1
EXHIBIT 9(m)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.,
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
AND
ALLSTATE LIFE FINANCIAL SERVICES, INC.
2
TABLE OF CONTENTS
DESCRIPTION PAGE
Section 1. Available Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Availability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Addition, Deletion or Modification of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 No Sales to the General Public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2. Processing Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Timely Pricing and Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Timely Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Applicable Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Book Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Parties To Cooperate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4. Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Tax Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Insurance and Certain Other Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Notice of Certain Proceedings and Other Circumstances . . . . . . . . . . . . . . . . . . . . . . . . 8
4.5 ALNY or the Underwriter To Provide Documents; Information About AVIF . . . . . . . . . . . . . . . . . 9
4.6 AVIF or AIM To Provide Documents; Information About ALNY and the Underwriter . . . . . . . . . . . . 10
Section 5. Mixed and Shared Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Disinterested Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 Monitoring for Material Irreconcilable Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.4 Conflict Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.5 Notice to ALNY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.6 Information Requested by Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.7 Compliance with SEC Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.8 Requirements for Other Insurance Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 Events of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 Notice Requirement for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
i
3
6.3 Funds To Remain Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.4 Survival of Warranties and Indemnifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.5 Continuance of Agreement for Certain Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7. Parties To Cooperate Respecting Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 8. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 10. Voting Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 11. Foreign Tax Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 12. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
12.1 Of AVIF and AIM by ALNY and the Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
12.2 Of ALNY and the Underwriter by AVIF and AIM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
12.3 Effect of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.4 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 13. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 14. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 15. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 16. Rights Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 17. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SCHEDULE A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SCHEDULE B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SCHEDULE C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ii
4
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of October,
1996 ("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); A I M Distributors, Inc., a Delaware corporation ("AIM");
Allstate Life Insurance Company of New York, a New York life insurance
company ("ALNY"), 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 is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, AIM currently serves as the distributor for the Shares; and
WHEREAS, ALNY 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
1
5
WHEREAS, ALNY will serve as the depositor of the Accounts, each of
which is registered as a unit investment trust investment company under the
1940 Act (or exempt therefrom), and the security interests deemed to be issued
by the Accounts under the Policies will be registered as securities under the
1933 Act (or exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, ALNY 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; and
WHEREAS, the Underwriter is a broker-dealer registered with the SEC
under the 1934 Act and a member in good standing of the NASD; and
WHEREAS, the Underwriter intends to enter into Selling Group
Agreements with entities that may legally sell the Policies (the "Selling Group
Members"); and
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 ALNY 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.
2
6
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 ALNY 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) ALNY 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. ALNY will perform such Account processing the same Business Day, and
will place corresponding orders to purchase or redeem Shares with AVIF by 9:00
a.m. Central Time the following Business Day; provided, however, that AVIF
shall provide additional time to ALNY 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 ALNY.
(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 ALNY and of redemption proceeds by AVIF, ALNY 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, ALNY 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 ALNY. Materiality and reprocessing cost reimbursement shall be determined
in accordance with standards established by the parties as provided in Schedule
B, attached hereto and incorporated herein.
2.2 TIMELY PAYMENTS.
ALNY 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.
3
7
AVIF will wire payment for net redemptions to an account designated by ALNY by
1:00 p.m. Central Time on the same day as the Order is placed, to the extent
practicable, but in any event within five (5) calendar days after the date the
order is placed in order to enable ALNY 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 ALNY 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), ALNY
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 9:00 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 ALNY 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 ALNY of any income dividends or
capital gain distributions payable on the Shares of any Fund. ALNY 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
ALNY 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. ALNY reserves the right to revoke
this election and to receive all such income dividends and capital gain
distributions in cash.
2.5 BOOK ENTRY.
Issuance and transfer of AVIF Shares will be by book entry only.
Stock certificates will not be issued to ALNY. Shares ordered from AVIF will
be recorded in an appropriate title for ALNY, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached
hereto and made a part hereof, each Party will bear all expenses incident to
its performance under this Agreement.
4
8
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 ALNY 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 ALNY 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.
(c) ALNY agrees that if the Internal Revenue Service ("IRS")
asserts in writing in connection with any governmental audit or review of ALNY
or, to ALNY's knowledge, of any Policy owner, annuitant or participant under
the Policies (collectively, "Participants"), that any Fund has failed to comply
with the diversification requirements of section 817(h) of the Code or ALNY
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) ALNY shall promptly notify AVIF of such assertion or
potential claim;
(ii) ALNY shall consult with AVIF as to how to minimize
any liability that may arise as a result of such failure or alleged
failure;
(iii) ALNY 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 ALNY 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 ALNY, to the effect that a
reasonable basis exists for making such a demonstration;
5
9
(iv) ALNY shall permit AVIF, its affiliates and their
legal and accounting advisors to attend, advise and otherwise assist
ALNY (which assistance ALNY 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 ALNY 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 ALNY 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 ALNY 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 ALNY to any such person without the express written consent of AVIF
which shall not be unreasonably withheld;
(vi) ALNY shall provide AVIF or its affiliates and their
accounting and legal advisors with such cooperation as AVIF shall
reasonably request (including, without limitation, by providing AVIF
and its accounting and legal advisors with copies of any relevant
books and records (or portions thereof) of ALNY that may be reasonably
requested by or on behalf of AVIF and that ALNY is permitted to
provide in accordance with applicable law) 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) ALNY 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
ALNY 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 ALNY, 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 ALNY
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 ALNY 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.
6
10
Should AVIF or any of its affiliates refuse to give its written
consent to any compromise or settlement of any claim or liability
hereunder, ALNY may, in its discretion, authorize AVIF or its affiliates
to act in the name of ALNY 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 ALNY 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) ALNY represents and warrants that the Policies currently are
and at all times will be treated as annuity, endowment, or life insurance
contracts under applicable provisions of the Code. ALNY 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, provided that such notice shall be kept confidential during the
period of ALNY's investigation of any such circumstances to the extent
permitted by applicable law.
(e) ALNY represents and warrants that each Account is and at all
times will be 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. ALNY 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 ALNY.
(b) ALNY represents and warrants that (i) it is an insurance
company duly organized, validly existing and in good standing under the laws of
the State of New York and has full corporate power, authority and legal right
to execute, deliver and perform its duties and comply with its obligations
under this Agreement, (ii) it has legally and validly established and maintains
each Account as a segregated asset account under Section 54240 of the New York
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,
7
11
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) ALNY 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 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) ALNY 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 ALNY 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
8
12
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 ALNY.
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) ALNY and/or 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 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. ALNY 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 ALNY OR THE UNDERWRITER TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) ALNY or the Underwriter will provide to AVIF or its designated
agent at least one (1) complete copy of all SEC registration statements,
Account Prospectuses, reports, any preliminary and final voting instruction
solicitation material, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to each Account or
the 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
at least one (1) 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 ALNY in the manner required by Section 9 hereof.
9
13
(c) Neither ALNY, 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.
(d) ALNY 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 OR AIM TO PROVIDE DOCUMENTS; INFORMATION ABOUT ALNY AND
THE UNDERWRITER.
(a) AVIF will provide to ALNY at least one (1) 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 ALNY 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 ALNY or the Underwriter in a timely manner so as to enable ALNY
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 ALNY or its designated agent at least one
(1) complete copy of each piece of sales literature or other promotional
material in which ALNY, the Underwriter or any of their respective affiliates
is named, or that refers to the Policies, 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 ALNY 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. ALNY 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 ALNY, 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
10
14
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 ALNY or its affiliates,
except with the express written permission of ALNY.
(e) AIM shall adopt and implement procedures reasonably designed to
ensure that information concerning ALNY, 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
ALNY, 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 ALNY, 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 ALNY 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 forty-five (45) days if the vacancy or
vacancies may be filled by the Board; (b) for a period of sixty (60) days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
AVIF agrees that its Board of Directors will monitor for the existence
of any material irreconcilable conflict between the interests of the
participants in all separate accounts of life insurance companies utilizing
AVIF ("Participating Insurance Companies"), including each Account
11
15
and participants on all qualified retirement and pension plans investing in
AVIF ("Participating Plans"). ALNY agrees to inform the Board of Directors of
AVIF of the existence of or any potential for any such material irreconcilable
conflict of which it is aware. The concept of a "material irreconcilable
conflict" is not defined by the 1940 Act or the rules thereunder, but the
Parties recognize that such a conflict may arise for a variety of reasons,
including, without limitation:
(a) an action by any state insurance or other regulatory
authority;
(b) a change in applicable federal or state insurance, tax or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax or
securities regulatory authorities;
(c) an administrative or judicial decision in any relevant
proceeding;
(d) the manner in which the investments of any Fund are being
managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract Participants or by Participants
of different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard
the voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
Consistent with the SEC's requirements in connection with exemptive
orders of the type referred to in Section 5.1 hereof, ALNY 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 ALNY 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, ALNY will, if it is a
Participating Insurance Company for which a material irreconcilable conflict is
relevant, at its own expense and to the extent reasonably practicable (as
determined by a majority of the Disinterested Directors), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict,
which steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of
the Accounts from AVIF or any Fund and reinvesting
such assets in a different investment medium,
including another Fund of AVIF, or submitting the
question whether such segregation should be
implemented to a vote of all affected Participants
and,
12
16
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
ALNY's decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, ALNY may be
required, at AVIF's election, to withdraw each Account's investment in AVIF or
any Fund. No charge or penalty will be imposed as a result of such withdrawal.
Any such withdrawal must take place within six (6)months after AVIF gives
notice to ALNY that this provision is being implemented, and until such
withdrawal AVIF shall continue to accept and implement orders by ALNY 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 ALNY conflicts
with the majority of other state regulators, then ALNY will withdraw each
Account's investment in AVIF within six (6) months after AVIF's Board of
Directors informs ALNY 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 ALNY for the purchase and redemption of Shares of AVIF.
(d) ALNY 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.
ALNY 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.
5.5 NOTICE TO ALNY.
AVIF will promptly make known in writing to ALNY 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.
13
17
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
ALNY 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.
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 ALNY 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 ALNY or its affiliates by the NASD, the SEC, any state
insurance regulator or any other regulatory body regarding ALNY's obligations
under this Agreement or related to the sale of the Policies, the
14
18
operation of each Account, or the purchase of Shares, if, in each case, AVIF or
AIM 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 ALNY 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, ALNY
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 ALNY, 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 ALNY; or
(e) upon termination of the corresponding Subaccount's investment
in the Fund pursuant to Section 5 hereof; or
(f) at the option of ALNY if the Fund ceases to qualify as a RIC
under Subchapter M of the Code or under successor or similar provisions, or if
ALNY reasonably believes that the Fund may fail to so qualify;
(g) at the option of ALNY if the Fund fails to comply with Section
817(h) of the Code or with successor or similar provisions (other than by
reason of the failure of the Policies issued by ALNY to qualify as annuity or
life insurance contracts under the Code, or the failure of any Account or
Policy to meet the definition of "segregated asset account" or "variable
contract"; respectively, within the meaning of the Code), or if ALNY reasonably
believes that the Fund may fail to so comply; or
(h) at the option of AVIF or AIM if the Policies issued by ALNY
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.
15
19
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until
the Party terminating this Agreement gives prior written notice to the other
Party to this Agreement of its intent to terminate, and such notice shall set
forth the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions
of Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given
at least six (6) months in advance of the effective date of termination unless
a shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions
of Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given
at least ninety (90) days in advance of the effective date of termination
unless a shorter time is agreed to by the Parties hereto; and
(c) in the event that any termination is based upon the provisions
of Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written
notice shall be given as soon as possible within twenty-four (24) hours after
the terminating Party learns of the event causing termination to be required.
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,
ALNY shall not (i) redeem AVIF Shares attributable to the Policies (as opposed
to AVIF Shares attributable to ALNY's assets held in each Account), or (ii)
prevent Participants from allocating payments to or transferring amounts from a
Fund that was otherwise available under the Policies, until six (6) months
after ALNY shall have notified AVIF of its intention to do so and until
thirty-six (36) full calendar months shall have expired from the date on which
an Account (including the Accounts of Glenbrook Life and Annuity Co.) 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 ALNY may, by written notice shorten
16
20
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; however, ALNY may utilize the services or
employees of its affiliated insurance companies to perform any of its duties
under this Agreement. Any such delegation or allocation of duties shall not be
construed as an impermissible assignment and shall not be considered to limit
any rights of ALNY under this Agreement.
SECTION 9. NOTICES
Notices and communications required or permitted by Section 9 hereof
will be given by means mutually acceptable to the Parties concerned. Each
other notice or communication required or permitted by this Agreement will be
given to the following persons at the following addresses and facsimile
numbers, or such other persons, addresses or facsimile numbers as the Party
receiving such notices or communications may subsequently direct in writing:
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
0000 Xxxxxxx Xxxx, Xxxxx X0X
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx Xxxxxxx, Esq.
17
21
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
Attn: Xxxxx X. Xxxxxx, Esq.
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures established pursuant to
Section 3.1 hereof, ALNY 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. ALNY will
vote Shares in accordance with timely instructions received from Participants.
ALNY will vote Shares that are (a) not attributable to Participants to whom
pass-through voting privileges are extended, or (b) attributable to
Participants, but for which no timely instructions have been received, in the
same proportion as Shares for which said instructions have been received from
Participants. Neither ALNY 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, except with respect to
matters as to which ALNY 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. ALNY reserves the right to vote shares held in any Account in
its own right, to the extent permitted by law. ALNY 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.
18
22
AVIF will notify ALNY (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 Participants for their approval (prior to
any Board of Directors meeting of AVIF at which such proposals are presented).
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with ALNY concerning any decision to
elect or not to elect pursuant to Section 853 of the Code to pass through the
benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF AVIF AND AIM BY ALNY AND THE UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, ALNY and the Underwriter each agrees to indemnify and hold harmless
AVIF, its affiliates (including AIM) except Participants, and each of their
respective directors and officers, and each person, if any, who controls AVIF
or its affiliates (including AIM) 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 ALNY) 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:
(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 ALNY 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
19
23
(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 ALNY or the
Underwriter and on which such persons have reasonably
relied) or the negligent, illegal or fraudulent
conduct of ALNY, 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 or AIM by or on behalf
of ALNY, 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 ALNY 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
ALNY or the Underwriter in this Agreement or arise
out of or result from any other material breach of
this Agreement by ALNY or the Underwriter; or
(v) arise as a result of failure by the Policies issued
by ALNY 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 ALNY 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 ALNY nor the Underwriter shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless
AVIF or AIM shall have notified ALNY
20
24
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 ALNY or the Underwriter of any such action shall not relieve
ALNY 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, ALNY or the Underwriter shall be entitled
to participate, at its own expense, in the defense of such action and ALNY 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 ALNY or the Underwriter
to such Indemnified Party of its election to assume the defense thereof, the
Indemnified Party will cooperate fully with ALNY and shall bear the fees and
expenses of any additional counsel retained by it, and ALNY 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 ALNY 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, to the extent permitted by law, AVIF and/or AIM each agrees
to indemnify and hold harmless ALNY, the Underwriter, their respective
affiliates, and each of their respective directors and officers, and each
person, if any, who controls ALNY, 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) 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:
(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 ALNY 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
21
25
(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 ALNY, 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 (including, but not limited to, the
provision of correct net asset value) 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 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(c), 12.2(d) and
12.2(e) 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, 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 ALNY 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 ALNY of Shares of another investment
company or portfolio for those of any adversely affected Fund as a
22
26
funding medium for each Account that ALNY reasonably deems necessary or
appropriate as a result of the noncompliance.
(c) 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 ALNY, each Account, the
Underwriter or Participants.
(d) 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 by it, and AVIF will not be liable to such
Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in connection
with the defense thereof, other than reasonable costs of investigation.
(e) In no event shall AVIF be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including
without limitation, ALNY, 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 ALNY or the Underwriter
hereunder or by any Participating Insurance Company under an agreement
containing substantially similar representations, warranties and covenants;
(ii) the failure by ALNY 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 ALNY 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 (e) shall not apply if the breach or failures
described in subparagraphs (i), (ii) and (iii), above, by ALNY 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.
23
27
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12.1(c) or 12.2(d) above of participation in or control
of any action by the Indemnifying Party will in no event be deemed to be an
admission by the Indemnifying Party of liability, culpability or
responsibility, and the Indemnifying Party will remain free to contest
liability with respect to the claim among the Parties or otherwise.
12.4 SUCCESSORS.
A successor by law of any Party shall be entitled to the benefits of
the indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with 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.
24
28
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: /s/ XXXXXX X. XXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxx
-------------------------------------
Title: President
------------------------------------
A I M DISTRIBUTORS, INC.
By: /s/ X.X. XXXXXXXXXX
------------------------------------
Name: X.X. Xxxxxxxxxx
-------------------------------------
Title: Sr. V.P.
------------------------------------
ALLSTATE LIFE INSURANCE COMPANY OF
NEW YORK, on behalf of itself and its
Separate Accounts as provided in Schedule A
By: /s/ XXXX XXXXXX
------------------------------------
Name: Xxxx Xxxxxx
-------------------------------------
Title: AVP
------------------------------------
ALLSTATE LIFE FINANCIAL SERVICES, INC.
By: /s/ XXXXXX X. XXXXX
---------------------------------------
Name: Xxxxxx Xxxxx
-------------------------------------
Title: President
------------------------------------
25
29
SCHEDULE A
FUNDS AVAILABLE UNDER THE POLICIES
AIM Variable Insurance Funds, Inc.
AIM V.I. Capital Appreciation Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Allstate Life Insurance Company of New York Separate Account A
POLICIES FUNDED BY THE SEPARATE ACCOUNTS
Individual and Group Flexible Premium Deferred Variable Annuity
Contracts
26
30
SCHEDULE B
AIM'S PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net
asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered
immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following
thresholds are applied:
a. If the amount of the difference in the erroneous net asset
value and the correct net asset value is less than .5% of the
correct net asset value, AIM will reimburse the affected Fund
to the extent of any loss resulting from the error. No other
adjustments shall be made.
b. If the amount of the difference in the erroneous net asset
value and the correct net asset value is .5% of the correct
net asset value or greater, then AIM will determine the impact
of the error to the affected Fund and shall reimburse such
Fund (and/or ALNY, as appropriate) to the extent of any loss
resulting from the error. To the extent that an overstatement
of net asset value per share is detected quickly and ALNY has
not mailed redemption checks to Participants, ALNY and AIM
agree to examine the extent of the error to determine the
feasibility of reprocessing such redemption transaction (for
purposes of reimbursing the Fund to the extent of any such
overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant
to paragraph (b), above, AIM shall reimburse ALNY for ALNY's reprocessing costs
in the amount of $3.00 per contract affected by $10 or more.
The Pricing Policies described herein may be modified by AVIF as approved by
its Board of Directors. AIM agrees to use its best efforts to notify ALNY at
least five (5) days prior to any such meeting of the Board of Directors of AVIF
to consider such proposed changes.
27
31
SCHEDULE C
EXPENSE ALLOCATIONS
----------------------------------------------------------------------------------------------------
DESCRIPTION ALNY AIM/AVIF
----------------------------------------------------------------------------------------------------
Registration
Prepare and file Account registration statements Fund registration statements
registration statements(1)
Payment of fees Account fees Fund fees
----------------------------------------------------------------------------------------------------
Prospectuses
Typesetting Account Prospectuses Fund Prospectuses
Printing(2) Account Prospectuses Fund Prospectuses
----------------------------------------------------------------------------------------------------
SAIs
Typesetting Account SAIs Fund SAIs
Printing Account SAIs Fund SAIs
----------------------------------------------------------------------------------------------------
Supplements (to Prospectuses
or SAIs)
Typesetting and Printing Account Supplements (unless changes Fund Supplements (unless changes
relate only to the Fund) relate only to the Account)
Fund Supplements (for changes that Account Supplements (for changes
relate only to Account) that relate only to Fund)
----------------------------------------------------------------------------------------------------
------------------------------
(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 ALNY and AIM are
printed together, the printing cost shall be allocated in proportion
to the number of pages attributable to each document.
28
32
----------------------------------------------------------------------------------------------------
DESCRIPTION ALNY AIM/AVIF
----------------------------------------------------------------------------------------------------
Financial Reports
Typesetting Account Reports Fund Reports
Printing(2) Account Reports Fund Reports
----------------------------------------------------------------------------------------------------
Mailing and Distribution(3)
To Contract owners Account and Fund Prospectuses, Supplements (for which AIM/AVIF is
SAIs, Supplements (for which ALNY responsible to typeset and print)
is responsible to typeset and
print) and Reports
Supplements (for which ALNY is Account and Fund Prospectuses,
To Offerees responsible to typeset and print) SAIs, Supplements (for which
AIM/AVIF is responsible to typeset
and print) and Reports
----------------------------------------------------------------------------------------------------
Proxies(4)
Typesetting, printing and Account and Fund Proxies where the Account and Fund Proxies where the
mailing of proxy solicitation matters submitted are solely matters submitted are solely Fund
materials and voting Account related related
instruction solicitation
materials and tabulation of
proxies to Participants
----------------------------------------------------------------------------------------------------
------------------------------
(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 ALNY and AIM.
29
33
----------------------------------------------------------------------------------------------------
DESCRIPTION ALNY AIM/AVIF
----------------------------------------------------------------------------------------------------
Other (Sales Related)
Contract owner Account related items Fund related items
communication
Distribution Policies
Administration Account (Policies)
----------------------------------------------------------------------------------------------------
30
