Exhibit h(76)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.,
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
CLARENDON INSURANCE AGENCY, INC.
TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
Section 1. Available Funds................................................. 2
1.1 Availability.................................................... 2
1.2 Addition, Deletion or Modification of Funds..................... 2
1.3 No Sales to the General Public.................................. 2
Section 2. Processing Transactions......................................... 2
2.1 Timely Pricing and Orders....................................... 2
2.2 Timely Payments................................................. 3
2.3 Applicable Price................................................ 3
2.4 Dividends and Distributions..................................... 4
2.5 Book Entry...................................................... 4
Section 3. Costs and Expenses.............................................. 4
3.1 General......................................................... 4
3.2 Parties To Cooperate............................................ 4
Section 4. Legal Compliance................................................ 4
4.1 Tax Laws........................................................ 4
4.2 Insurance and Certain Other Laws................................ 7
4.3 Securities Laws................................................. 8
4.4 Notice of Certain Proceedings and Other Circumstances........... 9
4.5 INSURER To Provide Documents; Information About AVIF............ 9
4.6 AVIF To Provide Documents; Information About INSURER............ 10
Section 5. Mixed and Shared Funding........................................ 11
5.1 General......................................................... 11
5.2 Disinterested Directors......................................... 12
5.3 Monitoring for Material Irreconcilable Conflicts................ 12
5.4 Conflict Remedies............................................... 13
5.5 Notice to INSURER .............................................. 14
5.6 Information Requested by Board of Directors..................... 14
5.7 Compliance with SEC Rules....................................... 14
5.8 Other Requirements.............................................. 14
Section 6. Termination..................................................... 15
6.1 Events of Termination........................................... 15
6.2 Notice Requirement for Termination.............................. 16
6.3 Funds To Remain Available....................................... 17
6.4 Survival of Warranties and Indemnifications..................... 17
6.5 Continuance of Agreement for Certain Purposes................... 17
Section 7. Parties To Cooperate Respecting Termination..................... 17
DESCRIPTION PAGE
----------- ----
Section 8. Assignment...................................................... 17
Section 9. Notices......................................................... 18
Section 10. Voting Procedures............................................... 18
Section 11. Foreign Tax Credits............................................. 19
Section 12. Indemnification................................................. 19
12.1 Of AVIF and AIM by INSURER and Clarendon........................ 19
12.2 Of INSURER and Clarendon by AVIF and AIM........................ 21
12.3 Effect of Notice................................................ 24
12.4 Successors...................................................... 24
Section 13. Applicable Law.................................................. 24
Section 14. Execution in Counterparts....................................... 24
Section 15. Severability.................................................... 24
Section 16. Rights Cumulative............................................... 24
Section 17. Headings........................................................ 24
Section 18. Confidentiality................................................. 25
Section 19. Trademarks and Fund Names....................................... 25
Section 20. Parties to Cooperate............................................ 26
Section 21. Access to Information by INSURER................................ 27
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 17th day of April, 2000
("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); A I M Distributors, Inc., a Maryland corporation ("AIM");
Sun Life Insurance and Annuity Company of New York, a New York life insurance
company ("INSURER"), on behalf of itself and each of its segregated asset
accounts listed in Schedule A hereto, as the parties hereto may amend from time
to time (each, an "Account," and collectively, the "Accounts"); and Clarendon
Insurance Agency, Inc. ("CLARENDON"), a Massachusetts corporation, a subsidiary
of INSURER and the principal underwriter of the Contracts (collectively, the
"Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of eighteen separate series ("Series"),
shares ("Shares") of each of which are registered under the Securities Act of
1933, as amended (the "1933 Act") and are currently sold to one or more separate
accounts of life insurance companies to fund benefits under variable annuity
contracts and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto
as the Parties hereto may amend from time to time (each a "Fund"; reference
herein to "AVIF" includes reference to each Fund, to the extent the context
requires) available for purchase by the Accounts; and
WHEREAS, INSURER will be the issuer of certain variable annuity contracts
and variable life insurance contracts ("Contracts") as set forth on Schedule A
hereto, as the Parties hereto may amend from time to time, which Contracts
(hereinafter collectively, the "Contracts"), if required by applicable law, will
be registered under the 1933 Act; and
WHEREAS, INSURER will fund the Contracts through the Accounts, each of
which may be divided into two or more subaccounts ("Subaccounts"; reference
herein to an "Account" includes reference to each Subaccount thereof to the
extent the context requires); and
WHEREAS, INSURER will serve as the depositor of the Accounts, each of
which is registered as a unit investment trust investment company under the 1940
Act (or exempt therefrom), and the security interests deemed to be issued by the
Accounts under the Contracts will be registered as securities under the 1933 Act
(or exempt therefrom); and
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WHEREAS, to the extent permitted by applicable insurance laws and
regulations, INSURER intends to purchase Shares of one or more of the Funds on
behalf of the Accounts to fund the Contracts; and
WHEREAS, CLARENDON is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY.
AVIF will make Shares of each Fund available to INSURER for purchase and
redemption at net asset value and with no sales charges, subject to the terms
and conditions of this Agreement. The Board of Directors of AVIF 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 if, in the sole discretion of the Directors
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, such action is deemed in the best interests of the
shareholders of such Fund.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall
include a reference to any such additional Fund. Schedule A, as amended from
time to time, is incorporated herein by reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC.
AVIF represents and warrants that no Shares of any Fund have been or will
be sold to the general public.
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) AVIF or its designated agent will use its best efforts to provide
INSURER with the net asset value per Share for each Fund by 5:30 p.m. Central
Time on each Business Day. As used herein, "Business Day" shall mean any day on
which (i) the New York Stock Exchange is open for regular trading, (ii) AVIF
calculates the Fund's net asset value, and (iii) INSURER is open for business.
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(b) INSURER will use the data provided by AVIF each Business Day pursuant
to paragraph (a) immediately above to calculate Account unit values and to
process transactions that receive that same Business Day's Account unit values.
INSURER will perform such Account processing the same Business Day, and will
place corresponding orders to purchase or redeem Shares with AVIF by 9:00 a.m.
Central Time the following Business Day; provided, however, that AVIF shall
provide additional time to INSURER in the event that AVIF is unable to meet the
5:30 p.m. Central Time stated in paragraph (a) immediately above. Such
additional time shall be equal to the additional time that AVIF takes to make
the net asset values available to INSURER.
(c) With respect to payment of the purchase price by INSURER and of
redemption proceeds by AVIF, INSURER and AVIF shall net purchase and redemption
orders with respect to each Fund and shall transmit one net payment per Fund in
accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value
information (as determined under SEC guidelines), INSURER shall be entitled to
an adjustment to the number of Shares purchased or redeemed to reflect the
correct net asset value per Share. Any material error in the calculation or
reporting of net asset value per Share, dividend or capital gain information
shall be reported promptly upon discovery to INSURER.
2.2 TIMELY PAYMENTS.
INSURER will wire payment for net purchases to a custodial account
designated by AVIF by 1:00 p.m. Central Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment for net
redemptions to an account designated by INSURER by 1:00 p.m. Central Time on the
same day as the Order is placed, to the extent practicable, but in any event
within five (5) calendar days after the date the order is placed in order to
enable INSURER to pay redemption proceeds within the time specified in Section
22(e) of the 1940 Act or such shorter period of time as may be required by law.
2.3 APPLICABLE PRICE.
(a) Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and other transactions under
Contracts (collectively, "Contract transactions") and that INSURER receives
prior to the close of regular trading on the New York Stock Exchange on a
Business Day will be executed at the net asset values of the appropriate Funds
next computed after receipt by AVIF or its designated agent of the orders. For
purposes of this Section 2.3(a), INSURER shall be the designated agent of AVIF
for receipt of orders relating to Contract transactions on each Business Day and
receipt by such designated agent shall constitute receipt by AVIF; provided that
AVIF receives notice of such orders by 9:00 a.m. Central Time on the next
following Business Day or such later time as computed in accordance with Section
2.1(b) hereof. AVIF will acknowledge and verify receipt of such orders by 12:00
p.m. Central Time on each business day on which orders are received.
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(b) All other Share purchases and redemptions by INSURER will be effected
at the net asset values of the appropriate Funds next computed after receipt by
AVIF or its designated agent of the order therefor, and such orders will be
irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS.
AVIF will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to INSURER of any income dividends
or capital gain distributions payable on the Shares of any Fund. INSURER hereby
elects to reinvest all dividends and capital gains distributions in additional
Shares of the corresponding Fund at the ex-dividend date net asset values until
INSURER otherwise notifies AVIF in writing, it being agreed by the Parties that
the ex-dividend date and the payment date with respect to any dividend or
distribution will be the same Business Day. INSURER reserves the right to revoke
this election and to receive all such income dividends and capital gain
distributions in cash.
2.5 BOOK ENTRY.
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to INSURER. Shares ordered from AVIF will be
recorded in an appropriate title for INSURER, on behalf of its Account, as
directed by INSURER.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto
and made a part hereof, each Party will bear all expenses incident to its
performance under this Agreement.
3.2 PARTIES TO COOPERATE.
Each Party agrees to cooperate with the others, as applicable, in
arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of AVIF and the Accounts. Except as
otherwise specifically provided herein, each Party will bear all expenses
incident to its performance under this Agreement.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) AVIF represents and warrants that each Fund is currently qualified as
a regulated investment company ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and represents that it will
qualify and maintain qualification of each Fund as a RIC. AVIF will notify
INSURER immediately upon having a reasonable basis for believing that a Fund has
ceased to so qualify or that it might not so qualify in the future.
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(b) AVIF represents that it will comply and maintain each Fund's
compliance with the diversification requirements set forth in Section 817(h) of
the Code and Section 1.817-5(b) of the regulations under the Code. AVIF will
notify INSURER immediately upon having a reasonable basis for believing that a
Fund has ceased to so comply or that a Fund might not so comply in the future.
In the event of a breach of this Section 4.1(b) by AVIF, it will take all
reasonable steps to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Section 1.817-5 of the regulations under the
Code.
(c) Notwithstanding Section 12.2 of this Agreement, INSURER agrees that if
the Internal Revenue Service ("IRS") asserts in writing in connection with any
governmental audit or review of INSURER or, to INSURER's knowledge, of any
Participant, that any Fund has failed to comply with the diversification
requirements of Subchapter M or Section 817(h) of the Code or INSURER otherwise
becomes aware of any facts that could give rise to any claim against AVIF or its
affiliates as a result of such a failure or alleged failure:
(i) INSURER shall promptly notify AVIF of such assertion or
potential claim (subject to the confidentiality provisions of
Section 18 as to any Participant);
(ii) INSURER shall consult with AVIF as to how to minimize any
liability that may arise as a result of such failure or
alleged failure;
(iii) INSURER shall, in good faith and to the extent not
inconsistent with its fiduciary duties to its Contract owners,
use its best efforts to minimize any liability of AVIF or its
affiliates 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;
(iv) INSURER shall permit AVIF, its affiliates and their legal and
accounting advisors to participate, at their sole expense, in
any conferences, settlement discussions or other
administrative or judicial proceeding or contests (including
judicial appeals thereof) with the IRS, any Participant or any
other claimant regarding any claims that could give rise to
liability to AVIF or its affiliates as a result of such a
failure or alleged failure; provided, however, that INSURER
will retain control of the conduct of such conferences
discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by INSURER to the
IRS, any Participant 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)), (a) shall be provided by INSURER to
AVIF (together with any supporting information or
analysis); subject to the confidentiality provisions of
Section 18, at least ten (10) business days or such shorter
period to which the Parties hereto agree prior to the day
on which such proposed materials are
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to be submitted, and (b) shall not be submitted by INSURER
to any such person without the express written consent of AVIF
which shall not be unreasonably withheld; provided, that in
any event, each Party shall use its best efforts to make, as
promptly as possible, the submissions to the Commissioner of
the IRS contemplated by paragraph (c)(iii) above;
(vi) INSURER shall provide AVIF or its affiliates and their
accounting and legal advisors with such cooperation as AVIF
shall reasonably request (including, without limitation, by
permitting AVIF and its accounting and legal advisors to
review the relevant books and records of INSURER) in order to
facilitate review by AVIF or its advisors of any written
submissions provided to it pursuant to the preceding clause or
its assessment of the validity or amount of any claim against
its arising from such a failure or alleged failure;
(vii) INSURER shall not with respect to any claim of the IRS or any
Participant that would give rise to a claim against AVIF or
its affiliates (a) compromise or settle any claim, (b) accept
any adjustment on audit, or (c) forego any allowable
administrative or judicial appeals, without the express
written consent of AVIF or its affiliates, which shall not be
unreasonably withheld, provided, that after exhausting all
administrative remedies, in the event of an adverse judicial
decision, INSURER shall either (a) appeal such decision,
provided, that to the extent requested by INSURER, AVIF or its
affiliates provides an opinion of independent counsel to the
effect that a reasonable basis exists for taking such appeal,
in which case the costs of such appeal shall be borne equally
by the Parties hereto, or (b) permit AVIF and its affiliates
to act in the name of INSURER and to control the conduct of
such appeal pursuant to the last paragraph of this Section
4.1(c), in which case the costs of such appeal shall be borne
by AVIF or its affiliates pursuant to that paragraph; and
(viii) AVIF and its affiliates shall have no liability as a result
of such failure or alleged failure if INSURER fails to comply
with any of the foregoing clauses (i) through (vii), and such
failure could be shown to have materially contributed to the
liability.
Should AVIF or any of its affiliates refuse to give its written consent to
any compromise or settlement of any claim or liability hereunder, INSURER may,
in its discretion, authorize AVIF or its affiliates to act in the name of
INSURER in, and to control the conduct of, such conferences, discussions,
proceedings, contests or appeals and all administrative or judicial appeals
thereof, and in that event AVIF or its affiliates shall bear the fees and
expenses associated with the conduct of the proceedings that it is so authorized
to control; provided, that in no event shall INSURER have any liability
resulting from AVIF's refusal to accept the proposed settlement or compromise
with respect to any failure to comply with the requirements of Subchapter M or
Section 817(h) of the Code caused by AVIF. As used in this Agreement, the term
"affiliates" shall have the same meaning as "affiliated person" as defined in
Section 2(a)(3) of the 1940 Act.
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(d) AVIF agrees to cooperate with INSURER with respect to the matters
described in paragraphs (c)(i) through (vii) above. AVIF further agrees that it
shall provide or cause to be provided to INSURER, on a quarterly basis, written
confirmation of each Fund's compliance with the diversification requirements of
Subchapter M and Section 817(h) of the Code.
(e) INSURER represents and warrants that the Contracts currently are and
will be treated as annuity contracts or life insurance contracts under
applicable provisions of the Code and that it will maintain such treatment;
INSURER will notify AVIF immediately upon having a reasonable basis for
believing that any of the Contracts have ceased to be so treated or that they
might not be so treated in the future.
(f) INSURER represents and warrants that each Account is a "segregated
asset account" and that interests in each 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. INSURER will continue to meet such definitional requirements, and it
will notify AVIF 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.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) AVIF will use its best efforts to comply with any applicable state
insurance laws or regulations, to the extent specifically requested by INSURER,
including, the furnishing of information not otherwise available to INSURER
which is required by state insurance law to enable INSURER to obtain the
authority needed to issue the Contracts in any applicable state.
(b) INSURER represents and warrants that (i) it is an insurance company
duly organized, validly existing and in good standing under the laws of the
State of New York and has full corporate power, authority and legal right to
execute, deliver and perform its duties and comply with its obligations under
this Agreement, (ii) it has legally and validly established and maintains each
Account as a segregated asset account under New York law and the regulations
thereunder, and (iii) the Contracts comply in all material respects with all
other applicable federal and state laws and regulations.
(c) AVIF represents and warrants that it is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Maryland
and has full power, authority, and legal right to execute, deliver, and perform
its duties and comply with its obligations under this Agreement.
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4.3 SECURITIES LAWS.
(a) INSURER represents and warrants that (i) interests in each Account
pursuant to the Contracts will be registered under the 1933 Act to the extent
required by the 1933 Act, (ii) the Contracts will be duly authorized for
issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and New
York law, (iii) each Account is and will remain registered under the 1940 Act,
to the extent required by the 1940 Act, (iv) each Account does and will comply
in all material respects with the requirements of the 1940 Act and the rules
thereunder, to the extent required, (v) each Account's 1933 Act registration
statement relating to the Contracts, together with any amendments thereto, will
at all times comply in all material respects with the requirements of the 1933
Act and the rules thereunder, (vi) INSURER will amend the registration statement
for its Contracts under the 1933 Act and for its Accounts under the 1940 Act
from time to time as required in order to effect the continuous offering of its
Contracts or as may otherwise be required by applicable law, and (vii) each
Account Prospectus will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(b) AVIF represents and warrants that (i) Shares sold pursuant to this
Agreement will be registered under the 1933 Act to the extent required by the
1933 Act and duly authorized for issuance and sold in compliance with Maryland
law, (ii) AVIF is and will remain registered under the 1940 Act to the extent
required by the 1940 Act, (iii) AVIF will amend the registration statement for
its Shares under the 1933 Act and itself under the 1940 Act from time to time as
required in order to effect the continuous offering of its Shares, (iv) AVIF
does and will comply in all material respects with the requirements of the 1940
Act and the rules thereunder, (v) AVIF's 1933 Act registration statement,
together with any amendments thereto, will at all times comply in all material
respects with the requirements of the 1933 Act and rules thereunder, and (vi)
AVIF's Prospectus will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(c) AVIF will at its expense register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and to the extent
reasonably deemed advisable by AVIF.
(d) AVIF currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it reserves the right to make such payments in the future. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
AVIF undertakes to have its Board of Directors, a majority of whom are not
"interested" persons of the Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
(e) AVIF represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities having access to
the funds and/or securities of the Fund are and continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund in an amount not less than the minimal coverage as required currently by
Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.
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4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF will immediately notify INSURER of (i) the issuance by any court
or regulatory body of any stop order, cease and desist order, or other similar
order with respect to AVIF's registration statement under the 1933 Act or AVIF
Prospectus, (ii) any request by the SEC for any amendment to such registration
statement or AVIF Prospectus that may affect the offering of Shares of AVIF,
(iii) the initiation of any proceedings for that purpose or for any other
purpose relating to the registration or offering of AVIF's Shares, or (iv) any
other action or circumstances that may prevent the lawful offer or sale of
Shares of any Fund in any state or jurisdiction, including, without limitation,
any circumstances in which (a) such Shares are not registered and, in all
material respects, issued and sold in accordance with applicable state and
federal law, or (b) such law precludes the use of such Shares as an underlying
investment medium of the Contracts issued or to be issued by INSURER. AVIF will
make every reasonable effort to prevent the issuance, with respect to any Fund,
of any such stop order, cease and desist order or similar order and, if any such
order is issued, to obtain the lifting thereof at the earliest possible time.
(b) INSURER will immediately notify AVIF of (i) the issuance by any court
or regulatory body of any stop order, cease and desist order, or other similar
order with respect to each Account's registration statement under the 1933 Act
relating to the Contracts or each Account Prospectus, (ii) any request by the
SEC for any amendment to such registration statement or Account Prospectus that
may affect the offering of Shares of AVIF, (iii) the initiation of any
proceedings for that purpose or for any other purpose relating to the
registration or offering of each Account's interests pursuant to the Contracts,
or (iv) any other action or circumstances that may prevent the lawful offer or
sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. INSURER will make every reasonable effort to prevent the issuance
of any such stop order, cease and desist order or similar order and, if any such
order is issued, to obtain the lifting thereof at the earliest possible time.
4.5 INSURER TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) INSURER will provide to AVIF or its designated agent at least one (1)
complete copy of all SEC registration statements, Account Prospectuses, reports,
any preliminary and final voting instruction solicitation material, applications
for exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to each Account or the Contracts, contemporaneously with the
filing of such document with the SEC or other regulatory authorities.
(b) INSURER will provide to AVIF or its designated agent at least one (1)
complete copy of each piece of sales literature or other promotional material in
which AVIF or any of its affiliates is named, at least ten (10) Business Days
prior to its use or such shorter period as the Parties hereto may, from time to
time, agree upon. No such material shall be used if AVIF or its designated agent
objects to such use within ten (10) Business Days after receipt of such material
or such shorter period as the Parties hereto may, from time to time, agree upon.
AVIF hereby designates AIM as the entity to receive such sales literature, until
such time as AVIF appoints another designated agent by giving notice to INSURER
in the manner required by Section 9 hereof.
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(c) Neither INSURER nor any of its affiliates, will give any information
or make any representations or statements on behalf of or concerning AVIF or its
affiliates in connection with the sale of the Contracts other than (i) the
information or representations contained in the registration statement,
including the AVIF Prospectus contained therein, relating to Shares, as such
registration statement and AVIF Prospectus may be amended from time to time; or
(ii) in reports or proxy materials for AVIF; or (iii) in published reports for
AVIF that are in the public domain and approved by AVIF for distribution; or
(iv) in sales literature or other promotional material approved by AVIF, except
with the express written permission of AVIF.
(d) INSURER shall adopt and implement procedures reasonably designed to
ensure that information concerning AVIF and its affiliates that is intended for
use only by brokers or agents selling the Contracts (i.e., information that is
not intended for distribution to Participants) ("broker only materials") is so
used, and neither AVIF nor any of its affiliates shall be liable for any losses,
damages or expenses relating to the improper use of such broker only materials.
(e) For the purposes of this Section 4.5, the phrase "sales literature or
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 messages), 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, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 0000 Xxx.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT INSURER.
(a) AVIF will provide to INSURER at least one (1) complete copy of all SEC
registration statements, AVIF Prospectuses, statements of additional information
reports, any preliminary and final proxy material, applications for exemptions,
exemptive orders, requests for no-action letters, and all amendments to any of
the above, that relate to AVIF or the Shares of a Fund, contemporaneously with
the filing of such document with the SEC or other regulatory authorities.
(b) AVIF will provide to INSURER or its designated agent at least one (1)
complete copy of each piece of sales literature or other promotional material in
which INSURER, or any of its respective affiliates is named, or that refers to
the Contracts, at least ten (10) Business Days prior to its use or such shorter
period as the Parties hereto may, from time to time, agree upon. No such
material shall be used if INSURER or its designated agent objects to such use
within ten (10) Business Days after receipt of such material or such shorter
period as the Parties hereto may, from time to time, agree upon. INSURER shall
receive all such sales literature until such time as it appoints a designated
agent by giving notice to AVIF in the manner required by Section 9 hereof.
10
(c) Neither AVIF nor any of its affiliates will give any information or
make any representations or statements on behalf of or concerning INSURER, each
Account, or the Contracts other than (i) the information or representations
contained in the registration statement, including each Account Prospectus
contained therein, relating to the Contracts, as such registration statement and
Account Prospectus may be amended from time to time; or (ii) in published
reports for the Account or the Contracts that are in the public domain and
approved by INSURER for distribution; or (iii) in sales literature or other
promotional material approved by INSURER or its affiliates, except with the
express written permission of INSURER.
(d) AVIF shall cause its principal underwriter to adopt and implement
procedures reasonably designed to ensure that information concerning INSURER,
and its respective affiliates that is intended for use only by brokers or agents
selling the Contracts (i.e., information that is not intended for distribution
to Participants) ("broker only materials") is so used, and neither INSURER, nor
any of its respective affiliates shall be liable for any losses, damages or
expenses relating to the improper use of such broker only materials.
(e) For purposes of this Section 4.6, the phrase "sales literature or
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 messages), 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, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 1940 Act.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
The SEC has granted an order to AVIF exempting it from certain provisions
of the 1940 Act and rules thereunder so that AVIF may be available for
investment by certain other entities, including, without limitation, separate
accounts funding variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies unaffiliated with INSURER,
and directors of qualified pension and retirement plans (collectively, "Mixed
and Shared Funding"). The Parties recognize that the SEC has imposed terms and
conditions for such orders that are substantially identical to many of the
provisions of this Section 5. Sections 5.2 through 5.8 below shall apply
pursuant to such an exemptive order granted to AVIF. AVIF hereby notifies
INSURER that it may be appropriate to include in the prospectus pursuant to
which a Contract is offered disclosure regarding the potential risks of Mixed
and Shared Funding.
11
5.2 DISINTERESTED DIRECTORS.
AVIF agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors TRUSTEES") are not
interested persons of AVIF within the meaning of Section 2(a)(19) of the 1940
Act and the Rules thereunder and as modified by any applicable orders of the
SEC, except that if this condition is not met by reason of the death,
disqualification, or bona fide resignation of any director, then the operation
of this condition shall be suspended (a) for a period of forty-five (45) days if
the vacancy or vacancies may be filled by the Board; (b) for a period of sixty
(60) days if a vote of shareholders is required to fill the vacancy or
vacancies; or (c) for such longer period as the SEC may prescribe by order upon
application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
AVIF agrees that its Board of Directors will monitor for the existence of
any material irreconcilable conflict between the interests of the Participants
in all separate accounts of life insurance companies utilizing AVIF
("Participating Insurance Companies"), including each Account, and participants
in all qualified retirement and pension plans investing in AVIF ("Participating
Plans"). INSURER agrees to inform the Board of Directors of AVIF of the
existence of or any potential for any such material irreconcilable conflict of
which it is aware. The concept of a "material irreconcilable conflict" is not
defined by the 1940 Act or the rules thereunder, but the Parties recognize that
such a conflict may arise for a variety of reasons, including, without
limitation:
(a) an action by any state insurance or other 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 Fund are being managed;
(e) a difference in voting instructions given by variable annuity contract
and variable life insurance contract Participants or by Participants of
different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the
voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
Consistent with the SEC's requirements in connection with exemptive orders
of the type referred to in Section 5.1 hereof, INSURER will assist the Board of
Directors in carrying out its responsibilities by providing the Board of
Directors with all information reasonably necessary for the Board of Directors
to consider any issue raised, including information as to a decision by
12
INSURER to disregard voting instructions of Participants. INSURER's
responsibilities in connection with the foregoing shall be carried out with a
view only to the interests of Participants.
5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the members of
the Board of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, INSURER will, if it is a Participating
Insurance Company for which a material irreconcilable conflict is relevant, at
its own expense and to the extent reasonably practicable (as determined by a
majority of the Disinterested Directors), take whatever steps are necessary to
remedy or eliminate the material irreconcilable conflict, which steps may
include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the
Accounts from AVIF or any Fund and reinvesting such assets
in a different investment medium, including another Fund of
AVIF, or submitting the question whether such segregation
should be implemented to a vote of all affected
Participants and, as appropriate, segregating the assets of
any particular group (e.g., annuity Participants, life
insurance Participants or all Participants) that votes in
favor of such segregation, or offering to the affected
Participants the option of making such a change; and
(ii) establishing a new registered investment company of the type
defined as a "management company" in Section 4(3) of the 1940
Act or a new separate account that is operated as a management
company.
(b) If the material irreconcilable conflict arises because of INSURER's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, INSURER may be
required, at AVIF's election, to withdraw each Account's investment in AVIF or
any Fund. No charge or penalty will be imposed as a result of such withdrawal.
Any such withdrawal must take place within six (6) months after AVIF gives
notice to INSURER that this provision is being implemented, and until such
withdrawal AVIF shall continue to accept and implement orders by INSURER for the
purchase and redemption of Shares of AVIF.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to INSURER conflicts with the
majority of other state regulators, then INSURER will withdraw each Account's
investment in AVIF within six (6) months after AVIF's Board of Directors informs
INSURER that it has determined that such decision has created a material
irreconcilable conflict, and until such withdrawal AVIF shall continue to accept
and implement orders by INSURER for the purchase and redemption of Shares of
AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) INSURER agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense and with a
view only to the interests of Participants.
13
(e) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will AVIF or any of its
affiliates be required to establish a new funding medium for any Contracts.
INSURER will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
5.5 NOTICE TO INSURER.
AVIF will promptly make known in writing to INSURER the Board of
Directors' determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
INSURER and AVIF (or its investment adviser) will at least annually submit
to the Board of Directors of AVIF such reports, materials or data as the Board
of Directors may reasonably request so that the Board of Directors may fully
carry out the obligations imposed upon it by the provisions hereof or any
exemptive order granted by the SEC to permit Mixed and Shared Funding, and said
reports, materials and data will be submitted at any reasonable time deemed
appropriate by the Board of Directors. All reports received by the Board of
Directors of potential or existing conflicts, and all Board of Directors actions
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies and Participating Plans of a conflict, and determining
whether any proposed action adequately remedies a conflict, will be properly
recorded in the minutes of the Board of Directors or other appropriate records,
and such minutes or other records will be made available to the SEC upon
request.
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which AVIF is serving as an investment medium for
variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding, AVIF agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply with
the terms and conditions of such exemptive relief that is afforded by any of
said rules that are applicable.
5.8 OTHER REQUIREMENTS.
AVIF will require that each Participating Insurance Company and
Participating Plan enter into an agreement with AVIF that contains in substance
the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b),
4.5(a), 5, and 10 of this Agreement.
14
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of any party, with or without cause with respect to the
Fund, upon one (1) year's advance written notice to the other parties, or, if
later, upon receipt of any required exemptive relief from the SEC, unless
otherwise agreed to in writing by the parties; or
(b) at the option of AVIF upon institution of formal proceedings against
INSURER or its affiliates by the NASD, the SEC, any state insurance regulator or
any other regulatory body regarding INSURER's obligations under this Agreement
or related to the sale of the Contracts, the operation of each Account, or the
purchase of Shares, if, in each case, AVIF reasonably determines that such
proceedings, or the facts on which such proceedings would be based, have a
material likelihood of imposing material adverse consequences on the Fund with
respect to which the Agreement is to be terminated; or
(c) at the option of INSURER upon institution of formal proceedings
against AVIF, its principal underwriter, or its investment adviser by the NASD,
the SEC, or any state insurance regulator or any other regulatory body regarding
AVIF's obligations under this Agreement or related to the operation or
management of AVIF or the purchase of AVIF Shares, if, in each case, INSURER
reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing material
adverse consequences on INSURER, or the Subaccount corresponding to the Fund
with respect to which the Agreement is to be terminated; or
(d) at the option of any Party in the event that (i) the Fund's Shares are
not registered and, in all material respects, issued and sold in accordance with
any applicable federal or state law, or (ii) such law precludes the use of such
Shares as an underlying investment medium of the Contracts issued or to be
issued by INSURER; or
(e) upon termination of the corresponding Subaccount's investment in
the Fund pursuant to Section 5 hereof; or
(f) at the option of INSURER if the Fund ceases to qualify as a RIC under
Subchapter M of the Code or under successor or similar provisions, or if INSURER
reasonably believes that the Fund may fail to so qualify; or
(g) at the option of INSURER if the Fund fails to comply with Section
817(h) of the Code or with successor or similar provisions, or if INSURER
reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by INSURER cease to
qualify as annuity contracts or life insurance contracts under the Code (other
than by reason of the Fund's noncompliance with Section 817(h) or Subchapter M
of the Code) or if interests in an Account under
15
the Contracts are not registered, where required, and, in all material respects,
are not issued or sold in accordance with any applicable federal or state law;
or
(i) upon another Party's material breach of any provision of this
Agreement; or
(j) at the option of INSURER or AVIF upon receipt of any necessary
regulatory approvals and/or the vote of the Contract owners having an interest
in the account (or any Subaccount) to substitute the shares of another
investment for the corresponding AVIF Shares in accordance with the terms of the
Contracts for which those Shares had been selected to serve as the underlying
investment media. INSURER will give thirty (30) days' prior written notice to
AVIF of the date of any proposed vote or other action taken to replace the AVIF
Shares; or
(k) at the option of INSURER, if INSURER determines in its sole judgment
exercised in good faith, that either AVIF or AVIF's investment adviser has
suffered a material adverse change in its business, operations or financial
condition since the date of this Agreement or is the subject of material adverse
publicity which is likely to have a material adverse impact upon the business
and operations of INSURER; or
(l) at the option of AVIF, if AVIF determines in its sole judgment
exercised in good faith, that INSURER has suffered a material adverse change in
its business, operations or financial condition since the date of this Agreement
or is the subject of material adverse publicity which is likely to have a
material adverse impact upon the business and operations of AVIF.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other Party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given at
least six (6) months in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of
Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given at
least ninety (90) days in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto; and
(c) in the event that any termination is based upon the provisions of
Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written
notice shall be given as soon as possible within twenty-four (24) hours after
the terminating Party learns of the event causing termination to be required.
16
6.3 FUNDS TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, AVIF will, at the
option of INSURER, continue to make available additional shares of the Fund
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 will be permitted to reallocate investments in
the Fund (as in effect on such date), redeem investments in the Fund and/or
invest in the Fund upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 6.3 will not apply to
any terminations under Section 5 and the effect of such terminations will be
governed by Section 5 of this Agreement.
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications will survive the termination of this
Agreement.
6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any Fund pursuant
to Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof,
this Agreement shall nevertheless continue in effect as to any Shares of that
Fund that are outstanding as of the date of such termination (the "Initial
Termination Date"). This continuation shall extend to the earlier of the date as
of which an Account owns no Shares of the affected Fund or a date (the "Final
Termination Date") six (6) months following the Initial Termination Date, except
that INSURER may, by written notice shorten said six (6) month period in the
case of a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or
6.1(i).
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable assistance to
one another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Contracts in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the written
consent of each other Party.
17
SECTION 9. NOTICES
Notices and communications required or permitted by Section 9 hereof will
be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given to
the following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
AIM VARIABLE INSURANCE FUNDS, INC.
A I M DISTRIBUTORS, INC.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
CLARENDON INSURANCE AGENCY, INC.
Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxxx Xxxxxxx, Esq.
Senior Associate Counsel
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof,
INSURER will distribute all proxy material furnished by AVIF to Participants to
whom pass-through voting privileges are required to be extended and will solicit
voting instructions from Participants. INSURER will vote Shares in accordance
with timely instructions received from Participants. INSURER will vote Shares
that are (a) not attributable to Participants to whom pass-through voting
privileges are extended, or (b) attributable to Participants, but for which no
timely instructions have been received, in the same proportion as Shares for
which said instructions have been received from Participants, so long as and to
the extent that the SEC continues to interpret the 1940 Act to require pass
through voting privileges for Participants. Neither INSURER nor any of its
affiliates will in any way recommend action in connection with or oppose or
interfere with the solicitation of proxies for the Shares held for such
Participants. INSURER reserves the right to vote shares held in any Account in
its own right, to the extent permitted by law. INSURER shall be responsible for
assuring that each of its Accounts holding Shares calculates voting privileges
in a manner consistent with that of other Participating Insurance Companies in
the manner required by the Mixed and Shared Funding exemptive order obtained by
AVIF. AVIF will notify INSURER of any changes of interpretations or amendments
to Mixed and Shared Funding exemptive order it has obtained. AVIF will comply
with all provisions of the 1940 Act requiring voting by shareholders, and in
particular,
18
AVIF either will provide for annual meetings (except insofar as the SEC may
interpret Section 16 of the 1940 Act not to require such meetings) or will
comply with Section 16(c) of the 1940 Act (although AVIF 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, AVIF will act in accordance with
the SEC's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors and with whatever rules the SEC may promulgate
with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with INSURER concerning any decision to
elect or not to elect pursuant to Section 853 of the Code to pass through the
benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF AVIF AND AIM BY INSURER AND CLARENDON.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below,
INSURER and CLARENDON agree to indemnify and hold harmless AVIF, its
affiliates, and each person, if any, who controls AVIF or its affiliates within
the meaning of Section 15 of the 1933 Act and each of their respective directors
and officers, (collectively, the "Indemnified Parties" for purposes of this
Section 12.1) against any and all losses, costs, expenses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
INSURER and CLARENDON) or actions in respect thereof (including, to the
extent reasonable, legal and other expenses), to which the Indemnified Parties
may become subject under any statute, regulation, at common law or otherwise;
provided, the Account owns shares of the Fund and insofar as such losses, costs,
expenses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
any Account's 1933 Act registration statement, any Account
Prospectus, the Contracts, or sales literature or
advertising 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 to
INSURER or CLARENDON by or on behalf of AVIF or AIM
for use in any Account's 1933 Act registration statement,
any Account Prospectus, the Contracts, or sales literature
or advertising or otherwise for use in connection with the
sale of Contracts or Shares (or any amendment or supplement
to any of the foregoing); or
19
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in AVIF's 1933 Act registration statement, AVIF
Prospectus, sales literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing, not supplied
for use therein by or on behalf of INSURER, CLARENDON
or their respective affiliates and on which such persons have
reasonably relied) or the negligent, illegal or fraudulent
conduct of INSURER, CLARENDON or their respective
affiliates or persons under their control (including, without
limitation, their employees and "Associated Persons," as that
term is defined in paragraph (m) of Article I of the NASD's
By-Laws), in connection with the sale or distribution of the
Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus, sales literature
or advertising of AVIF, or any amendment or supplement to any
of the foregoing, 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 and in
conformity with information furnished to AVIF or its
affiliates by or on behalf of INSURER, CLARENDON or
their respective affiliates for use in AVIF's 1933 Act
registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of
the foregoing; or
(iv) arise as a result of any failure by INSURER or CLARENDON to
perform the obligations, provide the services and furnish the
materials required of them under the terms of this Agreement,
or any material breach of any representation and/or warranty
made by INSURER or CLARENDON in this Agreement or arise out of
or result from any other material breach of this Agreement by
INSURER or CLARENDON; or
(v) arise as a result of failure by the Contracts issued by
INSURER to qualify as annuity contracts or life
insurance contracts under the Code, otherwise than by reason
of any Fund's failure to comply with Subchapter M or Section
817(h) of the Code.
(b) Neither INSURER nor CLARENDON shall be liable under this
Section 12.1 with respect to any losses, costs, expenses, claims, damages,
liabilities or actions to which an Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance by that Indemnified Party of its duties or by reason of that
Indemnified Party's reckless disregard of obligations or duties (i) under this
Agreement, or (ii) to AVIF.
(c) Neither INSURER nor CLARENDON shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
or AIM shall have notified INSURER and CLARENDON in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the action shall have been served upon such
20
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify INSURER and
CLARENDON of any such action shall not relieve INSURER and CLARENDON from
any liability which they may have to the Indemnified Party against whom such
action is brought otherwise than on account of this Section 12.1. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, INSURER and CLARENDON shall be entitled to
participate, at their own expense, in the defense of such action and also shall
be entitled to assume the defense thereof, with counsel approved by the
Indemnified Party named in the action, which approval shall not be unreasonably
withheld. After notice from INSURER or CLARENDON to such Indemnified
Party of INSURER's or CLARENDON's election to assume the defense thereof,
the Indemnified Party will cooperate fully with INSURER and CLARENDON and
shall bear the fees and expenses of any additional counsel retained by it, and
neither INSURER nor CLARENDON will be liable to such Indemnified Party
under this Agreement for any legal or other expenses subsequently incurred by
such Indemnified Party independently in connection with the defense thereof,
other than reasonable costs of investigation.
12.2 OF INSURER AND CLARENDON BY AVIF AND AIM.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, AVIF and AIM agree to indemnify and hold harmless
INSURER, CLARENDON, their respective affiliates, and each person, if any,
who controls INSURER, CLARENDON or their respective affiliates within the
meaning of Section 15 of the 1933 Act and each of their respective directors and
officers, (collectively, the "Indemnified Parties" for purposes of this Section
12.2) against any and all losses, costs, expenses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of AVIF and/or
AIM ) or actions in respect thereof (including, to the extent reasonable, legal
and other expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law, or otherwise; provided, the Account owns
shares of the Fund and insofar as such losses, costs, expenses, claims, damages,
liabilities or actions:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
AVIF's 1933 Act registration statement, AVIF Prospectus or
sales literature or advertising of AVIF (or any amendment
or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading;
provided, that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to AVIF
or its affiliates by or on behalf of INSURER,
CLARENDON or their respective affiliates for use in AVIF's
1933 Act registration statement, AVIF Prospectus, or in
sales literature or advertising or otherwise for use in
connection with the sale of Contracts or Shares (or any
amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in any Account's 1933 Act
21
registration statement, any Account Prospectus, sales
literature or advertising for the Contracts, or any amendment
or supplement to any of the foregoing, not supplied for use
therein by or on behalf of AVIF or AIM or their affiliates and
on which such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of AVIF or AIM or
their affiliates or persons under its control (including,
without limitation, their employees and "Associated Persons"
as that term is defined in Section (n) of Article I of the
NASD By-Laws), in connection with the sale or distribution of
AVIF Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any
Account's 1933 Act registration statement, any Account
Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon and in
conformity with information furnished to INSURER,
CLARENDON or their respective affiliates by or on behalf of
AVIF or AIM for use in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature or
advertising covering the Contracts, or any amendment or
supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement, or any
material breach of any representation and/or warranty made by
AVIF in this Agreement or arise out of or result from any
other material breach of this Agreement by AVIF.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e)
hereof, AVIF and AIM agree to indemnify and hold harmless the Indemnified
Parties from and against any and all losses, claims, damages, liabilities
(including amounts paid in settlement thereof with, the written consent of AVIF
and/or AIM) or actions in respect thereof (including, to the extent reasonable,
legal and other expenses) to which the Indemnified Parties may become subject
directly or indirectly under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or actions directly or indirectly
result from or arise out of the failure of any Fund to operate as a regulated
investment company in compliance with (i) Subchapter M of the Code and
regulations thereunder, or (ii) Section 817(h) of the Code and regulations
thereunder, including, without limitation, any income taxes and related interest
and penalties, rescission charges, liability under state law to Participants
asserting liability against INSURER pursuant to the Contracts, the costs
of any ruling and closing agreement or other settlement with the IRS, and the
cost of any substitution by INSURER of Shares of another investment
company or portfolio for those of any adversely affected Fund as a funding
medium for each Account that INSURER reasonably deems necessary or
appropriate as a result of the noncompliance.
22
(c) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any losses, costs, expenses, claims, damages, liabilities or actions
to which an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of such Indemnified Party's
reckless disregard of its obligations and duties (i) under this Agreement, or
(ii) to INSURER, CLARENDON, each Account or Participants.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any action against an Indemnified Party unless the Indemnified Party
shall have notified AVIF and/or AIM in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
action 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 AVIF or AIM of any such action shall not relieve
AVIF or AIM from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
12.2. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, AVIF and/or AIM will be entitled to participate,
at its own expense, in the defense of such action and also shall be entitled to
assume the defense thereof (which shall include, without limitation, the conduct
of any ruling request and closing agreement or other settlement proceeding with
the IRS), with counsel approved by the Indemnified Party named in the action,
which approval shall not be unreasonably withheld. After notice from AVIF and/or
AIM to such Indemnified Party of AVIF's or AIM's election to assume the defense
thereof, the Indemnified Party will cooperate fully with AVIF and AIM and shall
bear the fees and expenses of any additional counsel retained by it, and AVIF
will not be liable to such Indemnified Party under this Agreement for any legal
or other expenses subsequently incurred by such Indemnified Party independently
in connection with the defense thereof, other than reasonable costs of
investigation.
(e) In no event shall either AVIF or AIM be liable under the
indemnification provisions contained in this Agreement to any individual or
entity, including, without limitation, INSURER, CLARENDON or any other
Participating Insurance Company or any Participant, with respect to any losses,
claims, damages, liabilities or expenses that arise out of or result from (i) a
breach of any representation, warranty, and/or covenant made by INSURER
or CLARENDON hereunder or by any Participating Insurance Company under an
agreement containing substantially similar representations, warranties and
covenants; (ii) the failure by INSURER or any Participating Insurance
Company to maintain its segregated asset account (which invests in any Fund) as
a legally and validly established segregated asset account under applicable
state law and as a duly registered unit investment trust under the provisions of
the 1940 Act (unless exempt therefrom); or (iii) the failure by INSURER
or any Participating Insurance Company to maintain its variable annuity or life
insurance contracts (with respect to which any Fund serves as an underlying
funding vehicle) as annuity contracts or life insurance contracts under
applicable provisions of the Code.
23
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12.1(c) or 12.2(d) above of participation in or control
of any action by the indemnifying Party will in no event be deemed to be an
admission by the indemnifying Party of liability, culpability or responsibility,
and the indemnifying Party will remain free to contest liability with respect to
the claim among the Parties or otherwise.
12.4 SUCCESSORS.
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Delaware law, without regard for that state's
principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
SECTION 16. RIGHTS CUMULATIVE
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, that the Parties are entitled to under federal and state
laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for purposes
of reference only and shall not limit or define the meaning of the provisions of
this Agreement.
24
SECTION 18. CONFIDENTIALITY
AVIF acknowledges that the identities of the customers of INSURER
or any of its affiliates (collectively, the "INSURER Protected Parties"
for purposes of this Section 18), information maintained regarding those
customers, and all computer programs and procedures or other information
developed by the INSURER Protected Parties or any of their employees or
agents in connection with INSURER's performance of its duties under this
Agreement are the valuable property of the INSURER Protected Parties.
AVIF agrees that if it comes into possession of any list or compilation of the
identities of or other information about the INSURER Protected Parties'
customers, or any other information or property of the INSURER Protected
Parties, other than such information as may be independently developed or
compiled by AVIF from information supplied to it by the INSURER Protected
Parties' customers who also maintain accounts directly with AVIF, AVIF will hold
such information or property in confidence and refrain from using, disclosing or
distributing any of such information or other property except: (a) with
INSURER's prior written consent; or (b) as required by law or judicial
process. INSURER acknowledges that the identities of the customers of
AVIF or any of its affiliates (collectively, the AAVIF Protected Parties' for
purposes of this Section 18), information maintained regarding those customers,
and all computer programs and procedures or other information developed by the
AVIF Protected Parties or any of their employees or agents in connection with
AVIF's performance of its duties under this Agreement are the valuable property
of the AVIF Protected Parties. INSURER agrees that if it comes into
possession of any list or compilation of the identities of or other information
about the AVIF Protected Parties' customers or any other information or property
of the AVIF Protected Parties, other than such information as may be
independently developed or compiled by INSURER from information supplied
to it by the AVIF Protected Parties' customers who also maintain accounts
directly with INSURER, INSURER will hold such information or
property in confidence and refrain from using, disclosing or distributing any of
such information or other property except: (a) with AVIF's prior written
consent; or (b) as required by law or judicial process. Each party acknowledges
that any breach of the agreements in this Section 18 would result in immediate
and irreparable harm to the other parties for which there would be no adequate
remedy at law and agree that in the event of such a breach, the other parties
will be entitled to equitable relief by way of temporary and permanent
injunctions, as well as such other relief as any court of competent jurisdiction
deems appropriate.
SECTION 19. TRADEMARKS AND FUND NAMES
(a) A I M Management Group Inc. ("AIM" or "licensor"), an affiliate of
AVIF, owns all right, title and interest in and to the name, trademark and
service xxxx "AIM" and such other tradenames, trademarks and service marks as
may be set forth on Schedule B, as amended from time to time by written notice
from AIM to INSURER (the "AIM licensed marks" or the "licensor's licensed
marks") and is authorized to use and to license other persons to use such marks.
INSURER and its affiliates are hereby granted a non-exclusive license to use the
AIM licensed marks in connection with INSURER's performance of the services
contemplated under this Agreement, subject to the terms and conditions set forth
in this Section 19.
25
(b) The grant of license to INSURER and its affiliates ( the "licensee")
shall terminate automatically upon termination of this Agreement. Upon automatic
termination, the licensee shall cease to use the licensor's licensed marks,
except that INSURER shall have the right to continue to service any outstanding
Contracts bearing any of the AIM licensed marks. Upon AIM's elective termination
of this license, INSURER and its affiliates shall immediately cease to issue any
new annuity or life insurance contracts bearing any of the AIM licensed marks
and shall likewise cease any activity which suggests that it has any right under
any of the AIM licensed marks or that it has any association with AIM, except
that INSURER shall have the right to continue to service outstanding Contracts
bearing any of the AIM licensed marks and to use AIM licensed marks in such
materials as may be necessary for filing with any regulatory authority where
required by law or regulation or to enable INSURER to quote performance to
existing Contract owners.
(c) The licensee shall obtain the prior written approval of the licensor
for the public release by such licensee of any materials bearing the licensor's
licensed marks. The licensor's approvals shall not be unreasonably withheld and
may be obtained in connection with approval of sales materials as provided in
Section 4.5(b) hereof (i.e., approvals obtained under Section 4.5 hereof shall
be deemed approval pursuant to this Section 19).
(d) During the term of this grant of license, a licensor may request that
a licensee submit samples of any materials bearing any of the licensor's
licensed marks which were previously approved by the licensor but, due to
changed circumstances, the licensor may wish to reconsider. If, on
reconsideration, or on initial review, respectively, any such samples fail to
meet with the written approval of the licensor, then the licensee shall
immediately cease distributing such disapproved materials, upon receiving notice
of such failure by the licensor. The licensor's approval shall not be
unreasonably withheld, and the licensor, when requesting reconsideration of a
prior approval, shall assume the reasonable expenses of withdrawing and
replacing such disapproved materials. The licensee shall obtain the prior
written approval of the licensor for the use of any new materials developed to
replace the disapproved materials, in the manner set forth above.
(e) The licensee hereunder: (i) acknowledges and stipulates, based upon
the representations of the licensor set forth herein and without making any
independent inquiry thereof, that, to the best of the knowledge of the licensee,
the licensor's licensed marks are valid and enforceable trademarks and/or
service marks; (ii) acknowledges and stipulates that such licensee does not own
the licensor's licensed marks and claims no rights therein other than as a
licensee under this Agreement; (iii) agrees never to contend otherwise in legal
proceedings or in other circumstances; and (iv) acknowledges and agrees that the
use of the licensor's licensed marks pursuant to this grant of license shall
inure to the benefit of the licensor.
SECTION 20. PARTIES TO COOPERATE
Each party to this Agreement will cooperate with each other party and all
appropriate governmental authorities (including, without limitation, the SEC,
the NASD and state insurance regulators) and will permit each other and such
authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
26
SECTION 21. ACCESS TO INFORMATION BY INSURER
During ordinary business hours, AVIF shall afford INSURER, directly or
through its authorized representatives, reasonable access to all files, books,
records and other materials of AVIF (except for confidential or proprietary
materials) which directly relate to transactions arising in connection with this
Agreement and to make available appropriate personnel familiar with such items
for the purpose of explaining the form and content of such items. This Section
21 shall survive the termination of this Agreement.
27
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
----------------------- -------------------------------------
Xxxxx X. Xxxxxx Xxxxxx X. Xxxxxx
Assistant Secretary President
A I M DISTRIBUTORS, INC.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxx
----------------------- -------------------------------------
Xxxxx X. Xxxxxx Xxxxxxx X. Xxxx
Assistant Secretary President
SUN LIFE INSURANCE AND ANNUITY COMPANY OF
NEW YORK, on behalf of itself and its
separate accounts
By: /s/ Xxxxxx X. Xxxx
-------------------------------------
Xxxxxx X. Xxxx
By: /s/ Norton X. Xxxx, XX
-------------------------------------
Norton X. Xxxx, XX
CLARENDON INSURANCE AGENCY, INC.
By: /s/ Norton X. Xxxx, XX
-------------------------------------
Norton X. Xxxx, XX
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Xxxxxx X. Xxxxx
28
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
SUN LIFE (NY) VARIABLE ACCOUNT C
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
FUTURITY - NY VARIABLE AND FIXED ANNUITY CONTRACT
29
SCHEDULE B
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM and Design
[AIM LOGO]
--Registered Trademark--
30
SCHEDULE C
EXPENSE ALLOCATIONS
INSURER AVIF / AIM
------- ----------
preparing and filing the Account's preparing and filing the Fund's
registration statement registration statement
text composition for Account text composition for Fund
prospectuses and supplements prospectuses and supplements
text alterations of prospectuses text alterations of prospectuses
(Account) and supplements (Account) (Fund) and supplements (Fund)
printing Account and Fund prospectuses a camera ready Fund prospectus
and supplements
text composition and printing Account text composition and printing Fund
SAIs (if any) SAIs
mailing and distributing Account SAIs mailing and distributing Fund SAIs
(if any) to policy owners upon request to policy owners upon request by
by policy owners policy owners
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by or appropriate
under the Federal Securities Laws and
to prospective purchasers
text composition (Account), printing, text composition and printing of
mailing, and distributing annual and annual and semi-annual reports (Fund)
semi-annual reports for Account
text composition, printing, mailing, text composition, printing, mailing,
distributing, and tabulation of proxy distributing and tabulation of proxy
statements and voting instruction statements and voting instruction
solicitation materials to policy owners solicitation materials to policy
with respect to proxies related to the owners with respect to proxies
Account related to the Fund
preparation, printing and distributing
sales material and advertising relating
to the Funds, insofar as such materials
relate to the Contracts and filing such
materials with and obtaining approval
from, the SEC, the NASD, any state
insurance regulatory authority, and any
other appropriate regulatory authority,
to the extent required
31
