EXHIBIT h(9)
FUND PARTICIPATION AGREEMENT
Aetna Life Insurance and Annuity Company (the "Company"), and Aetna
Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced
VP, Inc., Aetna GET Fund, on behalf of each of its series, Aetna Generation
Portfolios, Inc., on behalf of each of its series, and Aetna Variable
Portfolios, Inc., on behalf of each of its series ("Funds"), and Aeltus
Investment Management, Inc. ("Aeltus" or "Adviser") hereby agree to an
arrangement whereby the Funds shall be made available to serve as underlying
investment media for Variable Annuity Contracts ("Contracts") to be issued by
the Company.
1. Establishment of Account.
The Company represents that it has established Variable Annuity
Accounts B, C and D and Variable Life Account B and may establish such
other accounts as may be set forth in Schedule A attached hereto (as
may be amended from time to time with the mutual consent of the parties
hereto) (the "Accounts"), each of which is a separate account
registered under the Investment Company Act of 1940 (except for such
accounts for which no registration is required), to serve as investment
vehicles for the Contracts. Each Contract provides for the allocation
of net amounts received by the Company to an Account for investment in
the shares of one of more specified open-end management investment
companies available through that Account as underlying investment
media. Selection of a particular investment management company and
changes therein from time to time are made by the participant or
Contract owner, as applicable under a particular Contract.
2. Pricing Information; Orders; Settlement.
(a) Each Fund will make shares available to be purchased by the
Company, and will accept redemption orders from the Company,
on behalf of each Account at the net asset value applicable to
each order on those days on which the Fund calculates its net
asset value (a "Business Day"). Fund shares shall be purchased
and redeemed in such quantity and at such times as determined
by the Company to be necessary to meet the requirements of
those Contracts for which the Fund serves as underlying
investment media, provided, however, that the Board of
Directors of the Fund (hereinafter the "Directors") may, upon
reasonable notice to the Company, refuse to sell shares of any
Fund to any person, or suspend or terminate the offering of
shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole
discretion of the Directors acting in good faith and in light
of their fiduciary duties under federal and/or any applicable
state laws, necessary in the best interests of the
shareholders of such Fund.
(b) Each Fund will provide to the Company closing net asset value,
dividend and capital gain information at the close of trading
each day that the New York Stock
Exchange (the "Exchange") is open (each such day a "Business
Day"), and in no event later than 6:30 p.m. eastern time on
such Business Day. The Company will send via facsimile or
electronic transmission to each Fund or its specified agent
orders to purchase and/or redeem Fund shares by 9:30 a.m.
eastern time the following business day. Payment for net
purchases will be wired by the Company to an account
designated by the Fund.
(c) Each Fund hereby appoints the Company as its agent for the
limited purpose of accepting purchase and redemption orders
for Fund shares relating to the Contracts from Contract owners
or participants. Orders from Contract owners or participants
received from any distributor of the Contracts (including
affiliates of the Company) by the Company, acting as agent for
the Fund, prior to the close of the Exchange on any given
business day will be executed by the Fund at the net asset
value determined as of the close of the Exchange on such
Business Day, provided that the Fund receives written (or
facsimile) notice of such order by 9:30 a.m. eastern time on
the next following Business Day. Any orders received by the
Company acting as agent on such day but after the close of the
Exchange will be executed by the Fund at the net asset value
determined as of the close of the Exchange on the next
business day following the day of receipt of such order,
provided that the Fund receives written (or facsimile) notice
of such order by 9:30 a.m. eastern time within two days
following the day of receipt of such order.
(d) Payments for net redemptions of shares of a Fund will be wired
by the Fund to an account designated by the Company. Payments
for net purchases of the Fund will be wired by the Company to
an account designated by the Fund on the same Business Day the
Company places an order to purchase Fund shares. Payments
shall be in federal funds transmitted by wire.
(e) Each party has the right to rely on information or
confirmations provided by the other party (or by any affiliate
of the other party), and shall not be liable in the event that
an error is a result of any misinformation supplied by the
other party. The Company shall assume responsibility as herein
described for any loss to a Fund caused by a cancellation or
correction made to an Instruction by a Plan Representative or
Participant subsequent to the date as of which such
Instruction has been received by the Company and originally
relayed to Aeltus, and the Company will immediately pay such
loss to such Fund upon the Company's receipt of written
notification, with supporting data. Aeltus shall indemnify and
hold the Company harmless, from the effective date of this
Agreement, against any amount the Company is required to pay
to Plans, Plan Representatives, or Participants due to: (i) an
incorrect calculation of a Fund's daily net asset value,
dividend rate, or capital gains distribution rate or (ii)
incorrect or unreasonably late reporting of the daily net
asset value deemed material in accordance with the Fund's
error correction policy, dividend rate, or capital gain
distribution rate, upon written notification by the Company,
with supporting data, to Aeltus.
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(f) The Company agrees to purchase and redeem the shares of the
Funds named in this Agreement or in Schedule B hereof in
accordance with the provisions of each Fund's then-current
prospectus and statement of additional information. The
Company shall not permit any person other than a Contract
owner or Participant to give instructions to the Company which
would require the Company to redeem or exchange shares of a
Fund. This provision shall not be construed to prohibit the
Company from substituting shares of another fund, as permitted
by law.
3. Expenses.
(a) Except as otherwise provided in this Agreement, all expenses
incident to the performance by each respective Fund under this
Agreement shall be paid by that Fund, including the cost of
registration of its shares with the Securities and Exchange
Commission (the "SEC") and in states where required. All
expenses incident to performance by each party of its
respective duties under this Agreement shall be paid by that
party, unless otherwise specified in this Agreement.
(b) The Funds or the Adviser shall provide to the Company periodic
fund reports to shareholders and other materials that are
required by law to be sent to Contract owners. In addition,
the Funds or the Adviser shall provide the Company with a
sufficient quantity of prospectuses, statements of additional
information and any supplements to any of these materials, to
be used in connection with the offerings and transactions
contemplated by this Agreement. In addition, the Funds shall
provide the Company with a sufficient quantity of proxy
material that is required to be sent to Contract owners. The
Adviser shall be permitted to review and approve the typeset
form of such material prior to such printing provided such
material has been provided by the Adviser to the Company
within a reasonable period of time prior to typesetting.
(c) In lieu of the Funds' or Adviser's providing printed copies of
prospectuses, statements of additional information and any
supplements to any of these materials, and periodic fund
reports to shareholders, the Company shall have the right to
request that the Funds transmit a copy of such materials in an
electronic format (Post Script files), which the Company may
use to have such materials printed together with similar
materials of other Account funding media that the Company or
any distributor will distribute to existing or prospective
Contract owners or participants.
4. Representations.
The Company agrees that it and its agents shall not, without the
written consent of a Fund or the Adviser, make representations
concerning the Fund, or its shares except those contained in the then
current prospectuses and in current printed sales literature approved
by or deemed approved by the Fund or the Adviser.
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5. Termination.
This agreement shall terminate as to the sale and issuance of new
Contracts:
(a) at the option of either the Company, the Adviser or with
respect to any Fund, upon sixty days advance written notice to
the other parties;
(b) at the option of the Company, upon one week advance written
notice to the Adviser and to any Fund, if Fund shares are not
available for any reason to meet the requirement of Contracts
as determined by the Company. Reasonable advance notice of
election to terminate shall be furnished by Company;
(c) at the option of either the Company, the Adviser or any Fund,
immediately upon institution of formal proceedings against the
broker-dealer or broker-dealers marketing the Contracts, the
Account, the Company, the Fund or the Adviser by the National
Association of Securities Dealers, Inc. (the "NASD"), the SEC
or any other regulatory body;
(d) upon the determination of the Accounts to substitute for the
shares of a Fund the shares of another investment company in
accordance with the terms of the applicable Contracts. The
Company will give sixty days written notice to the Fund and
the Adviser of any decision to replace the shares of that
Fund;
(e) upon assignment of this Agreement, unless made with the
written consent of all other parties hereto;
(f) if shares of a Fund are not registered, issued or sold in
conformance with Federal law or such law precludes the use of
such shares as an underlying investment medium for Contracts
issued or to be issued by the Company. Prompt notice shall be
given by the appropriate party should such situation occur.
6. Continuation of Agreement.
Termination as the result of any cause listed in Section 5 shall not
affect the Funds' obligation to furnish shares to Contracts then in
force for which such shares serve or may serve as the underlying medium
unless such further sale of Fund shares is prohibited by law or the SEC
or other regulatory body.
7. Advertising Materials; Filed Documents.
(a) Advertising and sales literature with respect to any Fund
prepared by the Company or its agents for use in marketing its
Contracts will be submitted to that Fund or its designee for
review before such material is submitted to any regulatory
body for review. No such material shall be used if the Fund or
its designee reasonably
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objects to such use in writing, transmitted by facsimile
within two business days after receipt of such material.
(b) Each Fund will provide additional copies of its financials as
soon as available to the Company and at least one complete
copy of all registration statements, prospectuses, statements
of additional information, annual and semi-annual reports,
proxy statements and all amendments or supplements to any of
the above that relate to the Fund promptly after the filing of
such document with the SEC or other regulatory authorities. At
the Adviser's request, the Company will provide to the Adviser
at least one complete copy of all registration statements,
prospectuses, statements of additional information, annual and
semi-annual reports, proxy statements, and all amendments or
supplements to any of the above that relate to the Accounts
promptly after the filing of such document with the SEC or
other regulatory authority.
(c) Each Fund or the Adviser will provide via Excel spreadsheet
diskette format or in electronic transmission to the Company
at least quarterly portfolio information necessary to update
Fund profiles within seven business days following the end of
each quarter.
8. Proxy Voting.
(a) The Company shall provide pass-through voting privileges on
shares of a Fund held by the separate accounts to all Contract
owners.
(b) The Company will distribute to Contract owners all proxy
material furnished by any Fund and will vote shares of the
Fund in accordance with instructions received from such
Contract owners. The Company and its agents shall not oppose
or interfere with the solicitation of proxies for shares of a
Fund held for such Contract owners and participants.
9. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Fund
and the Adviser, and their directors, officers, employees,
agents and each person, if any, who controls any Fund or its
Adviser within the meaning of the Securities Act of 1933 (the
"1933 Act") against any losses, claims, damages or liabilities
to which the Fund or any such director, officer, employee,
agent, or controlling person may become subject, under the
1933 Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement, prospectus or sales literature of the
Company 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, or arise out of or as a result of conduct,
statements or
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representations (other than statements or representations
contained in the prospectuses or sales literature of the Fund)
of the Company or its agents, with respect to the sale and
distribution of Contracts for which shares of the Fund are the
underlying investment. The Company will reimburse any legal or
other expenses reasonably incurred by a Fund or any such
director, officer, employee, agent, investment adviser, or
controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon (i) an untrue
statement or omission or alleged omission made in such
Registration Statement or prospectus in conformity with
written materials furnished to the Company by the Fund
specifically for use therein or (ii) the willful misfeasance,
bad faith, or gross negligence by the Fund or Adviser in the
performance of their duties or the Fund's or Adviser's
reckless disregard of obligations or duties under this
Agreement or to the Company, whichever is applicable. This
indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) Each Fund and the Adviser agree to indemnify and hold harmless
the Company and its directors, officers, employees, agents and
each person, if any, who controls the Company within the
meaning of the 1933 Act against any losses, claims, damages or
liabilities to which the Company or any such director,
officer, employee, agent or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in
the Registration Statement, prospectuses or sales literature
of the Fund 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 material fact required to be stated
therein or necessary to make the statements therein not
misleading. Each Fund, as appropriate, will reimburse any
legal or other expenses reasonably incurred by the Company or
any such director, officer, employee, agent, or controlling
person in connection with investigating or defending any such
loss, claim, damage, liability or action: provided, however,
that the Fund will not be liable in any such case to the
extent that any such loss, claims, damage or liability arises
out of or is based upon an untrue statement or omission or
alleged omission made in such Registration Statement or
prospectuses which are in conformity with written materials
furnished to the Fund by the Company specifically for use
therein.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of action, such indemnified party
will, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party of
the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than
under this Section 9. In case any such action is brought
against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate
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therein and, to the extent that it may wish to, assume the
defense thereof, with counsel satisfactory to such indemnified
party, and after notice from the indemnifying party to such
indemnified party of its election to assume the defense
thereof, the indemnifying party will not be liable to such
indemnified party under this Section 9 for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable
costs of investigation.
10. Miscellaneous.
(a) Amendment and Waiver. Neither this Agreement, nor any
provision hereof, may be amended, waived, discharged or
terminated orally, but only by an instrument in writing signed
by all parties hereto.
(b) Notices. All notices and other communications hereunder shall
be given or made in writing and shall be delivered personally,
or sent by telex, facsimile or registered or certified mail,
postage prepaid, return receipt requested, or recognized
overnight courier service to the party or parties to whom they
are directed at the following addresses, or at such other
addresses as may be designated by notice from such party to
all other parties.
To the Company: To the Adviser:
Aetna Life Insurance and Aeltus Investment Management,
Annuity Company Inc.
000 Xxxxxxxxxx Xxxxxx 000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000 Hartford, Connecticut 06103-1205
Attn: Xxxxx X. Xxxxxxx Attn: Xxxxxx X.Xxxxxx
To any Fund:
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: J. Xxxxx Xxx
Any notice, demand or other communication given in a manner prescribed
in this subsection (b) shall be deemed to have been delivered on
receipt.
(c) Successors and Assigns. This agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
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(d) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
agreement, and any party hereto may execute this Agreement by
signing any such counterpart.
(e) Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
(f) Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties hereto and
supersedes all prior agreement and understandings relating to
the subject matter hereof.
(g) Governing Law. This Agreement shall be governed and
interpreted in accordance with the laws of the State of
Connecticut.
(h) It is understood by the parties that this Agreement is not an
exclusive arrangement in any respect.
(i) The terms of this Agreement and the Schedules thereto will be
held confidential by each party except to the extent that
either party or its counsel may deem it necessary to disclose
such terms.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by
their duly authorized officers effective as of the 1st day of May, 1998.
AETNA LIFE INSURANCE AND ANNUITY COMPANY
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
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AETNA VARIABLE FUND
AETNA VARIABLE ENCORE FUND
AETNA INCOME SHARES
AETNA BALANCED VP, INC.
AETNA GET FUND
AETNA GENERATION PORTFOLIOS, INC.
AETNA VARIABLE PORTFOLIOS, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director
AELTUS INVESTMENT MANAGEMENT, INC.
By: /s/ J. Xxxxx Xxx
-----------------------------
Name: J. Xxxxx Xxx
Title: Managing Director, Chief Operating Officer
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SCHEDULE A
(For any future separate accounts - See Section 1)
SCHEDULE B
AETNA VARIABLE FUND
AETNA VARIABLE ENCORE FUND
AETNA INCOME SHARES
AETNA BALANCED VP, INC.
AETNA GET FUND
Series B
Series C
AETNA GENERATION PORTFOLIOS, INC.
Aetna Ascent VP
Aetna Crossroads VP
Aetna Legacy VP
AETNA VARIABLE PORTFOLIOS, INC.
Aetna Value Opportunity VP
Aetna Growth VP
Aetna Small Company VP
Aetna Index Plus Large Cap VP
Aetna High Yield VP
Aetna Real Estate Securities VP
Aetna Mid Cap VP
Aetna Index Plus Mid Cap VP
Aetna Index Plus Small Cap VP
Aetna Index Plus Bond VP
Aetna International VP
