BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.,
AETNA LIFE INSURANCE AND ANNUITY COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
AETNA LIFE INSURANCE AND ANNUITY COMPANY,
AS PRINCIPAL UNDERWRITER
Description
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Section 1. Available Funds............................................... 2
1.1 Availability.................................................... 2
1.2 Addition, Deletion or Modification of Funds..................... 2
Section 2. Processing Transactions....................................... 2
2.1 Timely Pricing and Orders....................................... 2
2.2 Timely Payments ................................................ 3
2.3 Applicable Price ............................................... 3
2.4 Dividends and Distributions .................................... 4
2.5 Book Entry ..................................................... 4
Section 3. Costs and Expenses............................................ 4
3.1 General ........................................................ 4
3.2 Registration ................................................... 4
3.3 Other (Non-Sales-Related) ...................................... 5
3.4 Other (Sales-Related) .......................................... 5
3.5 Parties To Cooperate............................................ 5
Section 4. Legal Compliance.............................................. 5
4.1 Tax Laws......................................................... 5
4.2 Insurance and Certain Other Laws................................ 8
4.3 Securities Laws................................................. 8
4.4 Notice of Certain Proceedings and Other Circumstances........... 9
4.5 LIFE COMPANY To Provide Documents; Information About AVIF...... 10
4.6 AVIF To Provide Documents; Information About LIFE COMPANY...... 11
Section 5. Mixed and Shared Funding..................................... 12
5.1 General ...................................................... 12
5.2 Disinterested Directors........................................ 13
5.3 Monitoring for Material Irreconcilable Conflicts............... 13
5.4 Conflict Remedies.............................................. 14
5.5 Notice to LIFE COMPANY......................................... 15
5.6.Information Requested by Board of Directors.................... 15
5.7 Compliance with SEC Rules...................................... 15
5.8 Other Requirements............................................. 16
2
Section 6. Termination.................................................. 16
6.1 Events of Termination.......................................... 16
6.2 Notice Requirement for Termination............................. 17
6.3 Funds To Remain Available...................................... 17
6.4 Survival of Warranties and Indemnifications.................... 18
Section 7. Parties To Cooperate Respecting Termination.................. 18
Section 8. Assignment................................................... 18
Section 9. Notices...................................................... 18
Section 10. Voting Procedures.......................................... 19
Section 11. Foreign Tax Credits........................................ 20
Section 12. Indemnification............................................. 20
12.1 General ...................................................... 20
12.2 Effect of Notice ............................................. 25
12.3 Successors ................................................... 25
Section 13. Applicable Law.............................................. 25
Section 14. Execution in Counterparts................................... 25
Section 15. Severability................................................ 25
Section 16. Rights Cumulative........................................... 25
Section 17. Headings.................................................... 25
Section 18. Confidentiality............................................. 26
Section 19. Parties to Cooperate........................................ 28
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PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 30th day of June, 1998
("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); A I M Distributors, Inc., a Delaware corporation ("A I
M"), Aetna Life Insurance and Annuity Company, a Connecticut life insurance
company ("LIFE COMPANY"), 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 Aetna Life
Insurance and Annuity Company, a registered broker-dealer, the principal
underwriter of the Contracts ("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 ("Series"), shares
("Shares") of each of which are registered under the Securities Act of 1933, as
amended (the "1933 Act") and are currently sold to one or more separate accounts
of life insurance companies to fund benefits under variable annuity contracts
and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto
as the Parties hereto may amend from time to time (each a "Fund"; reference
herein to "AVIF" includes reference to each Fund, to the extent the context
requires) available for purchase by the Accounts; and
WHEREAS A I M is registered as a broker-dealer with the SEC under the Securities
Exchange Act of 1934 as amended (the "1934 Act") and is a member in good
standing of the National Association of Securities Dealers, Inc. (the "NASD");
and;
WHEREAS, LIFE COMPANY represents that it has established Variable Annuity
Accounts B, C and D and may establish such other accounts as may be set forth in
Schedule A attached hereto and 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 under Connecticut Insurance law, and has registered or will
registered each of the Accounts (except for such Accounts for which no such
registration is required) as a unit investment trust under the Investment
Company Act of 1940 (the "1940 Act"), to serve as an investment vehicle for the
Contracts. Each Contract provides for the allocation of net amounts received by
LIFE COMPANY to an Account for investment in the shares of one or more specified
open-end management investment companies available through that
4
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.
WHEREAS, LIFE COMPANY will be the issuer of certain group and individual
variable annuity contracts and variable life insurance contracts and
Certificates issued to individuals under a group contract (collectively referred
to as "Contracts") which Contracts, if required by applicable law, will be
registered under the 1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds
on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 (" 1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
Section 1. Available Funds
1.1 Availability
(a) AVIF will make Shares of each Fund available to LIFE COMPANY 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.
(b) AVIF represents and warrants that it will give LIFE COMPANY at least 30
days written notice prior to closing any Fund or Series or to limit sales of
Shares of any Fund or Series in any way. In addition, AVIF will use its best
efforts to send any agendas or proposed agendas concerning a closing or
restriction with respect to a Fund to LIFE COMPANY within 24 hours of the
creation of such agenda or proposed agenda.
(c) Notwithstanding the above, if severe market conditions exist which
require immediate action in order to comply with all applicable laws and
regulations or if the continued offering is disadvantageous to the best
interest of the shareholders of the Fund being closed or restricted and it is
disadvantageous to the best interest of the
5
shareholders of the Fund to give 30 days notice, AVIF warrants and
represents that it will give notice within 24 hours of a decision to close
or restrict the offering of a Fund.
1.2 Addition, Deletion or Modification of Funds.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall
include a reference to any such additional Fund. Schedule A, as amended from
time to time, is incorporated herein by reference and is a part hereof.
Section 2. Processing Transactions
2.1 Timely Pricing and Orders.
(a) AVIF or its designated agent will use its best efforts to provide LIFE
COMPANY with the net asset value per Share, dividend and capital gain
information for each Fund by 6:30 p.m. Eastern Time on each Business Day. In the
event such information will not be provided by 6:30.p.m Eastern Time, AVIF will
notify LIFE COMPANY no later than 7:00 p.m. Eastern Time as to when such
information is forthcoming and will grant LIFE COMPANY any additional time it
needs under (b) below. As used herein, "Business Day" shall mean any day on
which (i) the New York Stock Exchange is open for regular trading, (ii) AVIF
calculates the Fund's net asset value, and (iii) LIFE COMPANY is open for
business.
(b) LIFE COMPANY 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. LIFE COMPANY will perform such Account processing the same Business Day,
and will place corresponding orders to purchase or redeem Shares with AVIF by
10:00 a.m. Eastern Time the following Business Day; provided, however, that AVIF
shall provide additional time to LIFE COMPANY in the event that AVIF is unable
to meet the 7:00 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 LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of
redemption proceeds by AVIF, LIFE COMPANY and AVIF shall net purchase and
redemption orders with respect to each Fund and shall transmit one net payment
for all Funds in accordance with Section 2.2 below.
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(d) If AVIF provides materially incorrect Share net asset value information
(as determined under SEC guidelines), LIFE COMPANY 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 LIFE COMPANY.
2.2 Timely Payments.
LIFE COMPANY will wire payment for net purchases to a custodial account
designated by AVIF by 4:00 p.m. Eastern Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment for net
redemptions to an account designated by LIFE COMPANY by 2:00 p.m. Eastern Time
on the same day as the Order is placed, to the extent practicable.
2.3 Applicable Price.
(a) Share purchase payments and redemption orders that result from purchase
payments, premium payments, surrenders and other transactions under Contracts
(collectively, "Contract transactions") and that LIFE COMPANY 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), LIFE COMPANY shall be the designated agent of AVIF for
receipt of orders relating to Contract transactions on each Business Day and
receipt by such designated agent shall constitute receipt by AVIF; provided that
AVIF receives notice of such orders by 10:00 a.m. Eastern Time on the next
following Business Day or such later time as computed in accordance with Section
2.1(b) hereof.
(b) All other Share purchases and redemptions by LIFE COMPANY 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.
LIFE COMPANY hereby elects to reinvest all dividends and capital gains
distributions in additional Shares of the corresponding Fund at the dividend
date net asset values until LIFE COMPANY 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. LIFE
COMPANY reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash.
2.5 Book Entry.
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Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to LIFE COMPANY. Shares ordered from AVIF will
be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
Section 3. Costs and Expenses
3.1 Expenses.
(a) Except as otherwise provided in this Agreement, all expenses incident
to the performance by the Fund under this Agreement shall be paid by AVIF,
including the cost of registration of Fund shares with the Securities and
Exchange Commission (the "SEC") and in states where required. AVIF and A I M
shall pay no fee or other compensation to LIFE COMPANY under this Agreement, and
LIFE COMPANY shall pay no fee or other compensation to AVIF or A I M , except as
provided herein and in Schedule B attached hereto and made a part of this
Agreement as may be amended from time to time with the mutual consent of the
parties hereto. 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) AVIF or A I M shall provide to LIFE COMPANY Post Script files of
periodic fund reports to shareholders and other materials that are required by
law to be sent to Contract owners. In addition, AVIF or A I M shall provide LIFE
COMPANY with a sufficient quantity of its 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, AVIF shall provide LIFE COMPANY with a sufficient quantity of its
proxy material that is required to be sent to Contract owners. A I M shall be
permitted to review and approve the typeset form of such material prior to such
printing provided such material has been provided by A I M to LIFE COMPANY
within a reasonable period of time prior to typesetting.
(c) In lieu of AVIF's or A I M's providing printed copies of prospectuses,
statements of additional information and any supplements to any of these
materials, and periodic fund reports to shareholders, LIFE COMPANY shall have
the right to request that AVIF transmit a copy of such materials (Post Script
files), which LIFE COMPANY may use to have such materials printed together with
similar materials of other Account funding media that LIFE COMPANY or any
distributor will distribute to existing or prospective Contract owners or
participants.
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Section 4. Legal Compliance
4.1 Tax Laws.
(a) AVIF represents and warrants that each Fund is currently qualified as a
regulated investment company ("RIC") under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), and represents that it will use qualify
and maintain qualification of each Fund as a RIC. AVIF will notify LIFE COMPANY
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 and warrants 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 LIFE COMPANY immediately upon having a reasonable basis for
believing that a Fund has ceased to so comply or that a Fund might not so comply
in the future. In the event of a breach of this Section 4.1(b) by AVIF, it will
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Section 1.817-5 of the regulations under the Code.
(c) AVIF and A I M represent and warrant that at all times while this
agreement is in effect, all beneficial interests will be owned by one or more
insurance companies or by any other party permitted under Section 1.817-5(f)(3)
of the Regulations promulgated under the Code or by the successor thereto, or by
any other party permitted under a Revenue Ruling or private letter ruling
granted by the Internal Revenue Service.
(d) LIFE COMPANY agrees that if the Internal Revenue Service ("IRS")
asserts in writing in connection with any governmental audit or review of LIFE
COMPANY or, to LIFE COMPANY's knowledge, of any Participant, that any Fund has
failed to comply with the diversification requirements of Section 817(h) of the
Code or LIFE COMPANY otherwise becomes aware of any facts that could give rise
to any claim against AVIF or its affiliates as a result of such a failure or
alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF of such assertion or
potential claim (subject to the Confidentiality provisions of
Section 18 as to any Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to minimize any
liability that may arise as a result of such failure or alleged
failure;
(iii) LIFE COMPANY shall use its best efforts to minimum any liability of
AVIF or its affiliates resulting from such failure, including,
without limitation, demonstrating, pursuant to Treasury Regulations
Section
9
1.8175(a)(2), to the Commissioner of the IRS that such
failure was inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal
and accounting advisers to participate in any conferences,
settlement discussions or other administrative or judicial
proceeding or contests (including judicial appeals thereof) with
the IRS, any Participant or any other claimant regarding any
claims that could give rise to liability to AVIF or its
affiliates as a result of such a failure or alleged failure;
provided, however, that LIFE COMPANY will retain control of the
conduct of such conferences discussions, proceedings, contests or
appeals;
(v) any written materials to be submitted by LIFE COMPANY 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)), shall be
provided by LIFE COMPANY to AVIF (together with any supporting
information or analysis); subject to the confidentiality
provisions of Section 18, at least seven (7) business days or
such shorter period to which the Parties hereto agree prior to
the day on which such proposed materials are to be submitted;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their
accounting and legal advisers with such cooperation as AVIF shall
reasonably request (including, without limitation, by permitting
AVIF and its accounting and legal advisers to review the relevant
books and records of LIFE COMPANY) in order to facilitate review
by AVIF or its advisers 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) LIFE COMPANY 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
LIFE COMPANY shall not be required to appeal any adverse judicial
decision unless (i) counsel, reasonably agreed to by all Parties,
provide an opinion that there is a reasonable basis for making such
an appeal and (ii) the appeal is limited to a determination as to
whether a Fund is adequately diversified within the meaning of
Section 817(h) of the Internal Revenue Code. In the event an appeal
is made, AVIF and A I M agree to pay LIFE COMPANY for all costs and
expenses incurred in its efforts to carry out the appeal;
10
(viii) AVIF and its affiliates shall have no liability as a result of such
failure or alleged failure if LIFE COMPANY fails to comply with any
of the foregoing clauses (i) through (vii), and such failure could
be shown to have materially contributed to the liability.
Should AVIF or A I M or any of its affiliates refuse to give its written
consent to any compromise or settlement of any claim or liability hereunder,
LIFE COMPANY may, in its discretion, authorize AVIF or its affiliates to act in
the name of LIFE COMPANY 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 LIFE COMPANY have any
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.
(e) LIFE COMPANY represents and warrants that the Contracts currently are
and will be treated as annuity contracts or life insurance contracts under
applicable provisions of the Code and that it will maintain such treatment; LIFE
COMPANY will notify AVIF immediately upon having a reasonable basis for
believing that any of the Contracts have ceased to be so treated or that they
might not be so treated in the near future.
(f) LIFE COMPANY represents and warrants that each Account is a "segregated
asset account" and that interests in each Account are offered exclusively
through the purchase of or transfer into a "variable contract," within the
meaning of such terms under Section 817 of the Code and the regulations
thereunder. LIFE COMPANY will use its best efforts to continue to meet such
definitional requirements, and it will notify AVIF immediately upon having a
reasonable basis for believing that such requirements have ceased to be met or
that they might not be met in the near future.
4.2 Insurance and Certain Other Laws.
(a) AVIF and A I M represent and warrant that they will notify LIFE COMPANY
of any material changes in the operation or diversification of the Funds that
may impact the LIFE COMPANY's compliance with state insurance laws, regulation
or pronouncements.
(b) LIFE COMPANY 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 Connecticut 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
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Section 38a of the Connecticut Insurance Law and the regulations thereunder, and
(iii) the Contracts comply in all material respects with all other applicable
federal and state laws and regulations.
(c) AVIF represents and warrants that (i) 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, (ii) it
has provided to LIFE COMPANY the Shared Funding Exemptive Order issued by the
SEC dated December 6, 1995 (File No. 812-9642), and (iii) the Funds comply in
all material respects with all applicable federal and state laws and
regulations.
4.3 Securities Laws.
(a) LIFE COMPANY represents and warrants that (i) interests in each Account
pursuant to the Contracts will be registered under the 1933 Act to the extent
required by the 1933 Act, (ii) the Contracts will be duly authorized for
issuance and sold in compliance with all applicable federal and state laws;
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and
Connecticut law, (iii) each Account is and will remain registered under the1940
Act, to the extent required by the 1940 Act, (iv) each Account does and will
comply in all material respects with the requirements of the 1940 Act and the
rules thereunder, to the extent required, (v) each Account's 1933 Act
registration statement relating to the Contracts, together with any amendments
thereto, with at all times comply in all material respects with the requirements
of the 1933 Act and the rules thereunder, (vi) LIFE COMPANY will amend the
registration statement for its Contracts under the 1933 Act and for its Accounts
under the 1940 Act from time to time as required in order to effect the
continuous offering of its Contracts or as may otherwise be required by
applicable law, and (vii) each Account Prospectus will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder.
(b) AVIF and A I M 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's Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder.
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(c) AVIF will at its expense register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and to the extent
reasonably deemed advisable by AVIF.
(d) AVIF currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it reserves the right to make such payments in the future. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
AVIF undertakes to have its Board of Directors, a majority of whom are not
"interested" persons of the Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
(e) AVIF represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities having access to
the funds and/or securities of the Fund are and continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund in an amount not less than the minimal coverage as required currently by
Rule 17g-(l) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.
4.4 Notice of Certain Proceedings and Other Circumstances.
(a) AVIF and ADVISER will immediately notify LIFE COMPANY of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to AVIF's registration statement
under the 1933 Act or AVIF Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or AVIF Prospectus that may affect the
offering of Shares of AVIF, (iii) the initiation of any proceedings for that
purpose or for any other purpose relating to the registration or offering of
AVIF's Shares, or (iv) any other action or circumstances-that may prevent the
lawful offer or sale of Shares of any Fund in any state or jurisdiction,
including, without limitation, any circumstances in which (a) such Shares are
not registered and, in all material respects, issued and sold in accordance with
applicable state and federal law, or (b) such law precludes the use of such
Shares as an underlying investment medium of the Contracts issued or to be
issued by LIFE COMPANY. 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) LIFE COMPANY will immediately notify AVIF and ADVISER of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to each Account's registration
statement under the 1933 Act relating to the Contracts or each Account
Prospectus, (ii) any request by the SEC for any amendment to such registration
statement or Account Prospectus that may affect the offering of Shares of AVIF,
(iii) the initiation of any proceedings for that purpose or for any other
purpose relating to the registration or offering of each Account's interests
pursuant to the Contracts, or (iv) any other action or circumstances that may
prevent the
13
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. LIFE COMPANY 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 LIFE COMPANY To Provide Documents: Information About AVIF.
(a) LIFE COMPANY will, upon reasonable request, provide to AVIF or its
designated agent at least one (1) complete copy of all SEC registration
statements, Account Prospectuses, reports, any preliminary and final voting
instruction solicitation material, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate to each
Account or the Contracts, as soon as possible after the filing with the filing
of such document with the SEC or other regulatory authorities.
(b) LIFE COMPANY will provide AVIF or its designated agent at least one (1)
complete copy of each piece of sales literature or other promotional material in
which AVIF or any of its affiliates is named (except "standardized material" as
defined hereafter), at least two (2) business days, or such shorter period as
the Parties hereto may, from time to time, agree upon, prior to its first use.
For purposes of this paragraph, "standardized material" is sales literature or
other promotional material that is not materially different, in format and/or
content, from materials that have previously been reviewed and authorized for
use under the terms of this paragraph. LIFE COMPANY agrees to bear all
responsibility and liability for any error in any standardized material (e.g.,
transposition of numbers) to the extent any information contained therein does
not conform to the information provided to LIFE COMPANY by A I M or AVIF. No
such sales literature or other promotional material shall be used if AVIF or its
designated agent reasonably objects to such use within two (2) business days, or
such shorter period as the Parties hereto may, from time to time, agree upon,
after receipt of such materials. AVIF hereby designates A I M as the entity to
receive such literature, until such time as AVIF appoints another designated
agent by giving notice to LIFE COMPANY in the manner required by Section 9
hereof. LIFE COMPANY will notify AVIF when it is sending material for review for
purposes of confirmation of receipt. AVIF has the right to request subsequent
review of standardized material and it proposed usage.
(c) Neither LIFE COMPANY nor any of its affiliates, will give any
information or make any representations or statements on behalf of or concerning
AVIF or its affiliates in connection with the sale of the Contracts other than
(i) the information or representations contained in the registration statement,
including the AVIF Prospectus contained therein, relating to Shares, as such
registration statement and AVIF Prospectus may be amended from time to time; or
(ii) in reports or proxy materials for AVIF; or (iii) in published reports for
AVIF that are in the public domain and approved by AVIF for distribution; or
(iv) in sales literature or other promotional material approved by AVIF, except
with the express written permission of AVIF.
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(d) LIFE COMPANY shall adopt and implement procedures reasonably designed
to ensure that information concerning AVIF and its affiliates that is intended
for use only by brokers or agents selling the Contracts (i.e., information that
is not intended for distribution to Participants) ("broker only materials") is
so used, and neither AVIF nor any of its affiliates shall e liable for any
losses, damages or expenses relating to the improper use of such broker only
materials.
(e) For the purposes of this Section 4.5, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media, (e.g.,
on-line networks such as the Internet or other electronic messages), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 0000 Xxx.
4.6 AVIF To Provide Documents: Information About LIFE COMPANY.
(a) AVIF wi1l provide to LIFE COMPANY 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 LIFE COMPANY Post Script files for all AVIF
prospectuses and printed copies, in an amount specified by LIFE COMPANY, of AVIF
statements of additional information, proxy materials, periodic reports to
shareholders and other materials required by law to be sent to Participants who
have allocated any Contract value to a Fund. AVIF will provide such copies to
LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, as the case may
be, to print and distribute such materials within the time required by law to be
furnished to Participants.
(c) AVIF will provide to LIFE COMPANY or its designated agent at least one
(1) complete copy of each piece of sales literature or other promotional
material in which LIFE COMPANY, or any of its respective affiliates is named, or
that refers to the Contracts, at least five (5) 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 LIFE COMPANY or its designated agent objects
to such use within five (5) Business Days after receipt of such material or such
shorter period as the Parties hereto may, from time
15
to time, agree upon. LIFE COMPANY 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 LIFE COMPANY,
each Account, or the Contracts other than (i) the information or representations
contained in the registration statement, including each Account Prospectus
contained therein, relating to the Contracts, as such registration statement and
Account Prospectus may be amended from time to time; or (ii) in published
reports for the Account or the Contracts that are in the public domain and
approved by LIFE COMPANY for distribution; or (iii) in sales literature or other
promotional material approved by LIFE COMPANY or its affiliates, except with the
express written permission of LIFE COMPANY.
(e) AVIF shall cause its principal underwriter to adopt and implement
procedures reasonably designed to ensure that information concerning LIFE
COMPANY, and its respective affiliates that is intended for use only by brokers
or agents selling the Contracts (i.e., information that is not intended for
distribution to Participants) ("broker only materials") is so used, and neither
LIFE COMPANY, nor any of its respective affiliates shall be liable for any
losses, damages or expenses relating to the improper use of such broker only
materials.
(f) For purposes of this Section 4.6, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media, (e.g., on-line
networks such as the Internet or other electronic messages), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising under the
NASD rules, the 1933 Act or the 1940 Act.
Section 5. Mixed and Shared Funding
5.1. General.
The SEC has granted an order to AVIF exempting it from certain provisions
of the 1940 Act and rules thereunder so that AVIF may be available for
investment by certain other entities, including, without limitation, separate
accounts funding variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies
16
unaffiliated with LIFE COMPANY, 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 pursuant to such an exemptive order granted to AVIF. AVIF
hereby notifies LIFE COMPANY that, in the event that AVIF implements Mixed and
Shared Funding, it may be appropriate to include in the prospectus pursuant to
which a Contract is offered disclosure regarding the potential risks of Mixed
and Shared Funding.
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, and participants
in all qualified retirement and pension plans investing in AVIF ("Participating
Plans"). LIFE COMPANY 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;
17
(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, LIFE COMPANY 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 LIFE COMPANY 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, LIFE COMPANY will, if it is a
Participating Insurance Company for which a material irreconcilable conflict is
relevant, at its own expense and to the extent reasonably practicable (as
determined by a majority of the Disinterested Directors), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict, which
steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the Accounts from
AVIF or any Fund and reinvesting such assets in a different investment
medium, including another Fund of AVIF, or submitting the question
whether such segregation should be implemented to a vote of all
affected Participants and, as appropriate, segregating the assets of
any particular group (e.g., annuity Participants, life insurance
Participants or all Participants) that votes in favor of such
segregation, or offering to the affected Participants the option of
making such a change; and
(ii) establishing a new registered investment company of the type defined as
a "management company" in Section 4(3) of the 1940 Act or a new
separate account that is operated as a management company.
(b) If the material irreconcilable conflict arises because of LIFE
COMPANY's decision to disregard Participant voting instructions and that
decision represents a minority position or would preclude a majority vote, LIFE
COMPANY 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
18
must take place within six (6) months after AVIF gives notice to LIFE COMPANY
that this provision is being implemented, and until such withdrawal AVIF shall
continue to accept and implement orders by LIFE COMPANY 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 LIFE COMPANY conflicts with the
majority of other state regulators, then LIFE COMPANY will withdraw each
Account's investment in AVIF within six (6) months after AVIF's Board of
Directors informs LIFE COMPANY that it has determined that such decision has
created a material irreconcilable conflict, and until such withdrawal AVIF shall
continue to accept and implement orders by LIFE COMPANY for the purchase and
redemption of Shares of AVIF. No charge or penalty will be imposed as a result
of such withdrawal.
(d) LIFE COMPANY 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 Contracts. LIFE
COMPANY will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
5.5 Notice to LIFE COMPANY.
AVIF will promptly make known in writing to LIFE COMPANY the Board of
Directors' determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
5.6 Information Requested by Board of Directors.
LIFE COMPANY and AVIF (or its investment adviser) will at least annually
submit to the Board of Directors of AVIF such reports, materials or data as the
Board of Directors may reasonably request so that the Board of Directors may
fully carry out the obligations imposed upon it by the provisions hereof or any
exemptive order granted by the SEC to permit Mixed and Shared Funding, and said
reports, materials and data will be submitted at any reasonable time deemed
appropriate by the Board of Directors. All reports received by the Board of
Directors of potential or existing conflicts, and all Board of Directors actions
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies and Participating Plan of a conflict, and determining
whether any proposed action adequately remedies a conflict, will be properly
recorded in
19
the minutes of the Board of Directors or other appropriate records, and such
minutes or other records will be made available to the SEC upon request.
5.7 Compliance with SEC Rules.
If, at any time during which AVIF is serving as an investment medium for
variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding, AVIF agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply with
the terms and conditions of such exemptive relief that is afforded by any of
said rules that are applicable.
5.8 Other Requirements.
AVIF will require that each Participating Insurance Company and
Participating Plan enter into an agreement with AVIF that contains in substance
the same provisions as are set forth in Sections 4.1(b), 4.1(e), 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 6.3 below, this Agreement will terminate as to a Fund:
(a) at the option of either LIFE COMPANY, A I M or the Fund, upon sixty
days advance written notice to the other parties;
(b) at the option of LIFE COMPANY, upon one week advance written notice to
A I M and the Fund, if Fund shares are not available for any reason to
meet the requirement of Contracts as determined by LIFE COMPANY.
(c) at the option of AVIF upon institution of formal proceedings against
LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding LIFE COMPANY's obligations
under this Agreement or related to the sale of the Contracts, the operation of
each Account, or the purchase of Shares, if, in each case, AVIF reasonably
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on the Fund with respect to which the Agreement is to be terminated;
(d) at the option of LIFE COMPANY upon institution of formal proceedings
against AVIF, its principal underwriter, or its investment adviser by the NASD,
the SEC,
20
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, LIFE COMPANY 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 LIFE COMPANY, or the Subaccount corresponding to the Fund with respect to
which the Agreement is to be terminated;
(e) upon the determination of the Accounts to substitute for the Fund's
shares the shares of another investment company in accordance with the terms of
the applicable Contracts. LIFE COMPANY will give 60 days written notice to the
Fund and A I M of any decision to replace the Fund's shares;
(f) upon assignment of this Agreement, unless made with the written consent
of all other parties hereto;
(g) if Fund shares are not registered, issued or sold in conformance with
Federal law or such law precludes the use of Fund shares as an underlying
investment medium for Contracts issued or to be issued by LIFE COMPANY. Prompt
notice shall be given by the appropriate party should such situation occur;
(h) upon termination of the corresponding Subaccount's investment in the
Fund pursuant to Section 5 hereof;
(i) at the option of AVIF if the Contracts issued by LIFE COMPANY 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 Contracts are not
registered, where required, and in all material respects, are not issued or sold
in accordance with any applicable federal state law
(j) upon another Party's material breach of any provision of this
Agreement, provided the breaching party is given five days notice of the breach
and a reasonable opportunity to cure.
6.2 Funds To Remain Available.
Notwithstanding any termination of this Agreement, except for termination
because the Contracts ceased 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), AVIF will, at the option of LIFE
COMPANY, continue to make available additional shares of the Fund pursuant to
the terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without
21
limitation, the owners of the Existing Contracts will be permitted to reallocate
investments in the Fund (as in effect on such date), redeem investments in the
Fund and/or invest in the Fund upon the making of additional purchase payments
under the Existing Contracts. The Parties agree that this Section 6.2 will not
apply to any terminations under Section 5 and the effect of such terminations
will be governed by-Section 5 of this Agreement.
6.3 Survival of Warranties and Indemnifications.
All warranties and indemnifications will survive the termination of this
Agreement to the extent they apply to this Agreement.
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 termination date
speci
fied in the notice of termination. Such steps may include combining the
affected Account with another Account, substituting other mutual fund shares for
those of the affected Fund, or otherwise terminating participation by the
Contracts in such Fund.
Section 8. Assignment
This Agreement may not be assigned by any Party, except with the written consent
of each other Party.
Section 9. Notices
All notices and other communications hereunder shall be given or made in writing
and shall be delivered personally, or sent by telex, telecopier 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.
AIM VARIABLE INSURANCE FUNDS, INC., AND A I M DISTRIBUTORS, INC.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
22
AETNA LIFE INSURANCE AND ANNUITY COMPANY (LIFE COMPANY
and UNDERWRITER)
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. XxXxxx, Counsel
Any notice, demand or other communication given in a manner prescribed in this
section shall be deemed to have been delivered on receipt.
Section 10. Voting Procedures
(a) LIFE COMPANY shall provide pass-through voting privileges on Fund shares
held by registered separate accounts to all Contract owners and participants
or Certificate Holders to the extent the SEC continues to interpret the 1940
Act as requiring such privileges. LIFE COMPANY shall ensure that each
registered Separate Account calculates voting privileges in a manner
consistent with other insurance companies whose registered separate accounts
invest in the Fund Shares. LIFE COMPANY shall provide pass-through voting
privileges on Fund shares held by unregistered separate accounts to all
Contract owners.
(b) LIFE COMPANY will distribute to Contract owners and participants, or as
appropriate, all proxy material furnished by the Fund and will vote Fund
shares in accordance with instructions received from such Contract owners
and participants. If and to the extent required by law, LIFE COMPANY, with
respect to each group Contract and in each Account shall vote Fund shares
for which no instructions have been received, as well as any shares it owns,
in the same proportion as shares for which such instructions have been
received. LIFE COMPANY and its agents shall not oppose or interfere with the
solicitation of proxies for Fund shares held for such Contract owners and
participants or Certificate Holders.
Section 11. Foreign Tax Credits
AVIF agrees to consult in advance with LIFE COMPANY 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. 1 Indemnification
12.1 General.
(a) LIFE COMPANY agrees to indemnify and hold harmless AVIF and A I M , and
their directors, officers, employees, agents and each person, if any, who
controls AVIF or A I M within the meaning of the Securities Act of 1933 (the
"1933 Act") against
23
any losses, claims, damages or liabilities to which AVIF or A I M or any
director, officer, employee, agent, or controlling person of AVF or A I M 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 (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, prospectus or sales literature of
LIFE COMPANY, or (ii) any 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 (iii) conduct, statements or representations (other
than statements or representations contained in the prospectuses or sales
literature of AVIF) of LIFE COMPANY or its agents, with respect to the sale and
distribution of Contracts for which Fund shares are the underlying investment or
(iv) any breach of LIFE COMPANY's representations and warranties under this
Agreement. LIFE COMPANY will reimburse any legal or other expenses reasonably
incurred by AVIF or A I M or any director, officer, employee, agent, investment
adviser, or controlling person of AVIF or A I M in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that LIFE 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 LIFE COMPANY by AVIF or A I M specifically for use therein or (ii)
the willful misfeasance, bad faith, or gross negligence by AVIF or A I M in the
performance of its duties or AVIF's or A I M's reckless disregard of obligations
or duties under this Agreement or to LIFE COMPANY, whichever is applicable. This
indemnity agreement will be in addition to any liability which LIFE COMPANY may
otherwise have.
(b) AVIF and A I M agree to indemnify and hold harmless LIFE COMPANY and
its directors, officers, employees, agents and each person, if any, who controls
LIFE COMPANY within the meaning of the 1933 Act against any losses, claims,
damages or liabilities to which LIFE 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 (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, prospectuses or sales literature of AVIF, or (ii) any 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 or (iii) any breach of the Fund's or A I M's
representations and warranties under this Agreement. AVIF and A I M will
reimburse any legal or other expenses reasonably incurred by LIFE 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 AVIF and A I M 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 prospectuses which are in conformity with written
materials furnished to AVIF or A I M by LIFE COMPANY specifically for use
therein, or (ii) the willful misfeasance, bad faith, or gross negligence by LIFE
24
COMPANY in the performance of its duties or LIFE COMPANY's reckless disregard of
obligations or duties under this Agreement or to A I M or AVIF, whichever is
applicable. This indemnity agreement will be in addition to any liability which
A I M or AVIF may otherwise have.
(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 failure 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 12. 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 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 12 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
12.2 Effect of Notice.
Any notice given by the indemnifying Party to an indemnified Party referred
to in Sections 12.l(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.
12.3 Successors.
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
25
Section 13. Applicable Law
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Connecticut 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.
Section 18. Confidentiality
AVIF acknowledges that the identities of the customers of LIFE COMPANY or
any of its affiliates (collectively, the "LIFE COMPANY Protected Parties" for
purposes of this Section 18), information maintained regarding those customers,
and all computer programs and procedures or other information developed by the
LIFE COMPANY Protected Parties or any of their employees or agents in connection
with LIFE COMPANY's performance of its duties under this Agreement are the
valuable property of the LIFE COMPANY Protected Parties. AVIF agrees that if it
comes into possession of any list or compilation of the identities of or other
information about the LIFE COMPANY Protected Parties' customers, or any other
information or property of the LIFE COMPANY Protected Parties, other than such
information as may be independently
26
developed or compiled by AVIF from information supplied to it by the LIFE
COMPANY Protected Parties' customers who also maintain accounts directly with
AVIF, AVIF will hold such information or property in confidence and refrain from
using, disclosing or distributing any of such information or other property
except: (a) with LIFE COMPANY's prior written consent (executed by an officer at
a Vice President level or higher); or (b) as required by law or judicial
process. LIFE COMPANY acknowledges that the identities of the customers of AVIF
or any of its affiliates (collectively, the "AVIF Protected Parties' for
purposes of this Section 18), information maintained regarding those customers,
and all computer programs and procedures or other information developed by the
AVIF Protected Parties or any of their employees or agents in connection with
AVIF's performance of its duties under this Agreement are the valuable property
of the AVIF Protected Parties. LIFE COMPANY agrees that if it comes into
possession of any list or compilation of the identities of or other information
about the AVIF Protected Parties' customers or any other information or property
of the AVIF Protected Parties, other than such information as may be
independently developed or compiled by LIFE COMPANY from information supplied to
it by the AVIF Protected Parties' customers who also maintain accounts directly
with LIFE COMPANY, LIFE COMPANY will hold such information or property in
confidence and refrain from using, disclosing or distributing any of such
information or other property except: (a) with AVIF's prior written consent
(executed by an officer at a Vice President level or higher); or (b) as required
by law or judicial process. Each party acknowledges that any breach of the
agreements in this Section 18 would result in immediate and irreparable harm to
the other parties for which there would be no adequate remedy at law and agree
that in the event of such a breach, the other parties will be entitled to
equitable relief by way of temporary and permanent injunctions, as well as such
other relief as any court of competent jurisdiction deems appropriate.
Section 19. Parties to Cooperate
Each party to this Agreement will cooperate with each other party and all
appropriate governmental authorities (including, without limitation, the SEC,
the NASD and state insurance regulators) and will permit each other and such
authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
27
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and, on their behalf by and through their duly authorized
officers signing below.
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
---------------------------- ------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
------------------------------ ----------------------
Title: Assistant Secretary Title: President
----------------------------- ---------------------
AETNA LIFE INSURANCE AND ANNUITY
COMPANY, on behalf of itself and its
separate accounts
Attest: /s/ XxxxXxxxx Xxxxxxxx By: /s/ Xxxxxx X. XxXxxxx
---------------------------- ------------------------
Name: XxxxXxxxx Xxxxxxxx Name: Xxxxxx X. XxXxxxx
------------------------------ ----------------------
Title: Assistant Corporate Secretary Title: Vice President
----------------------------- ---------------------
AETNA LIFE INSURANCE AND ANNUITY
COMPANY, as Principal Underwriter
Attest: /s/ XxxxXxxxx Xxxxxxxx By: /s/ Xxxxxx X. XxXxxxx
---------------------------- ------------------------
Name: XxxxXxxxx Xxxxxxxx Name: Xxxxxx X. XxXxxxx
------------------------------ ----------------------
Title: Assistant Corporate Secretary Title: Vice President
----------------------------- ---------------------
A I M DISTRIBUTORS, INC.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
----------------------------- ------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
------------------------------ ---------------------
Title: Assistant Secretary Title: President
----------------------------- ---------------------
28
SCHEDULE A
1. Series
AIM V.I. Capital Appreciation Fund
AIM V.I. Value Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. Government Securities Fund
AIM V.I. International Equity Fund
2. Separate Accounts
Variable Annuity Account B
Variable Annuity Account C
Variable Annuity Account D
29
Schedule B
The following costs, expenses and reimbursements will be paid by the party
indicated:
1. For purposes of Sections 2, 3 and 4, AVIF or A I M shall be liable to LIFE
COMPANY for systems and out of pocket costs incurred by the LIFE COMPANY in
making a Contract owner's, a participant's or beneficiary's account whole,
if such costs or expenses are a result of A I M's or AVIF's failure to
provide timely or correct net asset values (determined in accordance with
the pricing error policies established by AVIF's Board of Directors),
dividend and capital gains or financial information and if such information
is not corrected by 4 p.m. EST of the next business day after releasing such
incorrect information provided the incorrect NAV as well as the correct NAV
for each day that the error occurred is provided. If a mistake is caused in
supplying such information or confirmations, which results in a
determination by the Fund that a material error has occurred in the
calculation of the net asset values of the Fund, the amount required to make
a Contract owner's, Participant's or a beneficiary's account whole shall be
borne by the Fund, regardless of when the error is corrected.
The following limits shall apply to the collective liabilities of A I M
and/or AVIF, as appropriate to LIFE COMPANY for systems and out of pocket
costs incurred by LIFE COMPANY if such costs or expenses are a result of
the A I M or AVIF's failure to provide LIFE COMPANY with such correct or
timely information: (i) $1,000 per day for each day that incorrect
information provided by either A I M or AVIF is not corrected, if such
period does not include a month-end or a fiscal quarter-end, (ii) $1,500
per day for each day that such incorrect information provided by either A I
M or AVIF is not corrected, if such period does include a month-end or a
fiscal quarter-end, and (iii) up to $50,000 per occurrence in the aggregate
under (i) or (ii) above. Any incorrect information that has as a common
nexus any single error shall be deemed to be one occurrence for these
purposes provided all corrections are provided all corrections are provided
at the same time.
2. For purposes of this Agreement, AVIF or A I M shall pay for the cost of
typesetting and printing periodic fund reports to shareholders,
prospectuses, prospectus supplements, statements of additional information
and other materials that are required by law to be sent to Contract owners
or participants, as well as the cost of distributing such materials. LIFE
COMPANY shall pay for the cost of prospectuses and statements of additional
information and the distribution thereof for prospective Contract owners or
participants. Each party shall be provided with such supporting data as may
reasonably be requested for determining expenses under this Agreement.
30
3. AVIF shall pay all expenses in connection with the provision to LIFE COMPANY
of a sufficient quantity of its proxy material under this Agreement. The
cost associated with proxy preparation, group authorization letters,
programming for tabulation and necessary materials (including postage) will
be paid by AVIF.
Dated this 30th day of June, 1998.
AETNA LIFE INSURANCE AND ANNUITY COMPANY
By: /s/ Xxxxxx X. XxXxxxx
---------------------
Name: Xxxxxx X. XxXxxxx
-------------------
Title: Vice President
-------------------
AIM VARIABLE INSURANCE FUNDS, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
------------------
Title: President
-----------------
A I M DISTRIBUTORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
------------------
Title: President
-----------------
31
