receives a base fee of $600 per month and an annual fee
of $15.65 per open Fund shareholder account, subject to scheduled
increases, plus certain transaction fees and fees for closed accounts,
and is reimbursed for out-of-pocket expenses, which fees in turn are
passed through to DST as sub-agent.
All of IFTC's fees are subject to reduction pursuant to an agreed
formula for certain earnings credits on the cash balances of the
Funds. The following table shows gross fees, earnings credits and net
fees paid to IFTC for the period May 1, 1996 (date operations
commenced) to December 31, 1996, for each of the Funds in existence
during that period.
GROSS FEES EARNINGS NET FEES PAID
PAYABLE TO IFTC CREDITS TO IFTC
RECEIVED FROM
IFTC
- ----------------------------------------------------------------------
Berger IPT - $9,111 $ 127 $8,984
100 Fund
Berger IPT - $8,831 $ 101 $8,730
Growth and
Income Fund
Berger IPT -
Small
Company
Growth Fund $10,387 $ 369 $10,018
The trustees of each of the Funds have authorized portfolio
transactions to be placed on an agency basis through DST Securities,
Inc. ("DSTS"), a wholly-owned broker-dealer subsidiary of DST. When
transactions for a Fund are effected through DSTS, the commission
received by DSTS is credited against, and thereby reduces, certain
operating expenses that the Fund would otherwise be obligated to pay.
No portion of the commission is retained by DSTS. See Section 6
Brokerage Policy for further information concerning the expenses
reduced as a result of these arrangements.
In addition, under a separate Administrative Services Agreement
with each Fund except the Berger/BIAM IPT - International Fund, Berger
Associates performs certain administrative and recordkeeping services
not otherwise performed by IFTC, including
-32-<PAGE>
the preparation of financial statements and reports to be filed with
regulatory authorities. Each of those Funds pays Berger Associates a
fee at the annual rate of 1/100 of 1% (0.01%) of its average daily net
assets for such services. Under an Administrative Services Agreement
with the Berger/BIAM IPT - International Fund, BBOI Worldwide performs
similar administrative and recordkeeping services and the Fund pays
BBOI Worldwide a fee at the annual rate of 1/100 of 1% (0.01%/ of its
average daily net assets. These administrative services fees are in
addition to the investment advisory fees paid by each Fund under its
Investment Advisory Agreement. The administrative services fees may
be changed by the trustees without shareholder approval.
Under a Sub-Administration Agreement between the BBOI Worldwide
and Berger Associates, Berger Associates has been delegated all of
BBOI Worldwide's duties under the Administrative Services Agreement
and BBOI Worldwide's administrative duties under the Investment
Advisory Agreement for the Berger/BIAM IPT - International Fund. For
its services under the Sub-Administration Agreement, BBOI Worldwide
pays Berger Associates a fee of .2 of 1% (0.20%) of the average daily
net assets of the Berger/BIAM IPT - International Fund. During
certain periods, Berger Associates may voluntarily waive all or a
portion of its fee from BBOI Worldwide, which will not affect the fee
paid by the Fund to BBOI Worldwide under the Administrative Services
Agreement or the advisory fee paid to BBOI Worldwide under the
Investment Advisory Agreement.
Berger Associates has voluntarily agreed to waive its advisory
fee to the extent that normal operating expenses in any fiscal year,
including the management fee but excluding brokerage commissions,
interest, taxes and extraordinary expenses, of each of the Berger IPT
- - 100 Fund and the Berger IPT - Growth and Income Fund exceed 1.00%,
and the normal operating expenses in any fiscal year of the Berger IPT
- - Small Company Growth Fund exceed 1.15%, of the respective Fund's
average daily net assets. BBOI Worldwide has voluntarily agreed to
waive its advisory fee to the extent that normal operating expenses in
any fiscal year, including the investment advisory fee but excluding
brokerage commissions, interest, taxes and extraordinary expenses, of
the Berger/BIAM IPT - International Fund exceed 1.20% of that Fund's
average daily net assets.
The following tables show the cost to each Fund in existence at
December 31, 1996, of the advisory fee and the fees for the
administrative services for the period shown, the amounts reimbursed
to each Fund on account of excess expenses under the applicable
expense limitation, and the percentage of average daily net asset
value of the respective Fund that those represent.
-33-<PAGE>
Berger IPT - 100 Fund
---------------------
Adminis- Fee
Fiscal Year trative Waiver and Percent of
Ended Advisory Service Reimburse- Average
December 31, Fee Fee ments Total Net Assets
- ------------ -------- ------- ----------- ----- -----------
1996* $ 1,393 $ 19 $ (12,453) $ 0 0.0%
Berger IPT - Growth and Income Fund
-----------------------------------
Adminis- Fee
Fiscal Year trative Waiver and Percent of
Ended Advisory Service Reimburse- Average
December 31, Fee Fee ments Total Net Assets
- ----------- -------- -------- ----------- ----- -----------
1996* $ 1,350 $ 17 $ (12,091) $ 0 0.0%
Berger IPT - Small Company Growth Fund
--------------------------------------
Adminis- Fee
Fiscal Year trative Waiver and Percent of
Ended Advisory Service Reimburse- Average
December 31, Fee Fee ments Total Net Assets
- ------------ -------- -------- ----------- ----- -----------
1996* $ 1,620 $ 17 $ (13,415) $ 0 0.0%
____________________
* Covers period from May 1, 1996 (date operations commenced) to the
end of the Funds' first fiscal year on December 31, 1996.
From time to time, Berger Associates or BBOI Worldwide may
compensate Participating Insurance Companies or their affiliates whose
customers hold shares of the Funds for providing a variety of
administrative services (such as recordkeeping and accounting) and
investor support services (such as responding to inquiries and
preparing mailings to shareholders). This compensation, which may be
paid as a per account fee or as a percentage of the average daily net
assets invested in the Funds by the compensated Participating
Insurance Company, depending on the nature, extent and quality of the
services provided, will be paid from Berger Associates' or BBOI
Worldwide's own resources and not from the assets of the Funds.
DISTRIBUTOR
The distributor (principal underwriter) of the Fund's shares is
Berger Distributors, Inc. (the "Distributor"), 210 University
Boulevard, Suite 900, Denver, CO 80206. The Distributor may be
reimbursed by Berger Associates for its costs in distributing the
Funds' shares.
-34-<PAGE>
6. Brokerage Policy
----------------
Although each Fund retains full control over its own investment
policies, the Funds' advisor (or sub-advisor, in the case of the
Berger/BIAM IPT - International Fund) is authorized to place the
portfolio transactions of each Fund. The advisor or sub-advisor is
required to report on the placement of brokerage business to the
trustees of the Fund every quarter, indicating the brokers with whom
Fund portfolio business was placed and the basis for such placement.
The brokerage commissions paid by the Funds in existence during the
past fiscal year was as follows:
BROKERAGE COMMISSIONS
---------------------
FISCAL YEAR
ENDED
DECEMBER 31, 1996*
- ----------------------------------------------------------------------
BERGER IPT - 100 FUND $ 535
BERGER IPT - GROWTH AND INCOME FUND $ 688
BERGER IPT - SMALL COMPANY GROWTH FUND $ 607
* Covers period from May 1, 1996 (date operations commenced) to the
end of the Funds' first fiscal year on December 31, 1996.
The Investment Advisory Agreement that each Fund has with its
advisor (and the Sub-Advisory Agreement with the sub-advisor, in the
case of the Berger/BIAM IPT - International Fund) authorizes and
directs the advisor (or sub-advisor) to place portfolio transactions
for the Fund only with brokers and dealers who render satisfactory
service in the execution of orders at the most favorable prices and at
reasonable commission rates. However, each Agreement specifically
authorizes the advisor (or sub-advisor) to place such transactions
with a broker with whom it has negotiated a commission that is in
excess of the commission another broker or dealer would have charged
for effecting that transaction if the advisor (or sub-advisor)
determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services
provided by such broker viewed in terms of either that particular
transaction or the overall responsibilities of the advisor (or sub-
advisor).
In accordance with this provision of the Agreements, Berger
Associates places and BIAM may place portfolio brokerage business of
each Fund it advises with brokers who provide useful research
services. Such research services typically consist of studies made by
investment analysts or economists relating either to the past record
of and future outlook for companies and the industries in which they
operate, or to national and worldwide economic conditions, monetary
conditions and trends in investors' sentiment, and the relationship of
these factors to the securities market. In addition, such analysts
may be available for regular consultation so that Berger Associates or
BIAM may be apprised of
-35-<PAGE>
current developments in the above-mentioned factors. During the
period May 1, 1996 (date operations commenced) through the fiscal year
ended December 31, 1996, $27, $46, and $39 of the brokerage
commissions paid by the Berger IPT - 100 Fund, the Berger IPT - Growth
and Income Fund and the Berger IPT - Small Company Growth Fund,
respectively, were paid to brokers who agreed to provide to the Fund
selected research services prepared by the broker or subscribed or
paid for by the broker on behalf of the Fund. Those services included
a service used by the independent trustees of the Funds in reviewing
the Investment Advisory Agreements.
The research services received from brokers are often helpful to
Berger Associates and could be helpful to BIAM in performing its
investment advisory responsibilities to the Funds, but they are not
essential, and the availability of such services from brokers does not
reduce the responsibility of Berger Associates' or BIAM's advisory
personnel to analyze and evaluate the securities in which the Funds
invest. The research services obtained as a result of the Funds'
brokerage business also will be useful to Berger Associates or may be
useful to BIAM in making investment decisions for its other advisory
accounts, and, conversely, information obtained by reason of placement
of brokerage business of such other accounts may be used by Berger
Associates or BIAM in rendering investment advice to the Funds.
Although such research services may be deemed to be of value to Berger
Associates or BIAM, they are not expected to decrease the expenses
that Berger Associates or BIAM would otherwise incur in performing its
investment advisory services for the Funds nor will the advisory fees
that are received by Berger Associates or BIAM for their services be
reduced as a result of the availability of such research services from
brokers.
The trustees of each of the Funds have authorized portfolio
transactions to be placed on an agency basis through DST Securities,
Inc. ("DSTS"), a wholly-owned broker-dealer subsidiary of DST. When
transactions for a Fund are effected through DSTS, the commission
received by DSTS is credited against, and thereby reduces, certain
operating expenses that the Fund would otherwise be obligated to pay.
No portion of the commission is retained by DSTS.
Included in the brokerage commissions paid by the Funds during
the period May 1, 1996 (date operations commenced) through the fiscal
year ended December 31, 1996, as stated in the preceding table, are
the following amounts paid to DSTS, which served to reduce each Fund's
out-of-pocket expenses as follows:
COMMISSIONS PAID REDUCTION IN
THROUGH DSTS/1/ EXPENSES/1/
- ----------------------------------------------------------------------
Berger IPT - 100 $ 8/2/ $ 6
Fund
-36-<PAGE>
Berger IPT - Growth $ 0 $ 0
and Income Fund
Berger IPT - Small $ 0 $ 0
Company Growth Fund
____________________
/1/ No portion of the commission is retained by DSTS. Difference
between commissions paid through DSTS and reduction in expenses
constitute commissions paid to an unaffiliated clearing broker.
/2/ Constitutes 1.5% of the aggregate brokerage commissions paid by
the Berger IPT - 100 Fund and 1% of the aggregate dollar amount of
transactions placed by the Berger IPT - 100 Fund.
The trustees of each Fund have authorized sales by a broker-
dealer of variable insurance contracts that permit allocation of
contract values to one or more of the Funds to be considered as a
factor in the selection of broker-dealers to execute portfolio
transactions for the Funds. In placing portfolio business with such
broker-dealers, the advisor or sub-advisor will seek the best
execution of each transaction.
7. How To Purchase and Redeem Shares In the Funds
----------------------------------------------
Shares of the Funds are sold by the Funds on a continuous basis
to separate accounts of Participating Insurance Companies or to
qualified plans. Investors may not purchase or redeem shares of the
Funds directly, but only through variable insurance contracts offered
through the separate accounts of Participating Insurance Companies or
through qualified retirement plans. You should refer to the
applicable Separate Account Prospectus or your plan documents for
information on how to purchase or surrender a contract, make partial
withdrawals of contract values, allocate contract values to one or
more of the Funds, change existing allocation among investment
alternatives, including the Funds, or select specific Funds as
investment options for a qualified plan. No sales charge is imposed
upon the purchase or redemption of shares of the Funds. Sales charges
for the variable insurance contracts or qualified plans are described
in the relevant Separate Account Prospectuses or plan documents.
Fund shares are purchased or redeemed at the net asset value per
share next computed after receipt of a purchase or redemption order by
a Fund, its agent or its designee. Payment for redeemed shares
generally will be made within three business days following the date
of the request for redemption. However, payment may be postponed
under unusual circumstances, such as when normal trading is not taking
place on the New York Stock Exchange, an emergency as defined by the
Securities and Exchange Commission exists, or as permitted by the
Securities and Exchange Commission.
-37-<PAGE>
8. Suspension of Redemption Rights
-------------------------------
The right of redemption may be suspended for any period during
which the New York Stock Exchange is closed or the Securities and
Exchange Commission determines that trading on the Exchange is
restricted, or when there is an emergency as determined by the
Securities and Exchange Commission as a result of which it is not
reasonably practicable for a Fund to dispose of securities owned by it
or to determine the value of its net assets, or for such other period
as the Securities and Exchange Commission may by order permit for the
protection of shareholders of a Fund.
Each Fund intends to redeem its shares only for cash, although it
retains the right to redeem its shares in-kind under unusual
circumstances, in order to protect the interests of the remaining
shareholders, by the delivery of securities selected from its assets
at its discretion. If shares are redeemed in-kind, the redeeming
shareholder generally will incur brokerage costs in converting the
assets to cash. The method of valuing securities used to make
redemption in-kind will be the same as the method of valuing portfolio
securities described below.
9. How The Net Asset Value Is Determined
-------------------------------------
The net asset value of each Fund is determined once daily, at the
close of the regular trading session of the New York Stock Exchange
(the "Exchange") (normally 4:00 p.m., New York time, Monday through
Friday) each day that the Exchange is open. The Exchange is closed
and the net asset value of the Funds is not determined on weekends and
on New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day each
year. The per share net asset value of each Fund is determined by
dividing the total value of its securities and other assets, less
liabilities, by the total number of shares outstanding.
In determining net asset value, securities listed or traded
primarily on national exchanges, The Nasdaq Stock Market and foreign
exchanges are valued at the last sale price on such markets, or, if
such a price is lacking for the trading period immediately preceding
the time of determination, such securities are valued at the mean of
their current bid and asked prices. Securities that are traded in the
over-the-counter market are valued at the mean between their current
bid and asked prices. The market value of individual securities held
by each Fund will be determined by using prices provided by pricing
services which provide market prices to other mutual funds or, as
needed, by obtaining market quotations from independent
broker/dealers. Short-term money market securities maturing within 60
days are valued on the amortized cost basis, which approximates market
value. All assets and liabilities initially expressed in terms of
non-U.S. dollar currencies are translated into U.S. dollars at the
prevailing market rates as quoted by one or more banks or dealers
shortly before the close of the Exchange. Securities and assets for
which quotations are not readily available are valued at fair
-38-<PAGE>
values determined in good faith pursuant to consistently applied
procedures established by the trustees.
Generally, trading in foreign securities markets is substantially
completed each day at various times prior to the close of the
Exchange. The values of foreign securities used in computing the net
asset value of the shares of a Fund are determined as of the earlier
of such market close or the closing time of the Exchange.
Occasionally, events affecting the value of such securities may occur
between the times at which they are determined and the close of the
Exchange, or when the foreign market on which such securities trade is
closed but the Exchange is open, which will not be reflected in the
computation of net asset value. If during such periods, events occur
which materially affect the value of such securities, the securities
will be valued at their fair market value as determined in good faith
pursuant to consistently applied procedures established by the
directors or trustees.
A Fund's securities may be listed primarily on foreign exchanges
or over-the-counter dealer markets which may trade on days when the
Exchange is closed (such as a customary U.S. holiday) and on which the
Fund's net asset value is not calculated. As a result, the net asset
value of a Fund may be significantly affected by such trading on days
when shareholders cannot purchase or redeem shares of the Fund.
10. Income Dividends, Capital Gains
Distributions and Tax Treatment
-------------------------------
Each of the Funds intends to qualify to be treated as a separate
regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). If they so qualify and
meet certain minimum distribution requirements, the Funds generally
will not be liable for Federal income tax on the amount of their
earnings that are timely distributed. If a Fund distributes annually
less than 98% of its income and gain, under certain circumstances, it
may be subject to a nondeductible excise tax equal to 4% of the
shortfall.
Each Fund intends to restrict sales of its shares to
Participating Insurance Companies and qualified plans so as to qualify
for "look-through" treatment under the investment diversification
requirements of Code Section 817(h) which apply to certain insurance
company separate accounts. Each Fund also intends to manage its
investments in accordance with the diversification requirements of
Code Section 817(h) so that any separate account that holds shares in
any of the Funds as its sole asset will comply with those
requirements. For further information concerning Federal income tax
consequences for the owners of variable insurance contracts and
qualified plan participants, consult the appropriate Separate Account
Prospectus or plan documents.
-39-<PAGE>
All dividends or capital gains distributions paid by a Fund will
be automatically reinvested in shares of that Fund at the net asset
value on the ex-dividend date, unless an election is made on behalf of
a separate account or qualified plan to receive distributions in cash.
The tax treatment of distributions made to any shareholder will depend
on the shareholder's tax status.
The amount, timing and character of a Fund's income may be
affected by certain special U.S. tax rules that may apply to foreign
or other investments of a Fund. Any income received by a Fund from
foreign investments may also be subject to foreign income, withholding
or other taxes.
11. Performance Information
-----------------------
The Prospectus contains a brief description of how total return
is calculated.
Quotations of average annual total return for the Funds will be
expressed in terms of the average annual compounded rate of return of
a hypothetical investment in the Fund over periods of 1, 5 and
10 years (or the life of the Fund, if shorter). These are the rates
of return that would equate the initial amount invested to the ending
redeemable value. These rates of return are calculated pursuant to
the following formula: P(1 + T/n = ERV (where P = a hypothetical
initial payment of $1,000, T = the average annual total return,
n = the number of years and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the period). All
total return figures reflect the deduction of a proportional share of
Fund expenses on an annual basis, and assume that all dividends and
distributions are reinvested when paid.
In conjunction with performance reports, comparative data between
a Fund's performance for a given period and other types of investment
vehicles may be provided. A Fund's performance is based upon amounts
available for investment under variable insurance contracts of
Participating Insurance Companies or available for allocation to a
qualified plan account, rather than upon premiums paid or
contributions by contract owners or plan participants. Consequently
the Fund's total return data does not reflect the impact of sales
loads (whether front-load or deferred) or other contract or plan
charges deducted from premiums or from the assets of the separate
accounts or qualified plans that invest in the Fund. Such sales loads
and charges may be substantial and may vary widely among Participating
Insurance Companies and qualified plans. Accordingly, the total
return data for the Funds is most useful for comparison with
comparable data for other investment options under the same variable
insurance contract or qualified plan.
Comparisons of the Funds' total returns to those of other
investment vehicles are useful in evaluating the historical portfolio
management performance of the Funds' investment advisor. However,
such comparisons should not be mistaken for comparisons of
-40-<PAGE>
the returns from the purchase of a variable insurance contract of a
Participating Insurance Company, or investment in a qualified plan, to
the purchase of another investment vehicle. The Funds' total return
data should be reviewed along with comparable total return data for an
associated separate account or in conjunction with data (such as the
data contained in personalized, hypothetical illustrations of variable
life insurance contracts) that would permit evaluation of the
magnitude of charges and expenses attributable to the contract or plan
that are not reflected in the Fund's total return data.
For the Berger IPT - 100 Fund, the Berger IPT - Growth and Income
Fund and the Berger IPT - Small Company Growth Fund, the total returns
(not annualized) were 3.90%, 11.40% and (.50)%, respectively, for the
period May 1, 1996 (date operations commenced) through December 31,
1996.
12. Additional Information
----------------------
The Funds are separate series or portfolios established under the
Berger Institutional Products Trust, a Delaware business trust
organized under the Delaware Business Trust Act on October 17, 1995.
The Berger IPT - 100 Fund, the Berger IPT - Growth and Income Fund and
the Berger IPT - Small Company Growth Fund were established under the
Trust on October 17, 1995. The Berger/BIAM IPT - International Fund
was established under the Trust in April 1997. Currently the Funds
are the only series established under the Trust, although others may
be added in the future.
Under Delaware law, shareholders of the Trust will enjoy the same
limitations on personal liability as extended to stockholders of a
Delaware corporation. Further, the Trust Instrument of the Trust
provides that no shareholder shall be personally liable for the debts,
liabilities, obligations and expenses incurred by, contracted for or
otherwise existing with respect to, the Trust or any particular series
(fund) of the Trust. However, the principles of law governing the
limitations of liability of beneficiaries of a business trust have not
been authoritatively established as to business trusts organized under
the laws of one jurisdiction but operating or owning property in other
jurisdictions. In states that have adopted legislation containing
provisions comparable to the Delaware Business Trust Act, it is
believed that the limitation of liability of beneficial owners
provided by Delaware law should be respected. In those jurisdictions
that have not adopted similar legislative provisions, it is possible
that a court might hold that the shareholders of the Trust are not
entitled to the limitations of liability set forth in Delaware law or
the Trust Instrument and, accordingly, that they may be personally
liable for the obligations of the Trust.
In order to protect shareholders from such potential liability,
the Trust Instrument requires that every written obligation of the
Trust or any series thereof contain a statement to the effect that
such obligation may only be enforced against the assets of the Trust
or such series. The Trust Instrument also
-41-<PAGE>
provides for indemnification from the assets of the relevant series
for all losses and expenses incurred by any shareholder by reason of
being or having been a shareholder, and that the Trust shall, upon
request, assume the defense of any such claim made against such
shareholder for any act or obligation of the relevant series and
satisfy any judgment thereon from the assets of that series.
As a result, the risk of a shareholder of any Fund incurring
financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its
obligations. The Trust believes that, in view of the above, the risk
of personal liability to shareholders of any of the Funds is remote.
The trustees intend to conduct the operations of the Trust and the
Funds so as to avoid, to the extent possible, liability of
shareholders for liabilities of the Trust or the Funds.
Shares of the Funds have no preemptive rights, and since each
Fund has only one class of securities there are no sinking funds or
arrearage provisions which may affect the rights of the Fund shares.
Fund shares have no conversion or subscription rights. Shares of the
Funds may be transferred by endorsement, or other customary methods,
but none of the Funds is bound to recognize any transfer until it is
recorded on its books.
The separate accounts of the Participating Insurance Companies
and the trustees of the qualified plans invested in the Funds, rather
than individual contract owners or plan participants, are the
shareholders of the Funds. However, each Participating Insurance
Company or qualified plan will vote such shares as required by law and
interpretations thereof, as amended or changed from time to time.
Under current law, a Participating Insurance Company is required to
request voting instructions from its contract owners and must vote
Fund shares held by each of its separate accounts in proportion to the
voting instructions received. Additional information about voting
procedures is contained in the applicable Separate Account
Prospectuses.
Shareholders of each Fund generally vote separately on matters
relating to that Fund, although they will vote together with the
holders of all other series of the Trust in the election of trustees
of the Trust and on all matters relating to the Trust as a whole.
Each full share of each Fund has one vote. Shares of each Fund have
non-cumulative voting rights, which means that the holders of more
than 50% of the shares voting for the election of trustees can elect
100% of the trustees if they choose to do so and, in such event, the
holders of the remaining shares voting for the election of trustees
will not be able to elect any trustees. None of the Funds is required
to hold annual shareholder meetings unless required by the Investment
Company Act of 1940 or other applicable law or unless called by the
trustees.
As of December 31, 1996, 78% of the outstanding shares of the
Berger IPT - 100 Fund, 81% of the outstanding shares of the Berger IPT
- - Growth and Income Fund and 85% of the outstanding
-42-<PAGE>
shares of the Berger IPT - Small Company Growth Fund, were held by
Berger Associates, a Delaware corporation, which provided the initial
capital necessary to establish the Trust. Berger Associates may also
acquire shares of the Berger/BIAM IPT - International Fund to provide
it with start-up capital. As a result of its share ownership, Berger
Associates may be deemed to control each of those Funds and the Trust.
As of December 31, 1996, there was one other shareholder that owned
more than 5% of the outstanding shares of any of the Funds: Great
American Reserve Insurance Company, 11815 N. Pennsylvania Street,
Carmel, Indiana 46032, which owned 22%, 19% and 15% of the Berger IPT
- - 100 Fund, the Berger IPT - Growth and Income Fund and the Berger IPT
- - Small Company Growth Fund, respectively.
DISTRIBUTION
The Distributor is the principal underwriter of the shares of the
Funds. The Distributor is a registered broker-dealer under the
Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The Distributor acts as the
agent of the Funds in connection with the sale of their shares in all
states in which the shares are eligible for sale and in which the
Distributor is qualified as a broker-dealer.
The Trust, on behalf of each Fund, and the Distributor are
parties to a Distribution Agreement that continues through April 30,
1999, and thereafter from year to year if such continuation is
specifically approved at least annually by the trustees or by vote of
a majority of the outstanding shares of the Fund and in either case by
vote of a majority of the trustees of the Trust who are not
"interested persons" (as that term is defined in the Investment
Company Act of 1940) of the Trust or the Distributor. The
Distribution Agreement is subject to termination by a Fund or the
Distributor on 60 days' prior written notice, and terminates
automatically in the event of its assignment. Under the Distribution
Agreement, the Distributor continuously offers the shares of the Funds
and solicits orders to purchase Fund shares at net asset value.
OTHER INFORMATION
Davis, Graham & Stubbs LLP, 370 Seventeenth Street, Denver,
Colorado, acts as counsel to the Trust and the Funds.
Price Waterhouse LLP, 950 Seventeenth Street, Denver, Colorado,
acted as independent accountants for the Trust and each of the Funds
in existence for the period May 1, 1996 (date operations commenced) to
December 31, 1996.
The Trust has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement under the Securities Act of
1933, as amended, with respect to the securities of the Funds, of
which this Statement of Additional Information is a part. If further
information is desired with respect to any of the Funds or such
securities, reference is made to the Registration Statement and the
exhibits filed as a part thereof.
FINANCIAL STATEMENTS
The statements of assets and liabilities, including the schedules
of investments, and the related statements of operations and of
changes in net assets and the financial highlights for the Berger IPT
- - 100 Fund, the Berger IPT - Growth and Income Fund and
-43-<PAGE>
the Berger IPT - Small Company Growth Fund for the period May 1, 1996
(date operations commenced) to December 31, 1996, and the Report of
Independent Accountants thereon dated January 27, 1997, are
incorporated by reference into this Statement of Additional
Information from the Annual Report to Shareholders dated December 31,
1996, for each of those Funds. A copy of the 1996 Annual Report for
each of those Funds is enclosed with this Statement of Additional
Information.
-44-<PAGE>
APPENDIX A
HIGH-YIELD/HIGH RISK CONVERTIBLE BONDS
The Funds may purchase securities which are convertible into
common stock when the Funds' management believes they offer the
potential for a higher total return than nonconvertible securities.
While fixed income securities generally have a priority claim on a
corporation's assets over that of common stock, some of the
convertible securities which the Funds may hold are high-yield/high-
risk securities that are subject to special risks, including the risk
of default in interest or principal payments which could result in a
loss of income to a Fund or a decline in the market value of the
securities. Convertible securities often display a degree of market
price volatility that is comparable to common stocks.
Specifically, corporate debt securities which are below
investment grade (securities rated Ba or lower by Moody's or BB or
lower by Standard & Poor's) and unrated securities which a Fund may
purchase and hold are subject to a higher risk of non-payment of
principal or interest, or both, than higher grade debt securities.
Generally speaking, the lower the quality of a debt security (which
may be reflected in its Moody's and/or Standard & Poor's ratings), the
higher the yield it will provide, but the greater the risk that
interest or principal payments will not be made when due. Thus, the
lower the grade of a security, the more speculative characteristics it
generally has. Information about the ratings of Moody's and Standard
& Poor's, and the investment risks associated with the various
ratings, is set forth below.
The market prices of these lower grade convertible securities are
generally less sensitive to interest rate changes than higher-rated
investments, but more sensitive to economic changes or individual
corporate developments. Periods of economic uncertainty and change
can be expected to result in volatility of prices of these securities.
Lower rated securities also may have less liquid markets than higher
rated securities, and their liquidity as well as their value may be
adversely affected by poor economic conditions. Adverse publicity and
investor perceptions as well as new or proposed laws may also have a
negative impact on the market for high-yield/high-risk bonds.
CORPORATE BOND RATINGS
The ratings of fixed-income securities by Moody's and Standard &
Poor's are a generally accepted measurement of credit risk. However,
they are subject to certain limitations. Ratings are generally based
upon historical events and do not necessarily reflect the future. In
addition, there is a period of time between the issuance of a rating
and the update of the rating, during which time a published rating may
be inaccurate.
-45-<PAGE>
KEY TO MOODY'S CORPORATE RATINGS
Aaa-Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are protected
by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa-Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than in Aaa securities.
A-Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa-Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba-Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate
and thereby not well safeguarded during good and bad times over the
future. Uncertainty of position characterizes bonds of this class.
B-Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
Caa-Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with
respect to principal or interest.
Ca-Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
-46-<PAGE>
C-Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each
generic rating classification from Aa through B in its corporate bond
rating system. The modifier 1 indicates that the security ranks in
the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end of its generic category.
KEY TO STANDARD & POOR'S CORPORATE RATINGS
AAA-Debt rated AAA has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA-Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small
degree.
A-Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB-Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions, or
changing circumstances are more likely to lead to a weakened capacity
to pay interest and repay principal for debt in this category than in
higher rated categories.
BB, B, CCC, CC AND C-Debt rated BB, B, CCC, CC and C is regarded,
on balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation and C the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are out-weighed by the
large uncertainties or major risk exposures to adverse conditions.
C1-The rating C1 is reserved for income bonds on which no
interest is being paid.
D-Debt rated D is in default, and payment of interest and/or
repayment of principal is in arrears.
PLUS (+) OR MINUS (-)-The ratings from "AA" to "CCC" may be
modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.
-47-
<PAGE>
PART C. OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits:
---------------------------------
(a) Financial Statements.
--------------------
In Part A of the Registration Statement (Prospectus) for
Berger IPT - 100 Fund, Berger IPT - Growth and Income Fund
and Berger IPT - Small Company Growth Fund:
1. Financial Highlights for the Period May 1, 1996 (Date
Operations Commenced) to December 31, 1996
Included in Part B of this Registration Statement (Statement
of Additional Information) for the Berger IPT - 100 Fund,
Berger IPT - Growth and Income Fund and Berger IPT - Small
Company Growth Fund:
1. Report of Independent Accountants, dated January 27,
1997
2. Schedules of Investments as of December 31, 1996
3. Statements of Assets and Liabilities as of December 31,
1996
4. Statements of Operations for the Period May 1, 1996
(Date Operations Commenced) to December 31, 1996
5. Statements of Changes in Net Assets for the Period May
1, 1996 (Date Operations Commenced) to December 31,
1996
6. Notes to Financial Statements, December 31, 1996
7. Financial Highlights for the Period May 1, 1996 (Date
Operations Commenced) to December 31, 1996
In Part C of the Registration Statement:
None.
(b) Exhibits.
--------
The Exhibit Index following the signature pages below is
incorporated herein by reference.
Item 25. Persons Controlled by or Under Common Control With
Registrant
--------------------------------------------------
On the date that this amendment to the Registration
Statement becomes effective, Berger Associates, Inc., a Delaware
corporation, will own a majority of the outstanding shares of the
Registrant, having provided all the initial seed capital to
C-1
<PAGE>
establish the Registrant. Consequently, Berger Associates will be a
control person of the Registrant. Berger Associates will continue to
be a control person of the Registrant so long as it holds more than
25% of the Registrant's outstanding shares, as the term "control" is
defined in the Investment Company Act of 1940. So long as the
Registrant is controlled by Berger Associates, it will be under common
control with the other companies controlled by Berger Associates'
corporate parent, Kansas City Southern Industries, Inc. ("KCSI"). See
"Management and Investment Advice" in the Prospectus and "Investment
Advisor" in the Statement of Additional Information for more
information on KCSI and its affiliates.
Item 26. Number of Holders of Securities
-------------------------------
The number of record holders of shares of beneficial
interest in the series of Registrant's shares outstanding as of April
1, 1997, was as follows:
Series or Fund Number of Holders
of Shares
Berger IPT - 100 Fund 3
Berger IPT - Growth and Income Fund 2
Berger IPT - Small Company Growth Fund 3
Berger/BIAM IPT - International Fund 0
Item 27. Indemnification
---------------
Article IX, Section 2 of the Trust Instrument for Berger
Institutional Products Trust (the "Trust"), provides for
indemnification of certain persons acting on behalf of the Trust to
the fullest extent permitted by the law. In general, trustees,
officers, employees, managers and agents will be indemnified against
liability and against all expenses incurred by them in connection with
any claim, action, suit or proceeding (or settlement thereof) in which
they become involved by virtue of their Trust office, unless their
conduct is determined to constitute willful misfeasance, bad faith,
gross negligence or reckless disregard of their duties, or unless it
has been determined that they have not acted in good faith in the
reasonable belief that their actions were in or not opposed to the
best interests of the Trust. The Trust also may advance money for
these expenses, provided that the trustees, officers, employees,
managers or agents undertake to repay the Trust if their conduct is
later determined to preclude indemnification. The Trust has the power
to purchase insurance on behalf of its trustees, officers, employees,
managers and agents, whether or not it would be permitted or required
to indemnify them for any such liability under the Trust Instrument or
applicable law, and the Trust has purchased and
C-2
<PAGE>
maintains an insurance policy covering such persons against certain
liabilities incurred in their official capacities.
Item 28. Business and Other Connections of Investment Advisor
----------------------------------------------------
The business of Berger Associates, Inc., the investment
advisor of the Berger IPT - 100 Fund, the Berger IPT - Growth and
Income Fund and the Berger IPT - Small Company Growth Fund is
described in the Prospectus in Section 6 and in the Statement of
Additional Information in Section 4 which are included in this
Registration Statement. Information relating to the business and
other connections of the officers and directors of Berger Associates
(current and for the past two years) is listed in Schedules A and D of
Berger Associates' Form ADV as filed with the Securities and Exchange
Commission (File No. 801-9451, dated February 28, 1997), which
information from such schedules is incorporated herein by reference.
The business of BBOI Worldwide LLC ("BBOI Worldwide"), the
investment advisor of the Berger/BIAM IPT - International Fund, is
described in the Prospectus in Section 6 and in the Statement of
Additional Information in Section 4 which are included in this
Registration Statement. Information relating to the business and
other connections of the officers and managers of BBOI Worldwide
(current and for the past two years) is listed in Schedules A and D of
BBOI Worldwide's Form ADV as filed with the Securities and Exchange
Commission (File No. 801-52264, dated March 26, 1997), which
information from such schedules is incorporated herein by reference.
The business of Bank of Ireland Asset Management (U.S.)
Limited ("BIAM"), the sub-advisor to the Berger/BIAM IPT -
International Fund, is also described in Section 6 of the Prospectus
and in Section 4 of the Statement of Additional Information.
Information relating to the business and other connections of the
officers and directors of BIAM (current and for the past two years) is
listed in Schedules A and D of BIAM's Form ADV as filed with the
Securities and Exchange Commission (File No. 801-29606, dated March
26, 1997), which information from such schedules is incorporated
herein by reference.
Item 29. Principal Underwriters
----------------------
(a) Investment companies (other than the Registrant) for
which the Registrant's principal underwriter also acts as principal
underwriter:
The One Hundred Fund, Inc.
Berger One Hundred and One Fund, Inc.
Berger Investment Portfolio Trust
- --Berger Small Company Growth Fund
- --Berger New Generation Fund
Berger/BIAM Worldwide Funds Trust
- --Berger/BIAM International Fund
C-3<PAGE>
- --Berger/BIAM International Institutional Fund
- --Berger/BIAM International CORE Fund
Berger Omni Investment Trust
- --Berger Small Cap Value Fund
(b) For Berger Distributors, Inc.:
Name Positions and Positions and
Offices with Offices with
Underwriter Registrant
Craig D. Cloyed President and Director None
David G. Mertens Vice President and Director None
David J. Schultz Chief Financial Officer,
Secretary and Treasurer Assistant
Treasurer
Brian S. Ferrie Chief Compliance Officer None
Kevin R. Fay Director Vice President,
Secretary and
Treasurer
The principal business address of Mr. Mertens is 1850 Parkway
Place, Suite 420, Marietta, GA 30067. The principal business address
of each of the other persons in the table above is 210 University
Blvd., Suite 900, Denver, CO 80206.
(c) Not applicable.
Item 30. Location of Accounts and Records
--------------------------------
The accounts, books and other documents required to be maintained
by Section 31(a) of the 1940 Act and the rules promulgated thereunder
are maintained as follows:
(a) Shareholder records are maintained by the Registrant's
sub-transfer agent, DST Systems, Inc., P.O.
Box 419958, Kansas City, MO 64141;
(b) Accounting records relating to cash and other money
balances; asset, liability, reserve, capital, income
and expense accounts; portfolio securities; purchases
and sales; and brokerage commissions are maintained by
the Registrant's Recordkeeping and Pricing Agent,
Investors Fiduciary Trust Company ("IFTC"), 127 West
10th Street, Kansas City, Missouri 64105. Other
records of the Registrant relating to purchases
C-4<PAGE>
and sales; the Trust Instrument, minute books and
other trust records; brokerage orders; performance
information and other records are maintained at the
offices of the Registrant at 210 University Boulevard,
Suite 900, Denver, Colorado 80206.
(c) Certain records relating to day-to-day portfolio
management of the Berger/BIAM IPT - International Fund
are kept at Bank of Ireland Asset Management (U.S.)
Limited, 26 Fitzwilliam Street, Dublin 2, Ireland; or
at Bank of Ireland Asset Management (U.S.) Limited, 2
Greenwich Plaza, Greenwich, Connecticut 06830.
Item 31. Management Services
-------------------
The Registrant has no management-related service contract
which is not discussed in Parts A and B of this form. See Section 7
of the Prospectus and Section 5 of the Statement of Additional
Information for a discussion of the Recordkeeping and Pricing Agent
Agreement entered into between the Registrant and IFTC and the
Administrative Services Agreements entered into between the Registrant
and Berger Associates, Inc., and between the Registrant and BBOI
Worldwide LLC, investment advisors to various series of the
Registrant.
Item 32. Undertakings
------------
(a) Registrant hereby undertakes to file a post-effective
amendment, containing reasonably current financial statements relating
to the Berger/BIAM IPT - International Fund (which need not be
certified) within four to six months of the later of the effective
date of this amendment to the Registration Statement or commencement
of operations of such Fund.
(b) Registrant undertakes to comply with the following
policy with respect to calling meetings of shareholders for the
purpose of voting upon the removal of any trustee of the Registrant
and facilitating shareholder communications related to such meetings:
1. The trustees will promptly call a meeting of
shareholders for the purpose of voting upon the removal of any trustee
of the Registrant when requested in writing to do so by the record
holders of at least 10% of the outstanding shares of the Registrant.
2. Whenever ten or more shareholders of record who have
been shareholders of the Registrant for at least six months, and who
hold in the aggregate either shares having a net asset value of at
least $25,000 or at least 1% of the outstanding shares of the
Registrant, whichever is less, apply to the trustees in writing
stating that they wish to communicate with other shareholders with a
view to obtaining signatures to request such a
C-5<PAGE>
meeting, and deliver to the trustees a form of communication and
request which they wish to transmit, the trustees within 5 business
days after receipt of such application either will (i) give such
applicants access to a list of the names and addresses of all
shareholders of record of the Registrant, or (ii) inform such
applicants of the approximate number of shareholders of record and the
approximate cost of mailing the proposed communication and form of
request.
3. If the trustees elect to follow the course specified
in clause (ii), above, the trustees, upon the written request of such
applicants accompanied by tender of the material to be mailed and the
reasonable expenses of the mailing, will, with reasonable promptness,
mail such material to all shareholders of record, unless within 5
business days after such tender the trustees shall mail to such
applicants and file with the Securities and Exchange Commission (the
"Commission"), together with a copy of the material requested to be
mailed, a written statement signed by at least a majority of the
trustees to the effect that in their opinion either such material
contains untrue statements of fact or omits to state facts necessary
to make the statements contained therein not misleading, or would be
in violation of applicable law, and specifying the basis of such
opinion.
4. If the Commission enters an order either refusing to
sustain any of the trustees' objections or declaring that any
objections previously sustained by the Commission have been resolved
by the applicants, the trustees will cause the Registrant to mail
copies of such material to all shareholders of record with reasonable
promptness after the entry of such order and the renewal of such
tender.
(c) The Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of Registrant's latest
annual report to shareholders, upon request and without charge.
C-6<PAGE>
SIGNATURES
------------
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has duly caused
this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City and
County of Denver, and State of Colorado, on the 18th day of April,
1997.
BERGER INSTITUTIONAL PRODUCTS TRUST
-----------------------------------
(Registrant)
By/s/ Gerard M. Lavin
-----------------------------------
Name: Gerard M. Lavin
------------------------------
Title: President
-----------------------------
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Gerard M. Lavin President (Principal April 18, 1997
- --------------------
Gerard M. Lavin Executive Officer)
and Trustee
/s/ Kevin R. Fay Vice President, April 18, 1997
- --------------------
Kevin R. Fay Secretary and
Treasurer (Principal
Financial and
Accounting Officer)
/s/Dennis E. Baldwin* Trustee April 18, 1997
- --------------------
Dennis E. Baldwin
/s/William M.B. Berger* Trustee April 18, 1997
- -------------------
William M.B. Berger
/s/Louis R. Bindner* Trustee April 18, 1997
- -------------------
Louis R. Bindner
/s/Katherine A. Cattanach* Trustee April 18, 1997
- -------------------
Katherine A. Cattanach
C-7<PAGE>
/s/Lucy Black Creighton* Trustee April 18, 1997
- ------------------------
Lucy Black Creighton
/s/Paul R. Knapp* Trustee April 18, 1997
- ------------------------
Paul R. Knapp
/s/Harry T. Lewis, Jr.* Trustee April 18, 1997
- ------------------------
Harry T. Lewis, Jr.
/s/Michael Owen* Trustee April 18, 1997
- ------------------------
Michael Owen
/s/William Sinclaire* Trustee April 18, 1997
- ------------------------
William Sinclaire
/s/ Gerard M. Lavin
- ------------------------
*By: Gerard M. Lavin,
Attorney-in-fact
C-8<PAGE>
EXHIBIT INDEX
N-1A EDGAR
Exhibit Exhibit
No. No. Name of Exhibit
_____________ __________ _______________
(1) Exhibit 1 Trust Instrument
(1) Exhibit 2 Bylaws
Exhibit 3 Not Applicable
Exhibit 4 Not Applicable
(1) Exhibit 5.1 Form of Investment Advisory
Agreement for Berger IPT -
100 Fund
(1) Exhibit 5.2 Form of Investment Advisory
Agreement for Berger IPT -
Growth and Income Fund
(1) Exhibit 5.3 Form of Investment Advisory
Agreement for Berger IPT -
Small Company Growth Fund
* Exhibit 5.4 EX-99.B5.4 Form of Investment Advisory
Agreement for Berger/BIAM
IPT - International Fund
* Exhibit 5.5 EX-99.B5.5 Form of Sub-Advisory
Agreement for Berger/BIAM
IPT - International Fund
(2) Exhibit 6 Distribution Agreement
between Berger Institutional
Products Trust and Berger
Distributors, Inc.
Exhibit 7 Not Applicable
(1) Exhibit 8 Form of Custody Agreement
(1) Exhibit 9.1.1 Form of Administrative
Services Agreement for
Berger IPT - 100 Fund
(1) Exhibit 9.1.2 Form of Administrative
Services Agreement for
Berger IPT - Growth and
Income Fund
(1) Exhibit 9.1.3 Form of Administrative
Services Agreement for
Berger IPT - Small Company
Growth Fund
* Exhibit 9.1.4 EX-99.B9.1.4 Form of Administrative
Services Agreement for
Berger/BIAM IPT -
International Fund
* Exhibit 9.1.5 EX-99.B9.1.5 Form of Sub-Administration
Agreement for Berger/BIAM
IPT - International Fund
(1) Exhibit 9.2 Form of Recordkeeping and
Pricing Agent Agreement
(1) Exhibit 9.3 Form of Agency Agreement
(1) Exhibit 9.4 Form of Participation
Agreement between Berger
Institutional Products
Trust, Berger Associates,
Inc. and Great American
Reserve Insurance Company
(2) Exhibit 9.5 Form of Participation
Agreement between Berger
Institutional Products
Trust, Berger Associates,
Inc. and Ameritas Life
Insurance Company
* Exhibit 9.6 EX-99.B9.6 Form of Participation
Agreement between Berger
Institutional Products
C-9<PAGE>
Trust, BBOI Worldwide LLC
and Great American Reserve
Insurance Company
* Exhibit 9.7 EX-99.B9.7 Form of Participation
Agreement between Berger
Institutional Products
Trust, Berger Associates,
Inc., Berger Distributors,
Inc., Charles Schwab & Co.
Inc. and Great-West Life &
Annuity Insurance Company
* Exhibit 9.8 EX-99.B9.8 Form of Participation
Agreement between Berger
Institutional Products
Trust, Berger Associates,
Inc., Berger Distributors,
Inc., Charles Schwab & Co.
Inc. and First Great-West
Life & Annuity Insurance
Company
* Exhibit 9.9 EX-99.B9.9 Form of Participation
Agreement between Berger
Institutional Products
Trust, BBOI Worldwide LLC
and Canada Life Insurance
Company of America
* Exhibit 9.10 EX-99.B9.10 Form of Participation
Agreement between Berger
Institutional Products
Trust, BBOI Worldwide LLC
and Canada Life Insurance
Company of New York
* Exhibit 9.11 EX-99.B9.11 Form of Participation
Agreement between Berger
Institutional Products
Trust, Berger Associates,
Inc. and Prudential
Insurance Company of America
* Exhibit 9.12 EX-99.B9.12 Form of Participation
Agreement between Berger
Institutional Products
Trust, BBOI Worldwide LLC
and Prudential Insurance
Company of America
(1) Exhibit 10 Opinion and consent of
Davis, Graham & Stubbs LLP
* Exhibit 11 EX-99.B11 Consent of Price Waterhouse
LLP
Exhibit 12 Not Applicable
(1) Exhibit 13 Investment Letter from
Initial Stockholder
Exhibit 14 Not Applicable
Exhibit 15 Not Applicable
(1) Exhibit 16 Schedule for Computation of
Performance Data
(2) Exhibit 17.1 Financial Data Schedule for
Berger IPT - 100 Fund
(2) Exhibit 17.2 Financial Data Schedule for
Berger IPT - Growth and
Income Fund
(2) Exhibit 17.3 Financial Data Schedule for
Berger IPT - Small Company
Growth Fund
** Exhibit 17.4 Financial Data Schedule for
Berger/BIAM IPT -
International Fund
C-10<PAGE>
Exhibit 18 Not Applicable
_______________________
* Filed herewith.
** Not required until financial statements are required
for this series.
(1) Previously filed on April 18, 1996, with Pre-Effective
Amendment No. 1 to the Registrant's Registration
Statement on Form N-1A and incorporated herein by
reference.
(2) Previously filed on February 14, 1997, with Post-
Effective Amendment No. 2 to the Registrant's
Registration Statement on Form N-1A and incorporated
herein by reference.
C-11
EXHIBIT 5.4
INVESTMENT ADVISORY AGREEMENT
(BBOI WORLDWIDE LLC/BERGER INSTITUTIONAL PRODUCTS TRUST)
WITH RESPECT TO THE
BERGER/BIAM IPT - INTERNATIONAL FUND
This INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this
_____ day of _____________, 1997, between BBOI WORLDWIDE LLC, a
Delaware limited liability company ("BBOI Worldwide"), and BERGER
INSTITUTIONAL PRODUCTS TRUST, a Delaware business trust (the "Trust"),
with respect to BERGER/BIAM IPT - INTERNATIONAL FUND (the "Fund"), a
series of the Trust.
RECITALS
A. The Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the
"1940 Act").
B. The Trust is authorized to create separate series of
interests in the Trust, each with its own separate investment
portfolio, and has created the Fund as one such series.
C. The Trust and BBOI Worldwide deem it mutually advantageous
that BBOI Worldwide should be appointed to assume responsibility for
the day-to-day management of the Fund and of the securities in the
Fund in accordance with the terms and conditions of this Agreement.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Appointment. The Trust hereby appoints BBOI Worldwide as
-----------
investment advisor and manager with respect to the Fund for the period
and on the terms set forth in this Agreement. BBOI Worldwide hereby
accepts such appointment and agrees to render the services herein set
forth, for the compensation herein provided.
2. Investment Advisory Services. BBOI Worldwide undertakes to
----------------------------
act as investment advisor to the Fund and to discharge the following
duties, subject to the oversight of the Trustees of the Trust:
(a) to manage the investment operations of the Fund and the
composition of its investment portfolio, and to determine,
without prior consultation with the Trust, what securities
and other assets of the Fund will be acquired, held,
disposed of or loaned, in conformity with the investment
objective, policies and restrictions and the other
statements concerning the Fund in the Trust's Trust
Instrument, Bylaws and
<PAGE>
registration statement under the Investment Company Act of
1940 (the "1940 Act"), the Investment Advisers Act of 1940
("Advisers Act"), the rules thereunder, any orders issued to
the Trust by the Securities and Exchange Commission, and all
other applicable federal and state laws and regulations, and
to the provisions of the Internal Revenue Code of 1986, as
amended from time to time, as applicable to the Fund as a
regulated investment company under Subchapter M or as
required to maintain compliance with any diversification
provisions applicable to insurance company separate accounts
or qualified plans investing in the Fund;
(b) to cause its officers to attend meetings and furnish oral or
written reports, as the Trust may reasonably require, in
order to keep the Trustees and appropriate officers of the
Trust fully informed as to the condition of the investment
portfolio of the Fund, the investment decisions of BBOI
Worldwide, and the investment considerations which have
given rise to those decisions;
(c) to place orders for the purchase and sale of securities for
investments of the Fund and for other related transactions;
to give instructions to the custodian (including any
subcustodian) of the Fund as to deliveries of securities to
and from such custodian and receipt and payments of cash for
the account of the Fund, and advise the Trust on the same
day such instructions are given; to submit such reports
relating to the valuation of the Fund's assets and to
otherwise assist in the calculation of the net asset value
of interests in the Fund as may reasonably be requested; on
behalf of the Fund, to exercise such voting rights,
subscription rights, rights to consent to corporate action
and any other rights pertaining to the Fund's assets that
may be exercised, in accordance with any policy pertaining
to the same that may be adopted or agreed to by the Trustees
of the Trust, or, in the event that the Trust retains the
right to exercise such voting and other rights, to furnish
the Trust with advice as to the manner in which such rights
should be exercised;
(d) to maintain all books and records required to be maintained
by BBOI Worldwide pursuant to the 1940 Act and the rules and
regulations promulgated thereunder, as the same may be
amended from time to time, with respect to transactions on
behalf of the Fund, and to furnish the Trustees with such
periodic and special reports as the Trustees reasonably may
request. BBOI Worldwide hereby agrees that all records
which it maintains for the Fund or the Trust are the
property of the Trust, agrees to permit the reasonable
inspection thereof by the Trust or its designees and agrees
to preserve for the periods prescribed under the 1940 Act
any records which it maintains for the Trust and which are
required to be maintained under the 1940 Act, and further
agrees to surrender promptly to the Trust or its designees
any records which it maintains for the Trust upon request by
the Trust; and
(e) at such times as shall be reasonably requested by the
Trustees, to provide the Trustees with economic, operational
and investment data and reports, including without
-2-
<PAGE>
limitation all information and materials reasonably requested by or
requested to be delivered to the Trustees of the Trust pursuant to
Section 15(c) of the 1940 Act, and to make available to the Trustees
any economic, statistical and investment services normally available
to similar investment company clients of BBOI Worldwide.
3. Managerial and Administrative Services. BBOI Worldwide
--------------------------------------
shall perform, or arrange for the performance of, all managerial and
administrative services necessary for the operation of the Fund,
subject to the monitoring of the Trustees of the Trust, including but
not limited to:
(a) providing the Fund with office space, personnel, equipment
and facilities for maintaining its organization;
(b) on behalf of the Fund, supervising relations with, and
monitoring the performance of custodians, subcustodians,
depositories, transfer and pricing agents, accountants,
attorneys, placement agents, insurers and other persons in
any capacity deemed to be necessary or desirable;
(c) preparing all general investor communications, including
investor reports;
(d) providing personnel and assistance necessary to maintain the
registration, qualification or exemption to sell interests
under the federal securities laws and in each state where
BBOI Worldwide has determined such registration,
qualification or exemption to be advisable;
(e) monitoring the Fund's compliance with, insofar as they
relate to the Fund, (i) the Trust's Trust Instrument, Bylaws
and currently effective registration statement under the
1940 Act and any amendments or supplements thereto
("Registration Statement"); (ii) the written policies,
procedures and guidelines of the Fund, and written
instructions from the Trustees of the Trust based on
resolutions duly adopted by the Trustees; (iii) the
requirements of the Securities Act of 1933, the 1940 Act,
the Advisers Act, the rules thereunder, and all other
applicable federal and state laws and regulations; and (iv)
the provisions of Subchapter M of the Internal Revenue Code,
if applicable to any of the investors investing in the Fund;
(f) arranging for and supervising the preparation of any or all
registration statements, tax returns, proxy materials,
financial statements, notices and reports for filings with
regulatory authorities and distribution to holders of
interests in the Fund;
(g) conducting investor relations;
(h) maintaining the Fund's existence and its records; and
-3-
<PAGE>
(i) investigating the development of and developing and
implementing, if appropriate, management and investor
services designed to enhance the value or convenience of the
Fund as an investment vehicle.
4. Further Obligations. In all matters relating to the
-------------------
performance of this Agreement, BBOI Worldwide shall act in conformity
with the Trust's Trust Instrument, Bylaws and Registration Statement
and with the written policies, procedures and guidelines of the Fund,
and written instructions from the Trustees of the Trust based on
resolutions duly adopted by the Trustees, and comply with the
requirements of the 1940 Act, the Advisers Act, the rules thereunder,
and all other applicable federal and state laws and regulations. The
Trust agrees to provide to BBOI Worldwide copies of the Trust's Trust
Instrument, Bylaws, Registration Statement, written policies,
procedures and guidelines and written instructions of the Trustees
based on resolutions duly adopted by the Trustees, and any amendments
or supplements to any of them at, or, if practicable, before the time
such materials become effective. BBOI Worldwide may perform its
services through any qualified employee, officer or agent of BBOI
Worldwide, and the Trust shall not be entitled to the efforts, advice,
recommendations or judgment of any specific person.
5. Obligations of the Trust. The Trust shall have the
------------------------
following obligations under this Agreement:
(a) to keep BBOI Worldwide continuously and fully informed (or
cause the custodian of the Fund's assets to keep BBOI
Worldwide so informed) as to the composition of the
investment portfolio of the Fund, cash requirements and cash
available for investment in the Fund and the nature of all
of the Fund's assets and liabilities;
(b) to furnish BBOI Worldwide with a certified copy of any
financial statement or report prepared for the Fund by
certified or independent public accountants and with copies
of any financial statements or reports made to the Fund's
investors or to any governmental body or securities
exchange;
(c) to furnish BBOI Worldwide with any further materials or
information which BBOI Worldwide may reasonably request to
enable it to perform its function under this Agreement; and
(d) to compensate BBOI Worldwide for its services and in
accordance with the provisions of Section 6 hereof.
6. Compensation. The Trust shall pay to BBOI Worldwide for its
------------
services under this Agreement a fee, payable in United States dollars,
at an annual rate of 0.90% of the average daily net asset value of the
Fund. This fee shall be computed and accrued daily and payable
monthly on the last day of each month during which or part of which
this Agreement is in effect. BBOI Worldwide reserves the right to
waive or reimburse all or any portion of its fees hereunder.
-4-
<PAGE>
7. Expenses and Excluded Expenses. BBOI Worldwide shall pay
------------------------------
all its own costs and expenses incurred in rendering the services
required under this Agreement. Notwithstanding any other provision
hereof, it is expressly agreed that BBOI Worldwide shall not be
responsible to pay, directly or on behalf of the Fund, any of the
Fund's expenses, which shall remain the Trust's own obligation and
responsibility to pay, including without limitation: (a) expenses of
registering the Trust with securities authorities, or registration or
filing fees incurred in the registration, qualification or exemption
of interests in the Fund with securities authorities; (b) compensation
(including reimbursement of expenses) of the Trustees of the Trust who
are not "interested persons" as defined in the 1940 Act; (c) expenses
of preparing, printing and mailing reports, notices, proxy materials
and other required communications to investors in the Fund; (d) all
expenses incidental to holding meetings of the Trustees of the Trust
and of investors in the Fund, including proxy solicitations therefor;
(e) legal and audit expenses; (f) insurance premiums for fidelity and
other coverage; (g) brokerage commissions and other costs in
connection with the purchase and sale of securities and other assets
of the Fund; (h) custodian, transfer agent, recordkeeping and pricing
agent fees and expenses; (i) interest and taxes; and (j) such non-
recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Trust is a
party and the legal obligation which the Trust may have to indemnify
its Trustees and officers with respect thereto.
8. Brokerage Commissions. For purposes of this Agreement,
---------------------
brokerage commissions paid by the Fund upon the purchase or sale of
its portfolio securities shall be considered a cost of securities of
the Fund and shall be paid by the Fund. Absent instructions from the
Trust to the contrary, BBOI Worldwide shall place all orders for the
purchase and sale of securities for the Fund with brokers and dealers
selected by BBOI Worldwide. BBOI Worldwide is authorized and directed
to place portfolio transactions for the Fund only with brokers and
dealers who render satisfactory service in the execution of orders at
the most favorable prices and at reasonable commission rates,
provided, however, that BBOI Worldwide may pay a broker an amount of
commission for effecting a securities transaction in excess of the
amount of commission another broker would have charged for effecting
that transaction if BBOI Worldwide determines in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker viewed in
terms of either that particular transaction or the overall
responsibilities of BBOI Worldwide. BBOI Worldwide is also authorized
to consider sales of variable insurance contracts that permit
allocation of contract values to the Fund as a factor in selecting
broker-dealers to execute portfolio transactions for the Fund. In
placing portfolio business with such broker-dealers, BBOI Worldwide
shall seek the best execution of each transaction. Subject to the
terms of this Agreement and the applicable requirements and provisions
of the law, including the 1940 Act and the Securities Exchange Act of
1934, as amended, and in the event that BBOI Worldwide or an affiliate
is registered as a broker-dealer, BBOI Worldwide may select a broker
with which it or any of its affiliates or the Fund is affiliated.
BBOI Worldwide or such affiliated broker may effect or execute Fund
securities transactions on an agency basis, whether on a securities
exchange or in the over-the-counter market, and receive compensation
from the Fund therefor. Notwithstanding the foregoing, the Trust
shall retain the right to direct the placement of all portfolio
transactions, and the Trustees of the Trust may establish policies or
guidelines to be followed by BBOI Worldwide in placing portfolio
transactions for the Fund pursuant to the foregoing provisions. BBOI
Worldwide shall
-5-
<PAGE>
report on the placement of portfolio transactions in the prior fiscal
quarter at each quarterly meeting of such Trustees. To the extent
consistent with applicable law, purchase or sell orders for the Fund
may be aggregated with simultaneous purchase or sell orders for other
clients of BBOI Worldwide. Whenever BBOI Worldwide simultaneously
places orders to purchase or sell the same security on behalf of the
Fund and one or more other clients of BBOI Worldwide, such orders will
be allocated as to price and amount among all such clients in a manner
reasonably believed by BBOI Worldwide to be fair and equitable to each
client. The Trust recognizes that in some cases, this procedure may
adversely affect the results obtained for the Fund.
9. Representations of BBOI Worldwide. BBOI Worldwide hereby
---------------------------------
represents, warrants and covenants as follows:
(a) BBOI Worldwide: (i) is registered as an investment adviser
under the Advisers Act and will continue to be so registered
for so long as this Agreement remains in effect; (ii) is not
prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(iii) has met, and will continue to meet for so long as this
Agreement remains in effect, any other applicable federal or
state requirements, or the applicable requirement of any
regulatory or industry self-regulatory organization
necessary to be met in order to perform the services
contemplated by this Agreement; (iv) has the legal and
corporate authority to enter into and perform the services
contemplated by this Agreement; and (v) will immediately
notify the Trust of the occurrence of any event that would
disqualify BBOI Worldwide from serving as an investment
adviser of an investment company pursuant to Section 9(a) of
the 1940 Act or otherwise, and of the institution of any
administrative, regulatory or judicial proceeding against
BBOI Worldwide that could have a material adverse effect
upon BBOI Worldwide's ability to fulfill its obligations
under this Agreement.
(b) BBOI Worldwide has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the 1940
Act and will provide the Trust with a copy of such code of
ethics, together with evidence of its adoption. Within 45
days after the end of the last quarter of each fiscal year
of the Trust that this Agreement is in effect, BBOI
Worldwide shall certify to the Trust that BBOI Worldwide has
complied with the requirements of Rule 17j-1 during the
previous year and that there has been no violation of BBOI
Worldwide's code of ethics or, if such a violation has
occurred, that appropriate action was taken in response to
such violation. Upon the written request of the Trust, BBOI
Worldwide shall permit the Trust, its employees or its
agents to examine the reports required to be made to BBOI
Worldwide by Rule 17j-1(c)(1) and all other records relevant
to BBOI Worldwide's code of ethics.
(c) BBOI Worldwide has provided the Trust with a copy of its
Form ADV as most recently filed with the U.S. Securities and
Exchange Commission ("SEC") and will, promptly after filing
any amendment to its Form ADV with the SEC, furnish a copy
of such amendment to the Trust.
-6-
<PAGE>
(d) BBOI Worldwide will notify the Trust of any change or
proposed change in the identity or control of its members as
soon as known by BBOI Worldwide.
10. Term. This Agreement shall become effective as of the date
----
first set forth above and shall continue in effect until the last day
of April, 1999, unless sooner terminated in accordance with its terms,
and shall continue in effect from year to year thereafter only so long
as such continuance is specifically approved at least annually by the
vote of a majority of the Trustees of the Trust who are not parties
hereto or interested persons of the Trust or BBOI Worldwide, cast in
person at a meeting called for the purpose of voting on the approval
of the terms of such renewal, and by either the Trustees of the Trust
or the affirmative vote of a majority of the outstanding voting
securities of the Fund.
11. Termination. This Agreement may be terminated at any time,
-----------
without penalty, by the Trustees of the Trust, or by the holders of
interests in the Fund acting by vote of at least a majority of its
outstanding voting securities, provided in either case that 60 days'
advance written notice of termination be given to BBOI Worldwide at
its principal place of business. This Agreement may also be
terminated by the Trust: (i) upon material breach by BBOI Worldwide of
any of the representations and warranties set forth in Section 9 of
this Agreement, if such breach shall not have been cured within a 20-
day period after notice of such breach; or (ii) if BBOI Worldwide
becomes unable to discharge its duties and obligations under this
Agreement. This Agreement may be terminated by BBOI Worldwide at any
time, without penalty, by giving 60 days' advance written notice of
termination to the Trust, addressed to its principal place of
business.
12. Assignment and Amendments. This Agreement shall
-------------------------
automatically terminate in the event of its assignment. This
Agreement may be amended by the parties only in a written instrument
signed by all parties to this Agreement and only if such amendment is
specifically approved (i) by a majority of the Trustees, including a
majority of the Trustees who are not interested persons of the Trust
or BBOI Worldwide, and (ii) if required by applicable law, by the
affirmative vote of a majority of the outstanding voting securities of
the Fund. Notwithstanding the foregoing, the Trust's Registration
Statement and the written policies, procedures and guidelines, and
written instructions from the Trustees of the Trust based on
resolutions duly adopted by the Trustees referred to in Section 4
hereof may be amended by the Trust or the Trustees from time to time;
provided, however, that BBOI Worldwide shall not be obligated to
follow any such amendment until BBOI Worldwide has received such
amendment in writing from the Trust or the Trustees.
13. Delegation. Notwithstanding anything herein to the
----------
contrary, BBOI Worldwide may delegate any or all of its duties and
responsibilities under this Agreement to one or more parties subject
to the approval of the Trustees of the Trust and, if required by
applicable law, by the affirmative vote of a majority of the
outstanding voting securities of the Fund, pursuant in each case to a
written agreement with a party that, if applicable, meets the
requirements of Section 15 of the 1940 Act and the rules thereunder
applicable to contracts for service as an investment adviser of a
registered investment company, subject, however, to such exemptions as
may be granted by the Securities and Exchange Commission. No
delegation pursuant to this provision shall relieve BBOI
-7-
<PAGE>
Worldwide of its duties or responsibilities hereunder, and BBOI
Worldwide shall appropriately oversee, monitor and evaluate the
activities of any party appointed hereunder for the Fund.
14. Limitation on Personal Liability. NOTICE IS HEREBY GIVEN
--------------------------------
that the Trust is a business trust organized under the Delaware
Business Trust Act pursuant to a Certificate of Trust filed in the
office of the Secretary of State of the State of Delaware. All
parties to this Agreement acknowledge and agree that the Trust is a
series trust and all debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a
particular series shall be enforceable against the assets held with
respect to such series only, and not against the assets of the Trust
generally or against the assets held with respect to any other series
and further that no Trustee, officer or holder of shares of beneficial
interest of the Trust shall be personally liable for any of the
foregoing.
15. Limitation of Liability of BBOI Worldwide. BBOI Worldwide
-----------------------------------------
shall not be liable for any error of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission
taken with respect to the Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by
reason of reckless disregard of its obligations and duties hereunder
and except to the extent otherwise provided by law. BBOI Worldwide
shall be entitled to rely upon any written instructions from the
Trustees of the Trust based on resolutions duly adopted by the
Trustees and shall incur no liability to the Trust or the Fund in
acting upon such written instructions. As used in this section, "BBOI
Worldwide" shall include any affiliate of BBOI Worldwide performing
services for the Fund contemplated hereunder, the Sub-Advisor and the
Sub-Administrator as defined in Section 16 hereof, and managers,
directors, officers and employees of BBOI Worldwide and each of the
foregoing.
16. Indemnification. The Trust hereby indemnifies and holds
---------------
harmless BBOI Worldwide and its officers, managers, members, employees
and agents, and any controlling person thereof, and any person to whom
BBOI Worldwide has delegated any of its duties and responsibilities
pursuant to Section 13 hereof, including Bank of Ireland Asset
Management (U.S.) Limited, to which BBOI Worldwide has delegated its
duties and responsibilities specified in Section 2 of this Agreement
(the "Sub-Advisor") and Berger Associates, Inc., to which BBOI
Worldwide has delegated its duties and responsibilities specified in
Section 3 of this Agreement (the "Sub-Administrator"), from all
losses, charges, claims and liabilities, and all costs and expenses,
including without limitation reasonable attorneys' fees and
disbursements, arising from any action which BBOI Worldwide or the
Sub-Advisor or the Sub-Administrator takes or omits to take pursuant
to written instructions from the Trustees of the Trust based on
resolutions duly adopted by the Trustees, provided that no person
shall be indemnified hereunder against any liability to the Trust or
its shareholders (or any expenses incident to such liability) arising
out of their own willful misfeasance, bad faith or gross negligence in
the performance of their duties or by reason of their reckless
disregard of their duties or obligations under this Agreement.
BBOI Worldwide hereby indemnifies and holds harmless the Trust
and its Trustees, officers, shareholders, employees and agents, and
any controlling person thereof, from all losses, charges,
-8-
<PAGE>
claims and liabilities, and all costs and expenses, including without
limitation reasonable attorneys' fees and disbursements, arising out
of BBOI Worldwide's or the Sub-Advisor's or the Sub-Administrator's
willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its duties or
obligations under this Agreement, provided that no person shall be
indemnified hereunder against any liability to the Trust or its
shareholders (or any expenses incident to such liability) arising out
of their own willful misfeasance, bad faith or gross negligence in the
performance of their duties or by reason of their reckless disregard
of their duties or obligations under this Agreement.
17. Activities of BBOI Worldwide. The services of BBOI
----------------------------
Worldwide hereunder are not to be deemed to be exclusive, and BBOI
Worldwide is free to render services to other parties, so long as its
services under this Agreement are not materially adversely affected or
otherwise impaired thereby. Nothing in this Agreement shall limit or
restrict the right of any manager, officer or employee of BBOI
Worldwide to engage in any other business or to devote his or her time
and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature.
18. Independent Contractor. BBOI Worldwide shall for all
----------------------
purposes hereunder be deemed to be an independent contractor and
shall, unless otherwise provided or authorized, have no authority to
act for or represent the Trust or the Fund in any way, nor otherwise
be deemed an agent of, partner or joint venturer with, the Trust or
the Fund.
19. Names. The Trust and the Fund (together, the "Trust
-----
Entities") may use the name "Bank of Ireland Asset Management"
or"Berger" or any name derived from or similar to "Bank of Ireland
Asset Management" or "Berger Associates, Inc.," including without
limitation "Berger/BIAM," only for so long as this Agreement or any
extension, renewal or amendment hereof shall remain in effect. At
such time as such a contract shall no longer be in effect, each of the
Trust Entities will (to the extent that each lawfully can) cease to
use such a name or any other name indicating that it is advised by or
otherwise connected with Bank of Ireland Asset Management (U.S.)
Limited, an Irish company ("BIAM"), or Berger Associates, Inc., a
Delaware company ("Berger Associates"). The Trust Entities
acknowledge that they have adopted the term "Berger/BIAM" as part of
the Fund's name through permission of BIAM and Berger Associates,
respectively, and agree that BIAM and Berger Associates each reserve
to themselves, their respective affiliates and any successors to their
respective businesses the right to grant the non-exclusive right to
use the name "Bank of Ireland Asset Management," "BIAM," "Berger" or
"BAI" or any similar names to any other corporation or entity.
20. Certain Definitions. As used in this Agreement, the terms
-------------------
"vote of a majority of the outstanding voting securities,"
"assignment," "approved at least annually" and "interested persons"
shall have the same meanings as when used in the 1940 Act (in each
case as the 1940 Act is now in effect or hereafter may be amended) and
the rules and regulations thereunder, subject to such orders,
exemptions and interpretations as may be issued by the SEC under the
1940 Act and as may be then in effect. Where the effect of a
requirement of the federal securities laws reflected in any provision
-9-
<PAGE>
of this Agreement is made less restrictive by a rule, regulation,
order, interpretation or other authority of the SEC, whether of
special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation, order, interpretation
or other authority.
21. Governing Law. This Agreement shall be construed in
-------------
accordance with the laws of the State of Colorado (without giving
effect to the conflicts of laws principles thereof) and the 1940 Act.
To the extent that the applicable laws of the State of Colorado
conflict with the applicable provisions of the 1940 Act, the latter
shall control.
22. Miscellaneous. The headings in this Agreement are included
-------------
for convenience of reference only and in no way define or limit any of
the provisions thereof or otherwise affect their construction or
effect. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto
and their respective successors.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Agreement as of the date and year first above
written.
BBOI WORLDWIDE LLC
By________________________________________
Title:
BERGER INSTITUTIONAL PRODUCTS TRUST, with
respect to the BERGER/BIAM IPT -
INTERNATIONAL FUND
By________________________________________
Title:
-10-
Exhibit 5.5
SUB-ADVISORY AGREEMENT
WITH RESPECT TO THE
BERGER/BIAM IPT - INTERNATIONAL FUND
Agreement made as of this ___ day of _________________, 1997,
between BBOI Worldwide LLC ("BBOI Worldwide"), a Delaware limited
liability company, and Bank of Ireland Asset Management (U.S.) Limited
("BIAM"), an Irish corporation.
WHEREAS, BBOI Worldwide has entered into an Investment Advisory
Agreement (the "Advisory Agreement") with Berger Institutional
Products Trust (the "Trust"), a Delaware business trust and an open-
end management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), with respect to
Berger/BIAM IPT - International Fund (the "Fund"), a separate series
of the Trust; and
WHEREAS, BBOI Worldwide desires to delegate to BIAM its duties
and responsibilities for providing investment advisory services to the
Fund, and BIAM is willing to accept such delegation and to render such
investment advisory services.
NOW, THEREFORE, the parties agree as follows:
1. Delegation. Pursuant to Section 13 of the Advisory
----------
Agreement, BBOI Worldwide hereby delegates to BIAM all the duties and
responsibilities required to be performed by BBOI Worldwide for the
Fund pursuant to Section 2 of the Advisory Agreement. BIAM hereby
accepts such delegation and agrees to perform such duties and assume
such responsibilities, subject to the oversight of BBOI Worldwide and
the trustees of the Trust (the "Trustees"). No provision of this
Agreement shall relieve BBOI Worldwide of its duties or
responsibilities under the Advisory
<PAGE>
Agreement, and BBOI Worldwide shall appropriately oversee, monitor and
evaluate BIAM's performance of its duties and responsibilities under
this Agreement.
2. Further Obligations. In all matters relating to the
-------------------
performance of this Agreement, BIAM shall act in conformity with the
Trust's Trust Instrument, Bylaws and currently effective registration
statement under the 1940 Act and any amendments or supplements thereto
(the "Registration Statement") and with the written policies,
procedures and guidelines of the Fund, written instructions from the
Trustees based on resolutions duly adopted by the Trustees, and
written instructions from BBOI Worldwide, officers of the Trust,
and/or the Sub-Administrator (as defined in the Advisory Agreement)
and comply with the requirements of the 1940 Act, the Investment
Advisers Act of 1940, as amended, the rules thereunder, and all other
applicable federal and state laws and regulations. BBOI Worldwide
agrees to provide to BIAM copies of the Trust's Trust Instrument,
Bylaws, Registration Statement, written policies, procedures, and
guidelines, written instructions of the Trustees based on resolutions
duly adopted by the Trustees, and written instructions from BBOI
Worldwide, officers of the Trust, and the Sub-Administrator, and any
amendments or supplements to any of them at, or, if practicable,
before the time such materials become effective. BIAM may perform its
services through any qualified employee, officer or agent of BIAM, and
BBOI Worldwide and the Trust shall not be entitled to the efforts,
advice, recommendations or judgment of any specific person.
3. Obligations of BBOI Worldwide. BBOI Worldwide shall have
-----------------------------
the following obligations under this Agreement:
(a) To keep BIAM continuously and fully informed (or cause
the custodian of the Fund's assets to keep BIAM so informed) as
to the composition of the investment portfolio
-2-
<PAGE>
of the Fund, cash requirements and cash available for investment
in the Fund and the nature of all of the Fund's assets and
liabilities;
(b) To furnish BIAM with a certified copy of any financial
statement or report prepared for the Fund by certified or
independent public accountants and with copies of any financial
statements or reports made to the Fund's investors or to any
governmental body or securities exchange;
(c) To furnish BIAM with any further materials or
information which BIAM may reasonably request to enable it to
perform its function under this Agreement;
(d) To compensate BIAM for its services in accordance with
the provisions of Section 4 hereof.
4. Compensation. BBOI Worldwide shall pay to BIAM for its
------------
services under this Agreement a fee, payable in United States dollars,
at an annual rate of 0.40% of the average daily net asset value of the
Fund. This fee shall be computed and accrued daily and payable
monthly on the last day of each month during which or part of which
this Agreement is in effect. BIAM reserves the right to waive or
reimburse all or any portion of its fees hereunder. BIAM hereby
waives all fees payable under this Agreement during the period
beginning on the date hereof and ending on October 15, 2000, or such
other shorter period as the Board of Managers of BBOI Worldwide may
determine.
5. Expenses and Excluded Expenses. BIAM shall pay all its own
------------------------------
costs and expenses incurred in rendering the services required under
this Agreement. Notwithstanding any other provision hereof, it is
expressly agreed that BIAM shall not be responsible to pay, directly
or on behalf of the Fund, any of the Fund's expenses, including
without limitation the expenses described
-3-
<PAGE>
in Section 7(a) through (j) of the Advisory Agreement, which expenses
shall remain the Trust's own obligation and responsibility to pay.
6. Brokerage Commissions. For purposes of this Agreement,
---------------------
brokerage commissions paid by the Fund upon the purchase or sale of
its portfolio securities shall be considered a cost of securities of
the Fund and shall be paid by the Fund. Absent instructions from BBOI
Worldwide or the Trust to the contrary, BIAM shall place all orders
for the purchase and sale of securities for the Fund with brokers and
dealers selected by BIAM. BIAM is authorized and directed to place
portfolio transactions for the Fund only with brokers and dealers who
render satisfactory service in the execution of orders at the most
favorable prices and at reasonable commission rates, provided,
--------
however, that BIAM may pay a broker an amount of commission for
effecting a securities transaction in excess of the amount of
commission another broker would have charged for effecting that
transaction if BIAM determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage
and research services provided by such broker viewed in terms of
either that particular transaction or the overall responsibilities of
BIAM. BIAM is also authorized to consider sales of variable insurance
contracts that permit allocation of contract values to the Fund as a
factor in selecting broker-dealers to execute portfolio transactions
for the Fund. In placing portfolio business with such broker-dealers,
BIAM shall seek the best execution of each transaction. Subject to
the terms of this Agreement and the applicable requirements and
provisions of the law, including the 1940 Act and the Securities
Exchange Act of 1934, as amended, and in the event that BIAM or an
affiliate is registered as a broker-dealer, BIAM may select a broker
with which it or any of its affiliates or the Fund is affiliated.
BIAM or such affiliated broker may effect or execute Fund securities
transactions on an agency basis, whether on a securities exchange or
in the over-the-counter market, and receive compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the
right to direct the placement of all portfolio transactions, and BBOI
Worldwide or the Trustees may establish policies or guidelines to be
followed by BIAM in placing portfolio transactions for the Fund
pursuant to the foregoing provisions. BIAM shall report on the
placement of portfolio transactions in the prior fiscal quarter at
each quarterly meeting of the Trustees. To the extent consistent with
applicable law, purchase or sell orders for the Fund may be aggregated
with simultaneous purchase or sell orders for other clients of BIAM.
Whenever BIAM simultaneously places orders to purchase or sell the
same security on behalf of the Fund and one or more other clients of
BIAM, such orders will be allocated as to price and amount among all
such clients in a manner reasonably believed by BIAM to be fair and
equitable to each client. BBOI Worldwide and the Trust recognize
that, in some cases, this procedure may adversely affect the results
obtained for the Fund.
7. Term. This Agreement shall become effective as of the date
----
first set forth above and shall continue in effect until the last day
of April 1999, unless sooner terminated in accordance with its terms,
and shall continue in effect from year to year thereafter only so long
as such continuance is specifically approved at least annually by the
vote of a majority of the Trustees who are not parties hereto or
interested persons of the Trust or BBOI Worldwide, cast in person at a
meeting called for the purpose of voting on the approval of the terms
of such renewal, and by either the Trustees or the affirmative vote of
a majority of the outstanding voting securities of the Fund.
8. Termination. This Agreement may be terminated at any time,
-----------
without penalty, by BBOI Worldwide, the Trustees, or by the holders of
interests in the Fund acting by vote of at least a majority of its
outstanding voting securities, provided in any such case that 60 days'
advance written
-6-<PAGE>
notice of termination be given to BIAM at its principal place of
business. This Agreement may also be terminated by BBOI Worldwide or
the Trust if BIAM becomes unable to discharge its duties and
obligations under this Agreement. This Agreement may be terminated by
BIAM at any time, without penalty, by giving 60 days' advance written
notice of termination to BBOI Worldwide and to the Trust.
9. Assignment and Amendments. This Agreement shall
-------------------------
automatically terminate in the event of its assignment. This
Agreement may be amended by the parties only in a written instrument
signed by all parties to this Agreement and only if such amendment is
specifically approved (i) by a majority of the Trustees, including a
-
majority of the Trustees who are not interested persons of the Trust,
BBOI Worldwide or its affiliates, and (ii) if required by applicable
--
law, by the affirmative vote of a majority of the outstanding voting
securities in the Fund. Notwithstanding the foregoing, the Trust's
Registration Statement and the written policies, procedures and
guidelines, and written instructions from the Trustees based on
resolutions duly adopted by the Trustees referred to in Section 2
hereof may be amended by the Trust or the Trustees from time to time;
provided, however, that BIAM shall not be obligated to follow any such
- --------
amendment until BIAM has received such amendment in writing from the
Trust, the Trustees or from BBOI Worldwide.
10. Limitation of Liability of BIAM. BIAM shall not be liable
-------------------------------
for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission taken with respect to
the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder and except to the
extent otherwise provided by law. BIAM shall be entitled to rely upon
any written instructions from the Trustees of the Trust based on
resolutions duly adopted by the Trustees, and shall incur no
-6-
<PAGE>
liability to BBOI Worldwide, the Trust or the Fund in acting upon such
written instructions. In addition, BIAM shall be entitled to rely
upon any written instructions from BBOI Worldwide, the Sub-
Administrator or officers of the Trust, and shall incur no liability
to BBOI Worldwide in acting upon such written instructions. As used
in this section, "BIAM" shall include any affiliate of BIAM performing
services for the Fund contemplated hereunder and managers, directors,
officers and employees of BIAM and such affiliates.
11. Indemnification. BBOI Worldwide hereby indemnifies and
---------------
holds harmless BIAM and its officers, directors, shareholders,
employees and agents, and any controlling person thereof, from all
losses, charges, claims and liabilities, and all costs and expenses,
including without limitation reasonable attorneys' fees and
disbursements, arising from any action which BIAM takes or omits to
take pursuant to written instructions from BBOI Worldwide, the Sub-
Administrator, or from officers or Trustees of the Trust, provided
that no person shall be indemnified hereunder against any liability to
the Trust or its shareholders (or any expenses incident to such
liability) arising out of such person's own willful misfeasance, bad
faith or gross negligence in the performance of their duties or by
reason of their reckless disregard of their duties or obligations
under this Agreement.
BBOI Worldwide acknowledges and agrees that BIAM, as the party to
whom BBOI Worldwide has delegated pursuant to Section 13 of the
Advisory Agreement all of BBOI Worldwide's duties and responsibilities
required to be performed by BBOI Worldwide for the Fund pursuant to
Section 2 of the Advisory Agreement, is a person entitled to
indemnification by the Trust pursuant to Section 16 of the Advisory
Agreement.
BIAM hereby indemnifies and holds harmless BBOI Worldwide and the
Trust, and each of their Trustees, officers, managers, shareholders,
members, employees and agents, and any controlling
-7-
<PAGE>
person thereof, from all losses, charges, claims and liabilities, and
all costs and expenses, including without limitation reasonable
attorneys' fees and disbursements, arising out of BIAM's willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its duties or
obligations under this Agreement, provided that no person shall be
indemnified hereunder against any liability to the Trust or its
shareholders (or any expenses incident to such liability) arising out
of such person's own willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of their
reckless disregard of their duties or obligations under this
Agreement.
12. Activities of BIAM. The investment advisory services
------------------
provided by BIAM hereunder are not exclusive, and BIAM is free to
render similar services to others so long as its services under this
Agreement are not materially adversely affected or otherwise
materially impaired thereby. Nothing in this Agreement shall limit or
restrict the right of any director, officer, or employee of BIAM to
engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any business,
whether of a similar nature or a dissimilar nature.
13. Independent Contractor. BIAM shall for all purposes
----------------------
hereunder be deemed to be an independent contractor and shall, unless
otherwise provided or authorized, have no authority to act for or
represent BBOI Worldwide, the Fund or the Trust in any way, nor
otherwise be deemed an agent of, partner or joint venturer with, BBOI
Worldwide, the Fund or the Trust.
14. Third Party Beneficiary. The parties expressly acknowledge
-----------------------
and agree that the Trust is a third party beneficiary of this
Agreement and that the Trust shall have the full right to sue upon and
enforce this Agreement in accordance with its terms as if it were a
signatory hereto.
-8-
<PAGE>
15. Notices. Any notice or other communication required to be
-------
given pursuant to this Agreement shall be deemed duly given if
delivered or mailed by certified or registered mail, return receipt
requested and postage prepaid:
(a) To BBOI Worldwide at:
BBOI Worldwide LLC
210 University Boulevard
Denver, Colorado 80206
Attention: Gerard M. Lavin, Chief Executive Officer
Phone: (303) __________
Fax: (303) __________
(b) To BIAM at:
Bank of Ireland Asset Management
(U.S.) Limited
26 Fitzwilliam Place
Dublin 2, Ireland
Attention: William R. Cotter
Phone: 011 353 1 661 6433
Fax: 011 353 1 678 5342
with a copy to:
Bank of Ireland Asset Management
(U.S.) Limited
Two Greenwich Plaza
Greenwich, Connecticut 06830
Attention: Denis Curran
Phone: (203) 869-0111
Fax: (203) 869-0268
and
Debevoise & Plimpton
555 13th Street, N.W.
Washington, D.C. 20004
Attention: Marcia L. MacHarg
Phone: (202) 383-8058
Fax: (202) 383-8118
-9-
<PAGE>
(c) To the Trust at:
Berger Institutional Products Trust
210 University Boulevard
Suite 900
Denver, Colorado 80206
Attention: Gerard M. Lavin, President
Phone: (303) 329-0200
Fax: (303) 394-4397
with a copy to:
Davis, Graham & Stubbs LLP
370 Seventeenth Street
Suite 4700
Denver, Colorado 80202
Attention: Lester R. Woodward
Phone: (303) 892-9400
Fax: (303) 892-7400
16. Certain Definitions. As used in this Agreement, the terms
-------------------
"vote of a majority of the outstanding voting securities,"
"assignment," "approved at least annually," and "interested persons"
shall have the same meanings as when used in the 1940 Act (in each
case as the 1940 Act is now in effect or hereafter may be amended) and
the rules and regulations thereunder, subject to such orders,
exemptions and interpretations as may be issued by the Securities and
Exchange Commission (the "SEC") under the 1940 Act and as may be then
in effect. Where the effect of a requirement of the federal
securities laws reflected in any provision of this Agreement is made
less restrictive by a rule, regulation, order, interpretation or other
authority of the SEC, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule,
regulation, order, interpretation or other authority.
17. Governing Law. This Agreement shall be construed in
-------------
accordance with the laws of the State of New York (without giving
effect to the conflicts of laws principles thereof) and the 1940 Act.
To the extent that the applicable laws of the State of New York
conflict with the applicable provisions of the 1940 Act, the latter
shall control.
-11-
<PAGE>
18. Miscellaneous. This Agreement may be executed in two or
-------------
more counterparts, which taken together shall constitute one and the
same instrument. The headings in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions thereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective successors.
19. Form ADV. BBOI Worldwide hereby acknowledges receipt of the
--------
Form ADV, Part II which BIAM represents is the most recent version of
such form which BIAM has filed with the SEC. BIAM will, promptly
after filing any amendment to its Form ADV with the SEC, furnish a
copy of such amendment to BBOI Worldwide and to the Trust.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the
day and year first above written.
BBOI WORLDWIDE LLC
By:____________________________________
Name:
Title:
BANK OF IRELAND ASSET MANAGEMENT (U.S.)
LIMITED
By:____________________________________
Name:
Title:
-12-
Exhibit 9.1.4
ADMINISTRATIVE SERVICES AGREEMENT
(BBOI WORLDWIDE LLC/BERGER INSTITUTIONAL PRODUCTS TRUST)
WITH RESPECT TO THE
BERGER/BIAM IPT - INTERNATIONAL FUND
This ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is
entered into effective as of the ______ day of _______________, 1997,
by and between BBOI WORLDWIDE LLC, a Delaware limited liability
company ("BBOI Worldwide"), and BERGER INSTITUTIONAL PRODUCTS TRUST, a
Delaware business trust (the "Trust"), with respect to the BERGER/BIAM
IPT - INTERNATIONAL FUND, a series of the Trust (the "Fund").
RECITALS
A. The Trust is a Delaware business trust and an open-end,
management investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act").
B. The Fund is a series of the Trust for which BBOI Worldwide
acts as investment advisor.
C. The parties desire that in addition to its duties as
investment advisor, BBOI Worldwide provide certain administrative
services to the Trust with respect to the Fund, on the terms and
conditions set forth herein.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
(a) Appointment. The Trust hereby appoints BBOI Worldwide as
-----------
the administrator of the Fund, to provide to the Fund, at BBOI
Worldwide's expense except as specifically set forth below, all
services specified herein, for the period and on the terms set forth
in this Agreement. BBOI Worldwide hereby accepts such appointment and
agrees to render the services and assume the responsibilities herein
set forth, for the compensation herein provided. In performing its
services under this Agreement, BBOI Worldwide shall comply with all
relevant provisions of the 1940 Act and all other applicable federal
and state laws and regulations.
(b) Services to be Provided. BBOI Worldwide shall provide the
-----------------------
following services to the Fund at BBOI Worldwide's own expense:
(a) coordinating all matters relating to the operations of the
Fund, including any necessary coordination among the investment
advisor, sub-advisor, transfer agent, dividend disbursing agent, fund
accounting agent, accountants, attorneys and other parties performing
services or operational functions for the Fund;
<PAGE>
(b) providing personnel and assistance necessary to maintain the
qualification and/or registration to sell shares under the federal
securities laws and in each state where BBOI Worldwide has determined
such qualification and/or registration to be advisable;
(c) monitoring the Fund's compliance with (i) its Trust
Instrument, Bylaws and currently effective registration statement
under the Securities Act of 1933, as amended (the "1933 Act") and the
1940 Act and any amendments or supplements thereto ("Registration
Statement"); (ii) the written policies, procedures and guidelines of
the Fund, and the written instructions from the Trustees of the Trust
based on resolutions duly adopted by the Trustees; (iii) the
requirements of the 1933 Act, the 1940 Act, the rules thereunder, and
all other applicable federal and state laws and regulations; and (iv)
the provisions of the Internal Revenue Code, applicable to the Fund as
a regulated investment company under Subchapter M or as required to
maintain compliance with any diversification provisions applicable to
insurance company separate accounts or qualified plans investing in
the Fund;
(d) supervising the preparation of any or all registration
statements (including prospectuses and statements of additional
information), tax returns, proxy materials, financial statements,
notices and reports for filings with regulatory authorities and
distribution to shareholders of the Fund;
(e) issuing certain correspondence to shareholders;
(f) maintaining or supervising the maintenance of certain books
and records;
(g) providing the Trust with adequate personnel, office space,
communications facilities and other facilities necessary for operation
of the Fund as contemplated by this Agreement; and
(h) preparing and rendering to the Trustees of the Trust such
periodic and special reports as the Trustees may reasonably request.
(c) Expenses and Excluded Expenses. BBOI Worldwide shall pay
------------------------------
all its own costs and expenses incurred in providing the services
required under this Agreement. Notwithstanding any other provision
hereof, it is expressly agreed that BBOI Worldwide shall not be
responsible to provide to or procure for the Fund any of the following
services, or to pay, directly or on behalf of the Fund, any of the
following fees and expenses, which shall remain the Trust's own
obligation and responsibility to arrange for and pay: (a) investment
advisory services performed by any investment advisor for the Fund, or
any fees and expenses thereof; (b) expenses of registering the Trust
with securities authorities, or registration or filing fees incurred
in registering shares of the Fund with securities authorities; (c)
expenses of meetings of the Trustees and shareholders of the Trust
(including, without limitation, printing and mailing proxy statements
and proxy materials, proxy solicitation, proxy tabulation, on-site
space arrangements, catering and meeting communications); (d) legal
services or legal fees and expenses; (e) distribution, marketing,
underwriting or promotional services or any 12b-1 fees or other fees
and expenses in connection therewith; (f) taxes imposed on the Fund;
(g) brokerage commissions and other costs in connection with the
purchase and sale of
-2-
<PAGE>
securities and other portfolio assets; or (h) any non-recurring or
extraordinary items as may arise from time to time.
(d) Compensation. The Trust shall pay to BBOI Worldwide for the
------------
services provided under this Agreement a fee, payable in United States
dollars, at an annual rate of 0.01% of the average daily net asset
value of the Fund. Such fee shall be computed and accrued daily and
payable monthly on the last day of each month during which or part of
which this Agreement is in effect.
(e) Books and Records. BBOI Worldwide hereby agrees that all
-----------------
records which it maintains for the Fund or the Trust hereunder are the
property of the Trust, agrees to permit the reasonable inspection
thereof by the Trust or its designees and agrees to preserve for the
periods prescribed under the 1940 Act any records which it maintains
for the Fund or the Trust and which are required to be maintained
under the 1940 Act. BBOI Worldwide further agrees to surrender
promptly to the Trust or its designees any records which it maintains
for the Fund or the Trust upon request by the Trust.
(f) Term and Termination. This Agreement shall become effective
--------------------
as of the date first set forth above and shall continue until
terminated by either party on 60 days' written notice to the other
party. This Agreement may also be terminated by the Trustees of the
Trust at any time if BBOI Worldwide becomes unable to discharge its
duties and obligations under this Agreement.
(g) Assignment and Amendments. This Agreement shall not be
-------------------------
assigned by either party without the prior written consent of the
other party to the Agreement. This Agreement may be amended in
writing by the parties, provided that all such amendments shall be
subject to the approval of the Trustees of the Trust.
(h) Delegation. Notwithstanding anything herein to the
----------
contrary, BBOI Worldwide may delegate any or all of its duties and
responsibilities under this Agreement to one or more parties subject
to the approval of the Trustees of the Trust. No delegation pursuant
to this provision shall relieve BBOI Worldwide of its duties or
responsibilities hereunder, and BBOI Worldwide shall appropriately
supervise and monitor the activities of any party appointed hereunder
for the Fund.
(i) Limitation of Liability of BBOI Worldwide. BBOI Worldwide
-----------------------------------------
shall not be liable for any error of judgment or mistake of law or for
any act or omission taken with respect to the Fund, except for willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and
duties hereunder and except to the extent otherwise provided by law.
BBOI Worldwide shall be entitled to rely upon any written instructions
from the Trustees of the Trust based on resolutions duly adopted by
the Trustees and shall incur no liability to the Trust or the Fund in
acting upon such written instructions. As used in this section, "BBOI
Worldwide" shall include any affiliate of BBOI Worldwide performing
services for the Fund contemplated hereunder, the Sub-Administrator as
defined in Section 10 hereof, and managers, directors, officers and
employees of BBOI Worldwide and each of the foregoing.
-3-
<PAGE>
(j) Indemnification. The Trust hereby indemnifies and holds
---------------
harmless BBOI Worldwide and its officers, managers, members, employees
and agents, and any controlling person thereof, and any person to whom
BBOI Worldwide has delegated any of its duties and responsibilities
pursuant to Section 8 hereof, including Berger Associates, Inc., to
which BBOI Worldwide has delegated all its duties and responsibilities
under this Agreement (the "Sub-Administrator"), from all losses,
charges, claims and liabilities, and all costs and expenses, including
without limitation reasonable attorneys' fees and disbursements,
arising from any action which BBOI Worldwide or the Sub-Administrator
takes or omits to take pursuant to written instructions from the
Trustees of the Trust based on resolutions duly adopted by the
Trustees, provided that no person shall be indemnified hereunder
against any liability to the Trust or its shareholders (or any
expenses incident to such liability) arising out of their own willful
misfeasance, bad faith or gross negligence in the performance of their
duties or by reason of their reckless disregard of their duties or
obligations under this Agreement.
BBOI Worldwide hereby indemnifies and holds harmless the Trust
and its Trustees, officers, shareholders, employees and agents, and
any controlling person thereof, from all losses, charges, claims and
liabilities, and all costs and expenses, including without limitation
reasonable attorneys' fees and disbursements, arising out of BBOI
Worldwide's or the Sub-Administrator's willful misfeasance, bad faith
or gross negligence in the performance of its duties or by reason of
its reckless disregard of its duties or obligations under this
Agreement, provided that no person shall be indemnified hereunder
against any liability to the Trust or its shareholders (or any
expenses incident to such liability) arising out of their own willful
misfeasance, bad faith or gross negligence in the performance of their
duties or by reason of their reckless disregard of their duties or
obligations under this Agreement.
(k) Independent Contractor. BBOI Worldwide shall for all
----------------------
purposes hereunder be deemed to be an independent contractor and
shall, unless otherwise provided or authorized, have no authority to
act for or represent the Trust or the Fund in any way, nor otherwise
be deemed an agent of, partner or joint venturer with, the Trust or
the Fund.
(l) Activities of BBOI Worldwide. The services of BBOI
----------------------------
Worldwide hereunder are not to be deemed to be exclusive, and BBOI
Worldwide is free to render services to other parties, so long as its
services under this Agreement are not materially adversely affected or
otherwise impaired thereby. Nothing in this Agreement shall limit or
restrict the right of any manager, officer or employee of BBOI
Worldwide to engage in any other business or to devote his or her time
and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature.
(m) Limitation on Personal Liability. NOTICE IS HEREBY GIVEN
--------------------------------
that the Trust is a business trust organized under the Delaware
Business Trust Act pursuant to a Certificate of Trust filed in the
office of the Secretary of State of the State of Delaware. All
parties to this Agreement acknowledge and agree that the Trust is a
series trust and all debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a
particular series shall be
-4-
<PAGE>
enforceable against the assets held with respect to such series only,
and not against the assets of the Trust generally or against the
assets held with respect to any other series and further that no
Trustee, officer or holder of shares of beneficial interest of the
Trust shall be personally liable for any of the foregoing.
(n) Governing Law. This Agreement shall be construed in
-------------
accordance with the laws of the State of Colorado (without giving
effect to the conflicts of laws principles thereof) and the 1940 Act.
To the extent that the applicable laws of the State of Colorado
conflict with the applicable provisions of the 1940 Act, the latter
shall control.
(o) Miscellaneous. The headings in this Agreement are included
-------------
for convenience of reference only and in no way define or limit any of
the provisions thereof or otherwise affect their construction or
effect. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto
and their respective successors.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement effective as of the date first above written.
BBOI WORLDWIDE LLC
By:_____________________________________
Gerard M. Lavin
Chief Executive Officer
BERGER INSTITUTIONAL PRODUCTS TRUST
with respect to its series known as the
Berger/BIAM IPT - International Fund
By:_____________________________________
Gerard M. Lavin
President
-5-
Exhibit 9.1.5
SUB-ADMINISTRATION AGREEMENT
(BBOI WORLDWIDE LLC/BERGER ASSOCIATES, INC.)
WITH RESPECT TO THE
BERGER/BIAM IPT - INTERNATIONAL FUND
This SUB-ADMINISTRATION AGREEMENT (the "Agreement") is entered
into effective as of the _______ day of __________________, 1997, by
and between BBOI WORLDWIDE LLC, a Delaware limited liability company
("BBOI Worldwide"), and BERGER ASSOCIATES, INC., a Delaware
corporation ("Berger Associates").
RECITALS
A. BBOI Worldwide has entered into an Administrative Services
Agreement, of even date herewith (the "Administrative Services
Agreement"), with Berger Institutional Products Trust (the "Trust"), a
Delaware business trust and an open-end, management investment company
registered under the Investment Company Act of 1940 (the "1940 Act"),
pursuant to which BBOI Worldwide undertakes to provide certain
administrative services to the Berger/BIAM IPT - International Fund
(the "Fund"), a series of the Trust.
B. BBOI Worldwide has also entered into an Investment Advisory
Agreement, of even date herewith (the "Investment Advisory
Agreement"), with the Trust, pursuant to which BBOI Worldwide
undertakes to provide, in addition to investment advisory services,
certain managerial and administrative services to the Fund.
C. The parties desire that the administrative and managerial
duties and responsibilities of BBOI Worldwide under the Administrative
Services Agreement and the Investment Advisory Agreement be delegated
to and performed by Berger Associates, on the terms and conditions set
forth herein.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Delegation. BBOI Worldwide hereby delegates to Berger
----------
Associates the following duties and responsibilities:
(a) all duties and responsibilities required to be performed by
BBOI Worldwide pursuant to the Administrative Services
Agreement, including without limitation the services
specified in Section 2 thereof;
<PAGE>
(b) all duties and responsibilities required to be performed by
BBOI Worldwide pursuant to Section 3 of the Investment
Advisory Agreement.
Berger Associates hereby accepts such delegation and agrees to
perform the duties and assume the responsibilities specified in
Sections 1(a) and (b) hereof, for the compensation herein provided.
In performing its duties under this Agreement, Berger Associates shall
comply with all relevant provisions of the 1940 Act and all other
applicable federal and state laws and regulations and shall be subject
to the same obligations, restrictions and limitations as would apply
to BBOI Worldwide if it were performing under the Administrative
Services Agreement and the Investment Advisory Agreement,
respectively.
2. Expenses. Berger Associates shall pay all its own costs and
--------
expenses incurred in providing and procuring the services set forth in
Section 1 hereof, but shall not be responsible to pay any fees or
expenses of the service providers whose services are procured on
behalf of the Fund under the Administrative Services Agreement or
otherwise, which shall remain the Trust's or BBOI Worldwide's
obligation and responsibility to pay.
3. Excluded Services and Expenses. Berger Associates shall not
------------------------------
be responsible to provide to or procure for the Fund, or to pay,
directly or on behalf of the Fund, any of the services, fees or
expenses specified in the second sentence of Section 3 of the
Administrative Services Agreement or in Section 2 or Sections 7(a)-(j)
of the Investment Advisory Agreement.
4. Compensation. BBOI Worldwide shall pay to Berger Associates
------------
for the services rendered by and responsibilities assumed by Berger
Associates under this Agreement a fee, payable in United States
dollars, at an annual rate of 0.20% of the average daily net asset
value of the Fund. This fee shall be computed and accrued daily and
payable monthly on the last day of each month during which or part of
which this Agreement is in effect. Notwithstanding the foregoing,
Berger Associates shall waive its fees hereunder for the period
commencing on the date hereof and ending on October 15, 2000, or such
other shorter period as BBOI Worldwide may determine.
5. Books and Records. Berger Associates hereby agrees that all
-----------------
records which it maintains for the Fund or the Trust hereunder are the
property of the Trust. Berger Associates agrees to permit the
reasonable inspection thereof by the Trust, or its designees, and
agrees to preserve for the periods prescribed under the 1940 Act any
records which it maintains and which are required to be maintained
under the 1940 Act. Berger Associates further agrees to surrender
promptly upon request to the Trust or its designees any records which
Berger Associates maintains for such entity.
6. Term and Termination. This Agreement shall become effective
--------------------
as of the date first set forth above and shall continue until
terminated by either party on 60 days' written notice to the other
party. This Agreement may also be terminated by the Trustees of the
Trust (with respect to the Fund) at any time upon 60 days' written
notice to Berger Associates or at any time if Berger Associates
becomes unable to discharge its duties and obligations under this
Agreement.
-2-
<PAGE>
7. Assignment and Amendments. This Agreement shall not be
-------------------------
assigned by either party without the prior written consent of the
other party to the Agreement. This Agreement may be amended in
writing by the parties, provided that all such amendments shall be
subject to the approval of the Trustees of the Trust.
8. Limitation of Liability of Berger Associates. Berger
--------------------------------------------
Associates shall not be liable for any error of judgment or mistake of
law or for any act or omission taken with respect to the Fund, except
for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder and except to the extent otherwise
provided by law. Berger Associates shall be entitled to rely upon any
written instructions from BBOI Worldwide, the sub-advisor to which
BBOI Worldwide has delegated its duties and responsibilities specified
in Section 2 of the Investment Advisory Agreement (the "Sub-Advisor"),
or officers or Trustees of the Trust, and shall incur no liability to
BBOI Worldwide in acting upon such written instructions. As used in
this section, "Berger Associates" shall include any affiliate of
Berger Associates performing services for the Fund contemplated
hereunder and managers, directors, officers and employees of Berger
Associates and such affiliates.
9. Indemnification. BBOI Worldwide hereby indemnifies and
---------------
holds harmless Berger Associates and its officers, directors,
shareholders, employees and agents, and any controlling person
thereof, from all losses, charges, claims and liabilities, and all
costs and expenses, including without limitation reasonable attorneys'
fees and disbursements, arising from any action which Berger
Associates takes or omits to take pursuant to written instructions
from BBOI Worldwide, the Sub-Advisor or officers or Trustees of the
Trust, provided that no person shall be indemnified hereunder against
any liability to the Trust or its shareholders (or any expenses
incident to such liability) arising out of such person's own willful
misfeasance, bad faith or gross negligence in the performance of their
duties or by reason of their reckless disregard of their duties or
obligations under this Agreement.
Berger Associates hereby indemnifies and holds harmless BBOI
Worldwide and the Trust, and each of their Trustees, officers,
managers, shareholders, members, employees and agents, and any
controlling person thereof, from all losses, charges, claims and
liabilities, and all costs and expenses, including without limitation
reasonable attorneys' fees and disbursements, arising out of Berger
Associates' willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of
its duties or obligations under this Agreement, provided that no
person shall be indemnified hereunder against any liability to the
Trust or its shareholders (or any expenses incident to such liability)
arising out of such person's own willful misfeasance, bad faith or
gross negligence in the performance of their duties or by reason of
their reckless disregard of their duties or obligations under this
Agreement.
10. Independent Contractor. Berger Associates shall for all
----------------------
purposes hereunder be deemed to be an independent contractor and
shall, unless otherwise provided or authorized, have no authority to
act for or represent BBOI Worldwide, the Trust or the Fund in any way,
nor otherwise be deemed an agent of, partner or joint venturer with,
BBOI Worldwide, the Trust or the Fund.
-3-
<PAGE>
11. Activities of Berger Associates. The services of Berger
-------------------------------
Associates hereunder are not to be deemed to be exclusive, and Berger
Associates is free to render services to other parties, so long as its
services under this Agreement are not materially adversely affected or
otherwise impaired thereby. Nothing in this Agreement shall limit or
restrict the right of any director, officer or employee of Berger
Associates to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar nature.
12. Third Party Beneficiaries. The parties expressly
-------------------------
acknowledge and agree that the Trust is a third party beneficiary of
this Agreement and that the Trust shall have the full right to sue
upon and enforce this Agreement in accordance with its terms as if it
were a signatory hereto.
13. Governing Law. This Agreement shall be construed in
-------------
accordance with the laws of the State of Colorado (without giving
effect to the conflicts of laws principles thereof) and the 1940 Act.
To the extent that the applicable laws of the State of Colorado
conflict with the applicable provisions of the 1940 Act, the latter
shall control.
14. Miscellaneous. The headings in this Agreement are included
-------------
for convenience of reference only and in no way define or limit any of
the provisions thereof or otherwise affect their construction or
effect. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto
and their respective successors.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Agreement as of the date and year first above
written.
BBOI WORLDWIDE LLC
By_________________________________________
Title:
BERGER ASSOCIATES, INC.
By_________________________________________
Title:
-4-
Exhibit 9.6
PARTICIPATION AGREEMENT
Among
BERGER INSTITUTIONAL PRODUCTS TRUST
BBOI WORLDWIDE LLC
and
GREAT AMERICAN RESERVE INSURANCE COMPANY
THIS AGREEMENT, made and entered into this 3rd day of April,
1997 by and among GREAT AMERICAN RESERVE INSURANCE COMPANY,
(hereinafter the "Insurance Company"), a Texas corporation, on its own
behalf and on behalf of each segregated asset account of the Insurance
Company set forth on Schedule A hereto as may be amended from time to
time (each such account hereinafter referred to as the "Account"),
BERGER INSTITUTIONAL PRODUCTS TRUST, a Delaware business trust (the
"Trust") and BBOI WORLDWIDE LLC, a Delaware limited liability company
("BBOI Worldwide").
WHEREAS, the Trust engages in business as an open-end management
investment company and is available to act as the investment vehicle
for variable annuity and life insurance contracts to be offered by
separate accounts of insurance companies which have entered into
participation agreements substantially identical to this Agreement
("Participating Insurance Companies") and for qualified retirement and
pension plans ("Qualified Plans"); and
WHEREAS, the beneficial interest in the Trust is divided into
several series of shares, each designated a "Fund" and representing
the interest in a particular managed portfolio of securities and other
assets; and
WHEREAS, the Trust has obtained an order from the Securities
and Exchange Commission (the "Commission"), dated April 24, 1996 (File
No. 812-9852), 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 Investment Company Act of 1940, as
amended, (the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Trust to
be sold to and held by Qualified Plans and by variable annuity and
variable life insurance separate accounts of life insurance companies
that may or may not be affiliated with one another (the "Mixed and
Shared Funding Exemptive Order"); and
<PAGE>
WHEREAS, the Trust is registered as an open-end management
investment company under the 1940 Act and the offering of its shares
is registered under the Securities Act of 1933, as amended
(hereinafter the "1933 Act"); and
WHEREAS, BBOI Worldwide is duly registered as an investment
adviser under the Investment Advisers Act of 1940 and any applicable
state securities law; and
WHEREAS, the Insurance Company has registered under the 1933
Act, or will register under the 1933 Act, certain variable annuity or
variable life insurance contracts identified by the form number(s)
listed on Schedule B to this Agreement, as amended from time to time
hereafter by mutual written agreement of all the parties hereto (the
"Contracts"); and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the board of
directors of the Insurance Company on the date shown for that Account
on Schedule A hereto, to set aside and invest assets attributable to
the Contracts; and
WHEREAS, the Insurance Company has registered or will register
each Account as a unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Insurance Company intends to purchase shares in
the Funds at net asset value on behalf of each Account to fund the
Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the
Insurance Company, the Trust and BBOI Worldwide agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Trust agrees to sell to the Insurance Company those
shares of the Trust which each Account orders, executing such orders
on a daily basis at the net asset value next computed after receipt by
the Trust or its designee of the order for the shares of the Trust.
For purposes of this Section 1.1, the Insurance Company shall be the
designee of the Trust for receipt of such orders from the Accounts and
receipt by such designee shall constitute receipt by the Trust;
provided that the Trust receives notice of such order by 7:00 a.m.,
Mountain Time, on the next following Business Day. In this Agreement,
"Business Day" shall mean any day on which the New York Stock Exchange
is open for trading and on which the Trust calculates its net asset
value pursuant to the rules of the Commission.
1.2. The Trust agrees to make its shares available for purchase
at the applicable net asset value per share by the Insurance Company
and its Accounts on those days on which the Trust calculates its
-2-
<PAGE>
Funds' net asset values pursuant to rules of the Commission and the
Trust shall use reasonable efforts to calculate its Funds' net asset
values on each day on which the New York Stock Exchange is open for
trading. Notwithstanding the foregoing, the trustees of the Trust may
refuse to sell shares of any Fund to any person, or suspend or
terminate the offering of shares of any Fund if such action is
required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the trustees of the Trust acting in good
faith and in light of their fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the
shareholders of that Fund.
1.3. The Trust agrees that shares of the Trust will be sold
only to Accounts of Participating Insurance Companies and to Qualified
Plans. No shares of any Fund will be sold to the general public.
1.4. The Trust will not sell its shares to any insurance
company or separate account unless an agreement containing provisions
substantially the same as Sections 2.4, 3.4, 3.5, and Sections 7.1 -
7.7 of this Agreement is in effect to govern such sales.
1.5. The Trust agrees to redeem, on the Insurance Company's
request, any full or fractional shares of the Trust held by the
Account, executing such requests on a daily basis at the net asset
value next computed after receipt by the Trust or its designee of the
request for redemption. However, if one or more Funds has determined
to settle redemption transactions for all of its shareholders on a
delayed basis (more than one business day, but in no event more than
three Business Days, after the date on which the redemption order is
received, unless otherwise permitted by an order of the Commission
under Section 22(e) of the 1940 Act), the Trust shall be permitted to
delay sending redemption proceeds to the Insurance Company by the same
number of days that the Trust is delaying sending redemption proceeds
to the other shareholders of the Fund. For purposes of this Section
1.5, the Insurance Company shall be the designee of the Trust for
receipt of requests for redemption from each Account and receipt by
that designee shall constitute receipt by the Trust; provided that the
Trust receives notice of the request for redemption by 7:00 a.m.,
Mountain Time, on the next following Business Day.
1.6. The Insurance Company agrees to purchase and redeem the
shares of each Fund offered by the then-current prospectus of the
Trust in accordance with the provisions of that prospectus. The
Insurance Company agrees that all net amounts available under the
Contracts shall be invested in the Trust, or in the Insurance
Company's general account, provided that such amounts may also be
invested in an investment company other than the Trust if (a) the
other investment company, or series thereof, has investment objectives
or policies that are substantially different from the investment
objectives and policies of any Fund of the Trust in which the Account
may invest; or (b) the other investment company was available as a
funding vehicle for the Contracts prior to the date of this Agreement
-3-
<PAGE>
and the Insurance Company so informs the Trust and BBOI Worldwide
prior to their signing this Agreement; or (c) the Trust and BBOI
Worldwide consent in advance in writing to the use of the other
investment company.
1.7. The Insurance Company shall pay for Trust shares by 1:00
p.m., Mountain Time, on the next Business Day after an order to
purchase Trust shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by
wire. For the purpose of Sections 2.9 and 2.10, upon receipt by the
Trust of the federal funds so wired, such funds shall cease to be the
responsibility of the Insurance Company and shall become the
responsibility of the Trust. Payment of net redemption proceeds
(aggregate redemptions of a Fund's shares by an Account minus
aggregate purchases of that Fund's shares by that Account) of less
than $1 million for a given Business Day will be made by wiring
federal funds to the Insurance Company on the next Business Day after
receipt of the redemption request. Payment of net redemption proceeds
of $1 million or more will be by wiring federal funds within three
Business Days after receipt of the redemption request. However,
payment may be postponed under unusual circumstances, such as when
normal trading is not taking place on the New York Stock Exchange, an
emergency as defined by the Securities and Exchange Commission exists,
or as permitted by the Securities and Exchange Commission.
1.8. Issuance and transfer of the Trust's shares will be by
book entry only. Stock certificates will not be issued to the
Insurance Company or any Account. Shares ordered from the Trust will
be recorded in an appropriate title for each Account or the
appropriate subaccount of each Account.
1.9. The Trust shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Insurance Company
of any income, dividends or capital gain distributions payable on the
Funds' shares. The Insurance Company hereby elects to receive all
income dividends and capital gain distributions payable on a Fund's
shares in additional shares of that Fund. The Insurance Company
reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Trust
shall notify the Insurance Company of the number of shares issued as
payment of dividends and distributions.
1.10. The Trust shall make the net asset value per share for
each Fund available to the Insurance Company on a daily basis as soon
as reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make those per-share net
asset values available by 5:00 p.m., Mountain Time.
-4-
<PAGE>
ARTICLE II. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
2.1. The Insurance Company represents, warrants and agrees that
the offerings of the Contracts are, or will be, registered under the
1933 Act; that the Contracts will be issued and sold in compliance in
all material respects with all applicable federal and state laws and
that the sale of the Contracts shall comply in all material respects
with applicable state insurance suitability requirements. The
Insurance Company further represents that it is an insurance company
duly organized and in good standing under applicable law and that it
has legally and validly established the Account prior to any issuance
or sale thereof as a segregated asset account under the Texas
Insurance Code and has registered, or warrants and agrees that prior
to any issuance or sale of the Contracts it will register, the Account
as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the
Contracts.
2.2. The Trust warrants and agrees that Trust shares sold
pursuant to this Agreement shall be registered under the 1933 Act,
duly authorized for issuance and sale in compliance with the laws of
the State of Delaware and all applicable federal securities laws and
that the Trust is and shall remain registered under the 1940 Act. The
Trust warrants and agrees that it shall amend the registration
statement for its shares under the 1933 Act and the 1940 Act from time
to time as required in order to effect the continuous offering of its
shares. The Trust shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the
extent deemed advisable by the Trust or BBOI Worldwide.
2.3. The Trust represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended, (the "Code") and warrants and agrees
that it will make all reasonable efforts to maintain its qualification
(under Subchapter M or any successor or similar provision) and that it
will notify the Insurance Company immediately upon having a reasonable
basis for believing that it has ceased to so qualify or that it might
not so qualify in the future.
2.4. The Insurance Company represents that the Contracts are
currently treated as annuity or life insurance contracts under
applicable provisions of the Code and warrants and agrees that it will
make every effort to maintain such treatment and that it will notify
the Trust and BBOI Worldwide immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or
that they might not be so treated in the future.
2.5. The Trust may elect to make payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act. To
the extent that it decides to finance distribution expenses pursuant
to Rule 12b-1, the Trust undertakes to have a board of trustees, a
majority of whom are not interested persons of the Trust, formulate
and approve any plan under Rule 12b-1 to finance distribution
expenses.
-5-
<PAGE>
2.6. The Trust makes no representation warranties as to whether
any aspect of its operations (including, but not limited to, fees and
expenses and investment policies) complies or will comply with the
insurance laws or regulations of the various states.
2.7. The Trust represents that it is lawfully organized and
validly existing under the laws of the State of Delaware and
represents, warrants and agrees that it does and will comply in all
material respects with the 1940 Act.
2.8. BBOI Worldwide represents that it is and warrants that it
shall remain duly registered as an investment adviser under all
applicable federal and state securities laws and agrees that it shall
perform its obligations for the Trust in compliance in all material
respects with the laws of the State of Colorado and any applicable
state and federal securities laws.
2.9. The Trust and BBOI Worldwide represent and warrant that
all of their officers, employees, investment advisers, investment sub-
advisers, and other individuals or entities described in Rule 17g-1
under the 1940 Act 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 in an
amount not less than the minimum coverage required currently by Rule
17g-1 under the 1940 Act or related provisions as may be promulgated
from time to time. That fidelity bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding
company.
2.10. The Insurance Company represents and warrants that all of
its officers, employees, investment advisers, and other individuals or
entities described in Rule 17g-1 under the 1940 Act are and shall
continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust, in an amount not less
than the minimum coverage required currently for entities subject to
the requirements of Rule 17g-1 of the 1940 Act or related provisions
or 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.
ARTICLE III. DISCLOSURE DOCUMENTS AND VOTING
3.1. BBOI Worldwide shall provide the Insurance Company (at the
Insurance Company's expense) with as many copies of the Trust's
current prospectus as the Insurance Company may reasonably request.
If requested by the Insurance Company in lieu thereof, the Trust shall
provide such documentation (including a final copy of the new
prospectus as set in type at the Trust's expense) and other assistance
as is reasonably necessary in order for the Insurance Company once
each year (or more frequently if the prospectus for the Trust is
amended) to have the prospectus for the Contracts and the Trust's
prospectus printed together in one document (at the Insurance
Company's expense).
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3.2. The Trust's prospectus shall state that the Statement of
Additional Information for the Trust (the "SAI") is available from the
Trust, and BBOI Worldwide (or the Trust), at its expense, shall print
and provide the SAI free of charge to the Insurance Company and to any
owner of a Contract or prospective owner who requests the SAI.
3.3. The Trust, at its expense, shall provide the Insurance
Company with copies of its proxy material, reports to shareholders and
other communications to shareholders in such quantity as the Insurance
Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law, the Insurance
Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Trust shares in accordance with instruc-
tions received from Contract owners; and
(iii) vote Trust shares for which no instructions have
been received in the same proportion as Trust
shares of that Fund for which instructions have
been received;
so long as and to the extent that the Commission continues to
interpret the 1940 Act to require pass-through voting privileges for
variable contract owners. The Insurance 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 the standards set forth on
Schedule C attached hereto and incorporated herein by this reference,
which standards will also be provided to the other Participating
Insurance Companies. The Insurance Company shall fulfill its
obligation under, and abide by the terms and conditions of, the Mixed
and Shared Funding Exemptive Order.
3.5. The Trust will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Trust will
either provide for annual meetings (except insofar as the Commission
may interpret Section 16 of the 1940 Act not to require such meetings)
or, as the Trust currently intends, comply with Section 16(c) of the
1940 Act (although the Trust is not one of the trusts described in
Section 16(c) of that Act) as well as with Sections 16(a) and, if and
when applicable, 16(b). Further, the Trust will act in accordance
with the Commission's interpretation of the requirements of Section
16(a) with respect to periodic elections of trustees and with whatever
rules the Commission may promulgate with respect thereto.
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ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Insurance Company shall furnish, or shall cause to be
furnished, to the Trust or its designee, each piece of sales
literature or other promotional material in which the Trust, a sub-
adviser of one of the Funds, or BBOI Worldwide is named, at least
fifteen calendar days prior to its use. No such material shall be
used if the Trust or its designee objects to such use within ten
calendar days after receipt of such material.
4.2. The Insurance Company shall not give any information or
make any representations or statements on behalf of the Trust or
concerning the Trust in connection with the sale of the Contracts
other than the information or representations contained in the Trust's
registration statement, prospectus or SAI, as that registration
statement, prospectus or SAI may be amended or supplemented from time
to time, or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved by the Trust or its
designee or by BBOI Worldwide or its designee, except with the
permission of the Trust or BBOI Worldwide or their designees.
4.3. The Trust, BBOI Worldwide, or its designee shall furnish,
or shall cause to be furnished, to the Insurance Company or its
designee, each piece of sales literature or other promotional material
in which the Insurance Company or the Account is named at least
fifteen calendar days prior to its use. No such material shall be
used if the Insurance Company or its designee objects to such use
within ten calendar days after receipt of that material.
4.4. The Trust and BBOI Worldwide, or their designees, shall
not give any information or make any representations on behalf of the
Insurance Company or concerning the Insurance Company, any Account, or
the Contracts other than the information or representations contained
in a registration statement, prospectus or statement of additional
information for the Contracts, as that registration statement,
prospectus or statement of additional information may be amended or
supplemented from time to time, or in published reports for any
Account which are in the public domain or approved by the Insurance
Company for distribution to Contract owners, or in sales literature or
other promotional material approved by the Insurance Company or its
designee, except with the permission of the Insurance Company.
4.5. The Trust will provide to the Insurance Company at least
one complete copy of each registration statement, prospectus,
statement of additional information, report, proxy statement, piece of
sales literature or other promotional material, application for
exemption, request for no-action letter, and any amendment to any of
the above, that relate to the Trust or its shares, contemporaneously
with the filing of the document with the Commission, the National
Association of Securities Dealers, Inc. ("NASD"), or other regulatory
authorities.
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4.6. The Insurance Company will provide to the Trust at least
one complete copy of each registration statement, prospectus,
statement of additional information, report, solicitation for voting
instructions, piece of sales literature and other promotional
material, application for exemption, request for no-action letter, and
any amendment to any of the above, that relates to the Contracts or
the Account, contemporaneously with the filing of the document with
the Commission, the NASD, or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited
to, advertisements, newspaper, magazine, or other periodical, radio,
television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, or other public media, sales literature
(i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, shareholder
newsletters, seminar texts, 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, and
registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials.
4.8. At the request of any party to this Agreement, each other
party will make available to the other party's independent auditors
and/or representative of the appropriate regulatory agencies, all
records, data and access to operating procedures that may be
reasonably requested.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust and BBOI Worldwide shall pay no fee or other
compensation to the Insurance Company under this agreement, except as
set forth in Section 5.4 and except that if the Trust or any Fund
adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, BBOI Worldwide or the Trust may make payments
to the Insurance Company in amounts consistent with that 12b-1 plan,
subject to review by the trustees of the Trust.
5.2. All expenses incident to performance by the Trust under
this Agreement shall be paid by the Trust. The Trust shall see to it
that any offering of its shares is registered and that all of its
shares are authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Trust or
BBOI Worldwide, in accordance with applicable state laws prior to
their sale. The Trust shall bear the cost of registration and
qualification of the Trust's shares, preparation and filing of the
Trust's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing
the proxy materials and reports to shareholders, the preparation of
all statements and notices required by any federal or state law, and
all taxes on the issuance or transfer of the Trust's shares.
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<PAGE>
5.3. The Insurance Company shall bear the expenses of printing
and distributing to Contract owners the Contract prospectuses and of
distributing to Contract owners the Trust's prospectus, proxy
materials and reports.
5.4. The Insurance Company bears the responsibility and
correlative expense for administrative and support services for
Contract owners. BBOI Worldwide recognizes the Insurance Company as
the sole shareholder of shares of the Trust issued under this
Agreement. From time to time, BBOI Worldwide may pay amounts from its
past profits to the Insurance Company for providing certain
administrative services for the Trust or for providing other services
that relate to the Trust. In consideration of the savings resulting
from such arrangement, and to compensate the Insurance Company for its
costs, BBOI Worldwide agrees to pay to the Insurance Company an amount
equal to 25 basis points (0.25%) per annum of the average aggregate
amount invested by the Insurance Company in the Trust under this
Agreement. Such payments will be made only when the average aggregate
amount invested exceeds $1,000,000. The parties agree that such
payments are for administrative services and investor support
services, and do not constitute payment for investment advisory,
distribution or other services. Payment of such amounts by BBOI
Worldwide shall not increase the fees paid by the Trust or its
shareholders. The obligation to pay the amounts provided for in this
Section 5.4 may be assigned by BBOI Worldwide in its discretion to
Berger Associates, Inc., or other entity acceptable to the Insurance
Company.
ARTICLE VI. DIVERSIFICATION
6.1. The Trust will comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5 relating to the diversification
requirements for variable annuity, endowment, modified endowment or
life insurance contracts and any amendments or other modifications to
that Section or Regulation at all times necessary to satisfy those
requirements.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The trustees of the Trust will monitor the Trust for the
existence of any material irreconcilable conflict between the
interests of the variable Contract owners of all separate accounts
investing in the Trust and the participants of all Qualified Plans
investing in the Trust. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretive letter, or
any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any
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Fund are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract
owners; or (f) a decision by a Participating Insurance Company to
disregard the voting instructions of variable contract owners. The
trustees of the Trust shall promptly inform the Insurance Company if
they determine that an irreconcilable material conflict exists and the
implications thereof. The trustees of the Trust shall have sole
authority to determine whether an irreconcilable material conflict
exists and their determination shall be binding upon the Insurance
Company.
7.2. The Insurance Company and BBOI Worldwide each will report
promptly any potential or existing conflicts of which it is aware to
the trustees of the Trust. The Insurance Company and BBOI Worldwide
each will assist the trustees of the Trust in carrying out their
responsibilities under the Mixed and Shared Funding Exemptive Order,
by providing the trustees of the Trust with all information reasonably
necessary for them to consider any issues raised. This includes, but
is not limited to, an obligation by the Insurance Company to inform
the trustees of the Trust whenever Contract owner voting instructions
are to be disregarded. These responsibilities shall be carried out by
the Insurance Company with a view only to the interests of the
Contract owners and by BBOI Worldwide with a view only to the
interests of Contract holders and Qualified Plan participants.
7.3. If it is determined by a majority of the trustees of the
Trust, or a majority of the trustees who are not interested persons of
the Trust, any of its Funds, or BBOI Worldwide (the "Independent
Trustees"), that a material irreconcilable conflict exists, the
Insurance Company and/or other Participating Insurance Companies or
Qualified Plans that have executed participation agreements shall, at
their expense and to the extent reasonably practicable (as determined
by a majority of the Independent Trustees), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict,
up to and including: (1) withdrawing the assets allocable to some or
all of the separate accounts from the Trust or any Fund and
reinvesting those assets in a different investment medium, including
(but not limited to) another Fund of the Trust, or submitting the
question 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 (e.g., annuity contract owners,
life insurance contract owners, or variable contract owners of one or
more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected variable contract owners the
option of making such a change; and (2) establishing a new registered
management investment company or managed separate account and
obtaining any necessary approvals or orders of the Commission in
connection therewith.
7.4. If a material irreconcilable conflict arises because of a
decision by the Insurance Company to disregard Contract owner voting
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instructions and that decision represents a minority position or would
preclude a majority vote, the Insurance Company may be required, at
the Trust's election, to withdraw the affected Account's investment in
the Trust and terminate this Agreement with respect to that Account;
provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Independent
Trustees. Any such withdrawal and termination must take place within
six (6) months after the Trust gives written notice that this
provision is being implemented, and, until the end of that six month
period, the Trust shall continue to accept and implement orders by the
Insurance Company for the purchase (and redemption) of shares of the
Trust.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the
Insurance Company conflicts with the majority of other state
regulators, then the Insurance Company will withdraw the affected
Account's investment in the Trust and terminate this Agreement with
respect to that Account within six months after the trustees of the
Trust inform the Insurance Company in writing that they have deter-
mined that the state insurance regulator's decision has created an
irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a
majority of the Independent Trustees. Until the end of the foregoing
six month period, the Trust shall continue to accept and implement
orders by the Insurance Company for the purchase (and redemption) of
shares of the Trust.
7.6. For purposes of Sections 7.3 through 7.6 of this
Agreement, a majority of the Independent Trustees shall determine
whether any proposed action adequately remedies any irreconcilable
material conflict, but in no event will the Trust be required to
establish a new funding medium for the Contracts. The Insurance
Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been
declined by vote of a majority of Contract owners materially adversely
affected by the irreconcilable material conflict. In the event that
the trustees of the Trust determine that any proposed action does not
adequately remedy any irreconcilable material conflict, then the
Insurance Company will withdraw the Account's investment in the Trust
and terminate this Agreement within six (6) months after the trustees
of the Trust inform the Insurance Company in writing of the foregoing
determination, provided, however, that the withdrawal and termination
shall be limited to the extent required by the material irreconcilable
conflict, as determined by a majority of the Independent Trustees.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act or the rules promulgated thereunder with respect
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to mixed or shared funding (as defined in the Mixed and Shared Funding
Exemptive Order) on terms and conditions materially different from
those contained in the Mixed and Shared Funding Exemptive Order, then
(a) the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with
Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent those rules are applicable; and (b) Sections 3.4, 3.5, 7.1,
7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only
to the extent that terms and conditions substantially identical to
those Sections are contained in the Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE INSURANCE COMPANY
8.1(a). The Insurance Company agrees to indemnify and hold
harmless the Trust and each trustee, officer, employee or agent of the
Trust, and each person, if any, who controls the Trust within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Insurance Company) 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, acquisition, or redemption of the Trust's shares or the
Contracts and:
(i) 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 Contracts or
contained in the Contracts or sales literature for
the 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 the Insurance Company by
or on behalf of the Trust for use in the
registration statement or prospectus for the
Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts
or shares of the Trust;
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<PAGE>
(ii) 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
Trust not supplied by the Insurance Company, or
persons under its control) or wrongful conduct of
the Insurance Company or persons under its
control, with respect to the sale or distribution
of the Contracts or Trust Shares;
(iii) 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 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 a
statement or omission was made in reliance upon
information furnished in writing to the Trust by
or on behalf of the Insurance Company;
(iv) arise as a result of any failure by the
Insurance Company to provide the services and
furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material
breach of any representation, warranty or
agreement made by the Insurance Company in this
Agreement or arise out of or result from any other
material breach of this Agreement by the Insurance
Company,
as limited by and in accordance with the provisions of Sections 8.1(b)
and 8.1(c) hereof.
8.1(b). The Insurance 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 that may arise from that Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of that
Indemnified Party's duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to
the Trust, whichever is applicable.
8.1(c). The Insurance Company shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless that Indemnified Party shall have notified
the Insurance Company in writing within a reasonable time after the
summons or other first legal process giving information of the nature
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<PAGE>
of the claim shall have been served upon that Indemnified Party (or
after the Indemnified Party shall have received notice of such service
on any designated agent). Notwithstanding the foregoing, the failure
of any Indemnified Party to give notice as provided herein shall not
relieve the Insurance Company of its obligations hereunder except to
the extent that the Insurance Company has been prejudiced by such
failure to give notice. In addition, any failure by the Indemnified
Party to notify the Insurance Company of any such claim shall not
relieve the Insurance Company from any liability which it may have to
the Indemnified Party against whom the action is brought otherwise
than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Insurance
Company shall be entitled to participate, at its own expense, in the
defense of the action. The Insurance Company also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party
named in the action; provided, however, that if the Indemnified Party
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shall have reasonably concluded that there may be defenses available
to it which are different from or additional to those available to the
Insurance Company, the Insurance Company shall not have the right to
assume said defense, but shall pay the costs and expenses thereof
(except that in no event shall the Insurance Company be liable for the
fees and expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from the Insurance
Company to the Indemnified Party of the Insurance Company's election
to assume the defense thereof, and in the absence of such a reasonable
conclusion that there may be different or additional defenses
available to the Indemnified Party, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and
the Insurance Company will not be liable to that party under this
Agreement for any legal or other expenses subsequently incurred by the
party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the
Insurance Company of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the Trust's
shares or the Contracts or the operation of the Trust.
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<PAGE>
8.2. INDEMNIFICATION BY BBOI WORLDWIDE
8.2(a). BBOI Worldwide agrees to indemnify and hold harmless
the Insurance Company and each of its directors, officers, employees
or agents, and each person, if any, who controls the Insurance Company
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any
and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of BBOI Worldwide) or
litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, 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, acquisition or redemption of the Trust's shares or the
Contracts and:
(i) 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 the
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 the statement or omission or
alleged statement or omission was made in reliance
upon and in conformity with information furnished
in writing to BBOI Worldwide or the Trust by or on
behalf of the Insurance Company for use in the
registration statement or prospectus for the Trust
or in sales literature (or any amendment or
supplement) or otherwise for use in connection
with the sale of the Contracts or Trust shares;
(ii) 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 for the
Contracts not supplied by BBOI Worldwide or
persons under its control) or wrongful conduct of
the Trust, BBOI Worldwide or persons under their
control, with respect to the sale or distribution
of the Contracts or shares of the Trust;
(iii) 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 Contracts, or any
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<PAGE>
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 statement or
statements therein not misleading, if such statement or
omission was made in reliance upon information furnished in
writing to the Insurance Company by or on behalf of the
Trust;
(iv) 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, whether unintentional or in
good faith or otherwise, to comply with the
diversification requirements specified in Article
VI of this Agreement); or
(v) arise out of or result from any material
breach of any representation, warranty or
agreement made by BBOI Worldwide in this Agreement
or arise out of or result from any other material
breach of this Agreement by BBOI Worldwide;
as limited by and in accordance with the provisions of Sections 8.2(b)
and 8.2(c) hereof.
8.2(b) BBOI Worldwide 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 that may arise from the Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of the Indemnified
Party's duties or by reason of the Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the
Insurance Company or the Account, whichever is applicable.
8.2(c) BBOI Worldwide shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless the Indemnified Party shall have notified
BBOI Worldwide 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 the Indemnified Party (or after the
Indemnified Party shall have received notice of such service on any
designated agent). Notwithstanding the foregoing, the failure of any
Indemnified Party to give notice as provided herein shall not relieve
BBOI Worldwide of its obligations hereunder except to the extent that
BBOI Worldwide has been prejudiced by such failure to give notice. In
addition, any failure by the Indemnified Party to notify BBOI
Worldwide of any such claim shall not relieve BBOI Worldwide 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, BBOI Worldwide will be entitled to participate, at its own
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expense, in the defense thereof. BBOI Worldwide also shall be
entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action; provided, however, that if the
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Indemnified Party shall have reasonably concluded that there may be
defenses available to it which are different from or additional to
those available to BBOI Worldwide, BBOI Worldwide shall not have the
right to assume said defense, but shall pay the costs and expenses
thereof (except that in no event shall BBOI Worldwide be liable for
the fees and expenses of more than one counsel for Indemnified Parties
in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from BBOI Worldwide to
the Indemnified Party of BBOI Worldwide's election to assume the
defense thereof, and in the absence of such a reasonable conclusion
that there may be different or additional defenses available to the
Indemnified Party, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and BBOI Worldwide
will not be liable to that party under this Agreement for any legal or
other expenses subsequently incurred by that party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d) The Insurance Company agrees to notify BBOI Worldwide
promptly 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 Contracts or the operation of the Account.
8.3 INDEMNIFICATION BY THE TRUST
8.3(a). The Trust agrees to indemnify and hold harmless the
Insurance Company, and each of its directors, officers, employees and
agents, and each person, if any, who controls the Insurance Company
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any
and all losses, claims, damages, liabilities (including legal and
other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as those
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements result from the gross negligence, bad
faith or willful misconduct of any trustee(s) of the Trust, are
related to the operations of the Trust 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 specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material
breach of any representation, warranty or
agreement made by the Trust in this Agreement or
arise out of or result from any other material
breach of this Agreement by the Trust;
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as limited by, and in accordance with the provisions of, Sections
8.3(b) and 8.3(c) hereof.
8.3(b). The Trust shall not be liable under this indemnifica-
tion provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified
Party that may arise from the Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of the Indemnified
Party's duties or by reason of the Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the
Insurance Company, the Trust, BBOI Worldwide or the Account, whichever
is applicable.
8.3(c). The Trust shall not be liable under this indemnifica-
tion provision with respect to any claim made against an Indemnified
Party unless the Indemnified Party shall have notified the 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 the Indemnified Party (or after the Indemnified Party
shall have received notice of such service on any designated agent).
Notwithstanding the foregoing, the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Trust of its
obligations hereunder except to the extent that the Trust has been
prejudiced by such failure to give notice. In addition, any failure
by the Indemnified Party to notify the Trust of any such claim shall
not relieve the 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, the Trust will be entitled
to participate, at its own expense, in the defense thereof. The Trust
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action; provided, however, that
-------- -------
if the Indemnified Party shall have reasonably concluded that there
may be defenses available to it which are different from or additional
to those available to the Trust, the Trust shall not have the right to
assume said defense, but shall pay the costs and expenses thereof
(except that in no event shall the Trust be liable for the fees and
expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from the Trust to the
Indemnified Party of the Trust's election to assume the defense
thereof, and in the absence of such a reasonable conclusion that there
may be different or additional defenses available to the Indemnified
Party, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Trust will not be liable to
that party under this Agreement for any legal or other expenses
subsequently incurred by that party independently in connection with
the defense thereof other than reasonable costs of investigation.
-19-
<PAGE>
8.3(d). The Insurance Company and BBOI Worldwide agree promptly
to notify the Trust of the commencement of any litigation or proceed-
ings against it or any of its respective officers or directors in
connection with this Agreement, the issuance or sale of the Contracts,
the operation of the Account, or the sale or acquisition of shares of
the Trust.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and provisions hereof
interpreted under and in accordance with the laws of the State of
Delaware.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934, and 1940 Acts, and the rules and regulations and rulings
thereunder, including any exemptions from those statutes, rules and
regulations the Commission may grant (including, but not limited to,
the Mixed and Shared Funding Exemptive Order) and the terms hereof
shall be interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon one year advance
written notice to the other parties; provided, however, such notice
shall not be given earlier than one year following the date of this
Agreement; or
(b) at the option of the Insurance Company to the extent
that shares of Funds are not reasonably available to meet
the requirements of the Contracts as determined by the
Insurance Company, provided, however, that such a termina-
tion shall apply only to the Fund(s) not reasonably
available. Prompt written notice of the election to
terminate for such cause shall be furnished by the Insurance
Company to the Trust and BBOI Worldwide; or
(c) at the option of the Trust or BBOI Worldwide, in the
event that formal administrative proceedings are instituted
against the Insurance Company by the NASD, the Commission,
an insurance commissioner or any other regulatory body
regarding the Insurance Company's duties under this
Agreement or related to the sale of the Contracts, the
operation of any Account, or the purchase of the Trust's
shares, provided, however, that the Trust determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse
effect upon the ability of the Insurance Company to perform
its obligations under this Agreement; or
-20-
<PAGE>
(d) at the option of the Insurance Company in the event
that formal administrative proceedings are instituted
against the Trust or BBOI Worldwide by the NASD, the
Commission, or any state securities or insurance department
or any other regulatory body, provided, however, that the
Insurance Company determines in its sole judgement exercised
in good faith, that any such administrative proceedings will
have a material adverse effect upon the ability of the Trust
or BBOI Worldwide to perform its obligations under this
Agreement; or
(e) with respect to any Account, upon requisite vote of the
Contract owners having an interest in that Account (or any
subaccount) to substitute the shares of another investment
company for the corresponding Fund shares in accordance with
the terms of the Contracts for which those Fund shares had
been selected to serve as the underlying investment media.
The Insurance Company will give at least 30 days' prior
written notice to the Trust of the date of any proposed vote
to replace the Trust's shares; or
(f) at the option of the Insurance Company, in the event
any of the Trust's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or
exemptions therefrom, or such law precludes the use of those
shares as the underlying investment media of the Contracts
issued or to be issued by the Insurance Company; or
(g) at the option of the Insurance Company, if the Trust
ceases to qualify as a regulated investment company under
Subchapter M of the Code or under any successor or similar
provision, or if the Insurance Company reasonably believes
that the Trust may fail to so qualify; or
(h) at the option of the Insurance Company, if the Trust
fails to meet the diversification requirements specified in
Article VI hereof; or
(i) at the option of either the Trust or BBOI Worldwide, if
(1) the Trust or BBOI Worldwide, respectively, shall
determine, in their sole judgment reasonably exercised in
good faith, that the Insurance Company has suffered a
material adverse change in its business or financial
condition or is the subject of material adverse publicity
and that material adverse change or material adverse
publicity will have a material adverse impact upon the
business and operations of either the Trust or BBOI
Worldwide, (2) the Trust or BBOI Worldwide shall notify the
Insurance Company in writing of that determination and its
intent to terminate this Agreement, and (3) after
considering the actions taken by the Insurance Company and
-21-
<PAGE>
any other changes in circumstances since the giving of such
a notice, the determination of the Trust or BBOI Worldwide
shall continue to apply on the sixtieth (60th) day following
the giving of that notice, which sixtieth day shall be the
effective date of termination; or
(j) at the option of the Insurance Company, if (1) the
Insurance Company shall determine, in its sole judgment
reasonably exercised in good faith, that either the Trust or
BBOI Worldwide has suffered a material adverse change in its
business or financial condition or is the subject of
material adverse publicity and that material adverse change
or material adverse publicity will have a material adverse
impact upon the business and operations of the Insurance
Company, (2) the Insurance Company shall notify the Trust
and BBOI Worldwide in writing of the determination and its
intent to terminate the Agreement, and (3) after considering
the actions taken by the Trust and/or BBOI Worldwide and any
other changes in circumstances since the giving of such a
notice, the determination shall continue to apply on the
sixtieth (60th) day following the giving of the notice,
which sixtieth day shall be the effective date of
termination.
10.2. It is understood and agreed that the right of any party
hereto to terminate this Agreement pursuant to Section 10.1(a) may be
exercised for any reason or for no reason.
10.3. No termination of this Agreement shall be effective
unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to
terminate, which notice shall set forth the basis for the termination.
Furthermore,
(a) In the event that any termination is based upon the
provisions of Article VII, or the provision of Section 10.1(a),
10.1(i), 10.1(j), or 10.1(k) of this Agreement, the prior written
notice shall be given in advance of the effective date of termination
as required by those provisions; and
(b) in the event that any termination is based upon the
provisions of Section 10.1(c) or 10.1(d) of this Agreement, the prior
written notice shall be given at least ninety (90) days before the
effective date of termination.
10.4. Notwithstanding any termination of this Agreement,
subject to Section 1.2 of this Agreement and for so long as the Trust
continues to exist, the Trust and BBOI Worldwide shall at the option
of the Insurance Company, continue to make available additional shares
of the Trust pursuant to the terms and conditions of this Agreement,
for all Contracts in effect on the effective date of termination of
-22-
<PAGE>
this Agreement ("Existing Contracts"). Specifically, without limita-
tion, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Trust, redeem investments in the Trust
and/or invest in the Trust upon the making of additional purchase
payments under the Existing Contracts. The parties agree that this
Section 10.4 shall not apply to any terminations under Article VII and
the effect of Article VII terminations shall be governed by Article
VII of this Agreement.
10.5. The Insurance Company shall not redeem Trust shares
attributable to the Contracts (as opposed to Trust shares attributable
to the Insurance Company's assets held in the Account) except (i) as
necessary to implement Contract-owner-initiated transactions, or (ii)
as required by state and/or federal laws or regulations or judicial or
other legal precedent of general application (a "Legally Required
Redemption"). Upon request, the Insurance Company will promptly
furnish to the Trust and BBOI Worldwide the opinion of counsel for the
Insurance Company (which counsel shall be reasonably satisfactory to
the Trust and BBOI Worldwide) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, the Insurance Company shall not prevent new Contract
owners from allocating payments to a Fund that formerly was available
under the Contracts without first giving the Trust or BBOI Worldwide
90 days notice of its intention to do so.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of that other
party set forth below or at such other address as the other party may
from time to time specify in writing.
If to the Trust:
210 University Boulevard, Suite 900
Denver, Colorado 80206
Attention: Kevin R. Fay, Vice President
If to the Insurance Company:
11815 N. Pennsylvania Street
Carmel, Indiana 46032
Attention: L. Gregory Gloeckner, Chief Marketing Officer
If to BBOI Worldwide:
210 University Boulevard, Suite 900
Denver, Colorado 80206
Attention: Kevin R. Fay
-23-
<PAGE>
ARTICLE XII. MISCELLANEOUS
12.1. Subject to the requirements of legal process and
regulatory authority, each party hereto shall treat as confidential
the names and addresses of the owners of the Contracts and all
information reasonably identified as confidential in writing by any
other party hereto and, except as permitted by this Agreement, shall
not disclose, disseminate or utilize such names and addresses and
other confidential information without the express written consent of
the affected party unless and until that information may come into the
public domain.
12.2. 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.
12.3. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one
and the same instrument.
12.4. 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.
12.5. Each party hereto shall cooperate with each other party
and all appropriate governmental authorities (including without
limitation the Commission, the NASD and state insurance regulators)
and shall permit those authorities reasonable access to its books and
records in connection with any lawful investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
12.6. 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.
12.7. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns;
provided, that no party may assign this Agreement without the prior
written consent of the others.
-24-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly
authorized representative as of the date specified below.
Insurance Company:
GREAT AMERICAN RESERVE INSURANCE COMPANY
By its authorized officer,
By:______________________________________
Title:___________________________________
Date:____________________________________
Trust:
BERGER INSTITUTIONAL PRODUCTS TRUST
By its authorized officer,
By:______________________________________
Title:___________________________________
Date:____________________________________
BBOI Worldwide:
BBOI WORLDWIDE LLC
By its authorized officer,
By:______________________________________
Title:___________________________________
Date:____________________________________
-25-
<PAGE>
SCHEDULE A
ACCOUNTS
NAME OF ACCOUNT DATE OF RESOLUTION OF
INSURANCE COMPANY'S BOARD
WHICH ESTABLISHED THE ACCOUNT
Great American Reserve November 12, 1993
Variable Annuity Account E<PAGE>
SCHEDULE B
CONTRACTS
1. Contract Form 22-4047/22-4048
---------------<PAGE>
SCHEDULE C
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsi-
bilities for the handling of proxies relating to the Trust by BBOI
Worldwide, the Trust and the Insurance Company. The defined terms
herein shall have the meanings assigned in the Participation Agreement
except that the term "Insurance Company" shall also include the
department or third party assigned by the Insurance Company to perform
the steps delineated below.
1. The number of proxy proposals is given to the Insurance Company
by BBOI Worldwide as early as possible before the date set by
the Trust for the shareholder meeting to facilitate the
establishment of tabulation procedures. At this time BBOI
Worldwide will inform the Insurance Company of the Record,
Mailing and Meeting dates. This will be done verbally
approximately two months before meeting.
2. Promptly after the Record Date, the Insurance Company will
perform a "tape run", or other activity, which will generate the
names, addresses and number of units which are attributed to
each contractowner/policyholder (the "Customer") as of the
Record Date. Allowance should be made for account adjustments
made after this date that could affect the status of the
Customers' accounts of the Record Date.
Note: The number of proxy statements is determined by the
activities described in Step #2. The Insurance Company will use
its best efforts to call in the number of Customers to BBOI
Worldwide, as soon as possible, but no later than one week after
the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Insurance Company by the Trust. The
Insurance Company, at its expense, shall produce and personalize
the Voting Instruction cards. BBOI Worldwide must approve the
Card before it is printed. Allow approximately 2-4 business
days for printing information on the Cards. Information
commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification
of votes (already on Cards as printed by the Trust).
(This and related steps may occur later in the chronological
process due to possible uncertainties relating to the
proposals.)
<PAGE>
4. During this time, BBOI Worldwide will develop, produce, and the
Trust will pay for the Notice of Proxy and the Proxy Statement
(one document). Printed and folded notices and statements will
be sent to Insurance Company for insertion into envelopes
(envelopes and return envelopes are provided and paid for by the
Insurance Company). Contents of envelope sent to customers by
Insurance Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. Return envelope (postage pre-paid by Insurance Company)
addressed to the Insurance Company or its tabulation agent
d. "Urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to vote
as quickly as possible and that their vote is important.
One copy will be supplied by the Trust.)
e. Cover letter - optional, supplied by Insurance Company and
reviewed and approved in advance by BBOI Worldwide.
5. The above contents should be received by the Insurance Company
approximately 3-5 business days before mail date. Individual in
charge at Insurance Company reviews and approves the contents of
the mailing package to ensure correctness and completeness.
Copy of this approval sent to BBOI Worldwide.
6. Package mailed by the Insurance Company.
* The Trust must allow at least a 15-day solicitation time to
----
the Insurance Company as the shareowner. (A 5-week period
is recommended.) Solicitation time is calculated as
calendar days from (but not including) the meeting, counting
---
backwards.
7. Collection and tabulation of Cards begins. Tabulation usually
takes place in another department or another vendor depending on
process used. An often used procedure is to sort cards on
arrival by proposal into vote categories of all yes, no, or
mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for
postmark information would be due to an insurance
company's internal procedure.
8. If Cards are mutilated, or for any reason are illegible or are
not signed properly, they are sent back to the Customer with an
explanatory letter, a new Card and return envelope. The
mutilated or illegible Card is disregarded and considered to be
not received for purposes of vote tabulation. Such mutilated or
--- --------
illegible Cards are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards
are usually remedied individually.
-2-
<PAGE>
9. There are various control procedures used to ensure proper
tabulation of votes and accuracy of that tabulation. The most
prevalent is to sort the Cards as they first arrive into
categories depending upon their vote; an estimate of how the
vote is progressing may then be calculated. If the initial
estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
10. The actual tabulation of votes is done in units which is then
converted to shares. (It is very important that the Trust
receives the tabulations stated in terms of a percentage and the
number of shares.) BBOI Worldwide must review and approve
------
tabulation format.
11. Final tabulation in shares is verbally given by the Insurance
Company to BBOI Worldwide on the morning of the meeting not
later than 10:00 a.m. Denver time. BBOI Worldwide may request
an earlier deadline if required to calculate the vote in time
for the meeting.
12. A Certificate of Mailing and Authorization to Vote Shares will
be required from the Insurance Company as well as an original
copy of the final vote. BBOI Worldwide will provide a standard
form for each Certification.
13. The Insurance Company will be required to box and archive the
Cards received from the Customers. In the event that any vote
is challenged or if otherwise necessary for legal, regulatory,
or accounting purposes, BBOI Worldwide will be permitted
reasonable access to such Cards.
14. All approvals and "signing-off" may be done orally, but must
always be followed up in writing.
-3-
Exhibit 9.7
FUND PARTICIPATION AGREEMENT
Berger Institutional Products Trust
<PAGE>
TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares.................................4
ARTICLE II. Representations and Warranties......................7
ARTICLE III. Prospectuses and Proxy Statements; Voting..........11
ARTICLE IV. Sales Material and Information.....................14
ARTICLE V. Fees and Expenses..................................16
ARTICLE VI. Diversification and Qualification..................17
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order...........21
ARTICLE VIII. Indemnification....................................24
ARTICLE IX. Applicable Law.....................................37
ARTICLE X. Termination........................................38
ARTICLE XI. Notices............................................41
ARTICLE XII. Miscellaneous......................................42
SCHEDULE A Contracts..........................................46
SCHEDULE B Designated Portfolios..............................47
SCHEDULE C Administrative Services............................48
SCHEDULE D Reports per Section 6.6............................49
SCHEDULE E Expenses...........................................52
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
Among
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
BERGER INSTITUTIONAL PRODUCTS TRUST,
BERGER ASSOCIATES, INC.,
BERGER DISTRIBUTORS, INC.
and
CHARLES SCHWAB & CO., INC.
THIS AGREEMENT, made and entered into as of this ____ day of
_______________, 1997 by and among GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY (hereinafter "GWL&A"), a Colorado life insurance company, on
its own behalf and on behalf of its Separate Account Variable Annuity-
1 Series Account (the "Account"); BERGER INSTITUTIONAL PRODUCTS TRUST,
a Delaware Business Trust (hereinafter the "Fund"); BERGER ASSOCIATES,
INC. (hereinafter the "Adviser"), a corporation organized under the
laws of Delaware; BERGER DISTRIBUTORS, INC., a corporation organized
under the laws of Colorado (hereinafter the "Distributor"); and
CHARLES SCHWAB & CO., INC., a California corporation (hereinafter
"Schwab").
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle
for separate accounts established for variable life insurance policies
and/or variable annuity contracts (collectively, the "Variable
Insurance Products") to be offered by insurance companies, including
GWL&A, which have entered into participation agreements similar to
this Agreement (hereinafter "Participating Insurance Companies"); and
1
<PAGE>
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each designated a "Portfolio" and repre-
senting the interest in a particular managed portfolio of securities
and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission (hereinafter the "SEC"), dated April 24, 1996
(File No. 812-9852), granting Participating Insurance Companies and
variable annuity and variable life insurance separate accounts
exemptions from the provisions of sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (hereinafter
the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Fund to be sold to and
held by variable annuity and variable life insurance separate accounts
of life insurance companies that may or may not be affiliated with one
another and qualified pension and retirement plans ("Qualified Plans")
(hereinafter the "Mixed and Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and shares of the Portfolio(s)
are registered under the Securities Act of 1933, as amended
(hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser
under the Investment Advisers Act of 1940, as amended, and any
applicable state securities laws; and
WHEREAS, the Distributor is duly registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended, (the "1934
Act") and is a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD"); and
WHEREAS, GWL&A has registered certain variable annuity contracts
supported wholly or partially by the Account (the "Contracts") under
the 1933 Act and said Contracts are listed in Schedule A attached
hereto and incorporated herein by reference, as such Schedule may be
amended from time to time by mutual written agreement; and
2
<PAGE>
WHEREAS, the Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of
Directors of GWL&A on July 24, 1995, under the insurance laws of the
State of Colorado, to set aside and invest assets attributable to the
Contracts; and
WHEREAS, GWL&A has registered the Account as a unit investment
trust under the 1940 Act and has registered the securities deemed to
be issued by the Account under the 1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, GWL&A intends to purchase shares in the Portfolio(s)
listed in Schedule B attached hereto and incorporated herein by
reference, as such Schedule may be amended from time to time by mutual
written agreement (the "Designated Portfolio(s)"), on behalf of the
Account to fund the Contracts, and the Fund is authorized to sell such
shares to unit investment trusts such as the Account at net asset
value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Account also intends to purchase shares in other
open-end investment companies or series thereof not affiliated with
the Fund (the "Unaffiliated Funds") on behalf of the Account to fund
the Contracts; and
WHEREAS, Schwab will perform certain services for the Fund in
connection with the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, GWL&A,
Schwab, the Fund, the Distributor and the Adviser agree as follows:
3
<PAGE>
ARTICLE I. Sale of Fund Shares
-------------------
1.1. The Fund agrees to sell to GWL&A those shares of the
Designated Portfolio(s) which the Account orders, executing such
orders on each Business Day at the net asset value next computed after
receipt by the Fund or its designee of the order for the shares of the
Portfolios. For purposes of this Section 1.1, GWL&A shall be the
designee of the Fund for receipt of such orders and receipt by such
designee shall constitute receipt by the Fund, provided that the Fund
receives notice of any such order by 10:00 a.m. Eastern 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 the
Fund calculates its net asset value pursuant to the rules of the SEC.
1.2. The Fund agrees to make shares of the Designated Port-
folio(s) available for purchase at the applicable net asset value per
share by GWL&A and the Account on those days on which the Fund
calculates its Designated Portfolio(s)' net asset value pursuant to
rules of the SEC, and the Fund shall calculate such net asset value on
each day which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Trustees of the Fund
(hereinafter the "Board") may refuse to sell shares of any Portfolio
to any person, or suspend or terminate the offering of shares of any
Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the
Board acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary in the best interests
of the shareholders of such Portfolio.
1.3. The Fund will not sell shares of the Designated Portfolio(s)
to any other Participating Insurance Company separate account unless
an agreement containing provisions substantially the same as Sections
2.1, 3.5, 3.6, 3.7, and Article VII of this Agreement is in effect to
govern such sales.
1.4. The Fund agrees to redeem for cash, on GWL&A's request, any
full or fractional shares of the Fund held by GWL&A, executing such
requests on each Business Day at the net
4
<PAGE>
asset value next computed after receipt by the Fund or its designee of
the request for redemption. However, if one or more of the Designated
Portfolios has determined to settle redemption transactions for all of
its shareholders on a delayed basis (more than one Business Day, but
in no event more than three Business Days, after the date on which the
redemption order is received, unless otherwise permitted by an order
of the Commission under Section 22(e) of the 1940 Act), the Fund shall
be permitted to delay sending redemption proceeds to GWL&A by the same
number of days that the Fund is delayed sending redemption proceeds to
the other shareholders of the Fund. This Section 1.4 may be amended,
in writing, by the parties consistent with the requirements of the
1940 Act and interpretations thereof. For purposes of this Section
1.4, GWL&A shall be the designee of the Fund for receipt of requests
for redemption and receipt by such designee shall constitute receipt
by the Fund, provided that the Fund receives notice of any such
request for redemption by 10:00 A.M. Eastern time on the next
following Business Day.
1.5. The Parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive; the Fund's shares may
be sold to other Participating Insurance Companies (subject to Section
1.3 and Article VI hereof) and the cash value of the Contracts may be
invested in other investment companies.
1.6. GWL&A shall pay for Fund shares by 3:00 p.m. Eastern time on
the next Business Day after an order to purchase Fund shares is made
in accordance with the provisions of Section 1.1 hereof. Payment
shall be in federal funds transmitted by wire and/or by a credit for
any shares redeemed the same day as the purchase.
1.7. The Fund shall pay and transmit the proceeds of redemptions
of Fund shares by 3:00 p.m. Eastern Time on the next Business Day
after a redemption order is received in accordance with Section 1.4
hereof. Payment shall be in federal funds transmitted by wire and/or
a credit for any shares purchased the same day as the redemption.
5
<PAGE>
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to GWL&A or the
Account. Shares ordered from the Fund will be recorded in an
appropriate title for the Account or the appropriate sub-account of
the Account.
1.9. The Fund shall furnish same day notice (by wire or tele-
phone, followed by written confirmation) to GWL&A of any income,
dividends or capital gain distributions payable on the Designated
Portfolio(s)' shares. GWL&A hereby elects to receive all such income
dividends and capital gain distributions as are payable on the
Portfolio shares in additional shares of that Portfolio. GWL&A
reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund
shall notify GWL&A by the end of the next following Business Day of
the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Designated Portfolio available to GWL&A on each Business Day as soon
as reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make such net asset value
per share available by 6:00 p.m. Eastern time. In the event of an
error in the computation of a Designated Portfolio's net asset value
per share ("NAV") or any dividend or capital gain distribution (each,
a "pricing error"), the Adviser or the Fund shall immediately notify
GWL&A as soon as possible after discovery of the error. Such
notification may be verbal, but shall be confirmed promptly in writing
in accordance with Article XI of this Agreement. A pricing error
shall be corrected as follows: (a) if the pricing error results in a
difference between the erroneous NAV and the correct NAV of less than
$0.01 per share, then no corrective action need be taken; (b) if the
pricing error results in a difference between the erroneous NAV and
the correct NAV equal to or greater than $0.01 per share, but less
than 1/2 of 1% of the Designated Portfolio's NAV at the time of the
error, then the Adviser shall reimburse the Designated Portfolio for
any loss, after taking into consideration any positive effect of such
error; however, no adjustments to Contractowner accounts need be made;
and (c) if the pricing error results in a difference between the
erroneous NAV and the correct NAV equal to or greater than 1/2 of 1%
of the
6
<PAGE>
Designated Portfolio's NAV at the time of the error, then the Adviser
shall reimburse the Designated Portfolio for any loss (without taking
into consideration any positive effect of such error) and shall
reimburse GWL&A for the costs of adjustments made to correct
Contractowner accounts in accordance with the provisions of Schedule
E. If an adjustment is necessary to correct a material error which
has caused Contractowners to receive less than the amount to which
they are entitled, the number of shares of the applicable sub-account
of such Contractowners will be adjusted and the amount of any
underpayments shall be credited by the Adviser to GWL&A for crediting
of such amounts to the applicable Contractowners accounts. Upon
notification by the Adviser of any overpayment due to a material
error, GWL&A or Schwab, as the case may be, shall promptly remit to
Adviser any overpayment that has not been paid to Contractowners;
however, Adviser acknowledges that Schwab and GWL&A do not intend to
seek additional payments from any Contractowner who, because of a
pricing error, may have underpaid for units of interest credited to
his/her account. In no event shall Schwab or GWL&A be liable to
Contractowners for any such adjustments or underpayment amounts. A
pricing error within categories (b) or (c) above shall be deemed to be
"materially incorrect" or constitute a "material error" for purposes
of this Agreement.
The standards set forth in this Section 1.10 are based on the
Parties' understanding of the views expressed by the staff of the
Securities and Exchange Commission ("SEC") as of the date of this
Agreement. In the event the views of the SEC staff are later modified
or superseded by SEC or judicial interpretation, the parties shall
amend the foregoing provisions of this Agreement to comport with the
appropriate applicable standards, on terms mutually satisfactory to
all Parties.
ARTICLE II. Representations and Warranties
------------------------------
2.1. GWL&A represents and warrants that the Contracts and the
securities deemed to be issued by the Account under the Contracts are
or will be registered under the 1933 Act; that the Contracts will be
issued and sold in compliance in all material respects with all
applicable federal and state laws and that the sale of the Contracts
shall comply in all material respects with
7
<PAGE>
state insurance suitability requirements. GWL&A further represents
and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established the Account prior to any issuance or sale of units thereof
as a segregated asset account under Section 10-7-401, et. seq. of the
Colorado Insurance Law and has registered the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts and that it
will maintain such registration for so long as any Contracts are
outstanding as required by applicable law.
2.2. The Fund represents and warrants that Designated
Portfolio(s) shares sold pursuant to this Agreement shall be regis-
tered under the 1933 Act, duly authorized for issuance and sold in
compliance with all applicable federal securities laws including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act and
that the Fund is and shall remain registered under the 1940 Act. The
Fund shall amend the registration statement for its shares under the
1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of its shares.
2.3. The Fund reserves the right to adopt a plan pursuant to
Rule 12b-1 under the 1940 Act and to impose an asset-based or other
charge to finance distribution expenses as permitted by applicable law
and regulation. In any event, the Fund and Adviser agree to comply
with applicable provisions and SEC staff interpretations of the 1940
Act to assure that the investment advisory or management fees paid to
the Adviser by the Fund are in accordance with the requirements of the
1940 Act. To the extent that the Fund decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have its
Board, a majority of whom are not interested persons of the Fund,
formulate and approve any plan pursuant to Rule 12b-1 under the 1940
Act to finance distribution expenses.
2.4. The Fund represents and warrants that it will make every
effort to ensure that the investment policies, fees and expenses of
the Designated Portfolio(s) are and shall at all times remain in
compliance with the insurance and other applicable laws of the State
of Colorado and any other applicable state to the extent required to
perform this Agreement. The Fund further
8
<PAGE>
represents and warrants that it will make every effort to ensure that
Designated Portfolio(s) shares will be sold in compliance with the
insurance laws of the State of Colorado and all applicable state
insurance and securities laws. The Fund shall register and qualify
the shares for sale in accordance with the laws of the various states
if and to the extent required by applicable law. GWL&A and the Fund
will endeavor to mutually cooperate with respect to the implementation
of any modifications necessitated by any change in state insurance
laws, regulations or interpretations of the foregoing that affect the
Designated Portfolio(s) (a "Law Change"), and to keep each other
informed of any Law Change that becomes known to either party. In the
event of a Law Change, the Fund agrees that, except in those
circumstances where the Fund has advised GWL&A that its Board of
Directors has determined that implementation of a particular Law
Change is not in the best interest of all of the Fund's shareholders
with an explanation regarding why such action is lawful, any action
required by a Law Change will be taken.
2.5. The Fund represents and warrants that it is lawfully
organized and validly existing under the laws of the State of Delaware
and that it does and will comply in all material respects with the
1940 Act.
2.6. The Adviser represents and warrants that it is and shall
remain duly registered under all applicable federal and state
securities laws and that it shall perform its obligations for the Fund
in compliance in all material respects with the laws of the State of
Delaware and any applicable state and federal securities laws.
2.7. The Distributor represents and warrants that it is and
shall remain duly registered under all applicable federal and state
securities laws and that it shall perform its obligations for the Fund
in compliance in all material respects with the laws of the State of
Colorado and any applicable state and federal securities laws.
2.8. The Fund and the Adviser represent and warrant that all of
their respective officers, employees, investment advisers, and other
individuals or entities dealing with the
9
<PAGE>
money and/or securities of the Fund are, and shall continue to be at
all times, covered by one or more blanket fidelity bonds or similar
coverage for the benefit of the Fund in an amount not less than the
minimal coverage required by Rule 17g-1 under the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid
bonds shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
2.9. Schwab represents and warrants that it has completed,
obtained and performed, in all material respects, all registrations,
filings, approvals, and authorizations, consents and examinations
required by any government or governmental authority as may be
necessary to perform this Agreement. Schwab does and will comply, in
all material respects, with all applicable laws, rules and regulations
in the performance of its obligations under this Agreement.
2.10. The Fund will provide GWL&A with as much advance notice as
is reasonably practicable of any material change affecting the
Designated Portfolio(s) (including, but not limited to, any material
change in the registration statement or prospectus affecting the
Designated Portfolio(s)) and any proxy solicitation affecting the
Designated Portfolio(s) and consult with GWL&A in order to implement
any such change in an orderly manner, recognizing the expenses of
changes and attempting to minimize such expenses by implementing them
in conjunction with regular annual updates of the prospectus for the
Contracts. The Fund agrees to share equitably in expenses incurred by
GWL&A as a result of actions taken by the Fund, consistent with the
allocation of expenses contained in Schedule E attached hereto and
incorporated herein by reference.
2.11. GWL&A represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of 1986
as amended ("the Code"), that the Contracts are currently and at the
time of issuance will be treated as annuity contracts under applicable
provisions of the Code, and that it will make every effort to maintain
such treatment and that it will notify Schwab, the Fund, the
Distributor and the Adviser immediately upon having a reasonable basis
for believing that the Contracts have ceased to be so treated or that
they might
10
<PAGE>
not be so treated in the future. In addition, GWL&A represents and
warrants that the Account is a "segregated asset account" and that
interests in the Account are offered exclusively through the purchase
of or transfer into a "variable contract" within the meaning of such
terms under Section 817 of the Code and the regulations thereunder.
GWL&A will use every effort to continue to meet such definitional
requirements, and it will notify Schwab, the Fund, the Distributor and
the Adviser immediately upon having a reasonable basis for believing
that such requirements have ceased to be met or that they might not be
met in the future. GWL&A represents and warrants that it will not
purchase Fund shares with assets derived from tax-qualified retirement
plans except, indirectly, through Contracts purchased in connection
with such plans.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. At least annually, the Adviser or Distributor shall provide
GWL&A and Schwab with as many copies of the Fund's current prospectus
for the Designated Portfolio(s) as GWL&A and Schwab may reasonably
request for marketing purposes (including distribution to
Contractowners with respect to new sales of a Contract), with expenses
to be borne in accordance with Schedule E hereof. If requested by
GWL&A in lieu thereof, the Adviser, Distributor or Fund shall provide
such documentation (including a camera-ready copy and computer
diskette of the current prospectus for the Designated Portfolio(s))
and other assistance as is reasonably necessary in order for GWL&A
once each year (or more frequently if the prospectuses for the
Designated Portfolio(s) are amended) to have the prospectus for the
Contracts and the Fund's prospectus for the Designated Portfolio(s)
printed together in one document. The Fund and Adviser agree that the
prospectus (and semi-annual and annual reports) for the Designated
Portfolio(s) will describe only the Designated Portfolio(s) and will
not name or describe any other portfolios or series that may be in the
Fund unless required by law.
3.2. If applicable state or federal laws or regulations require
that the Statement of Additional Information ("SAI") for the Fund be
distributed to all Contractowners, then the Fund, Distributor and/or
the Adviser shall provide GWL&A with copies of the Fund's SAI or
11
<PAGE>
documentation thereof for the Designated Portfolio(s) in such quanti-
ties, with expenses to be borne in accordance with Schedule E hereof,
as GWL&A may reasonably require to permit timely distribution thereof
to Contractowners. The Adviser, Distributor and/or the Fund shall
also provide SAIs to any Contractowner or prospective owner who
requests such SAI from the Fund (although it is anticipated that such
requests will be made to GWL&A or Schwab).
3.3. The Fund, Distributor and/or Adviser shall provide GWL&A
and Schwab with copies of the Fund's proxy material, reports to stock-
holders and other communications to stockholders for the Designated
Portfolio(s) in such quantity, with expenses to be borne in accordance
with Schedule E hereof, as GWL&A may reasonably require to permit
timely distribution thereof to Contractowners.
3.4. It is understood and agreed that, except with respect to
information regarding GWL&A or Schwab provided in writing by that
party, neither GWL&A nor Schwab are responsible for the content of the
prospectus or SAI for the Designated Portfolio(s). It is also
understood and agreed that, except with respect to information
regarding the Fund, the Distributor, the Adviser or the Designated
Portfolio(s) provided in writing by the Fund, the Distributor or the
Adviser, neither the Fund, Distributor nor Adviser are responsible for
the content of the prospectus or SAI for the Contracts.
3.5. If and to the extent required by law GWL&A shall:
(i) solicit voting instructions from Contractowners;
(ii) vote the Designated Portfolio(s) shares held in
the Account in accordance with instructions
received from Contractowners: and
(iii) vote Designated Portfolio shares held in the
Account for which no instructions have been
received in the same proportion as Designated
Portfolio(s) shares for which instructions have
been received from Contractowners, so long as and
to the extent that the SEC continues to interpret
the 1940 Act to require pass-through voting
privileges for variable contract owners. GWL&A
reserves the right to vote Fund shares
12
<PAGE>
held in any segregated asset account in its own right,
to the extent permitted by law.
3.6. GWL&A shall be responsible for assuring that each of its
separate accounts holding shares of a Designated Portfolio calculates
voting privileges as directed by the Fund and agreed to by GWL&A and
the Fund. The Fund agrees to promptly notify GWL&A of any changes of
interpretations or amendments of the Mixed and Shared Funding
Exemptive Order. GWL&A shall fulfill its obligations under, and abide
by the terms of, the Mixed and Shared Funding Exemptive Order.
3.7. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will
either provide for annual meetings (except insofar as the SEC may
interpret Section 16 of the 1940 Act not to require such meetings) or,
as the Fund currently intends, comply with Section 16(c) of the 1940
Act (although the Fund is not one of the trusts described in Section
16(c) of that Act) as well as with Sections 16(a) and, if and when
applicable, 16(b). Further, the Fund will act in accordance with the
SEC's interpretation of the requirements of Section 16(a) with respect
to periodic elections of directors or trustees and with whatever rules
the Commission may promulgate with respect thereto.
13
<PAGE>
ARTICLE IV. Sales Material and Information
------------------------------
4.1. GWL&A and Schwab shall furnish, or shall cause to be fur-
nished, to the Fund or its designee, a copy of each piece of sales
literature or other promotional material that GWL&A or Schwab,
respectively, develops or proposes to use and in which the Fund (or a
Portfolio thereof), its Adviser or one of its sub-advisers or the
Distributor is named in connection with the Contracts, at least ten
(10) Business Days prior to its use. No such material shall be used
if the Fund or its designee objects to such use within five (5)
Business Days after receipt of such material.
4.2. GWL&A and Schwab shall not give any information or make any
representations or statements on behalf of the Fund in connection with
the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus
for the Fund shares, as such registration statement and prospectus may
be amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature or other promotional
material approved by the Fund, Distributor or Adviser, except with the
permission of the Fund, Distributor or Adviser.
4.3. The Fund or the Adviser shall furnish, or shall cause to be
furnished, to GWL&A and Schwab, a copy of each piece of sales litera-
ture or other promotional material in which GWL&A and/or its separate
account(s), or Schwab is named at least ten (10) Business Days prior
to its use. No such material shall be used if GWL&A or Schwab objects
to such use within five (5) Business Days after receipt of such
material.
4.4. The Fund, the Distributor and the Adviser shall not give
any information or make any representations on behalf of GWL&A or
concerning GWL&A, the Account, or the Contracts other than the
information or representations contained in a registration statement
or prospectus for the Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, or in
reports for the Account, or in sales literature or other
14
<PAGE>
promotional material approved by GWL&A or its designee, except with
the permission of GWL&A.
4.5. GWL&A, the Fund, the Distributor and the Adviser shall not
give any information or make any representations on behalf of or
concerning Schwab, or use Schwab's name except with the permission of
Schwab.
4.6. The Fund will provide to GWL&A and Schwab at least one com-
plete copy of all registration statements, prospectuses, SAIs,
reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the
Designated Portfolio(s), contemporaneously with the filing of such
document(s) with the SEC or NASD or other regulatory authorities.
4.7. GWL&A or Schwab will provide to the Fund at least one com-
plete copy of all registration statements, prospectuses, SAIs,
reports, solicitations for voting instructions, sales literature and
other promotional materials, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate
to the Contracts or the Account, contemporaneously with the filing of
such document(s) with the SEC, NASD, or other regulatory authority.
4.8. For purposes of Articles IV and VIII, the phrase "sales
literature and other promotional material" includes, but is not
limited to, 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; e.g., on-line
----
networks such as the Internet or other electronic media), sales
literature (i.e., any written communication distributed or made
----
generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar
texts, 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, and registration statements,
prospectuses, SAIs, shareholder reports,
15
<PAGE>
and proxy materials and any other material constituting sales
literature or advertising under the NASD rules, the 1933 Act or the
1940 Act.
4.9. At the request of any party to this Agreement, each other
party will make available to the other party's independent auditors
and/or representative of the appropriate regulatory agencies, all
records, data and access to operating procedures that may be
reasonably requested in connection with compliance and regulatory
requirements related to this Agreement or any party's obligations
under this Agreement.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund, the Distributor and the Adviser shall pay no fee
or other compensation to GWL&A under this Agreement, and GWL&A and
Schwab shall pay no fee or other compensation to the Fund, Distributor
or Adviser under this Agreement, although the parties hereto will bear
certain expenses in accordance with Schedule E, Articles III, V, and
other provisions of this Agreement.
5.2. All expenses incident to performance by the Fund, the
Distributor and the Adviser under this Agreement shall be paid by the
appropriate party, as further provided in Schedule E. The Fund shall
see to it that all shares of the Designated Portfolio(s) are
registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent required, in accordance with
applicable state laws prior to their sale.
5.3. The parties shall bear the expenses of routine annual
distribution (mailing costs) of the Fund's prospectus and distribution
(mailing costs) of the Fund's proxy materials and reports to owners of
Contracts offered by GWL&A, in accordance with Schedule E.
5.4. The Fund, the Distributor and the Adviser acknowledge that
a principal feature of the Contracts is the Contractowner's ability to
choose from a number of unaffiliated mutual funds (and portfolios or
series thereof), including the Designated Portfolio(s) and the
Unaffiliated
16
<PAGE>
Funds, and to transfer the Contract's cash value between funds and
portfolios. The Fund, the Distributor and the Adviser agree to
cooperate with GWL&A and Schwab in facilitating the operation of the
Account and the Contracts as described in the prospectus for the
Contracts, including but not limited to cooperation in facilitating
transfers between Unaffiliated Funds.
5.5. Schwab agrees to provide certain administrative services,
specified in Schedule C attached hereto and incorporated herein by
reference, in connection with the arrangements contemplated by this
Agreement. The parties acknowledge and agree that the services
referred to in this Section 5.5 are recordkeeping, shareholder
communication, and other transaction facilitation and processing, and
related administrative services only and are not the services of an
underwriter or a principal underwriter of the Fund, and that Schwab is
not an underwriter for the shares of the Designated Portfolio(s),
within the meaning of the 1933 Act or the 1940 Act.
5.6. As compensation for the services specified in Schedule C
hereto, the Adviser agrees to pay Schwab a monthly Administrative
Service Fee based on the percentage per annum on Schedule C hereto
applied to the average daily value of the shares of the Designated
Portfolio(s) held in the Account with respect to Contracts sold by
Schwab. This monthly Administrative Service Fee is due and payable
before the 15th (fifteenth) day following the last day of the month to
which it relates.
ARTICLE VI. Diversification and Qualification
---------------------------------
6.1. The Fund, the Distributor and the Adviser represent and
warrant that the Fund will at all times sell its shares and invest its
assets in such a manner as to ensure that the Contracts will be
treated as annuity contracts under the Code, and the regulations
issued thereunder. Without limiting the scope of the foregoing, the
Fund, Distributor and Adviser represent and warrant that the Fund and
each Designated Portfolio thereof will at all times comply with
Section 817(h) of the Code and Treasury Regulation Section 1.817-5, as
amended from time to time, and any Treasury interpretations thereof,
relating to the diversification
17
<PAGE>
requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications or successor
provisions to such Section or Regulations. The Fund, the Distributor
and the Adviser agree that shares of the Designated Portfolio(s) will
be sold only to Participating Insurance Companies and their separate
accounts and to Qualified Plans.
6.2. No shares of any Designated Portfolio of the Fund will be
sold to the general public.
6.3. The Fund, the Distributor and the Adviser represent and
warrant that the Fund and each Designated Portfolio is currently
qualified as a Regulated Investment Company under Subchapter M of the
Code, and that each Designated Portfolio will maintain such
qualification (under Subchapter M or any successor or similar
provisions) as long as this Agreement is in effect.
6.4. The Fund, Distributor or Adviser will notify GWL&A immedi-
ately upon having a reasonable basis for believing that the Fund or
any Designated Portfolio has ceased to comply with the aforesaid
Section 817(h) diversification or Subchapter M qualification
requirements or might not so comply in the future.
6.5. Without in any way limiting the effect of Sections 8.3, 8.4
and 8.5 hereof and without in any way limiting or restricting any
other remedies available to GWL&A or Schwab, the Adviser or
Distributor will pay all costs associated with or arising out of any
failure of the Fund or any Designated Portfolio to comply with
Sections 6.1, 6.2, or 6.3 hereof, including all costs associated with
reasonable and appropriate corrections or responses to any such fail-
ure; such costs may include, but are not limited to, the costs
involved in creating, organizing, and registering a new investment
company as a funding medium for the Contracts and/or the costs of
obtaining whatever regulatory authorizations are required to
substitute shares of another investment company for those of the
failed Portfolio (including but not limited to an order pursuant to
Section 26(b) of the 1940 Act); such costs are to include, but are not
limited to, fees and expenses of legal counsel and other advisors to
GWL&A and any federal income taxes or
18
<PAGE>
tax penalties and interest thereon (or "toll charges" or exactments or
amounts paid in settlement) incurred by GWL&A with respect to itself
or owners of its Contracts in connection with any such failure or
anticipated or reasonably foreseeable failure.
6.6. The Fund at the Fund's expense shall provide GWL&A or its
designee with reports certifying compliance with the aforesaid Section
817(h) diversification and Subchapter M qualification requirements, at
the times provided for and substantially in the form attached hereto
as Schedule D and incorporated herein by reference; provided, however,
that providing such reports does not relieve the Fund of its responsi-
bility for such compliance or of its liability for any non-compliance.
6.7. GWL&A agrees that if the Internal Revenue Service ("IRS")
asserts in writing in connection with any governmental audit or review
of GWL&A or, to GWL&A's knowledge, or any Contractowner that any
Designated Portfolio has failed to comply with the diversification
requirements of Section 817(h) of the Code or GWL&A otherwise becomes
aware of any facts that could give rise to any claim against the Fund,
Distributor or Adviser as a result of such a failure or alleged
failure:
(a) GWL&A shall promptly notify the Fund, the Distributor and
the Adviser of such assertion or potential claim;
(b) GWL&A shall consult with the Fund, the Distributor and the
Adviser as to how to minimize any liability that may arise as a
result of such failure or alleged failure;
(c) GWL&A shall use its best efforts to minimize any liability
of the Fund, the Distributor and the Adviser resulting from such
failure, including, without limitation, demonstrating, pursuant
to Treasury Regulations, Section 1.817-5(a)(2), to the
commissioner of the IRS that such failure was inadvertent;
19
<PAGE>
(d) any written materials to be submitted by GWL&A to the IRS,
any Contractowner or any other claimant in connection with any of
the foregoing proceedings or contests (including, without
limitation, any such materials to be submitted to the IRS
pursuant to Treasury Regulations, Section 1.817-5(a)(2)) shall be
provided by GWL&A to the Fund, the Distributor and the Adviser
(together with any supporting information or analysis) within at
least two (2) business days prior to submission;
(e) GWL&A shall provide the Fund, the Distributor and the Adviser
with such cooperation as the Fund, the Distributor and the
Adviser shall reasonably request (including, without limitation,
by permitting the Fund, the Distributor and the Adviser to review
the relevant books and records of GWL&A) in order to facilitate
review by the Fund, the Distributor and the Adviser of any
written submissions provided to it or its assessment of the
validity or amount of any claim against it arising from such
failure or alleged failure;
(f) GWL&A shall not with respect to any claim of the IRS or any
Contractowner that would give rise to a claim against the Fund,
the Distributor and the Adviser (i) compromise or settle any
claim, (ii) accept any adjustment on audit, or (iii) forego any
allowable administrative or judicial appeals, without the express
written consent of the Fund, the Distributor and the Adviser,
which shall not be unreasonably withheld; provided that, GWL&A
shall not be required to appeal any adverse judicial decision
unless the Fund and the Adviser shall have provided an opinion of
independent counsel to the effect that a reasonable basis exists
for taking such appeal; and further provided that the Fund, the
Distributor and the Adviser shall bear the costs and expenses,
including reasonable attorney's fees, incurred by GWL&A in
complying with this clause (f).
20
<PAGE>
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order
----------------------------------------
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract
owners of all separate accounts investing in the Fund and the
participants of all Qualified Plans investing in the Fund. An irre-
concilable material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d)
the manner in which the investments of any Portfolio are being
managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners or by
contract owners of different Participating Insurance Companies; or (f)
a decision by a Participating Insurance Company to disregard the
voting instructions of contract owners. The Board shall promptly
inform GWL&A if it determines that an irreconcilable material conflict
exists and the implications thereof. The directors of the Fund shall
have sole authority to determine whether an irreconcilable material
conflict exists and their determination shall be binding upon GWL&A.
7.2. GWL&A will report any potential or existing conflicts of
which it is aware to the Board. GWL&A will assist the Board in
carrying out its responsibilities under the Mixed and Shared Funding
Exemptive Order, by providing the Board with all information
reasonably necessary for the Board to consider any issues raised.
This includes, but is not limited to, an obligation by GWL&A to inform
the Board whenever contract owner voting instructions are to be
disregarded. Such responsibilities shall be carried out by GWL&A with
a view only to the interests of its Contractowners.
7.3. If it is determined by a majority of the Board, or a
majority of its directors who are not interested persons of the Fund,
the Distributor, the Adviser or any sub-adviser to any of the
Designated Portfolios (the "Independent Directors"), that a material
irreconcilable conflict exists, GWL&A and/or other Participating
Insurance Companies or Qualified Plans shall, at their expense and to
the extent reasonably practicable (as determined by a majority of the
Independent Directors), take whatever steps are necessary to remedy or
eliminate the irreconcilable material
21
<PAGE>
conflict, up to and including: (1) withdrawing the assets allocable
to some or all of the separate accounts from the Fund or any
Designated Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another portfolio of
the Fund, or submitting the question whether such segregation should
be implemented to a vote of all affected contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e.,
annuity contract owners, life insurance contract owners, or variable
contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2)
establishing a new registered management investment company or managed
separate account and obtaining any necessary approvals or orders of
the Commission in connection therewith.
7.4. If a material irreconcilable conflict arises because of a
decision by GWL&A to disregard contract owner voting instructions and
that decision represents a minority position or would preclude a
majority vote, GWL&A may be required, at the Fund's election, to
withdraw the Account's investment in the Fund and terminate this
Agreement; provided, however that such withdrawal and termination
shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Independent
Directors. Any such withdrawal and termination must take place within
six (6) months after the Fund gives written notice that this provision
is being implemented, and until the end of that six month period the
Fund shall continue to accept and implement orders by GWL&A for the
purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to GWL&A
conflicts with the majority of other state regulators, then GWL&A will
withdraw the Account's investment in the Fund and terminate this
Agreement within six months after the Board informs GWL&A in writing
that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. Until the end
22
<PAGE>
of the foregoing six month period, the Fund shall continue to accept
and implement orders by GWL&A for the purchase (and redemption) of
shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement,
a majority of the disinterested members of the Board shall determine
whether any proposed action adequately remedies any irreconcilable
material conflict, but in no event will the Fund be required to
establish a new funding medium for the Contracts. GWL&A shall not be
required by Section 7.3 to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority
of Contractowners materially and adversely affected by the
irreconcilable material conflict. In the event that the Board
determines that any proposed action does not adequately remedy any
irreconcilable material conflict, then GWL&A will withdraw the
Account's investment in the Fund and terminate this Agreement within
six (6) months after the Board informs GWL&A in writing of the
foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
Independent Directors.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules promulgated thereunder with
respect to mixed or shared funding (as defined in the Mixed and Shared
Funding Exemptive Order) on terms and conditions materially different
from those contained in the Mixed and Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with
Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable: and (b) Sections 3.5, 3.6, 3.7, 7.1,
7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only
to the extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or adopted.
23
<PAGE>
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification By GWL&A
------------------------
8.1(a). GWL&A agrees to indemnify and hold harmless the Fund,
the Distributor and the Adviser and each of their officers, directors
or trustees, employees or agents and each person, if any, who controls
the Fund, Distributor or Adviser within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of
this Section 8.1) against any and all losses, claims, expenses,
damages, liabilities (including amounts paid in settlement with the
written consent of GWL&A) or litigation (including reasonable 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, expenses, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to
the sale, acquisition or redemption of the Fund's shares or the
Contracts and:
(i) 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 SAI covering
the Contracts or contained in the Contracts or sales
literature or other promotional material for the 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 GWL&A or Schwab by or
on behalf of the Adviser, Distributor or Fund for use in
the registration statement, prospectus or SAI covering the
Contracts or contained in the Contracts or sales literature
or other promotional material for the Contracts (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or represen-
tations (other than statements or representations contained
in the registration statement, prospectus, SAI or sales
literature or other promotional material of the Fund not
supplied by GWL&A or persons under its control) or wrongful
conduct of GWL&A or persons under its control, with respect
to the sale or distribution of the Contracts or Fund
Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI or sales literature or other
promotional material of the Fund, 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 a statement or omission was made in
reliance upon information
24
<PAGE>
furnished in writing to the Fund, Adviser or Distributor by
or on behalf of GWL&A; or
(iv) arise as a result of any failure by GWL&A to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by GWL&A in this
Agreement or arise out of or result from any other material
breach of this Agreement by GWL&A, including without
limitation Section 2.11 and Section 6.7 hereof,
as limited by and in accordance with the provisions of Sections 8.1(b)
and 8.1(c) hereof.
8.1(b). GWL&A shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, 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 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
any of the Indemnified Parties.
8.1(c). GWL&A 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 GWL&A 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 GWL&A of any such claim shall not relieve GWL&A
from any liability which it may have to the Indemnified Party against
whom such action is brought on account of this indemnification
provision, except to the extent that GWL&A has been prejudiced by such
failure to give notice. In addition, any failure by the Indemnified
Party to notify GWL&A of any such claim shall not relieve GWL&A from
any liability which it may have to the Indemnified Party against whom
the action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against
the Indemnified Parties, GWL&A shall be entitled to participate, at
its own expense, in the defense of such action.
25
<PAGE>
GWL&A also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action; provided,
however, that if the Indemnified Party shall have reasonably concluded
that there may be defenses available to it which are different from or
additional to those available to GWL&A, GWL&A shall not have the right
to assume said defense, but shall pay the costs and expenses thereof
(except that in no event shall GWL&A be liable for the fees and
expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from GWL&A to such party
of GWL&A's election to assume the defense thereof, and in the absence
of such a reasonable conclusion that there may be different or
additional defenses available to the Indemnified Party, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and GWL&A 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.
8.1(d). The Indemnified Parties will promptly notify GWL&A of
the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the
Contracts or the operation of the Fund.
26
<PAGE>
8.2. Indemnification by Schwab
-------------------------
8.2(a). Schwab agrees to indemnify and hold harmless the Fund,
the Distributor and the Adviser and each of their officers, directors
or trustees, employees or agents, and each person, if any, who
controls the Fund, Distributor or Adviser within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 8.2) against any and all losses, claims,
expenses, damages and liabilities (including amounts paid in
settlement with the written consent of Schwab) or litigation
(including reasonable legal and other expenses), to which the Indemni-
fied 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, acquisition or redemption of the Fund's
shares or the Contracts and:
(i) arise out of Schwab's dissemination of information
regarding the Fund that is both (A) materially incorrect
and (B) that was neither contained in the Fund's
registration statement nor in the Fund's sales literature
or other promotional material or provided in writing to
Schwab, or approved in writing, by or on behalf of the
Fund, Distributor or Adviser; or
(ii) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
sales literature or other promotional material prepared or
approved by Schwab for the Contracts 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 GWL&A or Schwab by or on behalf of the Adviser,
Distributor or the Fund or to Schwab by GWL&A for use in
the registration statement, prospectus or SAI covering the
Contracts or contained in the Contracts or sales literature
or other promotional material for the Contracts (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts; or
(iii) arise out of or as a result of statements or represen-
tations (other than statements or representations contained
in the registration statement, prospectus, SAI or sales
literature or other promotional material of the Fund not
supplied by Schwab or persons under its control) or
wrongful conduct of Schwab or persons under its control,
with respect to the sale or distribution of the Contracts;
or
27
<PAGE>
(iv) arise as a result of any failure by Schwab to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Schwab in this
Agreement or arise out of or result from any other material
breach of this Agreement by Schwab;
as limited by and in accordance with the provisions of Sections 8.2(b)
and 8.2(c) hereof.
8.2(b). Schwab 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
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 any of the Indemnified Parties.
8.2(c). Schwab 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 Schwab 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 Schwab of any such claim shall not relieve
Schwab from any liability which it may have to the Indemnified Party
against whom such action is brought on account of this indemnification
provision, except to the extent that Schwab has been prejudiced by
such failure to give notice. In addition, any failure by the
Indemnified Party to notify Schwab of any such claim shall not relieve
Schwab from any liability which it may have to the Indemnified Party
against whom the action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against
the Indemnified Parties, Schwab shall be entitled to participate, at
its own expense, in the defense of such action. Schwab also shall be
entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action; provided, however, that if the
Indemnified Party shall have reasonably concluded that there may be
defenses available to it which are different from or additional to
those available to Schwab,
28
<PAGE>
Schwab shall not have the right to assume said defense, but shall pay
the costs and expenses thereof (except that in no event shall Schwab
be liable for the fees and expenses of more than one counsel for
Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances). After notice from Schwab
to such party of Schwab's election to assume the defense thereof, and
in the absence of such a reasonable conclusion that there may be
different or additional defenses available to the Indemnified Party,
the Indemnified Party shall bear the fees and expenses of any addi-
tional counsel retained by it, and Schwab 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.
8.2(d). The Indemnified Parties will promptly notify Schwab of
the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the
Contracts or the operation of the Fund.
8.3. Indemnification by the Adviser
8.3(a). The Adviser agrees to indemnify and hold harmless GWL&A
and Schwab and each of their directors, officers, employees or agents,
and each person, if any, who controls GWL&A or Schwab within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.3) against any and all losses,
claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Adviser) or litigation
(including reasonable 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, acquisition or
redemption of the Fund's shares or the Contracts and:
(i) 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 SAI or sales
literature or other promotional material of the Fund
prepared by the Adviser (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
29
<PAGE>
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 the Adviser, the Distributor or the Fund by or
on behalf of GWL&A or Schwab for use in the registration
statement, prospectus or SAI for the Fund or in sales
literature or other promotional material (or any amendment
or supplement) or otherwise for use in connection with the
sale of the Contracts or the Fund shares; or
(ii) arise out of or as a result of statements or represen-
tations (other than statements or representations contained
in the registration statement, prospectus, SAI or sales
literature or other promotional material for the Contracts
not supplied by the Adviser or persons under its control)
or wrongful conduct of the Adviser or persons under their
control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, or sales literature or other
promotional material covering the 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 statement or
statements therein not misleading, if such statement or
omission was made in reliance upon information furnished in
writing to GWL&A or Schwab by or on behalf of the Adviser,
the Distributor or the Fund; or
(iv) arise as a result of any failure by the Adviser to provide
the 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 and other qualification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Adviser;
as limited by and in accordance with the provisions of Sections 8.3(b)
and 8.3(c) hereof. This indemnification is in addition to and apart
from the responsibilities and obligations of the Adviser specified in
Article VI hereof.
8.3(b). The Adviser shall not be liable under this
indemnification provision with respect to any losses, claims,
expenses, damages, liabilities or litigation to which an Indemnified
Party
30
<PAGE>
would otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or 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 any of the Indemnified Parties.
8.3(c). The 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
the 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 the Adviser of any such
claim shall not relieve the Adviser from any liability which it may
have to the Indemnified Party against whom such action is brought on
account of this indemnification provision, except to the extent that
the Adviser has been prejudiced by such failure to give notice. In
addition, any failure by the Indemnified Party to notify the Adviser
of any such claim shall not relieve the Adviser from any liability
which it may have to the Indemnified Party against whom the action is
brought otherwise than on account of this indemnification provision.
In case any such action is brought against the Indemnified Parties,
the Adviser will be entitled to participate, at its own expense, in
the defense thereof. The Adviser also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the
action; provided, however, that if the Indemnified Party shall have
reasonably concluded that there may be defenses available to it which
are different from or additional to those available to the Adviser,
the Adviser shall not have the right to assume said defense, but shall
pay the costs and expenses thereof (except that in no event shall the
Adviser be liable for the fees and expenses of more than one counsel
for Indemnified Parties in connection with any one action or separate
but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances). After notice from the
Adviser to such party of the Adviser's election to assume the defense
thereof, and in the absence of such a reasonable conclusion that there
may be different or additional defenses available to the Indemnified
Party, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Adviser will not be liable
to such party under this Agreement for
31
<PAGE>
any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than
reasonable costs of investigation.
8.3(d). GWL&A and Schwab agree to promptly notify the Adviser of
the commencement of any litigation or proceedings against GWL&A or
Schwab or any of their officers or directors in connection with the
issuance or sale of the Contracts or the operation of the Account.
8.4. Indemnification By the Fund
---------------------------
8.4(a). The Fund agrees to indemnify and hold harmless GWL&A and
Schwab and each of their directors, officers, employees or agents and
each person, if any, who controls GWL&A or Schwab within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 8.4) against any and all losses, claims,
expenses, damages, liabilities (including amounts paid in settlement
with the written consent of the Fund) or litigation (including
reasonable 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, expenses, damages, liabili-
ties or expenses (or actions in respect thereof) or settlements, are
related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
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
and other qualification requirements specified in Article
VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund; or
(iii) arise out of or result from the incorrect or untimely
calculation or reporting of the daily net asset value per
share or dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.4(b)
and 8.4(c) hereof.
8.4(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages,
liabilities or litigation to which an Indemnified Party
32
<PAGE>
would otherwise be subject by reason of such Indemnified Party's will-
ful misfeasance, bad faith, or 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
any of the Indemnified Parties.
8.4(c). The Fund 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 the Fund 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 the Fund of any such claim shall not relieve it
from any liability which it may have to the Indemnified Party against
whom such action is brought on account of this indemnification
provision, except to the extent that the Fund has been prejudiced by
such failure to give notice. In addition, any failure by the
Indemnified Party to notify the Fund of any such claim shall not
relieve the Fund from any liability which it may have to the
Indemnified Party against whom the action is brought otherwise than on
account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The Fund
shall also be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action; provided, however, that
if the Indemnified Party shall have reasonably concluded that there
may be defenses available to it which are different from or additional
to those available to the Fund, the Fund shall not have the right to
assume said defense, but shall pay the costs and expenses thereof
(except that in no event shall the Fund be liable for the fees and
expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from the Fund to such
party of the Fund's election to assume the defense thereof, and in the
absence of such a reasonable conclusion that there may be different or
additional defenses available to the Indemnified Party, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Fund will not be liable to such party
under this Agreement for any legal or other expenses subsequently
incurred
33
<PAGE>
by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
8.4(d). GWL&A and Schwab each agree to promptly notify the Fund
of the commencement of any litigation or proceeding against GWL&A or
Schwab or any of their respective officers or directors in connection
with the Agreement, the issuance or sale of the Contracts, the
operation of the Account, or the sale or acquisition of shares of the
Fund.
8.5. Indemnification by the Distributor
----------------------------------
8.5(a). The Distributor agrees to indemnify and hold harmless
GWL&A and Schwab and each of their directors, officers, employees or
agents and each person, if any, who controls GWL&A or Schwab within
the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.5) against any
and all losses, claims, expenses, damages, liabilities (including
amounts paid in settlement with the written consent of the
Distributor) or litigation (including reasonable 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, expenses, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale,
acquisition or redemption of the Fund's shares or the contracts and:
(i) 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 SAI or sales
literature or other promotional material of the Fund
prepared by the Distributor (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 the
Adviser, the Distributor or Fund by or on behalf of GWL&A
or Schwab for use in the registration statement or SAI or
prospectus for the Fund or in sales literature or other
promotional material (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or Fund shares; or
34
<PAGE>
(ii) arise out of or as a result of statements or represen-
tations (other than statements or representations contained
in the registration statement, prospectus, SAI, sales
literature or other promotional material for the Contracts
not supplied by the Distributor or persons under its
control) or wrongful conduct of the Distributor or persons
under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, sales literature or other
promotional material covering the 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 statement or
statements therein not misleading, if such statement or
omission was made in reliance upon information furnished in
writing to GWL&A or Schwab by or on behalf of the Adviser,
the Distributor or Fund; or
(iv) arise as a result of any failure by the Distributor to
provide the 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 and other qualification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Distributor in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Fund, Adviser or
Distributor;
as limited by and in accordance with the provisions of Sections 8.5(b)
and 8.5(c) hereof. This indemnification is in addition to and apart
from the responsibilities and obligations of the Distributor specified
in Article VI hereof.
8.5(b). The Distributor shall not be liable under this
indemnification provision with respect to any losses, claims,
expenses, 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 negligence in the performance or
such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this
Agreement or to any of the Indemnified Parties.
8.5(c) The Distributor shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have
35
<PAGE>
notified the Distributor 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 the
Distributor of any such claim shall not relieve the Distributor from
any liability which it may have to the Indemnified Party against whom
such action is brought on account of this indemnification provision,
except to the extent that the Distributor has been prejudiced by such
failure to give notice. In addition, any failure by the Indemnified
Party to notify the Distributor of any such claim shall not relieve
the Distributor from any liability which it may have to the
Indemnified Party against whom the action is brought otherwise than on
account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Distributor will be
entitled to participate, at its own expense, in the defense thereof.
The Distributor also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action; provided,
however, that if the Indemnified Party shall have reasonably concluded
that there may be defenses available to it which are different from or
additional to those available to the Distributor, the Distributor
shall not have the right to assume said defense, but shall pay the
costs and expenses thereof (except that in no event shall the
Distributor be liable for the fees and expenses of more than one
counsel for Indemnified Parties in connection with any one action or
separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances). After
notice from the Distributor to such party of the Distributor's
election to assume the defense thereof, and in the absence of such a
reasonable conclusion that there may be different or additional
defenses available to the Indemnified Party, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by
it, and the Distributor 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.
8.5(d) GWL&A and Schwab agree to promptly notify the
Distributor of the commencement of any litigation or proceedings
against GWL&A or Schwab or any of their
36
<PAGE>
officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
ARTICLE IX. Applicable Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of
Colorado, without regard to the Colorado Conflict of Laws provisions.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 Acts, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the Securities and Exchange Commission may grant
(including, but not limited to, the Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
37
<PAGE>
ARTICLE X. Termination
-----------
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause,
with respect to some or all Portfolios, upon six (6) months
advance written notice delivered to the other parties;
provided, however, that such notice shall not be given
earlier than six (6) months following the date of this
Agreement; or
(b) at the option of GWL&A or Schwab by written notice to
the other parties with respect to any Portfolio based upon
GWL&A's or Schwab's determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) at the option of GWL&A or Schwab by written notice to
the other parties with respect to any Portfolio in the
event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/ or
federal law or such law precludes the use of such shares as
the underlying investment media of the Contracts issued or
to be issued by GWL&A; or
(d) at the option of the Fund or the Adviser in the event
that formal administrative proceedings are instituted
against GWL&A or Schwab by the NASD, the SEC, the Insurance
Commissioner or like official of any state or any other
regulatory body regarding GWL&A's or Schwab's duties under
this Agreement or related to the sale of the Contracts, the
operation of any Account, or the purchase of the Fund
shares, if, in each case, the Fund reasonably determines in
its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse
effect upon the ability of GWL&A or Schwab to perform its
obligations under this Agreement; or
(e) at the option of GWL&A or Schwab in the event that
formal administrative proceedings are instituted against
the Fund, the Distributor or the Adviser by the NASD, the
SEC, or any state securities or insurance department or any
other regulatory body, if Schwab or GWL&A reasonably
determines in its sole judgment exercised in good faith,
that any such administrative proceedings will have a
material adverse effect upon the ability of the Fund, the
Distributor or the Adviser to perform their obligations
under this Agreement; or
(f) at the option of GWL&A by written notice to the Fund
with respect to any Portfolio if GWL&A reasonably believes
that the Portfolio will fail to meet the Section 817(h)
diversification requirements or Subchapter M qualifications
specified in Article VI hereof; or
(g) at the option of either the Fund, the Distributor or
the Adviser, if (i) the Fund, Distributor or Adviser,
respectively, shall determine, in their sole judgment
38
<PAGE>
reasonably exercised in good faith, that either GWL&A or
Schwab has suffered a material adverse change in their
business or financial condition or is the subject of
material adverse publicity and that material adverse change
or publicity will have a material adverse impact on GWL&A's
or Schwab's ability to perform its obligations under this
Agreement, (ii) the Fund, Distributor or Adviser notifies
GWL&A or Schwab, as appropriate, of that determination and
its intent to terminate this Agreement, and (iii) after
considering the actions taken by GWL&A or Schwab and any
other changes in circumstances since the giving of such a
notice, the determination of the Fund, Distributor or
Adviser shall continue to apply on the sixtieth (60th) day
following the giving of that notice, which sixtieth day
shall be the effective date of termination; or
(h) at the option of either GWL&A or Schwab, if (i) GWL&A
or Schwab, respectively, shall determine, in its sole
judgment reasonably exercised in good faith, that the Fund,
Distributor or Adviser has suffered a material adverse
change in its business or financial condition or is the
subject of material adverse publicity and that material
adverse change or publicity will have a material adverse
impact on the Fund's, Distributor's or Adviser's ability to
perform its obligations under this Agreement, (ii) GWL&A or
Schwab notifies the Fund, Distributor or Adviser, as
appropriate, of that determination and its intent to
terminate this Agreement, and (iii) after considering the
actions taken by the Fund, Distributor or Adviser and any
other changes in circumstances since the giving of such a
notice, the determination of GWL&A or Schwab shall continue
to apply on the sixtieth (60th) day following the giving of
that notice, which sixtieth day shall be the effective date
of termination; or
(i) at the option of GWL&A in the event that formal
administrative proceedings are instituted against Schwab by
the NASD, the Securities and Exchange Commission, or any
state securities or insurance department or any other
regulatory body regarding Schwab's duties under this
Agreement or related to the sale of the Fund's shares or
the Contracts, the operation of any Account, or the
purchase of the Fund shares, provided, however, that GWL&A
determines in its sole judgment exercised in good faith,
that any such administrative proceedings will have a
material adverse effect upon the ability of Schwab to
perform its obligations related to the Contracts; or
(j) at the option of Schwab in the event that formal
administrative proceedings are instituted against GWL&A by
the NASD, the Securities and Exchange Commission, or any
state securities or insurance department or any other
regulatory body regarding GWL&A's duties under this
Agreement or related to the sale of the Fund's shares or
the Contracts, the operation of any Account, or the
purchase of the Fund shares, provided, however, that Schwab
determines in its sole judgment exercised in good faith,
that any such administrative proceedings will have a
material adverse effect upon the ability of GWL&A to
perform its obligations related to the Contracts; or
39
<PAGE>
(k) at the option of any non-defaulting party hereto in
the event of a material breach of this Agreement by any
party hereto (the "defaulting party") other than as
described in 10.1(a)-(j); provided, that the non-defaulting
party gives written notice thereof to the defaulting party,
with copies of such notice to all other non-defaulting
parties, and if such breach shall not have been remedied
within thirty (30) days after such written notice is given,
then the non-defaulting party giving such written notice
may terminate this Agreement by giving thirty (30) days
written notice of termination to the defaulting party.
10.2. Notice Requirement. No termination of this Agreement shall
------------------
be effective unless and until the party terminating this Agreement
gives prior written notice to all other parties of its intent to
terminate, which notice shall set forth the basis for the termination.
Furthermore,
(a) in the event any termination is based upon the provisions of
Article VII, or the provisions of Section 10.1(a), 10.1(g) or
10.1(h) of this Agreement, the prior written notice shall be
given in advance of the effective date of termination as required
by those provisions unless such notice period is shortened by
mutual written agreement of the parties;
(b) in the event any termination is based upon the provisions of
Section 10.1(d), 10.1(e), 10.1(i) or 10.1(j) of this Agreement,
the prior written notice shall be given at least sixty (60) days
before the effective date of termination; and
(c) in the event any termination is based upon the provisions of
Section 10.1(b), 10.1(c) or 10.1(f), the prior written notice
shall be given in advance of the effective date of termination,
which date shall be determined by the party sending the notice.
10.3. Effect of Termination. Notwithstanding any termination of
---------------------
this Agreement, other than as a result of a failure by either the Fund
or GWL&A to meet Section 817(h) of the Code diversification
requirements, the Fund, the Distributor and the Adviser shall, at the
option of GWL&A or Schwab, continue to make available additional
shares of the Designated Portfolio(s) pursuant to the terms and
conditions of this Agreement, for all 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
40
<PAGE>
reallocate investments in the Designated Portfolio(s), redeem
investments in the Designated Portfolio(s) and/or invest in the
Designated Portfolio(s) upon the making of additional purchase
payments under the Existing Contracts. The parties agree that this
Section 10.3 shall not apply to any terminations under Article VII and
the effect of such Article VII terminations shall be governed by
Article VII of this Agreement.
10.4. Surviving Provisions. Notwithstanding any termination of
--------------------
this Agreement, each party's obligations under Article VIII to
indemnify other parties shall survive and not be affected by any
termination of this Agreement. In addition, with respect to Existing
Contracts, all provisions of this Agreement shall also survive and not
be affected by any termination of this Agreement.
10.5. Survival of Agreement. A termination by Schwab shall
---------------------
terminate this Agreement only as to Schwab, and this Agreement shall
remain in effect as to the other parties; provided, however, that in
the event of a termination by Schwab the other parties shall have the
option to terminate this Agreement upon 60 (sixty) days notice, rather
than the six (6) months specified in Section 10.1(a).
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail 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 the Fund:
Berger Institutional Products Trust
210 University Boulevard, Suite 900
Denver, CO 80206
Attention: Kevin Fay
If to GWL&A:
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, CO 80111
Attention: Assistant Vice President, Savings Products
41
<PAGE>
If to the Adviser:
Berger Associates, Inc.
210 University Boulevard, Suite 900
Denver, CO 80206
Attention: Kevin Fay
If to the Distributor:
Berger Distributors, Inc.
210 University Boulevard, Suite 900
Denver, CO 80206
Attention: Craig D. Cloyed
If to Schwab:
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
Attention: General Counsel
ARTICLE XII. Miscellaneous
-------------
12.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information
reasonably identified as confidential in writing by any other party
hereto and, except as permitted by this Agreement, shall not disclose,
disseminate or utilize such names and addresses and other confidential
information without the express written consent of the affected party
until such time as such information may come into the public domain.
Without limiting the foregoing, no party hereto shall disclose any
information that another party has designated as proprietary.
12.2. 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.
42
<PAGE>
12.3. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one
and the same instrument.
12.4. 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.
12.5. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation
the SEC, the NASD and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby. Notwithstanding
the generality of the foregoing, each party hereto further agrees to
furnish the Colorado Insurance Commissioner with any information or
reports in connection with services provided under this Agreement
which such Commissioner may request in order to ascertain whether the
variable annuity operations of GWL&A are being conducted in a manner
consistent with the Colorado Variable Annuity Regulations and any
other applicable law or regulations.
12.6. Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in a
forum jointly selected by the relevant parties (but if applicable law
requires some other forum, then such other forum) in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.
12.7. 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.
12.8. This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written
consent of all parties hereto.
43
<PAGE>
12.9. Schwab and GWL&A agree that the obligations assumed by the
Fund, the Distributor and the Adviser pursuant to this Agreement shall
be limited in any case to the Fund, the Distributor and Adviser and
their respective assets and neither Schwab nor GWL&A shall seek
satisfaction of any such obligation from the shareholders of the Fund
or the Adviser, the directors, officers, employees or agents of the
Fund or Adviser, or any of them, except to the extent permitted under
this Agreement.
12.10. The Fund, the Distributor and the Adviser agree that
the obligations assumed by GWL&A and Schwab pursuant to this Agreement
shall be limited in any case to GWL&A and Schwab and their respective
assets and neither the Fund, Distributor nor Adviser shall seek
satisfaction of any such obligation from the shareholders of the GWL&A
or Schwab, the directors, officers, employees or agents of the GWL&A
or Schwab, or any of them, except to the extent permitted under this
Agreement.
12.11. No provision of this Agreement may be deemed or
construed to modify or supersede any contractual rights, duties, or
indemnifications, as between the Adviser and the Fund, and the
Distributor and the Fund.
44
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly
authorized representative and its seal to be hereunder affixed hereto
as of the date specified below.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By its authorized officer,
By:/s/ R.K. Shaw
----------------------------------------------
Title: Vice President, Marketing and Product
Development
Date: April 1, 1997
BERGER INSTITUTIONAL PRODUCTS TRUST
By its authorized officer,
By:/s/ Gerard M. Lavin
----------------------------------------------
Title: Gerard M. Lavin, President
Date: March 25, 1997
BERGER ASSOCIATES, INC.
By its authorized officer,
By:/s/ Gerard M. Lavin
----------------------------------------------
Title: Gerard M. Lavin, President
Date: March 25, 1997
BERGER DISTRIBUTORS, INC.
By its authorized officer,
By:/s/ Craig D. Cloyed
----------------------------------------------
Title: Craig D. Cloyed, President
Date: March 24, 1997
CHARLES SCHWAB & CO., INC.
By its authorized officer,
By:/s/ Jeff Benton
----------------------------------------------
Title: Vice President, Annuities & Life
Insurance
Date: March 31, 1997
45
<PAGE>
Schwab Variable Annuity
SCHEDULE A
----------
Contracts Form Numbers
--------- ------------
Great-West Life & Annuity Insurance Company
- -------------------------------------------
Group Variable/Fixed Annuity Contract J434
Individual Variable/Fixed Annuity Contract J434IND
<PAGE>
SCHEDULE B
----------
Designated Portfolios
- ---------------------
Berger IPT-Small Company Growth Fund
<PAGE>
SCHEDULE C
----------
ADMINISTRATIVE SERVICES
-----------------------
To be performed by Charles Schwab & Co., Inc.
A. Schwab will provide the properly registered and licensed
personnel and systems needed for all customer servicing and support -
for both fund and annuity information and questions - including:
respond to Contractowner inquiries
delivery of prospectus - both fund and annuity;
entry of initial and subsequent orders;
transfer of cash to insurance company and/or funds;
explanations of fund objectives and characteristics;
entry of transfers between funds;
fund balance and allocation inquiries;
mail fund prospectus.
B. For the services, Schwab shall receive a fee of 0.25% per annum
applied to the average daily value of the shares of the fund held by
Schwab's customers, payable by the Adviser directly to Schwab, such
payments being due and payable within 15 (fifteen) days after the last
day of the month to which such payment relates.
C. The Fund will calculate and Schwab will verify with GWL&A the
asset balance for each day on which the fee is to be paid pursuant to
this Agreement with respect to each Designated Portfolio.
D. Schwab will communicate all purchase, withdrawal, and exchange
orders it receives from its customers to GWL&A who will retransmit
them to each fund.
48
<PAGE>
SCHEDULE D
----------
Reports per Section 6.6
-----------------------
With regard to the reports relating to the quarterly testing of
compliance with the requirements of Section 817(h) and Subchapter M
under the Internal Revenue Code (the "Code") and the regulations
thereunder, the Fund shall provide within twenty (20) Business Days of
the close of the calendar quarter a report to GWL&A in the Form D1
attached hereto and incorporated herein by reference, regarding the
status under such sections of the Code of the Designated Portfolio(s),
and if necessary, identification of any remedial action to be taken to
remedy non-compliance.
With regard to the reports relating to the year-end testing of
compliance with the requirements of Subchapter M of the Code, referred
to hereinafter as "RIC status," the Fund will provide the reports on
the following basis: (i) the last quarter's quarterly reports can be
supplied within the 20-day period, and (ii) a year-end report will be
provided 45 days after the end of the calendar year. However, if a
problem with regard to RIC status, as defined below, is identified in
the third quarter report, on a weekly basis, starting the first week
of December, additional interim reports will be provided specially
addressing the problems identified in the third quarter report. If
any interim report memorializes the cure of the problem, subsequent
interim reports will not be required.
A problem with regard to RIC status is defined as any violation
of the following standards, as referenced to the applicable sections
of the Code:
(a) Less than ninety percent of gross income is derived from
sources of income specified in Section 851(b)(2);
(b) Thirty percent or greater gross income is derived from the
sale or disposition of assets specified in Section 851(b)(3);
(c) Less than fifty percent of the value of total assets consists
of assets specified in Section 851(b)(4)(A); and
(d) No more than twenty-five percent of the value of total assets
is invested in the securities of one issuer, as that requirement
is set forth in Section 851(b)(4)(B).
49
<PAGE>
FORM D1
CERTIFICATE OF COMPLIANCE
I, ____________________________, a duly authorized officer,
director or agent of ______________ Fund hereby swear and affirm that
__________________________________ Fund is in compliance with all
requirements of Section 817(h) and Subchapter M of the Internal
Revenue Code (the "Code") and the regulations thereunder as required
in the Fund Participation Agreement among Great-West Life & Annuity
Insurance Company, Charles Schwab & Co., Inc. and _______________
other than the exceptions discussed below:
Exceptions Remedial Action
- ---------- ---------------
_____________________________________
________________________________________
_____________________________________
________________________________________
_____________________________________
________________________________________
_____________________________________
________________________________________
_____________________________________
________________________________________
_____________________________________
________________________________________
_____________________________________
________________________________________
_____________________________________
________________________________________
_____________________________________
________________________________________
_____________________________________
________________________________________
_____________________________________
________________________________________
If no exception to report, please indicate "None."
Signed this _______ day of _______, _______.
_________________________________________
(Signature)
By:______________________________________
(Type or Print Name and Title/Position)
<PAGE>
SCHEDULE E
EXPENSES
--------
The Fund and/or the Distributor and/or Adviser, and GWL&A will
coordinate the functions and pay the costs of the completing these
functions based upon an allocation of costs in the tables below.
Costs shall be allocated to reflect the Fund's share of the total
costs determined according to the number of pages of the Fund's
respective portions of the documents.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Item Function Party Responsible for Party Responsible
Coordination for Expense
- -------------------------------------------------------------------------------------------------------------------
<S> <S> <S> <S>
Mutual Fund Prospectus Printing of combined GWL&A Fund, Distributor
prospectuses or Adviser, as
applicable
- -------------------------------------------------------------------------------------------------------------------
Fund, Distributor or GWL&A Fund, Distributor
Adviser shall supply or Adviser, as
GWL&A with such applicable
numbers of the
Designated Portfolio(s)
prospectus(es) as
GWL&A shall
reasonably request
- -------------------------------------------------------------------------------------------------------------------
Distribution to New and GWL&A GWL&A
Inforce Clients
- -------------------------------------------------------------------------------------------------------------------
Distribution to Prospecve Schwab Schwab
Clients
- -------------------------------------------------------------------------------------------------------------------
Product Prospectus Printing for Inforce GWL&A GWL&A
Clients
- -------------------------------------------------------------------------------------------------------------------
Printing for Prospectiv GWL&A Schwab
Clients
- -------------------------------------------------------------------------------------------------------------------
Distribution to New and GWL&A GWL&A
Inforce Clients
- -------------------------------------------------------------------------------------------------------------------
Distribution to Prospecve Schwab Schwab
Clients
- -------------------------------------------------------------------------------------------------------------------
Item Function Party Responsible for Party Responsible
Coordination for Expense
- -------------------------------------------------------------------------------------------------------------------
Mutual Fund Prospectus If Required by Fund, Fund Distributor or Fund Distributor
Update & Distribution Distributor or Adviser Adviser or Adviser
- -------------------------------------------------------------------------------------------------------------------
If Required by GWL&A GWL&A GWL&A
- -------------------------------------------------------------------------------------------------------------------
If Required by Schwab Schwab Schwab
- -------------------------------------------------------------------------------------------------------------------
Product Prospectus If Required by Fund, GWL&A Fund Distributor
Update & Distribution Distributor or Adviser or Adviser
- -------------------------------------------------------------------------------------------------------------------
52<PAGE>
- -------------------------------------------------------------------------------------------------------------------
Item Function Party Responsible for Party Responsible
Coordination for Expense
- -------------------------------------------------------------------------------------------------------------------
If Required by GWL&A GWL&A GWL&A
- -------------------------------------------------------------------------------------------------------------------
If Required by Schwab Schwab Schwab
- -------------------------------------------------------------------------------------------------------------------
Mutual Fund SAI Printing Fund, Distributor or Fund, Distributor
Adviser or Adviser
- -------------------------------------------------------------------------------------------------------------------
Distribution GWL&A GWL&A
- -------------------------------------------------------------------------------------------------------------------
Product SAI Printing GWL&A GWL&A
- -------------------------------------------------------------------------------------------------------------------
Distribution GWL&A GWL&A
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Item Function Party Responsible for Party Responsible
Coordination for Expense
- -------------------------------------------------------------------------------------------------------------------
Proxy Material for Printing if proxy Fund, Distributor or Fund, Distributor
Mutual Fund: required by Law Adviser or Adviser
- -------------------------------------------------------------------------------------------------------------------
Distribution (including GWL&A Fund, Distributor
labor) if proxy or Adviser
required by Law
- -------------------------------------------------------------------------------------------------------------------
Printing & distributionf GWL&A GWL&A
required by GWL&A
- -------------------------------------------------------------------------------------------------------------------
Printing & distributionf GWL&A Schwab
required by Schwab
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Item Function Party Responsible for Party Responsible
Coordination for Expense
- -------------------------------------------------------------------------------------------------------------------
Mutual Fund Annual & Printing of combined GWL&A Fund, Distributor
Semi-Annual Report reports or Adviser
- -------------------------------------------------------------------------------------------------------------------
Distribution GWL&A GWL&A and Schwab
- -------------------------------------------------------------------------------------------------------------------
Other communication to If Required by the Fund Schwab Fund, Distributor
New and Prospective Distributor or Adviser or Adviser
clients
- -------------------------------------------------------------------------------------------------------------------
If Required by GWL&A Schwab GWL&A
- -------------------------------------------------------------------------------------------------------------------
53<PAGE>
- -------------------------------------------------------------------------------------------------------------------
Item Function Party Responsible for Party Responsible
Coordination for Expense
- -------------------------------------------------------------------------------------------------------------------
If Required by Schwab Schwab Schwab
- -------------------------------------------------------------------------------------------------------------------
Other communication to Distribution (including GWL&A Fund, Distributor
inforce labor) if required by t or Adviser
Fund, Distributor or
Adviser
- -------------------------------------------------------------------------------------------------------------------
If Required by GWL&A GWL&A GWL&A
- -------------------------------------------------------------------------------------------------------------------
If Required by Schwab GWL&A Schwab
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Item Function Party Responsible for Party Responsible
Coordination for Expense
- -------------------------------------------------------------------------------------------------------------------
Errors in Share Price Cost of error to GWL&A Fund or Adviser
calculation pursuant to participants
Section 1.10
- -------------------------------------------------------------------------------------------------------------------
Cost of administrative GWL&A Fund or Adviser
work to correct error
- -------------------------------------------------------------------------------------------------------------------
Operations of the Fund All operations and Fund, Distributor or Fund or Adviser
related expenses, Adviser
including the cost of
registration and
qualification of shares
taxes on the issuance o
transfer of shares, cos
of management of the
business affairs of the
Fund, and expenses paid
or assumed by the fund
pursuant to any Rule
12b-1 plan
- -------------------------------------------------------------------------------------------------------------------
Operations of the Federal registration of GWL&A GWL&A
Account units of separate accou
(24f-2 fees)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
54
Exhibit 9.8
Note: This agreement is identical to Exhibit 9.7 to this Registration
Statement, except that First Great-West Life & Annuity Insurance
Company is substituted for Great-West Life & Annuity Insurance Company
as a party.
Exhibit 9.9
PARTICIPATION AGREEMENT
Among
BERGER INSTITUTIONAL PRODUCTS TRUST
BBOI WORLDWIDE LLC
and
CANADA LIFE INSURANCE COMPANY OF AMERICA
THIS AGREEMENT, made and entered into this 1st day of May, 1997
by and among CANADA LIFE INSURANCE COMPANY OF AMERICA, (hereinafter
the "Insurance Company"), a Michigan corporation, on its own behalf
and on behalf of each segregated asset account of the Insurance
Company set forth on Schedule A hereto as may be amended from time to
time (each such account hereinafter referred to as the "Account"),
BERGER INSTITUTIONAL PRODUCTS TRUST, a Delaware business trust (the
"Trust") and BBOI WORLDWIDE LLC, a Delaware limited liability company
("BBOI Worldwide").
WHEREAS, the Trust engages in business as an open-end management
investment company and is available to act as the investment vehicle
for variable annuity and life insurance contracts to be offered by
separate accounts of insurance companies which have entered into
participation agreements substantially identical to this Agreement
("Participating Insurance Companies") and for qualified retirement and
pension plans ("Qualified Plans"); and
WHEREAS, the beneficial interest in the Trust is divided into
several series of shares, each designated a "Fund" and representing
the interest in a particular managed portfolio of securities and other
assets; and
WHEREAS, the Trust has obtained an order from the Securities and
Exchange Commission (the "Commission"), dated April 24, 1996 (File No.
812-9852), granting Participating Insurance Companies and their
separate accounts exemptions from the provisions of Sections 9(a),
1<PAGE>
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as
amended, (the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Trust to
be sold to and held by Qualified Plans and by variable annuity and
variable life insurance separate accounts of life insurance companies
that may or may not be affiliated with one another (the "Mixed and
Shared Funding Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management
investment company under the 1940 Act and the offering of its shares
is registered under the Securities Act of 1933, as amended
(hereinafter the "1933 Act"); and
WHEREAS, BBOI Worldwide is duly registered as an investment
adviser under the Investment Advisers Act of 1940 and any applicable
state securities law; and
WHEREAS, the Insurance Company has registered under the 1933 Act,
or will register under the 1933 Act, certain variable annuity or
variable life insurance contracts identified by the form number(s)
listed on Schedule B to this Agreement, as amended from time to time
hereafter by mutual written agreement of all the parties hereto (the
"Contracts"); and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the board of
directors of the Insurance Company on the date shown for that Account
on Schedule A hereto, to set aside and invest assets attributable to
the Contracts; and
WHEREAS, the Insurance Company has registered or will register
each Account as a unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Insurance Company intends to purchase shares in the
Funds at net asset value on behalf of each Account to fund the
Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the
Insurance Company, the Trust and BBOI Worldwide agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Trust agrees to sell to the Insurance Company those
shares of the Trust which each Account orders, executing such orders
on a daily basis at the net asset value next computed after receipt by
the Trust or its designee of the order for the shares of the Trust.
For purposes of this Section 1.1, the Insurance Company shall be the
2<PAGE>
designee of the Trust for receipt of such orders from the Accounts and
receipt by such designee shall constitute receipt by the Trust;
provided that the Trust receives notice of such order by 7:00 a.m.,
Mountain Time, on the next following Business Day. In this Agreement,
"Business Day" shall mean any day on which the New York Stock Exchange
is open for trading and on which the Trust calculates its net asset
value pursuant to the rules of the Commission.
1.2. The Trust agrees to make its shares available for purchase
at the applicable net asset value per share by the Insurance Company
and its Accounts on those days on which the Trust calculates its
Funds' net asset values pursuant to rules of the Commission and the
Trust shall use reasonable efforts to calculate its Funds' net asset
values on each day on which the New York Stock Exchange is open for
trading. Notwithstanding the foregoing, the trustees of the Trust may
refuse to sell shares of any Fund to any person, or suspend or
terminate the offering of shares of any Fund if such action is
required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the trustees of the Trust acting in good
faith and in light of their fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the
shareholders of that Fund.
1.3. The Trust agrees that shares of the Trust will be sold only
to Accounts of Participating Insurance Companies and to Qualified
Plans. No shares of any Fund will be sold to the general public.
1.4. The Trust will not sell its shares to any insurance company
or separate account unless an agreement containing provisions
substantially the same as Sections 2.4, 3.4, 3.5, and Sections 7.1 -
7.7 of this Agreement is in effect to govern such sales.
1.5. The Trust agrees to redeem, on the Insurance Company's
request, any full or fractional shares of the Trust held by the
Account, executing such requests on a daily basis at the net asset
value next computed after receipt by the Trust or its designee of the
request for redemption. However, if one or more Funds has determined
to settle redemption transactions for all of its shareholders on a
delayed basis (more than one business day, but in no event more than
three Business Days, after the date on which the redemption order is
received, unless otherwise permitted by an order of the Commission
under Section 22(e) of the 1940 Act), the Trust shall be permitted to
delay sending redemption proceeds to the Insurance Company by the same
number of days that the Trust is delaying sending redemption proceeds
to the other shareholders of the Fund. For purposes of this Section
1.5, the Insurance Company shall be the designee of the Trust for
receipt of requests for redemption from each Account and receipt by
3<PAGE>
that designee shall constitute receipt by the Trust; provided that the
Trust receives notice of the request for redemption by 7:00 a.m.,
Mountain Time, on the next following Business Day.
1.6. The Insurance Company agrees to purchase and redeem the
shares of each Fund offered by the then-current prospectus of the
Trust in accordance with the provisions of that prospectus. The
Insurance Company agrees that all net amounts available under the
Contracts shall be invested in the Trust, or in the Insurance
Company's general account, provided that such amounts may also be
invested in an investment company other than the Trust if (a) the
other investment company, or series thereof, has investment objectives
or policies that are substantially different from the investment
objectives and policies of any Fund of the Trust in which the Account
may invest; or (b) the other investment company was available as a
funding vehicle for the Contracts prior to the date of this Agreement
and the Insurance Company so informs the Trust and BBOI Worldwide
prior to their signing this Agreement; or (c) the Trust and BBOI
Worldwide consent in advance in writing to the use of the other
investment company.
1.7. The Insurance Company shall pay for Trust shares by 1:00
p.m., Mountain Time, on the next Business Day after an order to
purchase Trust shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by
wire. For the purpose of Sections 2.9 and 2.10, upon receipt by the
Trust of the federal funds so wired, such funds shall cease to be the
responsibility of the Insurance Company and shall become the
responsibility of the Trust. Payment of net redemption proceeds
(aggregate redemptions of a Fund's shares by an Account minus
aggregate purchases of that Fund's shares by that Account) of less
than $1 million for a given Business Day will be made by wiring
federal funds to the Insurance Company on the next Business Day after
receipt of the redemption request. Payment of net redemption proceeds
of $1 million or more will be by wiring federal funds within three
Business Days after receipt of the redemption request. However,
payment may be postponed under unusual circumstances, such as when
normal trading is not taking place on the New York Stock Exchange, an
emergency as defined by the Securities and Exchange Commission exists,
or as permitted by the Securities and Exchange Commission.
1.8. Issuance and transfer of the Trust's shares will be by book
entry only. Stock certificates will not be issued to the Insurance
Company or any Account. Shares ordered from the Trust will be
recorded in an appropriate title for each Account or the appropriate
subaccount of each Account.
4<PAGE>
1.9. The Trust shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Insurance Company
of any income, dividends or capital gain distributions payable on the
Funds' shares. The Insurance Company hereby elects to receive all
income dividends and capital gain distributions payable on a Fund's
shares in additional shares of that Fund. The Insurance Company
reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Trust
shall notify the Insurance Company of the number of shares issued as
payment of dividends and distributions. Any material errors in the
calculation of the income dividends and capital gain distributions
shall be reported immediately upon discovery to the Insurance Company.
Non-material errors will be corrected in the next Business Day's net
asset value per share for the Fund in question.
1.10. The Trust shall make the net asset value per share for
each Fund available to the Insurance Company on a daily basis as soon
as reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make those per-share net
asset values available by 4:00 p.m., Mountain Time. Any material
error in the calculation of the net asset value per share shall be
reported immediately upon discovery to the Insurance Company. Non-
material errors will be corrected in the next Business Day's net asset
value per share for the Fund in question.
ARTICLE II. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
2.1. The Insurance Company represents, warrants and agrees that
the offerings of the Contracts are, or will be, registered under the
1933 Act; that the Contracts will be issued and sold in compliance in
all material respects with all applicable federal and state laws and
that the sale of the Contracts shall comply in all material respects
with applicable state insurance suitability requirements. The
Insurance Company further represents that it is an insurance company
duly organized and in good standing under applicable law and that it
has legally and validly established the Account prior to any issuance
or sale thereof as a segregated asset account under Section 500.925 of
the Michigan Insurance Code and has registered, or warrants and agrees
that prior to any issuance or sale of the Contracts it will register,
the Account as a unit investment trust in accordance with the provi-
sions of the 1940 Act to serve as a segregated investment account for
the Contracts.
2.2. The Trust warrants and agrees that Trust shares sold
pursuant to this Agreement shall be registered under the 1933 Act,
duly authorized for issuance and sale in compliance with the laws of
5<PAGE>
the State of Delaware and all applicable federal securities laws and
that the Trust is and shall remain registered under the 1940 Act. The
Trust warrants and agrees that it shall amend the registration
statement for its shares under the 1933 Act and the 1940 Act from time
to time as required in order to effect the continuous offering of its
shares. The Trust shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the
extent deemed advisable by the Trust or BBOI Worldwide.
2.3. The Trust represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended, (the "Code") and warrants and agrees
that it will make all reasonable efforts to maintain its qualification
(under Subchapter M or any successor or similar provision) and that it
will notify the Insurance Company immediately upon having a reasonable
basis for believing that it has ceased to so qualify or that it might
not so qualify in the future.
2.4. The Insurance Company represents that the Contracts are
currently treated as annuity or life insurance contracts under
applicable provisions of the Code and warrants and agrees that it will
make every effort to maintain such treatment and that it will notify
the Trust and BBOI Worldwide immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or
that they might not be so treated in the future.
2.5. The Trust may elect to make payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act. To
the extent that it decides to finance distribution expenses pursuant
to Rule 12b-1, the Trust undertakes to have a board of trustees, a
majority of whom are not interested persons of the Trust, formulate
and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Trust makes no representation warranties as to whether
any aspect of its operations (including, but not limited to, fees and
expenses and investment policies) complies or will comply with the
insurance laws or regulations of the various states.
2.7. The Trust represents that it is lawfully organized and
validly existing under the laws of the State of Delaware and
represents, warrants and agrees that it does and will comply in all
material respects with the 1940 Act.
2.8. BBOI Worldwide represents that it is and warrants that it
shall remain duly registered as an investment adviser under all
6<PAGE>
applicable federal and state securities laws and agrees that it shall
perform its obligations for the Trust in compliance in all material
respects with the laws of the State of Colorado and any applicable
state and federal securities laws.
2.9. The Trust and BBOI Worldwide represent and warrant that all
of their officers, employees, investment advisers, investment sub-
advisers, and other individuals or entities described in Rule 17g-1
under the 1940 Act 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 in an
amount not less than the minimum coverage required currently by Rule
17g-1 under the 1940 Act or related provisions as may be promulgated
from time to time. That fidelity bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding
company.
2.10. The Insurance Company represents and warrants that all of
its officers, employees, investment advisers, and other individuals or
entities described in Rule 17g-1 under the 1940 Act are and shall
continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust, in an amount not less
than the minimum coverage required currently for entities subject to
the requirements of Rule 17g-1 of the 1940 Act or related provisions
or 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.
ARTICLE III. DISCLOSURE DOCUMENTS AND VOTING
3.1. BBOI Worldwide shall provide the Insurance Company (at the
Insurance Company's expense) with as many copies of the Trust's
current prospectus as the Insurance Company may reasonably request.
If requested by the Insurance Company in lieu thereof, the Trust shall
provide such documentation (including a final copy of the new
prospectus as set in type at the Trust's expense) and other assistance
as is reasonably necessary in order for the Insurance Company once
each year (or more frequently if the prospectus for the Trust is
amended) to have the prospectus for the Contracts and the Trust's
prospectus printed together in one document (at the Insurance
Company's expense).
3.2. The Trust's prospectus shall state that the Statement of
Additional Information for the Trust (the "SAI") is available from the
Trust, and BBOI Worldwide (or the Trust), at its expense, shall print
and provide the SAI free of charge to the Insurance Company and to any
owner of a Contract or prospective owner who requests the SAI.
7<PAGE>
3.3. The Trust, at its expense, shall provide the Insurance
Company with copies of its proxy material, reports to shareholders and
other communications to shareholders in such quantity as the Insurance
Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law, the Insurance Company
shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Trust shares in accordance with instruc-
tions received from Contract owners; and
(iii) vote Trust shares for which no instructions have
been received in the same proportion as Trust
shares of that Fund for which instructions have
been received;
so long as and to the extent that the Commission continues to
interpret the 1940 Act to require pass-through voting privileges for
variable contract owners. The Insurance 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 the standards set forth on
Schedule C attached hereto and incorporated herein by this reference,
which standards will also be provided to the other Participating
Insurance Companies. The Insurance Company shall fulfill its
obligation under, and abide by the terms and conditions of, the Mixed
and Shared Funding Exemptive Order.
3.5. The Trust will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Trust will
either provide for annual meetings (except insofar as the Commission
may interpret Section 16 of the 1940 Act not to require such meetings)
or, as the Trust currently intends, comply with Section 16(c) of the
1940 Act (although the Trust is not one of the trusts described in
Section 16(c) of that Act) as well as with Sections 16(a) and, if and
when applicable, 16(b). Further, the Trust will act in accordance
with the Commission's interpretation of the requirements of Section
16(a) with respect to periodic elections of trustees and with whatever
rules the Commission may promulgate with respect thereto.
8<PAGE>
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Insurance Company shall furnish, or shall cause to be
furnished, to the Trust or its designee, each piece of sales
literature or other promotional material in which the Trust, a sub-
adviser of one of the Funds, or BBOI Worldwide is named, at least
fifteen calendar days prior to its use. No such material shall be
used if the Trust or its designee objects to such use within ten
calendar days after receipt of such material.
4.2. The Insurance Company shall not give any information or
make any representations or statements on behalf of the Trust or
concerning the Trust in connection with the sale of the Contracts
other than the information or representations contained in the Trust's
registration statement, prospectus or SAI, as that registration
statement, prospectus or SAI may be amended or supplemented from time
to time, or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved by the Trust or its
designee or by BBOI Worldwide or its designee, except with the
permission of the Trust or BBOI Worldwide or their designees.
4.3. The Trust, BBOI Worldwide, or its designee shall furnish,
or shall cause to be furnished, to the Insurance Company or its
designee, each piece of sales literature or other promotional material
in which the Insurance Company or the Account is named at least
fifteen calendar days prior to its use. No such material shall be
used if the Insurance Company or its designee objects to such use
within ten calendar days after receipt of that material.
4.4. The Trust and BBOI Worldwide, or their designees, shall not
give any information or make any representations on behalf of the
Insurance Company or concerning the Insurance Company, any Account, or
the Contracts other than the information or representations contained
in a registration statement, prospectus or statement of additional
information for the Contracts, as that registration statement,
prospectus or statement of additional information may be amended or
supplemented from time to time, or in published reports for any
Account which are in the public domain or approved by the Insurance
Company for distribution to Contract owners, or in sales literature or
other promotional material approved by the Insurance Company or its
designee, except with the permission of the Insurance Company.
4.5. The Trust will provide to the Insurance Company at least
one complete copy of each registration statement, prospectus,
statement of additional information, report, proxy statement, piece of
sales literature or other promotional material, application for
exemption, request for no-action letter, and any amendment to any of
the above, that relate to the Trust or its shares, contemporaneously
9<PAGE>
with the filing of the document with the Commission, the National
Association of Securities Dealers, Inc. ("NASD"), or other regulatory
authorities.
4.6. The Insurance Company will provide to the Trust at least
one complete copy of each registration statement, prospectus,
statement of additional information, report, solicitation for voting
instructions, piece of sales literature and other promotional
material, application for exemption, request for no-action letter, and
any amendment to any of the above, that relates to the Contracts or
the Account, contemporaneously with the filing of the document with
the Commission, the NASD, or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited
to, advertisements, newspaper, magazine, or other periodical, radio,
television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, or other public media, sales literature
(i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, shareholder
newsletters, seminar texts, 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, and
registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials.
4.8. At the request of any party to this Agreement, each other
party will make available to the other party's independent auditors
and/or representative of the appropriate regulatory agencies, all
records, data and access to operating procedures that may be
reasonably requested.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust and BBOI Worldwide shall pay no fee or other
compensation to the Insurance Company under this agreement, except as
set forth in Section 5.4 and except that if the Trust or any Fund
adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, BBOI Worldwide or the Trust may make payments
to the Insurance Company in amounts consistent with that 12b-1 plan,
subject to review by the trustees of the Trust.
5.2. All expenses incident to performance by the Trust under
this Agreement shall be paid by the Trust. The Trust shall see to it
10<PAGE>
that any offering of its shares is registered and that all of its
shares are authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Trust or
BBOI Worldwide, in accordance with applicable state laws prior to
their sale. The Trust shall bear the cost of registration and
qualification of the Trust's shares, preparation and filing of the
Trust's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing
the proxy materials and reports to shareholders, the preparation of
all statements and notices required by any federal or state law, and
all taxes on the issuance or transfer of the Trust's shares.
5.3. The Insurance Company shall bear the expenses of printing
and distributing to Contract owners the Contract prospectuses and of
distributing to Contract owners the Trust's prospectus, proxy
materials and reports.
5.4. The Insurance Company bears the responsibility and
correlative expense for administrative and support services for
Contract owners. BBOI Worldwide recognizes the Insurance Company as
the sole shareholder of shares of the Trust issued under this
Agreement. From time to time, BBOI Worldwide may pay amounts from its
past profits to the Insurance Company for providing certain
administrative services for the Trust or for providing other services
that relate to the Trust. In consideration of the savings resulting
from such arrangement, and to compensate the Insurance Company for its
costs, BBOI Worldwide agrees to pay to the Insurance Company an amount
equal to 25 basis points (0.25%) per annum of the average aggregate
amount invested by the Insurance Company in the Trust under this
Agreement. Such payments will be made only when the average aggregate
amount invested exceeds $1,000,000. The parties agree that such
payments are for administrative services and investor support
services, and do not constitute payment for investment advisory,
distribution or other services. Payment of such amounts by BBOI
Worldwide shall not increase the fees paid by the Trust or its
shareholders. The obligation to pay the amounts provided for in this
Section 5.4 may be assigned by BBOI Worldwide in its discretion to
Berger Associates, Inc., or other entity acceptable to the Insurance
Company.
ARTICLE VI. DIVERSIFICATION
6.1. The Trust will comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5 relating to the diversification
requirements for variable annuity, endowment, modified endowment or
life insurance contracts and any amendments or other modifications to
that Section or Regulation at all times necessary to satisfy those
requirements.
11<PAGE>
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The trustees of the Trust will monitor the Trust for the
existence of any material irreconcilable conflict between the
interests of the variable Contract owners of all separate accounts
investing in the Trust and the participants of all Qualified Plans
investing in the Trust. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretive letter, or
any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any
Fund are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract
owners; or (f) a decision by a Participating Insurance Company to
disregard the voting instructions of variable contract owners. The
trustees of the Trust shall promptly inform the Insurance Company if
they determine that an irreconcilable material conflict exists and the
implications thereof. The trustees of the Trust shall have sole
authority to determine whether an irreconcilable material conflict
exists and their determination shall be binding upon the Insurance
Company.
7.2. The Insurance Company and BBOI Worldwide each will report
promptly any potential or existing conflicts of which it is aware to
the trustees of the Trust. The Insurance Company and BBOI Worldwide
each will assist the trustees of the Trust in carrying out their
responsibilities under the Mixed and Shared Funding Exemptive Order,
by providing the trustees of the Trust with all information reasonably
necessary for them to consider any issues raised. This includes, but
is not limited to, an obligation by the Insurance Company to inform
the trustees of the Trust whenever Contract owner voting instructions
are to be disregarded. These responsibilities shall be carried out by
the Insurance Company with a view only to the interests of the
Contract owners and by BBOI Worldwide with a view only to the
interests of Contract holders and Qualified Plan participants.
7.3. If it is determined by a majority of the trustees of the
Trust, or a majority of the trustees who are not interested persons of
the Trust, any of its Funds, or BBOI Worldwide (the "Independent
Trustees"), that a material irreconcilable conflict exists, the
Insurance Company and/or other Participating Insurance Companies or
Qualified Plans that have executed participation agreements shall, at
their expense and to the extent reasonably practicable (as determined
12<PAGE>
by a majority of the Independent Trustees), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict,
up to and including: (1) withdrawing the assets allocable to some or
all of the separate accounts from the Trust or any Fund and
reinvesting those assets in a different investment medium, including
(but not limited to) another Fund of the Trust, or submitting the
question 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 (e.g., annuity contract owners,
life insurance contract owners, or variable contract owners of one or
more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected variable contract owners the
option of making such a change; and (2) establishing a new registered
management investment company or managed separate account and
obtaining any necessary approvals or orders of the Commission in
connection therewith.
7.4. If a material irreconcilable conflict arises because of a
decision by the Insurance Company to disregard Contract owner voting
instructions and that decision represents a minority position or would
preclude a majority vote, the Insurance Company may be required, at
the Trust's election, to withdraw the affected Account's investment in
the Trust and terminate this Agreement with respect to that Account;
provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Independent
Trustees. Any such withdrawal and termination must take place within
six (6) months after the Trust gives written notice that this
provision is being implemented, and, until the end of that six month
period, the Trust shall continue to accept and implement orders by the
Insurance Company for the purchase (and redemption) of shares of the
Trust.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the
Insurance Company conflicts with the majority of other state
regulators, then the Insurance Company will withdraw the affected
Account's investment in the Trust and terminate this Agreement with
respect to that Account within six months after the trustees of the
Trust inform the Insurance Company in writing that they have deter-
mined that the state insurance regulator's decision has created an
irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a
majority of the Independent Trustees. Until the end of the foregoing
six month period, the Trust shall continue to accept and implement
13<PAGE>
orders by the Insurance Company for the purchase (and redemption) of
shares of the Trust.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement,
a majority of the Independent Trustees shall determine whether any
proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Trust be required to establish a
new funding medium for the Contracts. The Insurance Company shall not
be required by Section 7.3 to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority
of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the trustees of the Trust
determine that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Insurance Company will
withdraw the Account's investment in the Trust and terminate this
Agreement within six (6) months after the trustees of the Trust inform
the Insurance Company in writing of the foregoing determination,
provided, however, that the withdrawal and termination shall be
limited to the extent required by the material irreconcilable
conflict, as determined by a majority of the Independent Trustees.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act or the rules promulgated thereunder with respect
to mixed or shared funding (as defined in the Mixed and Shared Funding
Exemptive Order) on terms and conditions materially different from
those contained in the Mixed and Shared Funding Exemptive Order, then
(a) the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with
Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent those rules are applicable; and (b) Sections 3.4, 3.5, 7.1,
7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only
to the extent that terms and conditions substantially identical to
those Sections are contained in the Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE INSURANCE COMPANY
8.1(a). The Insurance Company agrees to indemnify and hold
harmless the Trust and each trustee, officer, employee or agent of the
Trust, and each person, if any, who controls the Trust within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Insurance Company) or litigation
14<PAGE>
(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, acquisition, or redemption of the Trust's shares or the
Contracts and:
(i) 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 Contracts or
contained in the Contracts or sales literature for
the 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 the Insurance Company by
or on behalf of the Trust for use in the
registration statement or prospectus for the
Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts
or shares of the Trust;
(ii) 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
Trust not supplied by the Insurance Company, or
persons under its control) or wrongful conduct of
the Insurance Company or persons under its
control, with respect to the sale or distribution
of the Contracts or Trust Shares;
(iii) 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 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
-15<PAGE>
the statements therein not misleading if such a
statement or omission was made in reliance upon
information furnished in writing to the Trust by
or on behalf of the Insurance Company;
(iv) arise as a result of any failure by the
Insurance Company to provide the services and
furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material
breach of any representation, warranty or
agreement made by the Insurance Company in this
Agreement or arise out of or result from any other
material breach of this Agreement by the Insurance
Company,
as limited by and in accordance with the provisions of Sections 8.1(b)
and 8.1(c) hereof.
8.1(b). The Insurance 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 that may arise from that Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of that
Indemnified Party's duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to
the Trust, whichever is applicable.
8.1(c). The Insurance Company shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless that Indemnified Party shall have notified
the Insurance 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 that Indemnified Party (or
after the Indemnified Party shall have received notice of such service
on any designated agent). Notwithstanding the foregoing, the failure
of any Indemnified Party to give notice as provided herein shall not
relieve the Insurance Company of its obligations hereunder except to
the extent that the Insurance Company has been prejudiced by such
failure to give notice. In addition, any failure by the Indemnified
Party to notify the Insurance Company of any such claim shall not
relieve the Insurance Company from any liability which it may have to
the Indemnified Party against whom the action is brought otherwise
than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Insurance
Company shall be entitled to participate, at its own expense, in the
defense of the action. The Insurance Company also shall be entitled
16<PAGE>
to assume the defense thereof, with counsel satisfactory to the party
named in the action; provided, however, that if the Indemnified Party
-------- -------
shall have reasonably concluded that there may be defenses available
to it which are different from or additional to those available to the
Insurance Company, the Insurance Company shall not have the right to
assume said defense, but shall pay the costs and expenses thereof
(except that in no event shall the Insurance Company be liable for the
fees and expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from the Insurance
Company to the Indemnified Party of the Insurance Company's election
to assume the defense thereof, and in the absence of such a reasonable
conclusion that there may be different or additional defenses
available to the Indemnified Party, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and
the Insurance Company will not be liable to that party under this
Agreement for any legal or other expenses subsequently incurred by the
party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the
Insurance Company of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the Trust's
shares or the Contracts or the operation of the Trust.
8.2. INDEMNIFICATION BY BBOI WORLDWIDE
8.2(a). BBOI Worldwide agrees to indemnify and hold harmless the
Insurance Company and each of its directors, officers, employees or
agents, and each person, if any, who controls the Insurance Company
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any
and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of BBOI Worldwide) or
litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, 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, acquisition or redemption of the Trust's shares or the
Contracts and:
(i) 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 the
Trust (or any amendment or supplement to any of
17<PAGE>
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 the statement or omission or
alleged statement or omission was made in reliance
upon and in conformity with information furnished
in writing to BBOI Worldwide or the Trust by or on
behalf of the Insurance Company for use in the
registration statement or prospectus for the Trust
or in sales literature (or any amendment or
supplement) or otherwise for use in connection
with the sale of the Contracts or Trust shares;
(ii) 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 for the
Contracts not supplied by BBOI Worldwide or
persons under its control) or wrongful conduct of
the Trust, BBOI Worldwide or persons under their
control, with respect to the sale or distribution
of the Contracts or shares of the Trust;
(iii) 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 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 statement or statements
therein not misleading, if such statement or
omission was made in reliance upon information
furnished in writing to the Insurance Company by
or on behalf of the Trust;
(iv) 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, whether unintentional or in
good faith or otherwise, to comply with the
diversification requirements specified in Article
VI of this Agreement); or
18<PAGE>
(v) arise out of or result from any material
breach of any representation, warranty or
agreement made by BBOI Worldwide in this Agreement
or arise out of or result from any other material
breach of this Agreement by BBOI Worldwide;
as limited by and in accordance with the provisions of Sections 8.2(b)
and 8.2(c) hereof.
8.2(b) BBOI Worldwide 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 that may arise from the Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of the Indemnified
Party's duties or by reason of the Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the
Insurance Company or the Account, whichever is applicable.
8.2(c) BBOI Worldwide shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless the Indemnified Party shall have notified
BBOI Worldwide 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 the Indemnified Party (or after the
Indemnified Party shall have received notice of such service on any
designated agent). Notwithstanding the foregoing, the failure of any
Indemnified Party to give notice as provided herein shall not relieve
BBOI Worldwide of its obligations hereunder except to the extent that
BBOI Worldwide has been prejudiced by such failure to give notice. In
addition, any failure by the Indemnified Party to notify BBOI
Worldwide of any such claim shall not relieve BBOI Worldwide 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, BBOI Worldwide will be entitled to participate, at its own
expense, in the defense thereof. BBOI Worldwide also shall be
entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action; provided, however, that if the Indemni-
fied Party shall have reasonably concluded that there may be defenses
available to it which are different from or additional to those
available to BBOI Worldwide, BBOI Worldwide shall not have the right
to assume said defense, but shall pay the costs and expenses thereof
(except that in no event shall BBOI Worldwide be liable for the fees
and expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from BBOI Worldwide to
the Indemnified Party of BBOI Worldwide's election to assume the
19<PAGE>
defense thereof, and in the absence of such a reasonable conclusion
that there may be different or additional defenses available to the
Indemnified Party, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and BBOI Worldwide
will not be liable to that party under this Agreement for any legal or
other expenses subsequently incurred by that party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d) The Insurance Company agrees to notify BBOI Worldwide
promptly 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 Contracts or the operation of the Account.
8.3 INDEMNIFICATION BY THE TRUST
8.3(a). The Trust agrees to indemnify and hold harmless the
Insurance Company, and each of its directors, officers, employees and
agents, and each person, if any, who controls the Insurance Company
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any
and all losses, claims, damages, liabilities (including legal and
other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as those
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements result from the gross negligence, bad
faith or willful misconduct of any trustee(s) of the Trust, are
related to the operations of the Trust 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 specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material
breach of any representation, warranty or
agreement made by the Trust in this Agreement or
arise out of or result from any other material
breach of this Agreement by the Trust;
as limited by, and in accordance with the provisions of, Sections
8.3(b) and 8.3(c) hereof.
8.3(b). The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party that may
20<PAGE>
arise from the Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of the Indemnified Party's duties
or by reason of the Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Insurance
Company, the Trust, BBOI Worldwide or the Account, whichever is
applicable.
8.3(c). The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless the Indemnified Party shall have notified the 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 the Indemnified Party (or after the Indemnified Party
shall have received notice of such service on any designated agent).
Notwithstanding the foregoing, the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Trust of its
obligations hereunder except to the extent that the Trust has been
prejudiced by such failure to give notice. In addition, any failure
by the Indemnified Party to notify the Trust of any such claim shall
not relieve the 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, the Trust will be entitled
to participate, at its own expense, in the defense thereof. The Trust
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action; provided, however, that
-------- -------
if the Indemnified Party shall have reasonably concluded that there
may be defenses available to it which are different from or additional
to those available to the Trust, the Trust shall not have the right to
assume said defense, but shall pay the costs and expenses thereof
(except that in no event shall the Trust be liable for the fees and
expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from the Trust to the
Indemnified Party of the Trust's election to assume the defense
thereof, and in the absence of such a reasonable conclusion that there
may be different or additional defenses available to the Indemnified
Party, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Trust will not be liable to
that party under this Agreement for any legal or other expenses
subsequently incurred by that party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.3(d). The Insurance Company and BBOI Worldwide agree promptly
to notify the Trust of the commencement of any litigation or proceed-
ings against it or any of its respective officers or directors in
21<PAGE>
connection with this Agreement, the issuance or sale of the Contracts,
the operation of the Account, or the sale or acquisition of shares of
the Trust.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and provisions hereof
interpreted under and in accordance with the laws of the State of
Delaware.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934, and 1940 Acts, and the rules and regulations and rulings
thereunder, including any exemptions from those statutes, rules and
regulations the Commission may grant (including, but not limited to,
the Mixed and Shared Funding Exemptive Order) and the terms hereof
shall be interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon one year advance
written notice to the other parties; provided, however,
such notice shall not be given earlier than one year
following the date of this Agreement; or
(b) at the option of the Insurance Company to the extent
that shares of Funds are not reasonably available to
meet the requirements of the Contracts as determined by
the Insurance Company, provided, however, that such a
termination shall apply only to the Fund(s) not reason-
ably available. Prompt written notice of the election
to terminate for such cause shall be furnished by the
Insurance Company to the Trust and BBOI Worldwide; or
(c) at the option of the Trust or BBOI Worldwide, in the
event that formal administrative proceedings are
instituted against the Insurance Company by the NASD,
the Commission, an insurance commissioner or any other
regulatory body regarding the Insurance Company's
duties under this Agreement or related to the sale of
the Contracts, the operation of any Account, or the
purchase of the Trust's shares, provided, however, that
the Trust determines in its sole judgment exercised in
good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of
the Insurance Company to perform its obligations under
this Agreement; or
22<PAGE>
(d) at the option of the Insurance Company in the event
that formal administrative proceedings are instituted
against the Trust or BBOI Worldwide by the NASD, the
Commission, or any state securities or insurance
department or any other regulatory body, provided,
however, that the Insurance Company determines in its
sole judgement exercised in good faith, that any such
administrative proceedings will have a material adverse
effect upon the ability of the Trust or BBOI Worldwide
to perform its obligations under this Agreement; or
(e) with respect to any Account, upon requisite vote of the
Contract owners having an interest in that Account (or
any subaccount) to substitute the shares of another
investment company for the corresponding Fund shares in
accordance with the terms of the Contracts for which
those Fund shares had been selected to serve as the
underlying investment media. The Insurance Company
will give at least 30 days' prior written notice to the
Trust of the date of any proposed vote to replace the
Trust's shares; or
(f) at the option of the Insurance Company, in the event
any of the Trust's shares are not registered, issued or
sold in accordance with applicable state and/or federal
law or exemptions therefrom, or such law precludes the
use of those shares as the underlying investment media
of the Contracts issued or to be issued by the
Insurance Company; or
(g) at the option of the Insurance Company, if the Trust
ceases to qualify as a regulated investment company
under Subchapter M of the Code or under any successor
or similar provision, or if the Insurance Company
reasonably believes that the Trust may fail to so
qualify; or
(h) at the option of the Insurance Company, if the Trust
fails to meet the diversification requirements
specified in Article VI hereof; or
(i) at the option of either the Trust or BBOI Worldwide, if
(1) the Trust or BBOI Worldwide, respectively, shall
determine, in their sole judgment reasonably exercised
in good faith, that the Insurance Company has suffered
a material adverse change in its business or financial
23<PAGE>
condition or is the subject of material adverse
publicity and that material adverse change or material
adverse publicity will have a material adverse impact
upon the business and operations of either the Trust or
BBOI Worldwide, (2) the Trust or BBOI Worldwide shall
notify the Insurance Company in writing of that
determination and its intent to terminate this
Agreement, and (3) after considering the actions taken
by the Insurance Company and any other changes in
circumstances since the giving of such a notice, the
determination of the Trust or BBOI Worldwide shall
continue to apply on the sixtieth (60th) day following
the giving of that notice, which sixtieth day shall be
the effective date of termination; or
(j) at the option of the Insurance Company, if (1) the
Insurance Company shall determine, in its sole judgment
reasonably exercised in good faith, that either the
Trust or BBOI Worldwide has suffered a material adverse
change in its business or financial condition or is the
subject of material adverse publicity and that material
adverse change or material adverse publicity will have
a material adverse impact upon the business and
operations of the Insurance Company, (2) the Insurance
Company shall notify the Trust and BBOI Worldwide in
writing of the determination and its intent to
terminate the Agreement, and (3) after considering the
actions taken by the Trust and/or BBOI Worldwide and
any other changes in circumstances since the giving of
such a notice, the determination shall continue to
apply on the sixtieth (60th) day following the giving
of the notice, which sixtieth day shall be the
effective date of termination.
10.2. It is understood and agreed that the right of any party
hereto to terminate this Agreement pursuant to Section 10.1(a) may be
exercised for any reason or for no reason.
10.3. No termination of this Agreement shall be effective unless
and until the party terminating this Agreement gives prior written
notice to all other parties to this Agreement of its intent to
terminate, which notice shall set forth the basis for the termination.
Furthermore,
(a) In the event that any termination is based upon the
provisions of Article VII, or the provision of Section 10.1(a),
24<PAGE>
10.1(i), 10.1(j), or 10.1(k) of this Agreement, the prior written
notice shall be given in advance of the effective date of termination
as required by those provisions; and
(b) in the event that any termination is based upon the
provisions of Section 10.1(c) or 10.1(d) of this Agreement, the prior
written notice shall be given at least ninety (90) days before the
effective date of termination.
10.4. Notwithstanding any termination of this Agreement, subject
to Section 1.2 of this Agreement and for so long as the Trust
continues to exist, the Trust and BBOI Worldwide shall at the option
of the Insurance Company, continue to make available additional shares
of the Trust pursuant to the terms and conditions of this Agreement,
for all Contracts in effect on the effective date of termination of
this Agreement ("Existing Contracts"). Specifically, without limita-
tion, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Trust, redeem investments in the Trust
and/or invest in the Trust upon the making of additional purchase
payments under the Existing Contracts. The parties agree that this
Section 10.4 shall not apply to any terminations under Article VII and
the effect of Article VII terminations shall be governed by Article
VII of this Agreement.
10.5. The Insurance Company shall not redeem Trust shares
attributable to the Contracts (as opposed to Trust shares attributable
to the Insurance Company's assets held in the Account) except (i) as
necessary to implement Contract-owner-initiated transactions, or (ii)
as required by state and/or federal laws or regulations or judicial or
other legal precedent of general application (a "Legally Required
Redemption"). Upon request, the Insurance Company will promptly
furnish to the Trust and BBOI Worldwide the opinion of counsel for the
Insurance Company (which counsel shall be reasonably satisfactory to
the Trust and BBOI Worldwide) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, the Insurance Company shall not prevent new Contract
owners from allocating payments to a Fund that formerly was available
under the Contracts without first giving the Trust or BBOI Worldwide
90 days notice of its intention to do so.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of that other party
set forth below or at such other address as the other party may from
time to time specify in writing.
25<PAGE>
If to the Trust:
210 University Boulevard, Suite 900
Denver, Colorado 80206
Attention: Kevin R. Fay, Vice President
If to the Insurance Company:
6201 Powers Ferry Road
Atltanta, Georgia 30339
Attention: David Hopkins, Chief Counsel
If to BBOI Worldwide:
210 University Boulevard, Suite 900
Denver, Colorado 80206
Attention: Kevin R. Fay
ARTICLE XII. MISCELLANEOUS
12.1. Subject to the requirements of legal process and
regulatory authority, each party hereto shall treat as confidential
the names and addresses of the owners of the Contracts and all
information reasonably identified as confidential in writing by any
other party hereto and, except as permitted by this Agreement, shall
not disclose, disseminate or utilize such names and addresses and
other confidential information without the express written consent of
the affected party unless and until that information may come into the
public domain.
12.2. 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.
12.3. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one
and the same instrument.
12.4. 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.
12.5. Each party hereto shall cooperate with each other party
and all appropriate governmental authorities (including without
limitation the Commission, the NASD and state insurance regulators)
and shall permit those authorities reasonable access to its books and
records in connection with any lawful investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
26<PAGE>
12.6. 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.
12.7. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns;
provided, that no party may assign this Agreement without the prior
written consent of the others.
27<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly
authorized representative as of the date specified below.
Insurance Company:
CANADA LIFE INSURANCE COMPANY OF AMERICA
By its authorized officer,
By:_________________________________
Title:______________________________
Date:_______________________________
Trust:
BERGER INSTITUTIONAL PRODUCTS TRUST
By its authorized officer,
By:_________________________________
Title:______________________________
Date:_______________________________
BBOI Worldwide:
BBOI WORLDWIDE LLC
By its authorized officer,
By:_________________________________
Title:______________________________
Date:_______________________________
28<PAGE>
SCHEDULE A
ACCOUNTS
NAME OF ACCOUNT DATE OF RESOLUTION OF INSURANCE
COMPANY'S BOARD WHICH ESTABLISHED
Variable Annuity Account 1 THE ACCOUNT
July 22, 1988
29<PAGE>
SCHEDULE B
CONTRACTS
1. Contract Form - VariFund
--------
30<PAGE>
SCHEDULE C
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsi-
bilities for the handling of proxies relating to the Trust by BBOI
Worldwide, the Trust and the Insurance Company. The defined terms
herein shall have the meanings assigned in the Participation Agreement
except that the term "Insurance Company" shall also include the
department or third party assigned by the Insurance Company to perform
the steps delineated below.
1. The number of proxy proposals is given to the Insurance Company
by BBOI Worldwide as early as possible before the date set by the
Trust for the shareholder meeting to facilitate the establishment
of tabulation procedures. At this time BBOI Worldwide will
inform the Insurance Company of the Record, Mailing and Meeting
dates. This will be done verbally approximately two months
before meeting.
2. Promptly after the Record Date, the Insurance Company will
perform a "tape run", or other activity, which will generate the
names, addresses and number of units which are attributed to each
contractowner/policyholder (the "Customer") as of the Record
Date. Allowance should be made for account adjustments made
after this date that could affect the status of the Customers'
accounts of the Record Date.
Note: The number of proxy statements is determined by the
activities described in Step #2. The Insurance Company will use its
best efforts to call in the number of Customers to BBOI Worldwide, as
soon as possible, but no later than one week after the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Insurance Company by the Trust. The
Insurance Company, at its expense, shall produce and personalize
the Voting Instruction cards. BBOI Worldwide must approve the
Card before it is printed. Allow approximately 2-4 business days
for printing information on the Cards. Information commonly
found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification
of votes (already on Cards as printed by the Trust).
31<PAGE>
(This and related steps may occur later in the chronological
process due to possible uncertainties relating to the proposals.)
4. During this time, BBOI Worldwide will develop, produce, and the
Trust will pay for the Notice of Proxy and the Proxy Statement
(one document). Printed and folded notices and statements will
be sent to Insurance Company for insertion into envelopes
(envelopes and return envelopes are provided and paid for by the
Insurance Company). Contents of envelope sent to customers by
Insurance Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. Return envelope (postage pre-paid by Insurance Company)
addressed to the Insurance Company or its tabulation agent
d. "Urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to vote
as quickly as possible and that their vote is important.
One copy will be supplied by the Trust.)
e. Cover letter - optional, supplied by Insurance Company and
reviewed and approved in advance by BBOI Worldwide.
5. The above contents should be received by the Insurance Company
approximately 3-5 business days before mail date. Individual in
charge at Insurance Company reviews and approves the contents of
the mailing package to ensure correctness and completeness. Copy
of this approval sent to BBOI Worldwide.
6. Package mailed by the Insurance Company.
* The Trust must allow at least a 15-day solicitation time to
----
the Insurance Company as the shareowner. (A 5-week period
is recommended.) Solicitation time is calculated as
calendar days from (but not including) the meeting, counting
---
backwards.
7. Collection and tabulation of Cards begins. Tabulation usually
takes place in another department or another vendor depending on
process used. An often used procedure is to sort cards on
arrival by proposal into vote categories of all yes, no, or mixed
replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal
procedure.
32<PAGE>
8. If Cards are mutilated, or for any reason are illegible or are
not signed properly, they are sent back to the Customer with an
explanatory letter, a new Card and return envelope. The
mutilated or illegible Card is disregarded and considered to be
not received for purposes of vote tabulation. Such mutilated or
--- --------
illegible Cards are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards
are usually remedied individually.
9. There are various control procedures used to ensure proper
tabulation of votes and accuracy of that tabulation. The most
prevalent is to sort the Cards as they first arrive into
categories depending upon their vote; an estimate of how the vote
is progressing may then be calculated. If the initial estimates
and the actual vote do not coincide, then an internal audit of
that vote should occur. This may entail a recount.
10. The actual tabulation of votes is done in units which is then
converted to shares. (It is very important that the Trust
receives the tabulations stated in terms of a percentage and the
number of shares.) BBOI Worldwide must review and approve
------
tabulation format.
11. Final tabulation in shares is verbally given by the Insurance
Company to BBOI Worldwide on the morning of the meeting not
later than 10:00 a.m. Denver time. BBOI Worldwide may request an
earlier deadline if required to calculate the vote in time for
the meeting.
12. A Certificate of Mailing and Authorization to Vote Shares will
be required from the Insurance Company as well as an original
copy of the final vote. BBOI Worldwide will provide a standard
form for each Certification.
13. The Insurance Company will be required to box and archive the
Cards received from the Customers. In the event that any vote
is challenged or if otherwise necessary for legal, regulatory,
or accounting purposes, BBOI Worldwide will be permitted
reasonable access to such Cards.
14. All approvals and "signing-off" may be done orally, but must
always be followed up in writing.
32
Exhibit 9.10
Note: This agreement is identical to Exhibit 9.9 to this Registration
Statement, except that Canada Life Insurance Company of New York is
substituted for Canada Life Insurance Company as a party.
Exhibit 9.11
PARTICIPATION AGREEMENT
Among
BERGER INSTITUTIONAL PRODUCTS TRUST
BERGER ASSOCIATES, INC.
and
PRUDENTIAL INSURANCE COMPANY OF AMERICA
THIS AGREEMENT, made and entered into this 4th day of March,
1997 by and among PRUDENTIAL INSURANCE COMPANY OF AMERICA,
(hereinafter the "Insurance Company"), a New Jersey corporation, on
its own behalf and on behalf of each segregated asset account of the
Insurance Company set forth on Schedule A hereto as may be amended
from time to time (each such account hereinafter referred to as the
"Account"), BERGER INSTITUTIONAL PRODUCTS TRUST, a Delaware business
trust (the "Trust") and BERGER ASSOCIATES, INC., a Delaware
corporation ("Berger Associates").
WHEREAS, the Trust engages in business as an open-end management
investment company and is available to act as the investment vehicle
for variable annuity and life insurance contracts to be offered by
separate accounts of insurance companies which have entered into
participation agreements substantially identical to this Agreement
("Participating Insurance Companies") and for qualified retirement and
pension plans ("Qualified Plans"); and
WHEREAS, the beneficial interest in the Trust is divided into
several series of shares, each designated a "Fund" and representing
the interest in a particular managed portfolio of securities and other
assets; and
WHEREAS, the Trust has obtained an order from the Securities and
Exchange Commission (the "Commission"), dated April 24, 1996 (File No.
812-9852), granting Participating Insurance Companies and their
1<PAGE>
separate accounts exemptions from the provisions of Sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as
amended, (the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Trust to
be sold to and held by Qualified Plans and by variable annuity and
variable life insurance separate accounts of life insurance companies
that may or may not be affiliated with one another (the "Mixed and
Shared Funding Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management
investment company under the 1940 Act and the offering of its shares
is registered under the Securities Act of 1933, as amended
(hereinafter the "1933 Act"); and
WHEREAS, Berger Associates is duly registered as an investment
adviser under the Investment Advisers Act of 1940 and any applicable
state securities law; and
WHEREAS, the Insurance Company has registered under the 1933
Act, or will register under the 1933 Act, certain variable annuity or
variable life insurance contracts identified by the form number(s)
listed on Schedule B to this Agreement, as amended from time to time
hereafter by mutual written agreement of all the parties hereto (the
"Contracts"); and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the board of
directors of the Insurance Company on the date shown for that Account
on Schedule A hereto, to set aside and invest assets attributable to
the Contracts; and
WHEREAS, the Insurance Company has registered or will register
each Account as a unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Insurance Company intends to purchase shares in
the Funds at net asset value on behalf of each Account to fund the
Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the
Insurance Company, the Trust and Berger Associates agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Trust agrees to sell to the Insurance Company those
shares of the Trust which each Account orders, executing such orders
2<PAGE>
on a daily basis at the net asset value next computed after receipt by
the Trust or its designee of the order for the shares of the Trust.
For purposes of this Section 1.1, the Insurance Company shall be the
designee of the Trust for receipt of such orders from the Accounts and
receipt by such designee shall constitute receipt by the Trust;
provided that the Trust receives notice of such order by 7:00 a.m.,
Mountain Time, on the next following Business Day. In this Agreement,
"Business Day" shall mean any day on which the New York Stock Exchange
is open for trading and on which the Trust calculates its net asset
value pursuant to the rules of the Commission.
1.2. The Trust agrees to make its shares available for purchase
at the applicable net asset value per share by the Insurance Company
and its Accounts on those days on which the Trust calculates its
Funds' net asset values pursuant to rules of the Commission and the
Trust shall use reasonable efforts to calculate its Funds' net asset
values on each day on which the New York Stock Exchange is open for
trading. Notwithstanding the foregoing, the trustees of the Trust may
refuse to sell shares of any Fund to any person, or suspend or
terminate the offering of shares of any Fund if such action is
required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the trustees of the Trust acting in good
faith and in light of their fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the
shareholders of that Fund.
1.3. The Trust agrees that shares of the Trust will be sold
only to Accounts of Participating Insurance Companies and to Qualified
Plans. No shares of any Fund will be sold to the general public.
1.4. The Trust will not sell its shares to any insurance
company or separate account unless an agreement containing provisions
substantially the same as Sections 2.4, 3.4, 3.5, and Sections 7.1 -
7.7 of this Agreement is in effect to govern such sales.
1.5. The Trust agrees to redeem, on the Insurance Company's
request, any full or fractional shares of the Trust held by the
Account, executing such requests on a daily basis at the net asset
value next computed after receipt by the Trust or its designee of the
request for redemption. However, if one or more Funds has determined
to settle redemption transactions for all of its shareholders on a
delayed basis (more than one business day, but in no event more than
three Business Days, after the date on which the redemption order is
received, unless otherwise permitted by an order of the Commission
under Section 22(e) of the 1940 Act), the Trust shall be permitted to
3<PAGE>
delay sending redemption proceeds to the Insurance Company by the same
number of days that the Trust is delaying sending redemption proceeds
to the other shareholders of the Fund. For purposes of this Section
1.5, the Insurance Company shall be the designee of the Trust for
receipt of requests for redemption from each Account and receipt by
that designee shall constitute receipt by the Trust; provided that the
Trust receives notice of the request for redemption by 7:00 a.m.,
Mountain Time, on the next following Business Day.
1.6. The Insurance Company agrees to purchase and redeem the
shares of each Fund offered by the then-current prospectus of the
Trust in accordance with the provisions of that prospectus. The
Insurance Company agrees that all net amounts available under the
Contracts shall be invested in the Trust, or in the Insurance
Company's general account, provided that such amounts may also be
invested in an investment company other than the Trust if (a) the
other investment company, or series thereof, has investment objectives
or policies that are substantially different from the investment
objectives and policies of any Fund of the Trust in which the Account
may invest; or (b) the other investment company was available as a
funding vehicle for the Contracts prior to the date of this Agreement
and the Insurance Company so informs the Trust and Berger Associates
prior to their signing this Agreement; or (c) the Trust and Berger
Associates consent in advance in writing to the use of the other
investment company.
1.7. The Insurance Company shall pay for Trust shares by 1:00
p.m., Mountain Time, on the next Business Day after an order to
purchase Trust shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by
wire. For the purpose of Sections 2.9 and 2.10, upon receipt by the
Trust of the federal funds so wired, such funds shall cease to be the
responsibility of the Insurance Company and shall become the
responsibility of the Trust. Payment of net redemption proceeds
(aggregate redemptions of a Fund's shares by an Account minus
aggregate purchases of that Fund's shares by that Account) of less
than $1 million for a given Business Day will be made by wiring
federal funds to the Insurance Company on the next Business Day after
receipt of the redemption request. Payment of net redemption proceeds
of $1 million or more will be by wiring federal funds within three
Business Days after receipt of the redemption request. However,
payment may be postponed under unusual circumstances, such as when
normal trading is not taking place on the New York Stock Exchange, an
emergency as defined by the Securities and Exchange Commission exists,
or as permitted by the Securities and Exchange Commission.
4<PAGE>
1.8. Issuance and transfer of the Trust's shares will be by
book entry only. Stock certificates will not be issued to the
Insurance Company or any Account. Shares ordered from the Trust will
be recorded in an appropriate title for each Account or the
appropriate subaccount of each Account.
1.9. The Trust shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Insurance Company
of any income, dividends or capital gain distributions payable on the
Funds' shares. The Insurance Company hereby elects to receive all
income dividends and capital gain distributions payable on a Fund's
shares in additional shares of that Fund. The Insurance Company
reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Trust
shall notify the Insurance Company of the number of shares issued as
payment of dividends and distributions.
1.10. The Trust shall make the net asset value per share for
each Fund available to the Insurance Company on a daily basis as soon
as reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make those per-share net
asset values available by 5:00 p.m., Mountain Time.
ARTICLE II. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
2.1. The Insurance Company represents, warrants and agrees that
the offerings of the Contracts are, or will be, registered under the
1933 Act; that the Contracts will be issued and sold in compliance in
all material respects with all applicable federal and state laws and
that the sale of the Contracts shall comply in all material respects
with applicable state insurance suitability requirements. The
Insurance Company further represents that it is an insurance company
duly organized and in good standing under applicable law and that it
has legally and validly established the Account prior to any issuance
or sale thereof as a segregated asset account under the New Jersey
Insurance Code and has registered, or warrants and agrees that prior
to any issuance or sale of the Contracts it will register, the Account
as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the
Contracts.
2.2. The Trust warrants and agrees that Trust shares sold
pursuant to this Agreement shall be registered under the 1933 Act,
duly authorized for issuance and sale in compliance with the laws of
the State of Delaware and all applicable federal securities laws and
that the Trust is and shall remain registered under the 1940 Act. The
5<PAGE>
Trust warrants and agrees that it shall amend the registration
statement for its shares under the 1933 Act and the 1940 Act from time
to time as required in order to effect the continuous offering of its
shares. The Trust shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the
extent deemed advisable by the Trust or Berger Associates.
2.3. The Trust represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended, (the "Code") and warrants and agrees
that it will make all reasonable efforts to maintain its qualification
(under Subchapter M or any successor or similar provision) and that it
will notify the Insurance Company immediately upon having a reasonable
basis for believing that it has ceased to so qualify or that it might
not so qualify in the future.
2.4. The Insurance Company represents that the Contracts are
currently treated as annuity or life insurance contracts under
applicable provisions of the Code and warrants and agrees that it will
make every effort to maintain such treatment and that it will notify
the Trust and Berger Associates immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or
that they might not be so treated in the future.
2.5. The Trust may elect to make payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act. To
the extent that it decides to finance distribution expenses pursuant
to Rule 12b-1, the Trust undertakes to have a board of trustees, a
majority of whom are not interested persons of the Trust, formulate
and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Trust makes no representation warranties as to whether
any aspect of its operations (including, but not limited to, fees and
expenses and investment policies) complies or will comply with the
insurance laws or regulations of the various states.
2.7. The Trust represents that it is lawfully organized and
validly existing under the laws of the State of Delaware and
represents, warrants and agrees that it does and will comply in all
material respects with the 1940 Act.
2.8. Berger Associates represents that it is and warrants that
it shall remain duly registered as an investment adviser under all
applicable federal and state securities laws and agrees that it shall
6<PAGE>
perform its obligations for the Trust in compliance in all material
respects with the laws of the State of Colorado and any applicable
state and federal securities laws.
2.9. The Trust and Berger Associates represent and warrant that
all of their officers, employees, investment advisers, investment sub-
advisers, and other individuals or entities described in Rule 17g-1
under the 1940 Act 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 in an
amount not less than the minimum coverage required currently by Rule
17g-1 under the 1940 Act or related provisions as may be promulgated
from time to time. That fidelity bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding
company.
2.10. The Insurance Company represents and warrants that all of
its officers, employees, investment advisers, and other individuals or
entities described in Rule 17g-1 under the 1940 Act are and shall
continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust, in an amount not less
than the minimum coverage required currently for entities subject to
the requirements of Rule 17g-1 of the 1940 Act or related provisions
or 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.
ARTICLE III. DISCLOSURE DOCUMENTS AND VOTING
3.1. Berger Associates shall provide the Insurance Company (at
the Insurance Company's expense) with as many copies of the Trust's
current prospectus as the Insurance Company may reasonably request.
If requested by the Insurance Company in lieu thereof, the Trust shall
provide such documentation (including a final copy of the new
prospectus as set in type at the Trust's expense) and other assistance
as is reasonably necessary in order for the Insurance Company once
each year (or more frequently if the prospectus for the Trust is
amended) to have the prospectus for the Contracts and the Trust's
prospectus printed together in one document (at the Insurance
Company's expense).
3.2. The Trust's prospectus shall state that the Statement of
Additional Information for the Trust (the "SAI") is available from the
Trust, and Berger Associates (or the Trust), at its expense, shall
print and provide the SAI free of charge to the Insurance Company and
to any owner of a Contract or prospective owner who requests the SAI.
7<PAGE>
3.3. The Trust, at its expense, shall provide the Insurance
Company with copies of its proxy material, reports to shareholders and
other communications to shareholders in such quantity as the Insurance
Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law, the Insurance
Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Trust shares in accordance with instruc-
tions received from Contract owners; and
(iii) vote Trust shares for which no instructions have
been received in the same proportion as Trust
shares of that Fund for which instructions have
been received;
so long as and to the extent that the Commission continues to
interpret the 1940 Act to require pass-through voting privileges for
variable contract owners. The Insurance 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 the standards set forth on
Schedule C attached hereto and incorporated herein by this reference,
which standards will also be provided to the other Participating
Insurance Companies. The Insurance Company shall fulfill its
obligation under, and abide by the terms and conditions of, the Mixed
and Shared Funding Exemptive Order.
3.5. The Trust will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Trust will
either provide for annual meetings (except insofar as the Commission
may interpret Section 16 of the 1940 Act not to require such meetings)
or, as the Trust currently intends, comply with Section 16(c) of the
1940 Act (although the Trust is not one of the trusts described in
Section 16(c) of that Act) as well as with Sections 16(a) and, if and
when applicable, 16(b). Further, the Trust will act in accordance
with the Commission's interpretation of the requirements of Section
16(a) with respect to periodic elections of trustees and with whatever
rules the Commission may promulgate with respect thereto.
8<PAGE>
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Insurance Company shall furnish, or shall cause to be
furnished, to the Trust or its designee, each piece of sales
literature or other promotional material in which the Trust, a sub-
adviser of one of the Funds, or Berger Associates is named, at least
fifteen calendar days prior to its use. No such material shall be
used if the Trust or its designee objects to such use within ten
calendar days after receipt of such material.
4.2. The Insurance Company shall not give any information or
make any representations or statements on behalf of the Trust or
concerning the Trust in connection with the sale of the Contracts
other than the information or representations contained in the Trust's
registration statement, prospectus or SAI, as that registration
statement, prospectus or SAI may be amended or supplemented from time
to time, or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved by the Trust or its
designee or by Berger Associates, except with the permission of the
Trust or Berger Associates.
4.3. The Trust, Berger Associates, or its designee shall
furnish, or shall cause to be furnished, to the Insurance Company or
its designee, each piece of sales literature or other promotional
material in which the Insurance Company or the Account is named at
least fifteen calendar days prior to its use. No such material shall
be used if the Insurance Company or its designee objects to such use
within ten calendar days after receipt of that material.
4.4. The Trust and Berger Associates shall not give any
information or make any representations on behalf of the Insurance
Company or concerning the Insurance Company, any Account, or the
Contracts other than the information or representations contained in a
registration statement, prospectus or statement of additional
information for the Contracts, as that registration statement,
prospectus or statement of additional information may be amended or
supplemented from time to time, or in published reports for any
Account which are in the public domain or approved by the Insurance
Company for distribution to Contract owners, or in sales literature or
other promotional material approved by the Insurance Company or its
designee, except with the permission of the Insurance Company.
4.5. The Trust will provide to the Insurance Company at least
one complete copy of each registration statement, prospectus,
statement of additional information, report, proxy statement, piece of
sales literature or other promotional material, application for
exemption, request for no-action letter, and any amendment to any of
the above, that relate to the Trust or its shares, contemporaneously
9<PAGE>
with the filing of the document with the Commission, the National
Association of Securities Dealers, Inc. ("NASD"), or other regulatory
authorities.
4.6. The Insurance Company will provide to the Trust at least
one complete copy of each registration statement, prospectus,
statement of additional information, report, solicitation for voting
instructions, piece of sales literature and other promotional
material, application for exemption, request for no-action letter, and
any amendment to any of the above, that relates to the Contracts or
the Account, contemporaneously with the filing of the document with
the Commission, the NASD, or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited
to, advertisements, newspaper, magazine, or other periodical, radio,
television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, or other public media, sales literature
(i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, shareholder
newsletters, seminar texts, 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, and
registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials.
4.8. At the request of any party to this Agreement, each other
party will make available to the other party's independent auditors
and/or representative of the appropriate regulatory agencies, all
records, data and access to operating procedures that may be
reasonably requested.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust and Berger Associates shall pay no fee or other
compensation to the Insurance Company under this agreement, except as
set forth in Section 5.4 and except that if the Trust or any Fund
adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, Berger Associates or the Trust may make
payments to the Insurance Company in amounts consistent with that 12b-
1 plan, subject to review by the trustees of the Trust.
5.2. All expenses incident to performance by the Trust under
this Agreement shall be paid by the Trust. The Trust shall see to it
10<PAGE>
that any offering of its shares is registered and that all of its
shares are authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Trust or
Berger Associates, in accordance with applicable state laws prior to
their sale. The Trust shall bear the cost of registration and
qualification of the Trust's shares, preparation and filing of the
Trust's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing
the proxy materials and reports to shareholders, the preparation of
all statements and notices required by any federal or state law, and
all taxes on the issuance or transfer of the Trust's shares.
5.3. The Insurance Company shall bear the expenses of printing
and distributing to Contract owners the Contract prospectuses and of
distributing to Contract owners the Trust's prospectus, proxy
materials and reports.
5.4. The Insurance Company bears the responsibility and
correlative expense for administrative and support services for
Contract owners. Berger Associates recognizes the Insurance Company
as the sole shareholder of shares of the Trust issued under this
Agreement. From time to time, Berger Associates may pay amounts from
its past profits to the Insurance Company for providing certain
administrative services for the Trust or for providing other services
that relate to the Trust. In consideration of the savings resulting
from such arrangement, and to compensate the Insurance Company for its
costs, Berger Associates agrees to pay to the Insurance Company an
amount equal to 25 basis points (0.25%) per annum of the average
aggregate amount invested by the Insurance Company in the Trust under
this Agreement. Such payments will be made only when the average
aggregate amount invested exceeds $1,000,000. The parties agree that
such payments are for administrative services and investor support
services, and do not constitute payment for investment advisory,
distribution or other services. Payment of such amounts by Berger
Associates shall not increase the fees paid by the Trust or its
shareholders.
ARTICLE VI. DIVERSIFICATION
6.1. The Trust will comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5 relating to the diversification
11<PAGE>
requirements for variable annuity, endowment, modified endowment or
life insurance contracts and any amendments or other modifications to
that Section or Regulation at all times necessary to satisfy those
requirements.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The trustees of the Trust will monitor the Trust for the
existence of any material irreconcilable conflict between the
interests of the variable Contract owners of all separate accounts
investing in the Trust and the participants of all Qualified Plans
investing in the Trust. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretive letter, or
any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any
Fund are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract
owners; or (f) a decision by a Participating Insurance Company to
disregard the voting instructions of variable contract owners. The
trustees of the Trust shall promptly inform the Insurance Company if
they determine that an irreconcilable material conflict exists and the
implications thereof. The trustees of the Trust shall have sole
authority to determine whether an irreconcilable material conflict
exists and their determination shall be binding upon the Insurance
Company.
7.2. The Insurance Company and Berger Associates each will
report promptly any potential or existing conflicts of which it is
aware to the trustees of the Trust. The Insurance Company and Berger
Associates each will assist the trustees of the Trust in carrying out
their responsibilities under the Mixed and Shared Funding Exemptive
Order, by providing the trustees of the Trust with all information
reasonably necessary for them to consider any issues raised. This
includes, but is not limited to, an obligation by the Insurance
Company to inform the trustees of the Trust whenever Contract owner
voting instructions are to be disregarded. These responsibilities
shall be carried out by the Insurance Company with a view only to the
interests of the Contract owners and by Berger Associates with a view
only to the interests of Contract holders and Qualified Plan
participants.
7.3. If it is determined by a majority of the trustees of the
Trust, or a majority of the trustees who are not interested persons of
12<PAGE>
the Trust, any of its Funds, or Berger Associates (the "Independent
Trustees"), that a material irreconcilable conflict exists, the
Insurance Company and/or other Participating Insurance Companies or
Qualified Plans that have executed participation agreements shall, at
their expense and to the extent reasonably practicable (as determined
by a majority of the Independent Trustees), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict,
up to and including: (1) withdrawing the assets allocable to some or
all of the separate accounts from the Trust or any Fund and
reinvesting those assets in a different investment medium, including
(but not limited to) another Fund of the Trust, or submitting the
question 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 (e.g., annuity contract owners,
life insurance contract owners, or variable contract owners of one or
more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected variable contract owners the
option of making such a change; and (2) establishing a new registered
management investment company or managed separate account and
obtaining any necessary approvals or orders of the Commission in
connection therewith.
7.4. If a material irreconcilable conflict arises because of a
decision by the Insurance Company to disregard Contract owner voting
instructions and that decision represents a minority position or would
preclude a majority vote, the Insurance Company may be required, at
the Trust's election, to withdraw the affected Account's investment in
the Trust and terminate this Agreement with respect to that Account;
provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Independent
Trustees. Any such withdrawal and termination must take place within
six (6) months after the Trust gives written notice that this
provision is being implemented, and, until the end of that six month
period, the Trust shall continue to accept and implement orders by the
Insurance Company for the purchase (and redemption) of shares of the
Trust.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the
Insurance Company conflicts with the majority of other state
regulators, then the Insurance Company will withdraw the affected
Account's investment in the Trust and terminate this Agreement with
respect to that Account within six months after the trustees of the
Trust inform the Insurance Company in writing that they have deter-
mined that the state insurance regulator's decision has created an
13<PAGE>
irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a
majority of the Independent Trustees. Until the end of the foregoing
six month period, the Trust shall continue to accept and implement
orders by the Insurance Company for the purchase (and redemption) of
shares of the Trust.
7.6. For purposes of Sections 7.3 through 7.6 of this
Agreement, a majority of the Independent Trustees shall determine
whether any proposed action adequately remedies any irreconcilable
material conflict, but in no event will the Trust be required to
establish a new funding medium for the Contracts. The Insurance
Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been
declined by vote of a majority of Contract owners materially adversely
affected by the irreconcilable material conflict. In the event that
the trustees of the Trust determine that any proposed action does not
adequately remedy any irreconcilable material conflict, then the
Insurance Company will withdraw the Account's investment in the Trust
and terminate this Agreement within six (6) months after the trustees
of the Trust inform the Insurance Company in writing of the foregoing
determination, provided, however, that the withdrawal and termination
shall be limited to the extent required by the material irreconcilable
conflict, as determined by a majority of the Independent Trustees.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act or the rules promulgated thereunder with respect
to mixed or shared funding (as defined in the Mixed and Shared Funding
Exemptive Order) on terms and conditions materially different from
those contained in the Mixed and Shared Funding Exemptive Order, then
(a) the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with
Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent those rules are applicable; and (b) Sections 3.4, 3.5, 7.1,
7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only
to the extent that terms and conditions substantially identical to
those Sections are contained in the Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE INSURANCE COMPANY
8.1(a). The Insurance Company agrees to indemnify and hold
harmless the Trust and each trustee, officer, employee or agent of the
Trust, and each person, if any, who controls the Trust within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
14<PAGE>
Parties" for purposes of this Section 8.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Insurance Company) 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, acquisition, or redemption of the Trust's shares or the
Contracts and:
(i) 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 Contracts or
contained in the Contracts or sales literature for
the 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 the Insurance Company by
or on behalf of the Trust for use in the
registration statement or prospectus for the
Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts
or shares of the Trust;
(ii) 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
Trust not supplied by the Insurance Company, or
persons under its control) or wrongful conduct of
the Insurance Company or persons under its
control, with respect to the sale or distribution
of the Contracts or Trust Shares;
(iii) arise out of any untrue statement or
alleged untrue statement of a material fact
contained in a registration statement, prospectus,
15<PAGE>
or sales literature of the 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 a
statement or omission was made in reliance upon
information furnished in writing to the Trust by
or on behalf of the Insurance Company;
(iv) arise as a result of any failure by the
Insurance Company to provide the services and
furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material
breach of any representation, warranty or
agreement made by the Insurance Company in this
Agreement or arise out of or result from any other
material breach of this Agreement by the Insurance
Company,
as limited by and in accordance with the provisions of Sections 8.1(b)
and 8.1(c) hereof.
8.1(b). The Insurance 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 that may arise from that Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of that
Indemnified Party's duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to
the Trust, whichever is applicable.
8.1(c). The Insurance Company shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless that Indemnified Party shall have notified
the Insurance 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 that Indemnified Party (or
after the Indemnified Party shall have received notice of such service
on any designated agent). Notwithstanding the foregoing, the failure
of any Indemnified Party to give notice as provided herein shall not
relieve the Insurance Company of its obligations hereunder except to
the extent that the Insurance Company has been prejudiced by such
failure to give notice. In addition, any failure by the Indemnified
Party to notify the Insurance Company of any such claim shall not
relieve the Insurance Company from any liability which it may have to
16<PAGE>
the Indemnified Party against whom the action is brought otherwise
than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Insurance
Company shall be entitled to participate, at its own expense, in the
defense of the action. The Insurance Company also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party
named in the action; provided, however, that if the Indemnified Party
-------- -------
shall have reasonably concluded that there may be defenses available
to it which are different from or additional to those available to the
Insurance Company, the Insurance Company shall not have the right to
assume said defense, but shall pay the costs and expenses thereof
(except that in no event shall the Insurance Company be liable for the
fees and expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from the Insurance
Company to the Indemnified Party of the Insurance Company's election
to assume the defense thereof, and in the absence of such a reasonable
conclusion that there may be different or additional defenses
available to the Indemnified Party, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and
the Insurance Company will not be liable to that party under this
Agreement for any legal or other expenses subsequently incurred by the
party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the
Insurance Company of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the Trust's
shares or the Contracts or the operation of the Trust.
8.2. INDEMNIFICATION BY BERGER ASSOCIATES
8.2(a). Berger Associates agrees to indemnify and hold harmless
the Insurance Company and each of its directors, officers, employees
or agents, and each person, if any, who controls the Insurance Company
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any
and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of Berger Associates) or
litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, 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, acquisition or redemption of the Trust's shares or the
Contracts and:
17<PAGE>
(i) 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 the
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 the statement or omission or
alleged statement or omission was made in reliance
upon and in conformity with information furnished
in writing to Berger Associates or the Trust by or
on behalf of the Insurance Company for use in the
registration statement or prospectus for the Trust
or in sales literature (or any amendment or
supplement) or otherwise for use in connection
with the sale of the Contracts or Trust shares;
(ii) 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 for the
Contracts not supplied by Berger Associates or
persons under its control) or wrongful conduct of
the Trust, Berger Associates or persons under
their control, with respect to the sale or
distribution of the Contracts or shares of the
Trust;
(iii) 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 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 statement or statements
therein not misleading, if such statement or
omission was made in reliance upon information
furnished in writing to the Insurance Company by
or on behalf of the Trust;
18<PAGE>
(iv) 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, whether unintentional or in
good faith or otherwise, to comply with the
diversification requirements specified in Article
VI of this Agreement); or
(v) arise out of or result from any material
breach of any representation, warranty or
agreement made by Berger Associates in this Agree-
ment or arise out of or result from any other
material breach of this Agreement by Berger
Associates;
as limited by and in accordance with the provisions of Sections 8.2(b)
and 8.2(c) hereof.
8.2(b) Berger Associates 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 that may arise from the Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of the Indemnified
Party's duties or by reason of the Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the
Insurance Company or the Account, whichever is applicable.
8.2(c) Berger Associates shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless the Indemnified Party shall have notified
Berger Associates 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 the Indemnified Party (or
after the Indemnified Party shall have received notice of such service
on any designated agent). Notwithstanding the foregoing, the failure
of any Indemnified Party to give notice as provided herein shall not
relieve Berger Associates of its obligations hereunder except to the
extent that Berger Associates has been prejudiced by such failure to
give notice. In addition, any failure by the Indemnified Party to
notify Berger Associates of any such claim shall not relieve Berger
Associates 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, Berger Associates will be entitled to
participate, at its own expense, in the defense thereof. Berger
Associates also shall be entitled to assume the defense thereof, with
19<PAGE>
counsel satisfactory to the party named in the action; provided,
--------
however, that if the Indemnified Party shall have reasonably concluded
- -------
that there may be defenses available to it which are different from or
additional to those available to Berger Associates, Berger Associates
shall not have the right to assume said defense, but shall pay the
costs and expenses thereof (except that in no event shall Berger
Associates be liable for the fees and expenses of more than one
counsel for Indemnified Parties in connection with any one action or
separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances). After
notice from Berger Associates to the Indemnified Party of Berger
Associates's election to assume the defense thereof, and in the
absence of such a reasonable conclusion that there may be different or
additional defenses available to the Indemnified Party, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and Berger Associates will not be liable to
that party under this Agreement for any legal or other expenses
subsequently incurred by that party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.2(d) The Insurance Company agrees to notify Berger Associates
promptly 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 Contracts or the operation of the Account.
8.3 INDEMNIFICATION BY THE TRUST
8.3(a). The Trust agrees to indemnify and hold harmless the
Insurance Company, and each of its directors, officers, employees and
agents, and each person, if any, who controls the Insurance Company
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any
and all losses, claims, damages, liabilities (including legal and
other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as those
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements result from the gross negligence, bad
faith or willful misconduct of any trustee(s) of the Trust, are
related to the operations of the Trust 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
20<PAGE>
requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material
breach of any representation, warranty or
agreement made by the Trust in this Agreement or
arise out of or result from any other material
breach of this Agreement by the Trust;
as limited by, and in accordance with the provisions of, Sections
8.3(b) and 8.3(c) hereof.
8.3(b). The Trust shall not be liable under this indemnifica-
tion provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified
Party that may arise from the Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of the Indemnified
Party's duties or by reason of the Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the
Insurance Company, the Trust, Berger Associates or the Account,
whichever is applicable.
8.3(c). The Trust shall not be liable under this indemnifica-
tion provision with respect to any claim made against an Indemnified
Party unless the Indemnified Party shall have notified the 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 the Indemnified Party (or after the Indemnified Party
shall have received notice of such service on any designated agent).
Notwithstanding the foregoing, the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Trust of its
obligations hereunder except to the extent that the Trust has been
prejudiced by such failure to give notice. In addition, any failure
by the Indemnified Party to notify the Trust of any such claim shall
not relieve the 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, the Trust will be entitled
to participate, at its own expense, in the defense thereof. The Trust
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action; provided, however, that
-------- -------
if the Indemnified Party shall have reasonably concluded that there
may be defenses available to it which are different from or additional
to those available to the Trust, the Trust shall not have the right to
assume said defense, but shall pay the costs and expenses thereof
21<PAGE>
(except that in no event shall the Trust be liable for the fees and
expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from the Trust to the
Indemnified Party of the Trust's election to assume the defense
thereof, and in the absence of such a reasonable conclusion that there
may be different or additional defenses available to the Indemnified
Party, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Trust will not be liable to
that party under this Agreement for any legal or other expenses
subsequently incurred by that party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.3(d). The Insurance Company and Berger Associates agree
promptly to notify the Trust of the commencement of any litigation or
proceedings against it or any of its respective officers or directors
in connection with this Agreement, the issuance or sale of the
Contracts, the operation of the Account, or the sale or acquisition of
shares of the Trust.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and provisions hereof
interpreted under and in accordance with the laws of the State of
Delaware.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934, and 1940 Acts, and the rules and regulations and rulings
thereunder, including any exemptions from those statutes, rules and
regulations the Commission may grant (including, but not limited to,
the Mixed and Shared Funding Exemptive Order) and the terms hereof
shall be interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon one year advance
written notice to the other parties; provided, however, such
notice shall not be given earlier than one year following
the date of this Agreement; or
(b) at the option of the Insurance Company to the extent
that shares of Funds are not reasonably available to meet
the requirements of the Contracts as determined by the
22<PAGE>
Insurance Company, provided, however, that such a termina-
tion shall apply only to the Fund(s) not reasonably
available. Prompt written notice of the election to
terminate for such cause shall be furnished by the Insurance
Company to the Trust and Berger; or
(c) at the option of the Trust or Berger Associates, in the
event that formal administrative proceedings are instituted
against the Insurance Company by the NASD, the Commission,
an insurance commissioner or any other regulatory body
regarding the Insurance Company's duties under this
Agreement or related to the sale of the Contracts, the
operation of any Account, or the purchase of the Trust's
shares, provided, however, that the Trust determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse
effect upon the ability of the Insurance Company to perform
its obligations under this Agreement; or
(d) at the option of the Insurance Company in the event
that formal administrative proceedings are instituted
against the Trust or Berger Associates by the NASD, the
Commission, or any state securities or insurance department
or any other regulatory body, provided, however, that the
Insurance Company determines in its sole judgement exercised
in good faith, that any such administrative proceedings will
have a material adverse effect upon the ability of the Trust
or Berger Associates to perform its obligations under this
Agreement; or
(e) with respect to any Account, upon requisite vote of the
Contract owners having an interest in that Account (or any
subaccount) to substitute the shares of another investment
company for the corresponding Fund shares in accordance with
the terms of the Contracts for which those Fund shares had
been selected to serve as the underlying investment media.
The Insurance Company will give at least 30 days' prior
written notice to the Trust of the date of any proposed vote
to replace the Trust's shares; or
(f) at the option of the Insurance Company, in the event
any of the Trust's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or
exemptions therefrom, or such law precludes the use of those
shares as the underlying investment media of the Contracts
issued or to be issued by the Insurance Company; or
23<PAGE>
(g) at the option of the Insurance Company, if the Trust
ceases to qualify as a regulated investment company under
Subchapter M of the Code or under any successor or similar
provision, or if the Insurance Company reasonably believes
that the Trust may fail to so qualify; or
(h) at the option of the Insurance Company, if the Trust
fails to meet the diversification requirements specified in
Article VI hereof; or
(i) at the option of either the Trust or Berger Associates,
if (1) the Trust or Berger Associates, respectively, shall
determine, in their sole judgment reasonably exercised in
good faith, that the Insurance Company has suffered a
material adverse change in its business or financial
condition or is the subject of material adverse publicity
and that material adverse change or material adverse
publicity will have a material adverse impact upon the
business and operations of either the Trust or Berger
Associates, (2) the Trust or Berger Associates shall notify
the Insurance Company in writing of that determination and
its intent to terminate this Agreement, and (3) after
considering the actions taken by the Insurance Company and
any other changes in circumstances since the giving of such
a notice, the determination of the Trust or Berger
Associates shall continue to apply on the sixtieth (60th)
day following the giving of that notice, which sixtieth day
shall be the effective date of termination; or
(j) at the option of the Insurance Company, if (1) the
Insurance Company shall determine, in its sole judgment
reasonably exercised in good faith, that either the Trust or
Berger Associates has suffered a material adverse change in
its business or financial condition or is the subject of
material adverse publicity and that material adverse change
or material adverse publicity will have a material adverse
impact upon the business and operations of the Insurance
Company, (2) the Insurance Company shall notify the Trust
and Berger Associates in writing of the determination and
its intent to terminate the Agreement, and (3) after
considering the actions taken by the Trust and/or Berger
Associates and any other changes in circumstances since the
giving of such a notice, the determination shall continue to
apply on the sixtieth (60th) day following the giving of the
notice, which sixtieth day shall be the effective date of
termination.
24<PAGE>
10.2. It is understood and agreed that the right of any party
hereto to terminate this Agreement pursuant to Section 10.1(a) may be
exercised for any reason or for no reason.
10.3. No termination of this Agreement shall be effective
unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to
terminate, which notice shall set forth the basis for the termination.
Furthermore,
(a) In the event that any termination is based upon the
provisions of Article VII, or the provision of Section 10.1(a),
10.1(i), 10.1(j), or 10.1(k) of this Agreement, the prior written
notice shall be given in advance of the effective date of termination
as required by those provisions; and
(b) in the event that any termination is based upon the
provisions of Section 10.1(c) or 10.1(d) of this Agreement, the prior
written notice shall be given at least ninety (90) days before the
effective date of termination.
10.4. Notwithstanding any termination of this Agreement,
subject to Section 1.2 of this Agreement and for so long as the Trust
continues to exist, the Trust and Berger Associates shall at the
option of the Insurance Company, continue to make available additional
shares of the Trust pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of
termination of this Agreement ("Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts shall be
permitted to reallocate investments in the Trust, redeem investments
in the Trust and/or invest in the Trust upon the making of additional
purchase payments under the Existing Contracts. The parties agree
that this Section 10.4 shall not apply to any terminations under
Article VII and the effect of Article VII terminations shall be
governed by Article VII of this Agreement.
10.5. The Insurance Company shall not redeem Trust shares
attributable to the Contracts (as opposed to Trust shares attributable
to the Insurance Company's assets held in the Account) except (i) as
necessary to implement Contract-owner-initiated transactions, or (ii)
as required by state and/or federal laws or regulations or judicial or
other legal precedent of general application (a "Legally Required
Redemption"). Upon request, the Insurance Company will promptly
furnish to the Trust and Berger Associates the opinion of counsel for
the Insurance Company (which counsel shall be reasonably satisfactory
to the Trust and Berger Associates) to the effect that any redemption
25<PAGE>
pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, the Insurance Company shall not prevent new Contract
owners from allocating payments to a Fund that formerly was available
under the Contracts without first giving the Trust or Berger
Associates 90 days notice of its intention to do so.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of that other
party set forth below or at such other address as the other party may
from time to time specify in writing.
If to the Trust:
210 University Boulevard, Suite 900
Denver, Colorado 80206
Attention: Kevin R. Fay, Vice President
If to the Insurance Company:
751 Broad Street
Newark, New Jersey 07102
Attention: Mary Cavanaugh, Esq.
If to Berger Associates:
210 University Boulevard, Suite 900
Denver, Colorado 80206
Attention: Kevin R. Fay, Senior Vice President
ARTICLE XII. MISCELLANEOUS
12.1. Subject to the requirements of legal process and
regulatory authority, each party hereto shall treat as confidential
the names and addresses of the owners of the Contracts and all
information reasonably identified as confidential in writing by any
other party hereto and, except as permitted by this Agreement, shall
not disclose, disseminate or utilize such names and addresses and
other confidential information without the express written consent of
the affected party unless and until that information may come into the
public domain.
12.2. 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.
26<PAGE>
12.3. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one
and the same instrument.
12.4. 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.
12.5. Each party hereto shall cooperate with each other party
and all appropriate governmental authorities (including without
limitation the Commission, the NASD and state insurance regulators)
and shall permit those authorities reasonable access to its books and
records in connection with any lawful investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
12.6. 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.
12.7. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns;
provided, that no party may assign this Agreement without the prior
written consent of the others.
27<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly
authorized representative and its seal to be hereunder affixed hereto
as of the date specified below.
Insurance Company:
PRUDENTIAL INSURANCE COMPANY OF AMERICA
By its authorized officer,
By:_________________________________
Title:______________________________
Date:_______________________________
Trust:
BERGER INSTITUTIONAL PRODUCTS TRUST
By its authorized officer,
By:_________________________________
Title:______________________________
Date:_______________________________
Berger Associates:
BERGER ASSOCIATES, INC.
By its authorized officer,
By:_________________________________
Title:______________________________
Date:_______________________________
28<PAGE>
SCHEDULE A
ACCOUNTS
NAME OF ACCOUNT DATE OF RESOLUTION OF INSURANCE
COMPANY'S BOARD WHICH ESTABLISHED
Prudential Variable THE ACCOUNT
Contract Account GI-2
June 24, 1988
29<PAGE>
SCHEDULE B
CONTRACTS
1. Contract Form -
Group Variable Life Insurance Company # 89-759
30<PAGE>
SCHEDULE C
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsi-
bilities for the handling of proxies relating to the Trust by Berger
Associates, the Trust and the Insurance Company. The defined terms
herein shall have the meanings assigned in the Participation Agreement
except that the term "Insurance Company" shall also include the
department or third party assigned by the Insurance Company to perform
the steps delineated below.
1. The number of proxy proposals is given to the Insurance Company
by Berger Associates as early as possible before the date set by
the Trust for the shareholder meeting to facilitate the
establishment of tabulation procedures. At this time Berger
Associates will inform the Insurance Company of the Record,
Mailing and Meeting dates. This will be done verbally
approximately two months before meeting.
2. Promptly after the Record Date, the Insurance Company will
perform a "tape run", or other activity, which will generate the
names, addresses and number of units which are attributed to each
contractowner/policyholder (the "Customer") as of the Record
Date. Allowance should be made for account adjustments made
after this date that could affect the status of the Customers'
accounts of the Record Date.
Note: The number of proxy statements is determined by the
activities described in Step #2. The Insurance Company will use
its best efforts to call in the number of Customers to Berger
Associates, as soon as possible, but no later than one week after
the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Insurance Company by the Trust. The
Insurance Company, at its expense, shall produce and personalize
the Voting Instruction cards. Berger Associates must approve the
Card before it is printed. Allow approximately 2-4 business days
for printing information on the Cards. Information commonly
found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification
of votes (already on Cards as printed by the Trust).
31<PAGE>
(This and related steps may occur later in the chronological
process due to possible uncertainties relating to the proposals.)
4. During this time, Berger Associates will develop, produce, and
the Trust will pay for the Notice of Proxy and the Proxy
Statement (one document). Printed and folded notices and
statements will be sent to Insurance Company for insertion into
envelopes (envelopes and return envelopes are provided and paid
for by the Insurance Company). Contents of envelope sent to
customers by Insurance Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. Return envelope (postage pre-paid by Insurance Company)
addressed to the Insurance Company or its tabulation agent
d. "Urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to vote
as quickly as possible and that their vote is important.
One copy will be supplied by the Trust.)
e. Cover letter - optional, supplied by Insurance Company and
reviewed and approved in advance by Berger Associates.
5. The above contents should be received by the Insurance Company
approximately 3-5 business days before mail date. Individual in
charge at Insurance Company reviews and approves the contents of
the mailing package to ensure correctness and completeness. Copy
of this approval sent to Berger Associates.
6. Package mailed by the Insurance Company.
* The Trust must allow at least a 15-day solicitation
----
time to the Insurance Company as the shareowner. (A 5-week
period is recommended.) Solicitation time is calculated as
calendar days from (but not including) the meeting, counting
---
backwards.
7. Collection and tabulation of Cards begins. Tabulation usually
takes place in another department or another vendor depending on
process used. An often used procedure is to sort cards on
arrival by proposal into vote categories of all yes, no, or mixed
replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal
procedure.
32<PAGE>
8. If Cards are mutilated, or for any reason are illegible or are
not signed properly, they are sent back to the Customer with an
explanatory letter, a new Card and return envelope. The
mutilated or illegible Card is disregarded and considered to be
not received for purposes of vote tabulation. Such mutilated or
--- --------
illegible Cards are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards
are usually remedied individually.
9. There are various control procedures used to ensure proper
tabulation of votes and accuracy of that tabulation. The most
prevalent is to sort the Cards as they first arrive into
categories depending upon their vote; an estimate of how the vote
is progressing may then be calculated. If the initial estimates
and the actual vote do not coincide, then an internal audit of
that vote should occur. This may entail a recount.
10. The actual tabulation of votes is done in units which is then
converted to shares. (It is very important that the Trust
receives the tabulations stated in terms of a percentage and the
number of shares.) Berger Associates must review and approve
tabulation format.
11. Final tabulation in shares is verbally given by the Insurance
Company to Berger Associates on the morning of the meeting not
later than 10:00 a.m. Denver time. Berger Associates may request
an earlier deadline if required to calculate the vote in time for
the meeting.
12. A Certificate of Mailing and Authorization to Vote Shares will be
required from the Insurance Company as well as an original copy
of the final vote. Berger Associates will provide a standard
form for each Certification.
13. The Insurance Company will be required to box and archive the
Cards received from the Customers. In the event that any vote is
challenged or if otherwise necessary for legal, regulatory, or
accounting purposes, Berger Associates will be permitted
reasonable access to such Cards.
14. All approvals and "signing-off" may be done orally, but must
always be followed up in writing.
33
Exhibit 9.12
PARTICIPATION AGREEMENT
Among
BERGER INSTITUTIONAL PRODUCTS TRUST
BBOI WORLDWIDE LLC
and
PRUDENTIAL INSURANCE COMPANY OF AMERICA
THIS AGREEMENT, made and entered into this 13th day of March,
1997 by and among PRUDENTIAL INSURANCE COMPANY OF AMERICA,
(hereinafter the "Insurance Company"), a New Jersey corporation, on
its own behalf and on behalf of each segregated asset account of the
Insurance Company set forth on Schedule A hereto as may be amended
from time to time (each such account hereinafter referred to as the
"Account"), BERGER INSTITUTIONAL PRODUCTS TRUST, a Delaware business
trust (the "Trust") and BBOI WORLDWIDE LLC, a Delaware limited
liability company ("BBOI Worldwide").
WHEREAS, the Trust engages in business as an open-end management
investment company and is available to act as the investment vehicle
for variable annuity and life insurance contracts to be offered by
separate accounts of insurance companies which have entered into
participation agreements substantially identical to this Agreement
("Participating Insurance Companies") and for qualified retirement and
pension plans ("Qualified Plans"); and
WHEREAS, the beneficial interest in the Trust is divided into
several series of shares, each designated a "Fund" and representing
the interest in a particular managed portfolio of securities and other
assets; and
WHEREAS, the Trust has obtained an order from the Securities and
Exchange Commission (the "Commission"), dated April 24, 1996 (File No.
812-9852), granting Participating Insurance Companies and their
separate accounts exemptions from the provisions of Sections 9(a),
1<PAGE>
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as
amended, (the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Trust to
be sold to and held by Qualified Plans and by variable annuity and
variable life insurance separate accounts of life insurance companies
that may or may not be affiliated with one another (the "Mixed and
Shared Funding Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management
investment company under the 1940 Act and the offering of its shares
is registered under the Securities Act of 1933, as amended
(hereinafter the "1933 Act"); and
WHEREAS, BBOI Worldwide is duly registered as an investment
adviser under the Investment Advisers Act of 1940 and any applicable
state securities law; and
WHEREAS, the Insurance Company has registered under the 1933 Act,
or will register under the 1933 Act, certain variable annuity or
variable life insurance contracts identified by the form number(s)
listed on Schedule B to this Agreement, as amended from time to time
hereafter by mutual written agreement of all the parties hereto (the
"Contracts"); and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the board of
directors of the Insurance Company on the date shown for that Account
on Schedule A hereto, to set aside and invest assets attributable to
the Contracts; and
WHEREAS, the Insurance Company has registered or will register
each Account as a unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Insurance Company intends to purchase shares in the
Funds at net asset value on behalf of each Account to fund the
Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the
Insurance Company, the Trust and BBOI Worldwide agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Trust agrees to sell to the Insurance Company those
shares of the Trust which each Account orders, executing such orders
on a daily basis at the net asset value next computed after receipt by
2<PAGE>
the Trust or its designee of the order for the shares of the Trust.
For purposes of this Section 1.1, the Insurance Company shall be the
designee of the Trust for receipt of such orders from the Accounts and
receipt by such designee shall constitute receipt by the Trust;
provided that the Trust receives notice of such order by 7:00 a.m.,
Mountain Time, on the next following Business Day. In this Agreement,
"Business Day" shall mean any day on which the New York Stock Exchange
is open for trading and on which the Trust calculates its net asset
value pursuant to the rules of the Commission.
1.2. The Trust agrees to make its shares available for purchase
at the applicable net asset value per share by the Insurance Company
and its Accounts on those days on which the Trust calculates its
Funds' net asset values pursuant to rules of the Commission and the
Trust shall use reasonable efforts to calculate its Funds' net asset
values on each day on which the New York Stock Exchange is open for
trading. Notwithstanding the foregoing, the trustees of the Trust may
refuse to sell shares of any Fund to any person, or suspend or
terminate the offering of shares of any Fund if such action is
required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the trustees of the Trust acting in good
faith and in light of their fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the
shareholders of that Fund.
1.3. The Trust agrees that shares of the Trust will be sold only
to Accounts of Participating Insurance Companies and to Qualified
Plans. No shares of any Fund will be sold to the general public.
1.4. The Trust will not sell its shares to any insurance company
or separate account unless an agreement containing provisions
substantially the same as Sections 2.4, 3.4, 3.5, and Sections 7.1 -
7.7 of this Agreement is in effect to govern such sales.
1.5. The Trust agrees to redeem, on the Insurance Company's
request, any full or fractional shares of the Trust held by the
Account, executing such requests on a daily basis at the net asset
value next computed after receipt by the Trust or its designee of the
request for redemption. However, if one or more Funds has determined
to settle redemption transactions for all of its shareholders on a
delayed basis (more than one business day, but in no event more than
three Business Days, after the date on which the redemption order is
received, unless otherwise permitted by an order of the Commission
under Section 22(e) of the 1940 Act), the Trust shall be permitted to
delay sending redemption proceeds to the Insurance Company by the same
number of days that the Trust is delaying sending redemption proceeds
3<PAGE>
to the other shareholders of the Fund. For purposes of this Section
1.5, the Insurance Company shall be the designee of the Trust for
receipt of requests for redemption from each Account and receipt by
that designee shall constitute receipt by the Trust; provided that the
Trust receives notice of the request for redemption by 7:00 a.m.,
Mountain Time, on the next following Business Day.
1.6. The Insurance Company agrees to purchase and redeem the
shares of each Fund offered by the then-current prospectus of the
Trust in accordance with the provisions of that prospectus. The
Insurance Company agrees that all net amounts available under the
Contracts shall be invested in the Trust, or in the Insurance
Company's general account, provided that such amounts may also be
invested in an investment company other than the Trust if (a) the
other investment company, or series thereof, has investment objectives
or policies that are substantially different from the investment
objectives and policies of any Fund of the Trust in which the Account
may invest; or (b) the other investment company was available as a
funding vehicle for the Contracts prior to the date of this Agreement
and the Insurance Company so informs the Trust and BBOI Worldwide
prior to their signing this Agreement; or (c) the Trust and BBOI
Worldwide consent in advance in writing to the use of the other
investment company.
1.7. The Insurance Company shall pay for Trust shares by 1:00
p.m., Mountain Time, on the next Business Day after an order to
purchase Trust shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by
wire. For the purpose of Sections 2.9 and 2.10, upon receipt by the
Trust of the federal funds so wired, such funds shall cease to be the
responsibility of the Insurance Company and shall become the
responsibility of the Trust. Payment of net redemption proceeds
(aggregate redemptions of a Fund's shares by an Account minus
aggregate purchases of that Fund's shares by that Account) of less
than $1 million for a given Business Day will be made by wiring
federal funds to the Insurance Company on the next Business Day after
receipt of the redemption request. Payment of net redemption proceeds
of $1 million or more will be by wiring federal funds within three
Business Days after receipt of the redemption request. However,
payment may be postponed under unusual circumstances, such as when
normal trading is not taking place on the New York Stock Exchange, an
emergency as defined by the Securities and Exchange Commission exists,
or as permitted by the Securities and Exchange Commission.
4<PAGE>
1.8. Issuance and transfer of the Trust's shares will be by book
entry only. Stock certificates will not be issued to the Insurance
Company or any Account. Shares ordered from the Trust will be
recorded in an appropriate title for each Account or the appropriate
subaccount of each Account.
1.9. The Trust shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Insurance Company
of any income, dividends or capital gain distributions payable on the
Funds' shares. The Insurance Company hereby elects to receive all
income dividends and capital gain distributions payable on a Fund's
shares in additional shares of that Fund. The Insurance Company
reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Trust
shall notify the Insurance Company of the number of shares issued as
payment of dividends and distributions.
1.10. The Trust shall make the net asset value per share for
each Fund available to the Insurance Company on a daily basis as soon
as reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make those per-share net
asset values available by 5:00 p.m., Mountain Time.
ARTICLE II. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
2.1. The Insurance Company represents, warrants and agrees that
the offerings of the Contracts are, or will be, registered under the
1933 Act; that the Contracts will be issued and sold in compliance in
all material respects with all applicable federal and state laws and
that the sale of the Contracts shall comply in all material respects
with applicable state insurance suitability requirements. The
Insurance Company further represents that it is an insurance company
duly organized and in good standing under applicable law and that it
has legally and validly established the Account prior to any issuance
or sale thereof as a segregated asset account under the New Jersey
Insurance Code and has registered, or warrants and agrees that prior
to any issuance or sale of the Contracts it will register, the Account
as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the
Contracts.
2.2. The Trust warrants and agrees that Trust shares sold
pursuant to this Agreement shall be registered under the 1933 Act,
duly authorized for issuance and sale in compliance with the laws of
the State of Delaware and all applicable federal securities laws and
that the Trust is and shall remain registered under the 1940 Act. The
5<PAGE>
Trust warrants and agrees that it shall amend the registration
statement for its shares under the 1933 Act and the 1940 Act from time
to time as required in order to effect the continuous offering of its
shares. The Trust shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the
extent deemed advisable by the Trust or BBOI Worldwide.
2.3. The Trust represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended, (the "Code") and warrants and agrees
that it will make all reasonable efforts to maintain its qualification
(under Subchapter M or any successor or similar provision) and that it
will notify the Insurance Company immediately upon having a reasonable
basis for believing that it has ceased to so qualify or that it might
not so qualify in the future.
2.4. The Insurance Company represents that the Contracts are
currently treated as annuity or life insurance contracts under
applicable provisions of the Code and warrants and agrees that it will
make every effort to maintain such treatment and that it will notify
the Trust and BBOI Worldwide immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or
that they might not be so treated in the future.
2.5. The Trust may elect to make payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act. To
the extent that it decides to finance distribution expenses pursuant
to Rule 12b-1, the Trust undertakes to have a board of trustees, a
majority of whom are not interested persons of the Trust, formulate
and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Trust makes no representation warranties as to whether
any aspect of its operations (including, but not limited to, fees and
expenses and investment policies) complies or will comply with the
insurance laws or regulations of the various states.
2.7. The Trust represents that it is lawfully organized and
validly existing under the laws of the State of Delaware and
represents, warrants and agrees that it does and will comply in all
material respects with the 1940 Act.
2.8. BBOI Worldwide represents that it is and warrants that it
shall remain duly registered as an investment adviser under all
applicable federal and state securities laws and agrees that it shall
6<PAGE>
perform its obligations for the Trust in compliance in all material
respects with the laws of the State of Colorado and any applicable
state and federal securities laws.
2.9. The Trust and BBOI Worldwide represent and warrant that all
of their officers, employees, investment advisers, investment sub-
advisers, and other individuals or entities described in Rule 17g-1
under the 1940 Act 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 in an
amount not less than the minimum coverage required currently by Rule
17g-1 under the 1940 Act or related provisions as may be promulgated
from time to time. That fidelity bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding
company.
2.10. The Insurance Company represents and warrants that all of
its officers, employees, investment advisers, and other individuals or
entities described in Rule 17g-1 under the 1940 Act are and shall
continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust, in an amount not less
than the minimum coverage required currently for entities subject to
the requirements of Rule 17g-1 of the 1940 Act or related provisions
or 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.
ARTICLE III. DISCLOSURE DOCUMENTS AND VOTING
3.1. BBOI Worldwide shall provide the Insurance Company (at the
Insurance Company's expense) with as many copies of the Trust's
current prospectus as the Insurance Company may reasonably request.
If requested by the Insurance Company in lieu thereof, the Trust shall
provide such documentation (including a final copy of the new
prospectus as set in type at the Trust's expense) and other assistance
as is reasonably necessary in order for the Insurance Company once
each year (or more frequently if the prospectus for the Trust is
amended) to have the prospectus for the Contracts and the Trust's
prospectus printed together in one document (at the Insurance
Company's expense).
3.2. The Trust's prospectus shall state that the Statement of
Additional Information for the Trust (the "SAI") is available from the
Trust, and BBOI Worldwide (or the Trust), at its expense, shall print
and provide the SAI free of charge to the Insurance Company and to any
owner of a Contract or prospective owner who requests the SAI.
7<PAGE>
3.3. The Trust, at its expense, shall provide the Insurance
Company with copies of its proxy material, reports to shareholders and
other communications to shareholders in such quantity as the Insurance
Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law, the Insurance Company
shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Trust shares in accordance with instructions
received from Contract owners; and
(iii) vote Trust shares for which no instructions have been
received in the same proportion as Trust shares of that
Fund for which instructions have been received;
so long as and to the extent that the Commission continues to
interpret the 1940 Act to require pass-through voting privileges for
variable contract owners. The Insurance 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 the standards set forth on
Schedule C attached hereto and incorporated herein by this reference,
which standards will also be provided to the other Participating
Insurance Companies. The Insurance Company shall fulfill its
obligation under, and abide by the terms and conditions of, the Mixed
and Shared Funding Exemptive Order.
3.5. The Trust will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Trust will
either provide for annual meetings (except insofar as the Commission
may interpret Section 16 of the 1940 Act not to require such meetings)
or, as the Trust currently intends, comply with Section 16(c) of the
1940 Act (although the Trust is not one of the trusts described in
Section 16(c) of that Act) as well as with Sections 16(a) and, if and
when applicable, 16(b). Further, the Trust will act in accordance
with the Commission's interpretation of the requirements of Section
16(a) with respect to periodic elections of trustees and with whatever
rules the Commission may promulgate with respect thereto.
8<PAGE>
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Insurance Company shall furnish, or shall cause to be
furnished, to the Trust or its designee, each piece of sales
literature or other promotional material in which the Trust, a sub-
adviser of one of the Funds, or BBOI Worldwide is named, at least
fifteen calendar days prior to its use. No such material shall be
used if the Trust or its designee objects to such use within ten
calendar days after receipt of such material.
4.2. The Insurance Company shall not give any information or
make any representations or statements on behalf of the Trust or
concerning the Trust in connection with the sale of the Contracts
other than the information or representations contained in the Trust's
registration statement, prospectus or SAI, as that registration
statement, prospectus or SAI may be amended or supplemented from time
to time, or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved by the Trust or its
designee or by BBOI Worldwide or its designee, except with the
permission of the Trust or BBOI Worldwide or their designees.
4.3. The Trust, BBOI Worldwide, or its designee shall furnish,
or shall cause to be furnished, to the Insurance Company or its
designee, each piece of sales literature or other promotional material
in which the Insurance Company or the Account is named at least
fifteen calendar days prior to its use. No such material shall be
used if the Insurance Company or its designee objects to such use
within ten calendar days after receipt of that material.
4.4. The Trust and BBOI Worldwide, or their designees, shall not
give any information or make any representations on behalf of the
Insurance Company or concerning the Insurance Company, any Account, or
the Contracts other than the information or representations contained
in a registration statement, prospectus or statement of additional
information for the Contracts, as that registration statement,
prospectus or statement of additional information may be amended or
supplemented from time to time, or in published reports for any
Account which are in the public domain or approved by the Insurance
Company for distribution to Contract owners, or in sales literature or
other promotional material approved by the Insurance Company or its
designee, except with the permission of the Insurance Company.
4.5. The Trust will provide to the Insurance Company at least
one complete copy of each registration statement, prospectus,
statement of additional information, report, proxy statement, piece of
9<PAGE>
sales literature or other promotional material, application for
exemption, request for no-action letter, and any amendment to any of
the above, that relate to the Trust or its shares, contemporaneously
with the filing of the document with the Commission, the National
Association of Securities Dealers, Inc. ("NASD"), or other regulatory
authorities.
4.6. The Insurance Company will provide to the Trust at least
one complete copy of each registration statement, prospectus,
statement of additional information, report, solicitation for voting
instructions, piece of sales literature and other promotional
material, application for exemption, request for no-action letter, and
any amendment to any of the above, that relates to the Contracts or
the Account, contemporaneously with the filing of the document with
the Commission, the NASD, or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited
to, advertisements, newspaper, magazine, or other periodical, radio,
television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, or other public media, sales literature
(i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, shareholder
newsletters, seminar texts, 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, and
registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials.
4.8. At the request of any party to this Agreement, each other
party will make available to the other party's independent auditors
and/or representative of the appropriate regulatory agencies, all
records, data and access to operating procedures that may be
reasonably requested.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust and BBOI Worldwide shall pay no fee or other
compensation to the Insurance Company under this agreement, except as
set forth in Section 5.4 and except that if the Trust or any Fund
adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, BBOI Worldwide or the Trust may make payments
to the Insurance Company in amounts consistent with that 12b-1 plan,
subject to review by the trustees of the Trust.
10<PAGE>
5.2. All expenses incident to performance by the Trust under
this Agreement shall be paid by the Trust. The Trust shall see to it
that any offering of its shares is registered and that all of its
shares are authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Trust or
BBOI Worldwide, in accordance with applicable state laws prior to
their sale. The Trust shall bear the cost of registration and
qualification of the Trust's shares, preparation and filing of the
Trust's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing
the proxy materials and reports to shareholders, the preparation of
all statements and notices required by any federal or state law, and
all taxes on the issuance or transfer of the Trust's shares.
5.3. The Insurance Company shall bear the expenses of printing
and distributing to Contract owners the Contract prospectuses and of
distributing to Contract owners the Trust's prospectus, proxy
materials and reports.
5.4. The Insurance Company bears the responsibility and
correlative expense for administrative and support services for
Contract owners. BBOI Worldwide recognizes the Insurance Company as
the sole shareholder of shares of the Trust issued under this
Agreement. From time to time, BBOI Worldwide may pay amounts from its
past profits to the Insurance Company for providing certain
administrative services for the Trust or for providing other services
that relate to the Trust. In consideration of the savings resulting
from such arrangement, and to compensate the Insurance Company for its
costs, BBOI Worldwide agrees to pay to the Insurance Company an amount
equal to 25 basis points (0.25%) per annum of the average aggregate
amount invested by the Insurance Company in the Trust under this
Agreement. Such payments will be made only when the average aggregate
amount invested exceeds $1,000,000. The parties agree that such
payments are for administrative services and investor support
services, and do not constitute payment for investment advisory,
distribution or other services. Payment of such amounts by BBOI
Worldwide shall not increase the fees paid by the Trust or its
shareholders. The obligation to pay the amounts provided for in this
Section 5.4 may be assigned by BBOI Worldwide in its discretion to
Berger Associates, Inc., or other entity acceptable to the Insurance
Company.
ARTICLE VI. DIVERSIFICATION
6.1. The Trust will comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5 relating to the diversification
11<PAGE>
requirements for variable annuity, endowment, modified endowment or
life insurance contracts and any amendments or other modifications to
that Section or Regulation at all times necessary to satisfy those
requirements.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The trustees of the Trust will monitor the Trust for the
existence of any material irreconcilable conflict between the
interests of the variable Contract owners of all separate accounts
investing in the Trust and the participants of all Qualified Plans
investing in the Trust. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretive letter, or
any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any
Fund are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract
owners; or (f) a decision by a Participating Insurance Company to
disregard the voting instructions of variable contract owners. The
trustees of the Trust shall promptly inform the Insurance Company if
they determine that an irreconcilable material conflict exists and the
implications thereof. The trustees of the Trust shall have sole
authority to determine whether an irreconcilable material conflict
exists and their determination shall be binding upon the Insurance
Company.
7.2. The Insurance Company and BBOI Worldwide each will report
promptly any potential or existing conflicts of which it is aware to
the trustees of the Trust. The Insurance Company and BBOI Worldwide
each will assist the trustees of the Trust in carrying out their
responsibilities under the Mixed and Shared Funding Exemptive Order,
by providing the trustees of the Trust with all information reasonably
necessary for them to consider any issues raised. This includes, but
is not limited to, an obligation by the Insurance Company to inform
the trustees of the Trust whenever Contract owner voting instructions
are to be disregarded. These responsibilities shall be carried out by
the Insurance Company with a view only to the interests of the
Contract owners and by BBOI Worldwide with a view only to the
interests of Contract holders and Qualified Plan participants.
7.3. If it is determined by a majority of the trustees of the
Trust, or a majority of the trustees who are not interested persons of
12<PAGE>
the Trust, any of its Funds, or BBOI Worldwide (the "Independent
Trustees"), that a material irreconcilable conflict exists, the
Insurance Company and/or other Participating Insurance Companies or
Qualified Plans that have executed participation agreements shall, at
their expense and to the extent reasonably practicable (as determined
by a majority of the Independent Trustees), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict,
up to and including: (1) withdrawing the assets allocable to some or
all of the separate accounts from the Trust or any Fund and
reinvesting those assets in a different investment medium, including
(but not limited to) another Fund of the Trust, or submitting the
question 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 (e.g., annuity contract owners,
life insurance contract owners, or variable contract owners of one or
more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected variable contract owners the
option of making such a change; and (2) establishing a new registered
management investment company or managed separate account and
obtaining any necessary approvals or orders of the Commission in
connection therewith.
7.4. If a material irreconcilable conflict arises because of a
decision by the Insurance Company to disregard Contract owner voting
instructions and that decision represents a minority position or would
preclude a majority vote, the Insurance Company may be required, at
the Trust's election, to withdraw the affected Account's investment in
the Trust and terminate this Agreement with respect to that Account;
provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Independent
Trustees. Any such withdrawal and termination must take place within
six (6) months after the Trust gives written notice that this
provision is being implemented, and, until the end of that six month
period, the Trust shall continue to accept and implement orders by the
Insurance Company for the purchase (and redemption) of shares of the
Trust.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the
Insurance Company conflicts with the majority of other state
regulators, then the Insurance Company will withdraw the affected
Account's investment in the Trust and terminate this Agreement with
respect to that Account within six months after the trustees of the
Trust inform the Insurance Company in writing that they have deter-
mined that the state insurance regulator's decision has created an
13<PAGE>
irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a
majority of the Independent Trustees. Until the end of the foregoing
six month period, the Trust shall continue to accept and implement
orders by the Insurance Company for the purchase (and redemption) of
shares of the Trust.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement,
a majority of the Independent Trustees shall determine whether any
proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Trust be required to establish a
new funding medium for the Contracts. The Insurance Company shall not
be required by Section 7.3 to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority
of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the trustees of the Trust
determine that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Insurance Company will
withdraw the Account's investment in the Trust and terminate this
Agreement within six (6) months after the trustees of the Trust inform
the Insurance Company in writing of the foregoing determination,
provided, however, that the withdrawal and termination shall be
limited to the extent required by the material irreconcilable
conflict, as determined by a majority of the Independent Trustees.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act or the rules promulgated thereunder with respect
to mixed or shared funding (as defined in the Mixed and Shared Funding
Exemptive Order) on terms and conditions materially different from
those contained in the Mixed and Shared Funding Exemptive Order, then
(a) the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with
Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent those rules are applicable; and (b) Sections 3.4, 3.5, 7.1,
7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only
to the extent that terms and conditions substantially identical to
those Sections are contained in the Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE INSURANCE COMPANY
8.1(a). The Insurance Company agrees to indemnify and hold
harmless the Trust and each trustee, officer, employee or agent of the
14<PAGE>
Trust, and each person, if any, who controls the Trust within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Insurance Company) 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, acquisition, or redemption of the Trust's shares or the
Contracts and:
(i) 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 Contracts or
contained in the Contracts or sales literature for
the 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 the Insurance Company by
or on behalf of the Trust for use in the
registration statement or prospectus for the
Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts
or shares of the Trust;
(ii) 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
Trust not supplied by the Insurance Company, or
persons under its control) or wrongful conduct of
the Insurance Company or persons under its
control, with respect to the sale or distribution
of the Contracts or Trust Shares;
15<PAGE>
(iii) 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 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 a
statement or omission was made in reliance upon
information furnished in writing to the Trust by
or on behalf of the Insurance Company;
(iv) arise as a result of any failure by the
Insurance Company to provide the services and
furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material
breach of any representation, warranty or
agreement made by the Insurance Company in this
Agreement or arise out of or result from any other
material breach of this Agreement by the Insurance
Company,
as limited by and in accordance with the provisions of Sections 8.1(b)
and 8.1(c) hereof.
8.1(b). The Insurance 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 that may arise from that Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of that
Indemnified Party's duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to
the Trust, whichever is applicable.
8.1(c). The Insurance Company shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless that Indemnified Party shall have notified
the Insurance 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 that Indemnified Party (or
after the Indemnified Party shall have received notice of such service
on any designated agent). Notwithstanding the foregoing, the failure
of any Indemnified Party to give notice as provided herein shall not
16<PAGE>
relieve the Insurance Company of its obligations hereunder except to
the extent that the Insurance Company has been prejudiced by such
failure to give notice. In addition, any failure by the Indemnified
Party to notify the Insurance Company of any such claim shall not
relieve the Insurance Company from any liability which it may have to
the Indemnified Party against whom the action is brought otherwise
than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Insurance
Company shall be entitled to participate, at its own expense, in the
defense of the action. The Insurance Company also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party
named in the action; provided, however, that if the Indemnified Party
-------- -------
shall have reasonably concluded that there may be defenses available
to it which are different from or additional to those available to the
Insurance Company, the Insurance Company shall not have the right to
assume said defense, but shall pay the costs and expenses thereof
(except that in no event shall the Insurance Company be liable for the
fees and expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from the Insurance
Company to the Indemnified Party of the Insurance Company's election
to assume the defense thereof, and in the absence of such a reasonable
conclusion that there may be different or additional defenses
available to the Indemnified Party, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and
the Insurance Company will not be liable to that party under this
Agreement for any legal or other expenses subsequently incurred by the
party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the
Insurance Company of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the Trust's
shares or the Contracts or the operation of the Trust.
8.2. INDEMNIFICATION BY BBOI WORLDWIDE
8.2(a). BBOI Worldwide agrees to indemnify and hold harmless the
Insurance Company and each of its directors, officers, employees or
agents, and each person, if any, who controls the Insurance Company
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any
and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of BBOI Worldwide) or
17<PAGE>
litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, 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, acquisition or redemption of the Trust's shares or the
Contracts and:
(i) 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 the
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 the statement or omission or
alleged statement or omission was made in reliance
upon and in conformity with information furnished
in writing to BBOI Worldwide or the Trust by or on
behalf of the Insurance Company for use in the
registration statement or prospectus for the Trust
or in sales literature (or any amendment or
supplement) or otherwise for use in connection
with the sale of the Contracts or Trust shares;
(ii) 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 for the
Contracts not supplied by BBOI Worldwide or
persons under its control) or wrongful conduct of
the Trust, BBOI Worldwide or persons under their
control, with respect to the sale or distribution
of the Contracts or shares of the Trust;
(iii) 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 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
18<PAGE>
necessary to make the statement or statements
therein not misleading, if such statement or
omission was made in reliance upon information
furnished in writing to the Insurance Company by
or on behalf of the Trust;
(iv) 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, whether unintentional or in
good faith or otherwise, to comply with the
diversification requirements specified in Article
VI of this Agreement); or
(v) arise out of or result from any material
breach of any representation, warranty or
agreement made by BBOI Worldwide in this Agreement
or arise out of or result from any other material
breach of this Agreement by BBOI Worldwide;
as limited by and in accordance with the provisions of Sections 8.2(b)
and 8.2(c) hereof.
8.2(b) BBOI Worldwide 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 that may arise from the Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of the Indemnified
Party's duties or by reason of the Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the
Insurance Company or the Account, whichever is applicable.
8.2(c) BBOI Worldwide shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless the Indemnified Party shall have notified
BBOI Worldwide 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 the Indemnified Party (or after the
Indemnified Party shall have received notice of such service on any
designated agent). Notwithstanding the foregoing, the failure of any
Indemnified Party to give notice as provided herein shall not relieve
BBOI Worldwide of its obligations hereunder except to the extent that
BBOI Worldwide has been prejudiced by such failure to give notice. In
addition, any failure by the Indemnified Party to notify BBOI
Worldwide of any such claim shall not relieve BBOI Worldwide from any
liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification
19<PAGE>
provision. In case any such action is brought against the Indemnified
Parties, BBOI Worldwide will be entitled to participate, at its own
expense, in the defense thereof. BBOI Worldwide also shall be
entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action; provided, however, that if the
------- -------
Indemnified Party shall have reasonably concluded that there may be
defenses available to it which are different from or additional to
those available to BBOI Worldwide, BBOI Worldwide shall not have the
right to assume said defense, but shall pay the costs and expenses
thereof (except that in no event shall BBOI Worldwide be liable for
the fees and expenses of more than one counsel for Indemnified Parties
in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from BBOI Worldwide to
the Indemnified Party of BBOI Worldwide's election to assume the
defense thereof, and in the absence of such a reasonable conclusion
that there may be different or additional defenses available to the
Indemnified Party, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and BBOI Worldwide
will not be liable to that party under this Agreement for any legal or
other expenses subsequently incurred by that party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d) The Insurance Company agrees to notify BBOI Worldwide
promptly 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 Contracts or the operation of the Account.
8.3 INDEMNIFICATION BY THE TRUST
8.3(a). The Trust agrees to indemnify and hold harmless the
Insurance Company, and each of its directors, officers, employees and
agents, and each person, if any, who controls the Insurance Company
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any
and all losses, claims, damages, liabilities (including legal and
other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as those
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements result from the gross negligence, bad
faith or willful misconduct of any trustee(s) of the Trust, are
related to the operations of the Trust and:
20<PAGE>
(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 specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material
breach of any representation, warranty or
agreement made by the Trust in this Agreement or
arise out of or result from any other material
breach of this Agreement by the Trust;
as limited by, and in accordance with the provisions of, Sections
8.3(b) and 8.3(c) hereof.
8.3(b). The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party that may
arise from the Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of the Indemnified Party's duties
or by reason of the Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Insurance
Company, the Trust, BBOI Worldwide or the Account, whichever is
applicable.
8.3(c). The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless the Indemnified Party shall have notified the 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 the Indemnified Party (or after the Indemnified Party
shall have received notice of such service on any designated agent).
Notwithstanding the foregoing, the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Trust of its
obligations hereunder except to the extent that the Trust has been
prejudiced by such failure to give notice. In addition, any failure
by the Indemnified Party to notify the Trust of any such claim shall
not relieve the 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, the Trust will be entitled
to participate, at its own expense, in the defense thereof. The Trust
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action; provided, however, that
-------- -------
if the Indemnified Party shall have reasonably concluded that there
21<PAGE>
may be defenses available to it which are different from or additional
to those available to the Trust, the Trust shall not have the right to
assume said defense, but shall pay the costs and expenses thereof
(except that in no event shall the Trust be liable for the fees and
expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from the Trust to the
Indemnified Party of the Trust's election to assume the defense
thereof, and in the absence of such a reasonable conclusion that there
may be different or additional defenses available to the Indemnified
Party, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Trust will not be liable to
that party under this Agreement for any legal or other expenses
subsequently incurred by that party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.3(d). The Insurance Company and BBOI Worldwide agree promptly
to notify the Trust of the commencement of any litigation or proceed-
ings against it or any of its respective officers or directors in
connection with this Agreement, the issuance or sale of the Contracts,
the operation of the Account, or the sale or acquisition of shares of
the Trust.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and provisions hereof
interpreted under and in accordance with the laws of the State of
Delaware.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934, and 1940 Acts, and the rules and regulations and rulings
thereunder, including any exemptions from those statutes, rules and
regulations the Commission may grant (including, but not limited to,
the Mixed and Shared Funding Exemptive Order) and the terms hereof
shall be interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon one year advance
written notice to the other parties; provided, however, such
notice shall not be given earlier than one year following
the date of this Agreement; or
22<PAGE>
(b) at the option of the Insurance Company to the extent
that shares of Funds are not reasonably available to meet
the requirements of the Contracts as determined by the
Insurance Company, provided, however, that such a termina-
tion shall apply only to the Fund(s) not reasonably
available. Prompt written notice of the election to
terminate for such cause shall be furnished by the Insurance
Company to the Trust and BBOI Worldwide; or
(c) at the option of the Trust or BBOI Worldwide, in the
event that formal administrative proceedings are instituted
against the Insurance Company by the NASD, the Commission,
an insurance commissioner or any other regulatory body
regarding the Insurance Company's duties under this
Agreement or related to the sale of the Contracts, the
operation of any Account, or the purchase of the Trust's
shares, provided, however, that the Trust determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse
effect upon the ability of the Insurance Company to perform
its obligations under this Agreement; or
(d) at the option of the Insurance Company in the event
that formal administrative proceedings are instituted
against the Trust or BBOI Worldwide by the NASD, the
Commission, or any state securities or insurance department
or any other regulatory body, provided, however, that the
Insurance Company determines in its sole judgement exercised
in good faith, that any such administrative proceedings will
have a material adverse effect upon the ability of the Trust
or BBOI Worldwide to perform its obligations under this
Agreement; or
(e) with respect to any Account, upon requisite vote of the
Contract owners having an interest in that Account (or any
subaccount) to substitute the shares of another investment
company for the corresponding Fund shares in accordance with
the terms of the Contracts for which those Fund shares had
been selected to serve as the underlying investment media.
The Insurance Company will give at least 30 days' prior
written notice to the Trust of the date of any proposed vote
to replace the Trust's shares; or
(f) at the option of the Insurance Company, in the event
any of the Trust's shares are not registered, issued or sold
23<PAGE>
in accordance with applicable state and/or federal law or
exemptions therefrom, or such law precludes the use of those
shares as the underlying investment media of the Contracts
issued or to be issued by the Insurance Company; or
(g) at the option of the Insurance Company, if the Trust
ceases to qualify as a regulated investment company under
Subchapter M of the Code or under any successor or similar
provision, or if the Insurance Company reasonably believes
that the Trust may fail to so qualify; or
(h) at the option of the Insurance Company, if the Trust
fails to meet the diversification requirements specified in
Article VI hereof; or
(i) at the option of either the Trust or BBOI Worldwide, if
(1) the Trust or BBOI Worldwide, respectively, shall
determine, in their sole judgment reasonably exercised in
good faith, that the Insurance Company has suffered a
material adverse change in its business or financial
condition or is the subject of material adverse publicity
and that material adverse change or material adverse
publicity will have a material adverse impact upon the
business and operations of either the Trust or BBOI
Worldwide, (2) the Trust or BBOI Worldwide shall notify the
Insurance Company in writing of that determination and its
intent to terminate this Agreement, and (3) after
considering the actions taken by the Insurance Company and
any other changes in circumstances since the giving of such
a notice, the determination of the Trust or BBOI Worldwide
shall continue to apply on the sixtieth (60th) day following
the giving of that notice, which sixtieth day shall be the
effective date of termination; or
(j) at the option of the Insurance Company, if (1) the
Insurance Company shall determine, in its sole judgment
reasonably exercised in good faith, that either the Trust or
BBOI Worldwide has suffered a material adverse change in its
business or financial condition or is the subject of
material adverse publicity and that material adverse change
or material adverse publicity will have a material adverse
impact upon the business and operations of the Insurance
Company, (2) the Insurance Company shall notify the Trust
and BBOI Worldwide in writing of the determination and its
intent to terminate the Agreement, and (3) after considering
24<PAGE>
the actions taken by the Trust and/or BBOI Worldwide and any
other changes in circumstances since the giving of such a
notice, the determination shall continue to apply on the
sixtieth (60th) day following the giving of the notice,
which sixtieth day shall be the effective date of
termination.
10.2. It is understood and agreed that the right of any party
hereto to terminate this Agreement pursuant to Section 10.1(a) may be
exercised for any reason or for no reason.
10.3. No termination of this Agreement shall be effective unless
and until the party terminating this Agreement gives prior written
notice to all other parties to this Agreement of its intent to
terminate, which notice shall set forth the basis for the termination.
Furthermore,
(a) In the event that any termination is based upon the
provisions of Article VII, or the provision of Section 10.1(a),
10.1(i), 10.1(j), or 10.1(k) of this Agreement, the prior written
notice shall be given in advance of the effective date of termination
as required by those provisions; and
(b) in the event that any termination is based upon the
provisions of Section 10.1(c) or 10.1(d) of this Agreement, the prior
written notice shall be given at least ninety (90) days before the
effective date of termination.
10.4. Notwithstanding any termination of this Agreement, subject
to Section 1.2 of this Agreement and for so long as the Trust
continues to exist, the Trust and BBOI Worldwide shall at the option
of the Insurance Company, continue to make available additional shares
of the Trust pursuant to the terms and conditions of this Agreement,
for all Contracts in effect on the effective date of termination of
this Agreement ("Existing Contracts"). Specifically, without limita-
tion, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Trust, redeem investments in the Trust
and/or invest in the Trust upon the making of additional purchase
payments under the Existing Contracts. The parties agree that this
Section 10.4 shall not apply to any terminations under Article VII and
the effect of Article VII terminations shall be governed by Article
VII of this Agreement.
10.5. The Insurance Company shall not redeem Trust shares
attributable to the Contracts (as opposed to Trust shares attributable
to the Insurance Company's assets held in the Account) except (i) as
25<PAGE>
necessary to implement Contract-owner-initiated transactions, or (ii)
as required by state and/or federal laws or regulations or judicial or
other legal precedent of general application (a "Legally Required
Redemption"). Upon request, the Insurance Company will promptly
furnish to the Trust and BBOI Worldwide the opinion of counsel for the
Insurance Company (which counsel shall be reasonably satisfactory to
the Trust and BBOI Worldwide) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, the Insurance Company shall not prevent new Contract
owners from allocating payments to a Fund that formerly was available
under the Contracts without first giving the Trust or BBOI Worldwide
90 days notice of its intention to do so.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of that other party
set forth below or at such other address as the other party may from
time to time specify in writing.
If to the Trust:
210 University Boulevard, Suite 900
Denver, Colorado 80206
Attention: Kevin R. Fay, Vice President
If to the Insurance Company:
751 Broad Street
Newark, New Jersey
Attention: Mary Cavanaugh, Esq.
If to BBOI Worldwide:
210 University Boulevard, Suite 900
Denver, Colorado 80206
Attention: Kevin R. Fay
ARTICLE XII. MISCELLANEOUS
12.1. Subject to the requirements of legal process and
regulatory authority, each party hereto shall treat as confidential
the names and addresses of the owners of the Contracts and all
information reasonably identified as confidential in writing by any
other party hereto and, except as permitted by this Agreement, shall
26<PAGE>
not disclose, disseminate or utilize such names and addresses and
other confidential information without the express written consent of
the affected party unless and until that information may come into the
public domain.
12.2. 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.
12.3. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one
and the same instrument.
12.4. 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.
12.5. Each party hereto shall cooperate with each other party
and all appropriate governmental authorities (including without
limitation the Commission, the NASD and state insurance regulators)
and shall permit those authorities reasonable access to its books and
records in connection with any lawful investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
12.6. 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.
12.7. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns;
provided, that no party may assign this Agreement without the prior
written consent of the others.
27<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly
authorized representative as of the date specified below.
Insurance Company:
PRUDENTIAL INSURANCE COMPANY OF AMERICA
By its authorized officer,
By:_________________________________
Title:______________________________
Date:_______________________________
Trust:
BERGER INSTITUTIONAL PRODUCTS TRUST
By its authorized officer,
By:_________________________________
Title:______________________________
Date:_______________________________
BBOI Worldwide:
BBOI WORLDWIDE LLC
By its authorized officer,
By:_________________________________
Title:______________________________
Date:_______________________________
28<PAGE>
SCHEDULE A
ACCOUNTS
NAME OF ACCOUNT DATE OF RESOLUTION OF INSURANCE
COMPANY'S BOARD WHICH ESTABLISHED
Prudential Variable THE ACCOUNT
Contract Account GI-2
June 24, 1988
29<PAGE>
SCHEDULE B
CONTRACTS
1. Contract Form -
Group Variable Life Insurance Company # 89-759__
30<PAGE>
SCHEDULE C
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsi-
bilities for the handling of proxies relating to the Trust by BBOI
Worldwide, the Trust and the Insurance Company. The defined terms
herein shall have the meanings assigned in the Participation Agreement
except that the term "Insurance Company" shall also include the
department or third party assigned by the Insurance Company to perform
the steps delineated below.
1. The number of proxy proposals is given to the Insurance Company
by BBOI Worldwide as early as possible before the date set by the
Trust for the shareholder meeting to facilitate the establishment
of tabulation procedures. At this time BBOI Worldwide will
inform the Insurance Company of the Record, Mailing and Meeting
dates. This will be done verbally approximately two months
before meeting.
2. Promptly after the Record Date, the Insurance Company will
perform a "tape run", or other activity, which will generate the
names, addresses and number of units which are attributed to each
contractowner/policyholder (the "Customer") as of the Record
Date. Allowance should be made for account adjustments made
after this date that could affect the status of the Customers'
accounts of the Record Date.
Note: The number of proxy statements is determined by the
activities described in Step #2. The Insurance Company will use
its best efforts to call in the number of Customers to BBOI
Worldwide, as soon as possible, but no later than one week after
the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Insurance Company by the Trust. The
Insurance Company, at its expense, shall produce and personalize
the Voting Instruction cards. BBOI Worldwide must approve the
Card before it is printed. Allow approximately 2-4 business days
for printing information on the Cards. Information commonly
found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification
of votes (already on Cards as printed by the Trust).
31<PAGE>
(This and related steps may occur later in the chronological
process due to possible uncertainties relating to the proposals.)
4. During this time, BBOI Worldwide will develop, produce, and the
Trust will pay for the Notice of Proxy and the Proxy Statement
(one document). Printed and folded notices and statements will
be sent to Insurance Company for insertion into envelopes
(envelopes and return envelopes are provided and paid for by the
Insurance Company). Contents of envelope sent to customers by
Insurance Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. Return envelope (postage pre-paid by Insurance Company)
addressed to the Insurance Company or its tabulation agent
d. "Urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to vote
as quickly as possible and that their vote is important.
One copy will be supplied by the Trust.)
e. Cover letter - optional, supplied by Insurance Company and
reviewed and approved in advance by BBOI Worldwide.
5. The above contents should be received by the Insurance Company
approximately 3-5 business days before mail date. Individual in
charge at Insurance Company reviews and approves the contents of
the mailing package to ensure correctness and completeness. Copy
of this approval sent to BBOI Worldwide.
6. Package mailed by the Insurance Company.
* The Trust must allow at least a 15-day solicitation time to
----
the Insurance Company as the shareowner. (A 5-week period
is recommended.) Solicitation time is calculated as
calendar days from (but not including) the meeting, counting
---
backwards.
7. Collection and tabulation of Cards begins. Tabulation usually
takes place in another department or another vendor depending on
process used. An often used procedure is to sort cards on
arrival by proposal into vote categories of all yes, no, or mixed
replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal
procedure.
32<PAGE>
8. If Cards are mutilated, or for any reason are illegible or are
not signed properly, they are sent back to the Customer with an
explanatory letter, a new Card and return envelope. The
mutilated or illegible Card is disregarded and considered to be
not received for purposes of vote tabulation. Such mutilated or
--- --------
illegible Cards are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards
are usually remedied individually.
9. There are various control procedures used to ensure proper
tabulation of votes and accuracy of that tabulation. The most
prevalent is to sort the Cards as they first arrive into
categories depending upon their vote; an estimate of how the vote
is progressing may then be calculated. If the initial estimates
and the actual vote do not coincide, then an internal audit of
that vote should occur. This may entail a recount.
10. The actual tabulation of votes is done in units which is then
converted to shares. (It is very important that the Trust
receives the tabulations stated in terms of a percentage and the
number of shares.) BBOI Worldwide must review and approve
------
tabulation format.
11. Final tabulation in shares is verbally given by the Insurance
Company to BBOI Worldwide on the morning of the meeting not later
than 10:00 a.m. Denver time. BBOI Worldwide may request an
earlier deadline if required to calculate the vote in time for
the meeting.
12. A Certificate of Mailing and Authorization to Vote Shares will be
required from the Insurance Company as well as an original copy
of the final vote. BBOI Worldwide will provide a standard form
for each Certification.
13. The Insurance Company will be required to box and archive the
Cards received from the Customers. In the event that any vote is
challenged or if otherwise necessary for legal, regulatory, or
accounting purposes, BBOI Worldwide will be permitted reasonable
access to such Cards.
14. All approvals and "signing-off" may be done orally, but must
always be followed up in writing.
33
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
and Statement of Additional Information constituting parts of this
Post-Effective Amendment No. 3 to the registration statement on Form
N-1A (the "Registration Statement") of our report dated January 27,
1997, relating to the financial statements and the financial
highlights appearing in the December 31, 1996 Annual Report to
Shareholders of Berger Institutional Products Trust, which is also
incorporated by reference into the Registration Statement. We also
consent to the references to us under the heading "Condensed Financial
Information" in the Prospectus and under the heading "Additional
Information" in the Statement of Additional Information.
PRICE WATERHOUSE LLP
Denver, Colorado
April 18, 1997
