PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.,
GLENBROOK LIFE AND ANNUITY COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
AND
ALLSTATE LIFE FINANCIAL SERVICES, INC.
TABLE OF CONTENTS
DESCRIPTION PAGE
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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 . . . . . . . . . . . . . . . . . . . 3
Section 2. Processing Transactions. . . . . . . . . . . . . . . . . . . . . . 3
2.1 TIMELY PRICING AND ORDERS. . . . . . . . . . . . . . . . . . . . . . 3
2.2 TIMELY PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 APPLICABLE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 DIVIDENDS AND DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . 4
2.5 BOOK ENTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 PARTIES TO COOPERATE . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4. Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 TAX LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 INSURANCE AND CERTAIN OTHER LAWS . . . . . . . . . . . . . . . . . . 8
4.3 SECURITIES LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES. . . . . . . . 9
4.5 GLENBROOK OR THE UNDERWRITER TO PROVIDE DOCUMENTS; INFORMATION ABOUT
AVIF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT GLENBROOK AND THE
UNDERWRITER. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Section 5. Mixed and Shared Funding . . . . . . . . . . . . . . . . . . . . .12
5.1 GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
5.2 DISINTERESTED DIRECTORS. . . . . . . . . . . . . . . . . . . . . . .12
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS . . . . . . . . . .12
5.4 CONFLICT REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . .13
5.5 NOTICE TO GLENBROOK. . . . . . . . . . . . . . . . . . . . . . . . .15
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS. . . . . . . . . . . . .15
5.7 COMPLIANCE WITH SEC RULES. . . . . . . . . . . . . . . . . . . . . .15
5.8 REQUIREMENTS FOR OTHER INSURANCE COMPANIES . . . . . . . . . . . . .15
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Section 6. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
6.1 EVENTS OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . . .16
6.2 NOTICE REQUIREMENT FOR TERMINATION . . . . . . . . . . . . . . . . .17
6.3 FUNDS TO REMAIN AVAILABLE. . . . . . . . . . . . . . . . . . . . . .17
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS. . . . . . . . . . . . .18
6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES. . . . . . . . . . . .18
Section 7. Parties To Cooperate Respecting Termination. . . . . . . . . . . .18
Section 8. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Section 9. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Section 10. Voting Procedures . . . . . . . . . . . . . . . . . . . . . . . .19
Section 11. Foreign Tax Credits . . . . . . . . . . . . . . . . . . . . . . .20
Section 12. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . .20
12.1 OF AVIF BY GLENBROOK AND THE UNDERWRITER . . . . . . . . . . . . . .20
12.2 OF GLENBROOK AND THE UNDERWRITER BY AVIF AND AIM . . . . . . . . . .22
12.3 EFFECT OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . .25
12.4 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Section 13. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 14. Execution in Counterparts . . . . . . . . . . . . . . . . . . . .26
Section 15. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 16. Rights Cumulative . . . . . . . . . . . . . . . . . . . . . . . .26
Section 17. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
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PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the ____ day of _________, 1995
("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); A I M Distributors, Inc., a Delaware corporation ("AIM");
Glenbrook Life and Annuity Company, an Illinois life insurance company
("Glenbrook"), 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 Allstate Life
Financial Services, Inc., a Delaware corporation and the principal underwriter
of the Contracts and Policies referred to below ("Underwriter") (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 nine separate 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
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, AIM currently serves as the distributor for the Shares; and
WHEREAS, Glenbrook will be the issuer of certain variable annuity contracts
("Contracts") and/or variable life insurance policies ("Policies") as set forth
on Schedule A hereto, as the Parties hereto may amend from time to time, which
Contracts and Policies (hereinafter collectively, the "Policies"), if required
by applicable law, will be registered under the 1933 Act; and
WHEREAS, the Accounts 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, Glenbrook 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),
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and the security interests deemed to be issued by the Accounts under the
Policies will be registered as securities under the 1933 Act (or exempt
therefrom);
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Glenbrook intends to purchase Shares in one or more of the Funds on
behalf of the Accounts to fund the Policies PROVIDED, that AVIF implements Mixed
and Shared Funding, described below, pursuant to an exemptive order from the SEC
or otherwise;
WHEREAS, the Underwriter is a broker-dealer registered with the SEC under
the Securities and Exchange Act of 1934 (the "1934 Act") and a member in good
standing of the National Association of Securities, Inc. ("NASD"); and
WHEREAS, the Underwriter intends to enter into Selling Group Agreements
with entities that may legally sell the Policies (the "Selling Group Members");
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 Glenbrook 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 Policies, 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.
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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
Glenbrook with the net asset value per Share for each Fund by 6:00 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 and (ii) AVIF
calculates the Fund's net asset value.
(b) Glenbrook 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.
Glenbrook will perform such Account processing the same Business Day, and will
place corresponding orders to purchase or redeem Shares with AVIF by 9 a.m.
Central time the following Business Day; PROVIDED, however, that AVIF shall
provide additional time to Glenbrook in the event that AVIF is unable to meet
the 6:00 p.m. 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 Glenbrook.
(c) Each order to purchase or redeem Shares will separately describe the
amount of Shares of each Fund to be purchased, redeemed or exchanged and will
not be netted; PROVIDED, however, with respect to payment of the purchase price
by Glenbrook and of redemption proceeds by AVIF, Glenbrook 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. Each order to
purchase or redeem Shares shall also specify whether the order results from
purchase payments, surrenders, partial withdrawals, routine withdrawals of
charges, or requests for other transactions under Policies (collectively,
"Policy transactions").
(d) If AVIF provides materially incorrect Share net asset value
information, Glenbrook 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 Glenbrook. Materiality shall be determined in accordance with standards
established by AVIF as provided in Schedule B, attached hereto and incorporated
herein. Schedule B may be modified by AVIF as approved by Glenbrook, provided
that such approval shall not be unreasonably withheld in
3
consideration of (1) AVIF's need to comply with any SEC rulings, regulations or
interpretations, (2) AVIF's desire to have standards consistent with those of
other mutual funds advised by A I M Advisors, Inc. or its affiliates, and (3)
AVIF's desire to conform to general industry practices.
2.2 TIMELY PAYMENTS.
Glenbrook 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 Glenbrook 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 calendar days after the date the order is placed in order to enable
Glenbrook 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 and redemption orders that result from Policy
transactions and that Glenbrook 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), Glenbrook
shall be the designated agent of AVIF for receipt of orders relating to Policy
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 a.m. Central time on the next following Business Day or such later time
computed in accordance with Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by Glenbrook 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 promptly to Glenbrook of any income dividends or
capital gain distributions payable on the Shares of any Fund. Glenbrook 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
Glenbrook 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. Glenbrook reserves the right to
revoke this election and to receive all such income dividends and capital gain
distributions in cash.
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2.5 BOOK ENTRY.
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to Glenbrook. Shares ordered from AVIF will be
recorded in an appropriate title for Glenbrook, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule B, 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.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) AVIF represents and warrants that each Fund is currently qualified and
will continue to qualify as a regulated investment company ("RIC") under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
AVIF will notify Glenbrook 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.
(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 Glenbrook 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.
5
(c) Glenbrook agrees that if the Internal Revenue Service ("IRS") asserts
in writing in connection with any governmental audit or review of Glenbrook or,
to Glenbrook's knowledge, of any Participant, that any Fund has failed to comply
with the diversification requirements of section 817(h) of the Code or Glenbrook
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 to so
comply with section 817(h) (hereinafter respectively referred to in this
paragraph (c) as "failure" or "alleged failure"):
(i) Glenbrook shall promptly notify AVIF of such assertion or potential
claim;
(ii) Glenbrook shall consult with AVIF as to how to minimize any liability
that may arise as a result of such failure or alleged failure;
(iii) Glenbrook shall 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,
PROVIDED that Glenbrook shall not be required to make any such
demonstration of inadvertence unless AVIF represents or provides an opinion
of counsel, which representation or opinion shall be reasonably
satisfactory to Glenbrook, to the effect that a reasonable basis exists
for making such a demonstration;
(iv) Glenbrook shall permit AVIF, its affiliates and their legal and
accounting advisors to attend, advise and otherwise assist Glenbrook (which
assistance Glenbrook shall consider and/or accept in good faith) with
respect to 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 that Glenbrook shall control,
in good faith, the conduct of such conferences, discussions, proceedings,
or contests or appeals thereof;
(v) any written materials to be submitted by Glenbrook 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 Glenbrook to AVIF (together with any
supporting information or analysis) at least ten (10) business days, or
such shorter period to which the Parties hereto may from time to time
agree, prior to the day on which such proposed materials are to be
submitted and (b) shall not be submitted by Glenbrook to any such person
without the express written consent of AVIF which shall not be unreasonably
withheld;
(vi) Glenbrook shall provide AVIF or its affiliates and their accounting
and legal advisors with such cooperation as AVIF shall reasonably request
(including, without limitation, by
6
providing AVIF and its accounting and legal advisors with copies of any relevant
books and records (or portions thereof) of Glenbrook reasonably requested by or
on behalf of AVIF) 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) Glenbrook 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 Glenbrook shall not be required, after
exhausting all administrative remedies, to appeal any adverse IRS or
judicial decision unless AVIF or its affiliates shall have provided an
opinion of counsel approved by Glenbrook, which approval shall not be
unreasonably withheld, to the effect that a reasonable basis exists for
taking such appeal (or, in the case of an appeal to the United States
Supreme Court, that Glenbrook should be more likely than not to prevail on
such appeal), and PROVIDED FURTHER that each Party shall bear one-half of
the expenses of any judicial appeal; and
(viii) AVIF and its affiliates shall have no liability as a result of such
failure or alleged failure if Glenbrook 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, Glenbrook may,
in its discretion, authorize AVIF or its affiliates to act in the name of
Glenbrook 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 Glenbrook have liability resulting
from AVIF's refusal to accept the proposed settlement or compromise with respect
to any failure 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.
(d) Glenbrook represents and warrants that the Policies currently are and
will be treated as annuity, endowment, or life insurance contracts under
applicable provisions of the Code and that it will use its best efforts to
maintain such treatment; Glenbrook will notify AVIF immediately upon having a
reasonable basis for believing that any of the Policies have ceased to be so
treated or that they might not be so treated in the future.
(e) Glenbrook 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. Glenbrook will use its best efforts to continue to meet such
definitional
7
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 and AIM will use their best efforts to comply with any applicable
state insurance laws or regulations, to the extent specifically requested in
writing by Glenbrook.
(b) Glenbrook 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 Illinois 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 Section 245.21 of the Illinois
Insurance Code and the regulations thereunder, and (iii) the Policies 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.
(d) AIM represents and warrants that it is a Delaware corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has full power, authority, and legal right to execute, deliver, and
perform its duties and comply with its obligations under this Agreement.
(e) The Underwriter represents and warrants that it is a Delaware
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has full power, authority, and legal right to
execute, deliver, and perform its duties and comply with its obligations under
this Agreement.
4.3 SECURITIES LAWS.
(a) Glenbrook and the Underwriter represent and warrant that (i) interests
in each Account pursuant to the Policies will be registered under the 1933 Act
to the extent required by the 1933 Act, (ii) the Policies 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 Illinois 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
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Account's 1933 Act registration statement relating to the Policies, 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) Glenbrook
will amend the registration statement for its Policies 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 Policies 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 and AIM represent and warrant 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 Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder.
(c) AVIF will 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.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF and/or AIM will immediately notify Glenbrook 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, (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
Policies issued or to be issued by Glenbrook. 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) Glenbrook and the Underwriter 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
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respect to each Account's registration statement under the 1933 Act relating to
the Policies or each Account Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or Account Prospectus, (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
Policies, 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. Glenbrook 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 GLENBROOK OR THE UNDERWRITER TO PROVIDE DOCUMENTS; INFORMATION ABOUT
AVIF.
(a) Glenbrook or the Underwriter will provide to AVIF or its designated
agent at least one 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 Policies,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) The Underwriter will provide to AVIF or its designated agent with at
least one complete copy of each piece of sales literature or other promotional
material not prepared by AVIF or its affiliates, 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 its investment adviser as the entity to receive such sales
literature, until such time as AVIF appoints another designated agent by giving
notice to Glenbrook in the manner required by Section 9 hereof.
(c) Neither Glenbrook, the Underwriter, nor any of their respective
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 Policies 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 sales literature or other promotional material approved by AVIF, except
with the express written permission of AVIF.
10
(d) Glenbrook and the Underwriter 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
Policies (I.E., information that is not intended for distribution to
Participants or offerees) ("broker only materials") is so used, and neither AVIF
nor any of its affiliates shall be liable for any losses, damages or expense
relating to the improper use of such broker only materials.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT GLENBROOK AND THE
UNDERWRITER.
(a) AVIF will provide to Glenbrook at least one complete copy of all SEC
registration statements, AVIF Prospectuses, reports, any preliminary and final
proxy material, applications for exemptions, 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 Glenbrook or the Underwriter camera ready or
computer diskette copies of all AVIF Prospectuses, proxy materials, periodic
reports to shareholders and other materials required by law to be sent to
Participants who have allocated any Policy value to a Fund. AVIF will provide
such copies to Glenbrook or the Underwriter in a timely manner so as to enable
Glenbrook or the Underwriter, as the case may be, to print and distribute such
materials within the time required by law to be furnished to Participants.
(c) AIM will provide to Glenbrook or its designated agent with at least
one complete copy of each piece of sales literature or other promotional
material in which Glenbrook, the Underwriter or any of their respective
affiliates is named, or that refers to the Policies, at least 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 Glenbrook or its designated
agent objects to such use within 10 Business Days after receipt of such material
or such shorter period as the Parties hereto may, from time to time, agree upon.
Glenbrook 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.
(d) Neither AVIF nor any of its affiliates will give any information or
make any representations or statements on behalf of or concerning Glenbrook, the
Underwriter, each Account, or the Policies other than (i) the information or
representations contained in the registration statement, including each Account
Prospectus contained therein, relating to the Policies, as such registration
statement and Account Prospectus may be amended from time to time; or (ii) in
reports or voting instruction materials for each Account; or (iii) in sales
literature or other promotional material approved by Glenbrook or its
affiliates, except with the express written permission of Glenbrook.
11
(e) AIM shall adopt and implement procedures reasonably designed to ensure
that information concerning Glenbrook, the Underwriter, and their respective
affiliates that is intended for use only by brokers or agents selling the
Policies (I.E., information that is not intended for distribution to
Participants or offerees) ("broker only materials") is so used, and neither
Glenbrook, the Underwriter, nor any of their respective affiliates shall be
liable for any losses, damages or expense relating to the improper use of such
broker only materials.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
AVIF has applied for an order from the SEC 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 life insurance contracts, separate accounts
of insurance companies unaffiliated with Glenbrook, and trustees 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, if and only if AVIF implements Mixed
and Shared Funding, pursuant to such an exemptive order or otherwise. AVIF
hereby notifies Glenbrook that, in the event that AVIF implements Mixed and
Shared Funding, it may be appropriate to include in the prospectus pursuant to
which a Policy is offered disclosure regarding the potential risks of Mixed and
Shared Funding.
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") 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 45 days if the vacancy or vacancies may
be filled by the Board; (b) for a period of 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
12
insurance companies utilizing AVIF ("Participating Insurance Companies"),
including each Account. Glenbrook 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; or
(f) a decision by a Participating Insurance Company to disregard the
voting instructions of Participants.
Consistent with the SEC's requirements in connection with exemptive orders
of the type referred to in Section 5.1 hereof, Glenbrook 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
Glenbrook to disregard voting instructions 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, Glenbrook 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
13
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) 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 Glenbrook's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, Glenbrook 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 months after AVIF
gives notice to Glenbrook that this provision is being implemented, and until
such withdrawal AVIF shall continue to accept and implement orders by Glenbrook
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 Glenbrook conflicts with the
majority of other state regulators, then Glenbrook will withdraw each Account's
investment in AVIF within six months after AVIF's Board of Directors informs
Glenbrook that it has determined that such decision has created a material
irreconcilable conflict (after consideration of the interests of all
Participants), and until such withdrawal AVIF shall continue to accept and
implement orders by Glenbrook for the purchase and redemption of Shares of AVIF.
(d) Glenbrook 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.
(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 Policies.
Glenbrook will not be required by the terms hereof to establish a new funding
medium for any Policies if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
14
5.5 NOTICE TO GLENBROOK.
AVIF will promptly make known in writing to Glenbrook 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.
Glenbrook 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 application filed with 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 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 Policies, 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 REQUIREMENTS FOR OTHER INSURANCE COMPANIES.
AVIF will require that each Participating Insurance Company 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.
15
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 AVIF or Glenbrook upon the approval by (i) a majority
of the Disinterested Directors or (ii) a majority vote of the Shares of the
affected Fund that are held in the corresponding Subaccount of an Account
(pursuant to the procedures set forth in Section 10 of this Agreement for voting
Shares in accordance with Participant instructions); or
(b) at the option of AVIF or AIM upon institution of formal proceedings
against Glenbrook or its affiliates by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding Glenbrook's obligations under
this Agreement or related to the sale of the Policies, 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 Glenbrook 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, Glenbrook
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 Glenbrook, 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 Policies issued or to be issued
by Glenbrook; or
(e) upon termination of the corresponding Subaccount's investment in the
Fund pursuant to Section 5 hereof; or
(f) at the option of Glenbrook if the Fund ceases to qualify as a RIC
under Subchapter M of the Code or under successor or similar provisions, or if
Glenbrook reasonably believes that the Fund may fail to so qualify;
16
(g) at the option of Glenbrook if the Fund fails to comply with Section
817(h) of the Code or with successor or similar provisions, or if Glenbrook
reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF or AIM if the Policies issued by Glenbrook 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 the Policies 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.
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
Section 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
Section 6.1(b) or Section 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
Section 6.1(d), Section 6.1(f), Section 6.1(g), Section 6.1(h) or Section 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.
6.3 FUNDS TO REMAIN AVAILABLE.
Except (a) as necessary to implement Participant-initiated transactions,
(b) as required by state insurance laws or regulations, (c) as required pursuant
to Section 5 of this Agreement, or (d) with respect to any Fund as to which this
Agreement has terminated pursuant to Section 6.1 hereof, Glenbrook shall not (i)
redeem AVIF Shares attributable to the Policies (as opposed to AVIF Shares
attributable to Glenbrook's assets held in each Account), or (ii) prevent
Participants from allocating
17
payments to or transferring amounts from a Fund that was otherwise available
under the Policies, until six (6) months after Glenbrook shall have notified
AVIF of its intention to do so and until 36 full calendar months shall have
expired from the date on which an Account first invested in any Fund.
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 Glenbrook 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 Policies in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the written
consent of each other Party.
18
SECTION 9. NOTICES
Notices and communications required or permitted by Section 2 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:
Glenbrook Life and Annuity Company
0000 Xxxxxxx Xxxx, Xxxxx X0X
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx Xxxxxxx, Esq.
Allstate Life Financial Services, Inc.
0000 Xxxxxxx Xxxx, Xxxxx X0X
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxx Xxxxxxx, Esq.
AIM Variable Insurance Funds, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
A I M Distributors, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof,
Glenbrook 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. Glenbrook will vote Shares in
accordance with timely instructions received from Participants.
19
Glenbrook will vote Shares that are (a) not attributable to Participants 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. Neither Glenbrook 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, provided,
however, that AVIF acknowledges that Glenbrook may disregard Participant voting
instructions to the extent permitted by Rules 6e-2 and 6e-3(T) under the 1940
Act. Neither Glenbrook nor any of its affiliates will in any way recommend
action in connection with or oppose or interfere such Participants, except with
respect to matters as to which Glenbrook has the right, under Rule 6e-2 or 6e-
3(T) under the 1940 Act, to vote the Shares without regard to voting
instructions from Participants. Glenbrook reserves the right to vote shares
held in any Account in its own right, to the extent permitted by law. Glenbrook
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 or in the manner required by any Mixed and
Shared Funding exemptive order that AVIF may obtain in the future. AVIF will
notify Glenbrook (i) of any changes of interpretations or amendments to any
Mixed and Shared Funding exemptive order it obtains in the future and (ii) of
any proposal to be submitted to shareholders for their approval.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with Glenbrook 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 BY GLENBROOK AND THE UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below,
Glenbrook and the Underwriter each agrees to indemnify and hold harmless AVIF,
its affiliates, and each of their respective directors and officers, and each
person, if any, who controls AVIF or its affiliates within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Section 12.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of Glenbrook) 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, insofar as such losses, claims,
damages, liabilities or actions are related to the sale or acquisition of AVIF's
Shares and:
20
(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 Policies, or sales
literature or advertising for the Policies (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 Glenbrook or the
Underwriter by or on behalf of AVIF for use in any Account's 1933 Act
registration statement, any Account Prospectus, the Policies, or sales
literature or advertising or otherwise for use in connection with the
sale of Policies 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 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 Glenbrook
or the Underwriter and on which such persons have reasonably relied)
or the negligent, illegal or fraudulent conduct of Glenbrook, the
Underwriter 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 Policies 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 by or on behalf of Glenbrook, the
Underwriter 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 Glenbrook or the Underwriter 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
Glenbrook or the Underwriter in this Agreement or arise out of or
result from any other material breach of this Agreement by Glenbrook
or the Underwriter; or
21
(v) arise as a result of failure by the Policies issued by Glenbrook to
qualify as life insurance, endowment, or annuity 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 Glenbrook nor the Underwriter shall be liable under this
Section 12.1 with respect to any losses, 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 Glenbrook nor the Underwriter shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
shall have notified Glenbrook or the Underwriter 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 Glenbrook or the Underwriter of any
such action shall not relieve Glenbrook or the Underwriter from any liability
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this Section 12.1. Except as otherwise provided
herein, in case any such action is brought against an Indemnified Party,
Glenbrook or the Underwriter shall be entitled to participate, at its own
expense, in the defense of such action and Glenbrook or the Underwriter 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 Glenbrook or the Underwriter to such Indemnified
Party of its election to assume the defense thereof, the Indemnified Party will
cooperate fully with Glenbrook and shall bear the fees and expenses of any
additional counsel retained by it, and Glenbrook 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.
12.2 OF GLENBROOK AND THE UNDERWRITER BY AVIF AND AIM.
(a) Except to the extent provided in Sections 12.2(d), 12.2(e) and
12.2(f), below, AVIF and/or AIM, as appropriate, each agrees to indemnify and
hold harmless Glenbrook, the Underwriter, their respective affiliates, and each
of their respective directors and officers, and each person, if any, who
controls Glenbrook, the Underwriter, or their respective affiliates within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 12.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
AVIF and/or AIM, as appropriate) 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, insofar as
22
such losses, claims, damages, liabilities or actions are related to the sale or
acquisition of AVIF's Shares and:
(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 Glenbrook or its affiliates for use in AVIF's 1933 Act
registration statement, AVIF Prospectus, or in sales literature or
advertising (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 registration statement, any Account Prospectus, sales
literature or advertising for the Policies, or any amendment or
supplement to any of the foregoing, not supplied for use therein by or
on behalf of AVIF or its affiliates and on which such persons have
reasonably relied) or the negligent, illegal or fraudulent conduct of
AVIF, its affiliates or persons under their control (including,
without limitation, their employees and "Associated Persons"), 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 Policies, 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 Glenbrook,
the Underwriter, or their respective affiliates by AVIF or AIM
for use in any Account's 1933 Act registration statement, any
Account Prospectus, sales literature or advertising covering the
Policies, or any amendment or supplement to any of the foregoing;
or
(iv) arise as a result of any failure by AVIF or AIM to perform their
respective 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
23
warranty made by AVIF or AIM in this Agreement or arise out of or result from
any other material breach of this Agreement by AVIF or AIM.
(b) Except to the extent provided in Sections 12.2(d), 12.2(e) and 12.2(f)
hereof, AVIF agrees 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, except as set forth in Section 12.2(c) below,
the written consent of AVIF) 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 penalties, rescission charges, liability under state law to Participants
asserting liability against Glenbrook or the Underwriter pursuant to the
Policies, the costs of any ruling and closing agreement or other settlement with
the IRS, and the cost of any substitution by Glenbrook of Shares of another
investment company or portfolio for those of any adversely affected Fund as a
funding medium for each Account that Glenbrook reasonably deems necessary or
appropriate as a result of the noncompliance.
(c) The written consent of AVIF referred to in Section 12.2(b) above shall
not be required with respect to amounts paid in connection with any ruling and
closing agreement or other settlement with the IRS.
(d) AVIF shall not be liable under this Section 12.2 with respect to any
losses, 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 Glenbrook, each Account, the
Underwriter or Participants.
(e) AVIF shall not be liable under this Section 12.2 with respect to any
action against an Indemnified Party unless the Indemnified Party shall have
notified AVIF 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 of any such action shall not relieve AVIF 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
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, with counsel
approved by the Indemnified Party named in the action, which approval shall not
be unreasonably withheld. After notice from AVIF to such Indemnified Party of
AVIF's election to assume the defense thereof, the Indemnified Party will
cooperate fully with AVIF and shall bear the fees and expenses of any additional
counsel retained
24
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.
(f) In no event shall AVIF be liable under the indemnification provisions
contained in this Agreement to any individual or entity, including without
limitation, Glenbrook, the Underwriter, 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 Glenbrook or the Underwriter
hereunder or by any Participating Insurance Company under an agreement
containing substantially similar representations, warranties and covenants; (ii)
the failure by Glenbrook 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 Glenbrook or any Participating
Insurance Company to maintain its variable annuity and/or variable life
insurance contracts (with respect to which any Fund serves as an underlying
funding vehicle) as life insurance, endowment or annuity contracts under
applicable provisions of the Code; provided, however, that the limitation of
liability contained in this paragraph (f) shall not apply if the breach or
failures described in subparagraphs (i), (ii) and (iii), above, by Glenbrook or
any Participating Insurance Company resulted from the failure of AVIF to comply
with the requirements of Subchapter M or Section 817(h) of the Code.
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party referred
to in Section 12.1(c) or 12.2(e) 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.
25
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Maryland 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.
26
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.
By_____________________________________
Title___________________________________
A I M DISTRIBUTORS, INC.
By_____________________________________
Title___________________________________
GLENBROOK LIFE AND ANNUITY COMPANY, on behalf of itself and
its Separate Account A
By_____________________________________
Title___________________________________
ALLSTATE LIFE FINANCIAL SERVICES, INC.
By_____________________________________
Title___________________________________
27
SCHEDULE A
FUNDS AVAILABLE UNDER THE POLICIES
AIM Variable Insurance Funds, Inc.
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Glenbrook Life and Annuity Company Separate Account A
POLICIES FUNDED BY THE SEPARATE ACCOUNTS
Individual and Group Flexible Premium Deferred Variable Annuity Contracts
28
SCHEDULE B
[To be Provided]
29
SCHEDULE C
EXPENSE ALLOCATIONS
DESCRIPTION GLENBROOK AIM
----------- --------- ---
REGISTRATION
Prepare and file Account registration Fund registration
registration statements statements
statements 1
Payment of fees Account fees Fund fees
PROSPECTUSES
Text composition Account Prospectuses Fund Prospectuses
Printing 2 Account Prospectuses Fund Prospectuses
SAIs
Text composition Account SAIs Fund SAIs
Printing Account SAIs Fund SAIs
SUPPLEMENTS (TO
PROSPECTUSES OR
SAIs)
Account Supplements Fund Supplements (UNLESS
Text composition (UNLESS changes relate changes relate only to
only to the Fund) the Account)
Printing Account Supplements Fund Supplements
------------------------
1 Includes all filings and costs necessary to keep
registrations current and effective; including, without
limitation, filing Forms N-SAR and Rule 24f-2 Notices as required
by law.
2 To the extent that documents prepared by Glenbrook and AIM
are printed together, the printing cost shall be allocated in
proportion to the number of pages attributable to each document.
30
DESCRIPTION GLENBROOK AIM
----------- --------- ---
FINANCIAL REPORTS
Preparation Account Reports Fund Reports
Printing 2 Account Reports Fund Reports
MAILING AND DISTRIBUTION 3
To Contractowners Account and Fund
Prospectuses, SAIs,
Supplements and Reports
To Offerees Account and Fund
Prospectuses, SAIs,
Supplements and Reports
PROXIES 4
Text composition, Account and Fund Proxies Account and Fund Proxies
printing and mailing where the matters where the matters submitted
of proxy solicitation submitted are solely are solely Fund related
materials and voting Account related
instruction solicitation
materials and
tabulation of proxies
SALES LITERATURE
Preparation Policies (Account) and Fund
Regulatory Filing Account and Fund - state Policies and Fund - except for
insurance regulatory state insurance regulatory
filings only filings
---------------------------------
3 To the extent required by law.
4 When proxy materials are required for both Account and Fund
matters, the costs shall be split proportionately based upon
those materials related solely to the Account and those materials
related solely to the Fund. The cost with respect to joint
materials shall be allocated evenly between Glenbrook and AIM.
31
DESCRIPTION GLENBROOK AIM
----------- --------- ---
OTHER (SALES RELATED)
Contractowner Account related items Fund related items
communication
Distribution Policies Fund
Administration Account (Policies) Fund
32