PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS,
A I M DISTRIBUTORS, INC.,
AND
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
TABLE OF CONTENTS
DESCRIPTION PAGE
SECTION 1. AVAILABLE FUNDS............................................ 2
1.1 Availability............................................... 2
1.2 Addition, Deletion or Modification of Funds................ 3
1.3 No Sales to the General Public............................. 3
SECTION 2. PROCESSING TRANSACTIONS.................................... 3
2.1 Timely Pricing and Orders.................................. 3
2.2 Timely Payments............................................ 4
2.3 Applicable Price........................................... 4
2.4 Dividends and Distributions................................ 5
2.5 Book Entry................................................. 5
SECTION 3. COSTS AND EXPENSES......................................... 5
3.1 General.................................................... 5
3.2 Parties To Cooperate....................................... 6
SECTION 4. LEGAL COMPLIANCE........................................... 6
4.1 Tax Laws................................................... 6
4.2 Insurance and Certain Other Laws........................... 8
4.3 Securities Laws............................................ 9
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
4.7 Additional Representations and Warranties ................. 12
SECTION 5. MIXED AND SHARED FUNDING................................... 13
5.1 General.................................................... 13
5.2 Disinterested Trustees..................................... 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............................. 16
5.7 Compliance with SEC Rules.................................. 16
5.8 Other Requirements......................................... 16
SECTION 6. TERMINATION................................................ 16
6.1 Events of Termination...................................... 16
6.2 Notice Requirement for Termination......................... 17
6.3 Funds to Remain Available.................................. 18
6.4 Survival of Warranties and Indemnifications................ 18
6.5 Continuance of Agreement for Certain Purposes.............. 18
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION................ 19
SECTION 8. ASSIGNMENT................................................. 19
SECTION 9. NOTICES.................................................... 19
SECTION 10. VOTING PROCEDURES.......................................... 19
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SECTION 11. FOREIGN TAX CREDITS........................................ 20
SECTION 12. INDEMNIFICATION............................................ 20
12.1 Of AVIF and AIM by LIFE COMPANY............................ 20
12.2 Of LIFE COMPANY by AVIF and AIM............................ 22
12.3 Effect of Notice........................................... 25
12.4 Successors................................................. 25
SECTION 13. APPLICABLE LAW............................................. 25
SECTION 14. EXECUTION OF COUNTERPARTS.................................. 25
SECTION 15. SEVERABILITY............................................... 25
SECTION 16. RIGHTS CUMULATIVE.......................................... 25
SECTION 17. HEADINGS................................................... 26
SECTION 18. CONFIDENTIALITY............................................ 26
SECTION 19. TRADEMARKS AND FUND NAMES.................................. 26
SECTION 20. PARTIES TO COOPERATE....................................... 27
SECTION 21. AMENDMENT; NEED FOR........................................ 27
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PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the ___ day of September, 2005
("Agreement"), by and among AIM VARIABLE INSURANCE FUNDS, a Delaware Trust
("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"), NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION, a life insurance company organized under
the laws of the State of Delaware ("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"); (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 twenty-seven separate series
("Series"), shares ("Shares") 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, LIFE COMPANY will be the issuer of certain variable annuity
contracts and variable life insurance contracts ("Contracts") as set forth on
Schedule A hereto, as the Parties hereto may amend from time to time, which
Contracts (hereinafter collectively, the "Contracts"), if required by applicable
law, will be registered under the 1933 Act; and
WHEREAS, LIFE COMPANY will fund the Contracts through the Accounts, each
of which may be divided into two or more subaccounts ("Subaccounts"; reference
herein to an "Account" includes reference to each Subaccount thereof to the
extent the context requires); and
WHEREAS, LIFE COMPANY will serve as the depositor of the Accounts, each of
which is registered as a unit investment trust investment company under the 1940
Act (or exempt therefrom), and the security interests deemed to be issued by the
Accounts under the Contracts will be registered as securities under the 1933 Act
(or exempt therefrom); and
WHEREAS, LIFE COMPANY is an insurance company that has established or will
establish one or more Separate Accounts to offer variable annuities and/or
variable life insurance
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contracts listed in Schedule A attached hereto as the Parties may amend from
time to time by mutual written agreement (the "Contracts") issued by LIFE
COMPANY and, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase, on behalf of the Separate
Accounts, shares of AVIF to fund certain Contracts, and AVIF is authorized to
sell such shares at net asset value. Persons that are parties to a Contract with
LIFE COMPANY (or other persons who may exercise rights under the Contracts) are
Contract owners ("Contract owners"); and
WHEREAS, AIM is a broker-dealer registered with the SEC under the 1934 Act
and a member in good standing of the NASD;
WHEREAS, AVIF has obtained an order from the SEC, dated December 6, 1995,
(File No. 812-9642), granting Participating Insurance Companies and variable
annuity and variable life insurance separate accounts exemptions from the
provisions of sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Funds to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated life insurance
companies (hereinafter the "Shared Funding Order").
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 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 AVIF (the "Board") may
refuse to sell Shares of any Fund to any person, or suspend or terminate the
offering of Shares of any Fund (a) if such action is required by law or by
regulatory authorities having jurisdiction, (b) if, in the sole discretion of
the Trustees 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, or (c) if such action is required by
any policies that the Board has adopted and that apply to all Participating
Insurance Companies.
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.
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1.3 NO SALES TO THE GENERAL PUBLIC
AVIF represents and warrants that no Shares of any Fund have been or will
be sold to the general public.
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS
(a) AVIF or its designated agent will use its best efforts to provide LIFE
COMPANY with the net asset value per Share for each Fund by 6:30 p.m. Eastern
Time on each Business Day. As used herein, "Business Day" shall mean any day on
which (i) the New York Stock Exchange is open for regular trading, (ii) AVIF
calculates the Fund's net asset value, and (iii) LIFE COMPANY is open for
business. In the event that AVIF or its designated agent is unable to meet the
6:30 p.m. time stated herein, AVIF shall provide additional time for the Company
to place orders for the purchase and redemption of shares equal to the
additional time it takes AVIF to make the net asset values available to the LIFE
COMPANY. However, if the net asset values are not available for inclusion in the
next business cycle and purchase orders/redemptions are not able to be
calculated and available for the LIFE COMPANY to execute within the time frame
identified in Sections 1.1 hereof, the LIFE COMPANY on behalf of the Account(s),
shall be entitled to an adjustment to the number of shares purchased or redeemed
to reflect the net asset values computed as of the close of the prior Business
Day. AVIF shall calculate such net asset values in accordance with AVIF's
registration statement.
(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
10:30 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 6:30 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
per Fund in accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value
information (as determined under SEC guidelines), 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. 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 (except that for any
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money market fund, materiality shall be determined in a manner consistent with
Rule 2a-7 under the 1940 Act).
2.2 TIMELY PAYMENTS
LIFE COMPANY will wire payment for net purchases to a custodial account
designated by AVIF by 3:00 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 before 3:00 p.m. Eastern
Time on the same day as the Order is placed.
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 (or such
other time set by the Board for purposes of determining the current net asset
value of a Fund in accordance with Rule 22c-1 under the 0000 Xxx) 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, in accordance with
Section 22(c) and Rule 22c-1 under the 1940 Act, on each Business Day and
receipt by such designated agent shall constitute receipt by AVIF; provided that
AVIF receives notice of such orders by 10:30 a.m. Eastern Time on the next
following Business Day or such later time as computed in accordance with Section
2.1(b) hereof. In connection with this Section 2.3(a), LIFE COMPANY represents
and warrants that it will not submit any order for Shares or engage in any
practice, nor will it allow or suffer any person acting on its behalf to submit
any order for Shares or engage in any practice, that would violate or cause a
violation of applicable law or regulation including, without limitation Section
22 of the 1940 Act and the rules thereunder. For purposes of this section, LIFE
COMPANY shall be the agent of AVIF for receipt of purchase orders and redemption
requests from each Account and receipt by LIFE COMPANY by the earlier of 4:00
p.m. (Eastern Time) or the close of regular trading as the New York Stock
Exchange (or such other time that AVIF determines the NAV as set forth in the
prospectus for the funds) constitutes receipt by AVIF on that day, provides AVIF
or its agent receives notice of net purchase orders or net redemption requests
by 10:30 a.m. (Eastern time) on the next following business day or such later
time as permitted by this section.
(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.
(c) Without limiting the scope or effect of Section 1.1 hereof, pursuant
to which the Board may reject a Share purchase order by or on behalf of LIFE
COMPANY under the circumstances described therein, LIFE COMPANY agrees to
cooperate with the Fund and AIM to prevent any person exercising, or purporting
to exercise, rights or privileges under one or more
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Contracts (including, but not limited to Contract owners, annuitants, insureds
or participants, as the case may be (collectively, "Participants")) from
engaging in any trading practices in any Fund that the Board or AIM determines,
in good faith and in their sole discretion, to be detrimental or potentially
detrimental to the other shareholders of the Fund, or to be in contravention of
any applicable law or regulation including, without limitation, Section 22 of
the 1940 Act and the rules thereunder. Such cooperation may include, but shall
not be limited to, identifying the person or persons engaging in such trading
practices, facilitating the imposition of any applicable redemption fee on such
person or persons, limiting the telephonic or electronic trading privileges of
such person or persons, and taking such other remedial steps, all to the extent
permitted or required by applicable law.
(d) If one or more Funds has determined to settle redemption transactions
for all of its shareholders on a delayed basis (more than one Business Day, but
in no event more than five Business Days after the date on which the redemption
order is received and consistent with Section 22(c) of the 1940 Act and any
rules or orders of the SEC thereunder), AVIF shall be permitted to delay sending
redemption proceeds to Company by the same number of days that AVIF is delaying
sending redemption proceeds to the other shareholders of the Funds; provided
that in no event may any delay by AVIF in paying redemption proceeds cause the
Company or Separate Accounts to fail to meet its obligations under Section 22(e)
of the 1940 Act, or require the Company to pay redemption proceeds out of its
general account.
2.4 DIVIDENDS AND DISTRIBUTIONS
AVIF will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to LIFE COMPANY of any income
dividends or capital gain distributions payable on the Shares of any Fund. LIFE
COMPANY 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 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
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.
AVIF shall furnish to LIFE COMPANY the CUSIP number assigned to each Fund.
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, or arrange for others to bear, all
expenses incident to its performance
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under this Agreement.
3.2 PARTIES TO COOPERATE
Each Party agrees to cooperate with the others, as applicable, in
arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of AVIF and the Accounts.
SECTION 4. LEGAL COMPLIANCE SECTION
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
its best efforts to qualify and to 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 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 take
all reasonable steps to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Section 1.817-5 of the
regulations under the Code.
(c) Notwithstanding any other provision of this Agreement, 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 Participants, 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 reasonable best efforts to minimize any
liability of AVIF or its affiliates resulting from such failure, including,
without limitation, demonstrating, pursuant to Treasury Regulations Section
1.817-5(a)(2), to the Commissioner of the IRS that such failure was inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal and
accounting
6
advisors 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; and provided further, however, such participation rights
shall not apply to the extent any such conferences, discussions or other
proceedings or contests do not relate to the transactions contemplated by this
Agreement; and;
(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 that relate to such a failure or alleged failure
(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 LIFE COMPANY to AVIF (together with any supporting information or analysis);
subject to the confidentiality provisions of Section 18, at least ten (10)
business days or such shorter period to which the Parties hereto agree prior to
the day on which such proposed materials are to be submitted, and (b) shall not
be submitted by LIFE COMPANY to any such person without the express written
consent of AVIF which shall not be unreasonably withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their
accounting and legal advisors with such cooperation as AVIF shall reasonably
request (including, without limitation, by permitting AVIF and its accounting
and legal advisors to review the relevant books and records of LIFE COMPANY that
relate to such a failure or alleged failure) 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) 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, after exhausting all
administrative remedies, to pursue any judicial proceeding unless AVIF or its
affiliates shall have provided a written opinion of independent counsel
reasonably acceptable to LIFE COMPANY that it is at least more likely than not
that such proceeding shall be successful; provided further that LIFE COMPANY
shall not be required to appeal any adverse judicial decision unless AVIF or its
affiliates shall have provided an opinion of independent counsel reasonably
acceptable to LIFE COMPANY to the effect that a reasonable basis exists for
taking such appeal; and provided further that the costs of any such appeal shall
be borne equally by the Parties hereto, provided that the foregoing opinion
concludes that it is at least more likely than not that such appeal will be
successful; otherwise, such costs of appeal shall be borne solely by AVIF or its
affiliates; and
(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 materially contributed to
the liability.
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Should AVIF or any of its affiliates reasonably 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.
(d) 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 future.
(e) 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 future.
4.2 INSURANCE AND CERTAIN OTHER LAWS
(a) The shares of the Funds sold by AVIF shall be sold in material
compliance with this Agreement and with any applicable federal and state
insurance laws or regulations. To the extent specifically requested in writing
by LIFE COMPANY, AVIF shall furnish information that is not otherwise available
to LIFE COMPANY and that is required by state insurance law to enable LIFE
COMPANY to obtain the authority needed to issue the Contracts in any applicable
state.
(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 Delaware 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 Delaware and New York 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 it is lawfully 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.
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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 the
law(s) of LIFE COMPANY's state(s) of organization and domicile, (iii) each
Account is and will remain registered under the 1940 Act, to the extent required
by the 1940 Act, (iv) each Account does and will comply in all material respects
with the requirements of the 1940 Act and the rules thereunder, to the extent
required, (v) each Account's 1933 Act registration statement relating to the
Contracts, together with any amendments thereto, will at all times comply in all
material respects with the requirements of the 1933 Act and the rules
thereunder, (vi) 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, Statement of Additional Information, and then-current stickers
(collectively referred to herein as "Account Prospectus"), will at all times
comply in all material respects with the requirements of the 1933 Act and the
rules thereunder.
(b) AVIF represents and warrants that (i) Shares sold pursuant to this
Agreement will be registered under the 1933 Act to the extent required by the
1933 Act and duly authorized for issuance and sold in compliance with Delaware
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, Statement of Additional Information, and then-current
stickers (collectively referred to herein as "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 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 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-(1) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.
4.4 NOTICE OF CERTAIN PROCEEDINGS
(a) AVIF or AIM will immediately notify LIFE COMPANY of (i) the issuance
by any
9
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
and AIM 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 of (i) the issuance by any
court or regulatory body of any stop order, cease and desist order, or other
similar order with respect to each Account's registration statement under the
1933 Act relating to the Contracts or each Account Prospectus, (ii) any request
by the SEC for any amendment to such registration statement or Account
Prospectus that may affect the offering of Shares of AVIF, (iii) the initiation
of any proceedings for that purpose or for any other purpose relating to the
registration or offering of each Account's interests pursuant to the Contracts,
or (iv) any other action or circumstances that may prevent the lawful offer or
sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. 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 provide to AVIF or its designated agent at least one
(1) complete copy of all SEC registration statements, Account Prospectuses,
reports, any preliminary and final voting instruction solicitation material,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to each Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) LIFE COMPANY will provide to AVIF or its designated agent at least one
(1) complete copy of each piece of sales literature or other promotional
material in which AVIF or any of its affiliates is named, at least 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 AVIF 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 to
time, agree upon. AVIF hereby designates AIM as the entity to receive such sales
literature, until such time as AVIF appoints another designated agent by giving
notice to LIFE COMPANY in the manner required by Section 9 hereof.
(c) Neither LIFE COMPANY nor any of its affiliates, will give any
information or make
10
any representations or statements on behalf of or concerning AVIF or its
affiliates in connection with the sale of the Contracts other than (i) the
information or representations contained in the registration statement,
including the AVIF Prospectus contained therein, relating to Shares, as such
registration statement and AVIF Prospectus may be amended from time to time; or
(ii) in reports or proxy materials for AVIF; or (iii) in published reports for
AVIF that are in the public domain and approved by AVIF for distribution; or
(iv) in sales literature or other promotional material approved by AVIF, except
with the express written permission of AVIF.
(d) 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 be liable for any
losses, damages or expenses relating to the improper use of such broker only
materials. When providing LIFE COMPANY with "Broker only materials", AVIF will
provide LIFE COMPANY with clear instructions that any such material is "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 will 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 a camera ready copy of 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. At LIFE COMPANY'S reasonable request AVIF will
provide such materials in an electronic format suitable for use by a financial
printer and a format suitable for use on the LIFE
11
COMPANY'S website.
(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 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 0000 Xxx.
4.7 ADDITIONAL REPRESENTATIONS AND WARRANTIES
(a) Each Party represents and warrants that it shall comply with
anti-money laundering laws and regulations applicable to it, including the
relevant provisions of the USA PATRIOT Act
12
(Pub. L. No. 107-56 (2001) and the regulations issued thereunder.
(b) Each Party represents and warrants that it shall comply with privacy
and notice provisions of 15 U.S.C. Sections 6801-6827 and any regulations
promulgated thereunder (including, but not limited to, 17 C.F.R. Part 248)
applicable to it as they may be amended from time to time.
(c) Each Party represents and warrants that it has full power and
authority to enter into and perform its obligations under this Agreement; it has
duly taken all necessary steps to authorize the person signing this Agreement on
its behalf to do so and to authorize the performance of its obligations under
this Agreement and assuming the accuracy of and compliance with this
representation and warranty by all Parties, this Agreement will be valid,
binding on, and enforceable against such Party in accordance with its terms,
subject only to such limitations as apply generally to the rights of creditors,
such as, but not limited to, bankruptcy laws, laws governing the insolvency of
insurance companies and other entities, and principles of equity.
SECTION 5. MIXED AND SHARED FUNDING SECTION
5.1 GENERAL
The SEC has granted an order to AVIF exempting it from certain provisions
of the 1940 Act and rules thereunder so that AVIF may be available for
investment by certain other entities, including, without limitation, separate
accounts funding variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies unaffiliated with 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 the 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 TRUSTEES
AVIF agrees that its Board shall at all times consist of trustees a
majority of whom (the "Disinterested Trustees") are not interested persons of
AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the rules
thereunder and as modified by any applicable orders of the SEC, except that if
this condition is not met by reason of the death, disqualification, or bona fide
resignation of any director, then the operation of this condition shall be
suspended (a) for a period of forty-five (45) days if the vacancy or vacancies
may be filled by the Board; (b) for a period of sixty (60) days if a vote of
shareholders is required to fill the vacancy or vacancies or (c) for such longer
period as the SEC may prescribe by order upon application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS
AVIF agrees that its Board will monitor for the existence of any material
irreconcilable
13
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 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, LIFE COMPANY will assist the
Board in carrying out its responsibilities by providing the Board with all
information reasonably necessary for the Board to consider any issue raised,
including information as to a decision by LIFE COMPANY to disregard voting
instructions of Participants. LIFE COMPANY's responsibilities in connection with
the foregoing shall be carried out with a view only to the interests of
Participants.
5.4 CONFLICT REMEDIES
(a) It is agreed that if it is determined by a majority of the members of
the Board or a majority of the Disinterested Trustees 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 Trustees), 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,
14
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 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 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 Trustees 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's
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.
15
5.6 INFORMATION REQUESTED BY BOARD
LIFE COMPANY and AVIF (or its investment adviser) will at least annually
submit to the Board of AVIF such reports, materials or data as the Board may
reasonably request so that the Board 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. All reports
received by the Board of potential or existing conflicts, and all Board actions
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies and Participating Plans of a conflict, and determining
whether any proposed action adequately remedies a conflict, will be properly
recorded in the minutes of the Board or other appropriate records, and such
minutes or other records will be made available to the SEC upon request.
5.7 COMPLIANCE WITH SEC RULES
If, at any time during which AVIF is serving as an investment medium for
variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding, AVIF agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply with
the terms and conditions of such exemptive relief that is afforded by any of
said rules that are applicable.
5.8 OTHER REQUIREMENTS.
AVIF will require that each Participating Insurance Company and
Participating Plan enter into an agreement with AVIF that contains in substance
the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b),
4.5(a), 5, and 10 of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of any party, with or without cause with respect to the
Fund, upon ninety (90) days advance written notice to the other parties, or, if
later, upon receipt of any required exemptive relief from the SEC, unless
otherwise agreed to in writing by the parties; or
(b) at the option of AVIF upon institution of formal proceedings against
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
16
respect to which the Agreement is to be terminated; or
(c) 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, 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; or
(d) at the option of any Party in the event that (i) the Fund's Shares are
not registered and, in all material respects, issued and sold in accordance with
any applicable federal or state law, or (ii) such law precludes the use of such
Shares as an underlying investment medium of the Contracts issued or to be
issued by LIFE COMPANY, or shares of that Fund that are not reasonably available
to meet the requirements of the Contracts as determined by the LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the
Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC
under Subchapter M of the Code or under successor or similar provisions, or if
LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANY if the Fund fails to comply with Section
817(h) of the Code or with successor or similar provisions, or if LIFE COMPANY
reasonably believes that the Fund may fail to so comply; or
(h) 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 or state law; or
(i) upon another Party's material breach of any provision of this
Agreement.
6.2 NOTICE REQUIREMENT FOR TERMINATION
No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other Party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) or 6.1(e) 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;
17
(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 effective
upon receipt of such notice by all parties; 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
Notwithstanding any termination of this Agreement by LIFE COMPANY, 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"), unless AIM or the Board
determines that doing so would not serve the best interests of the shareholders
of the affected Funds or would be inconsistent with applicable law or regulation
or unless AVIF requests that LIFE COMPANY seek an order pursuant to Section
26(c) of the 1940 Act to permit the substitution of other securities for the
shares of the Fund. AVIF shall bear the cost of any such described event.
Specifically, without limitation, the owners of the Existing Contracts will be
permitted to reallocate investments in the Fund (as in effect on such date),
redeem investments in the Fund and/or invest in the Fund upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 6.3 will not apply to any (i) terminations under Section 5 and
the effect of such terminations will be governed by Section 5 of this Agreement
or (ii) any rejected purchase and/or redemption order as described in Section
2.3(c) hereof.
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 LIFE COMPANY may, by written notice shorten said six (6) month period in
the case of a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or
6.1(i).
18
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION SECTION
The Parties hereto agree to cooperate and give reasonable assistance to
one another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Contracts in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the
written consent of each other Party.
SECTION 9. NOTICES
Notices and communications required or permitted will be given by means
mutually acceptable to the Parties concerned. Each other notice or communication
required or permitted by this Agreement will be given to the following persons
at the following addresses and facsimile numbers, or such other persons,
addresses or facsimile numbers as the Party receiving such notices or
communications may subsequently direct in writing:
AIM VARIABLE INSURANCE FUNDS
A I M DISTRIBUTORS, INC.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn:
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX, 00000
Attn:
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3
hereof, LIFE COMPANY 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. LIFE COMPANY will vote
Shares in accordance with timely instructions received from Participants. LIFE
COMPANY 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
19
have been received, in the same proportion as Shares for which said instructions
have been received from Participants, so long as and to the extent that the SEC
continues to interpret the 1940 Act to require pass through voting privileges
for Participants. Neither LIFE COMPANY 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. LIFE COMPANY reserves the
right to vote shares held in any Account in its own right, to the extent
permitted by law. LIFE COMPANY 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 the Mixed and Shared Funding exemptive order obtained by AVIF. AVIF will
notify LIFE COMPANY of any changes of interpretations or amendments to Mixed and
Shared Funding exemptive order it has obtained. AVIF will comply with all
provisions of the 1940 Act requiring voting by shareholders, and in particular,
AVIF either will provide for annual meetings (except insofar as the SEC may
interpret Section 16 of the 1940 Act not to require such meetings) or will
comply with Section 16(c) of the 1940 Act (although AVIF is not one of the
trusts described in Section 16(c) of that Act) as well as with Sections 16(a)
and, if and when applicable, 16(b). Further, AVIF will act in accordance with
the SEC's interpretation of the requirements of Section 16(a) with respect to
periodic elections of trustees and with whatever rules the SEC may promulgate
with respect thereto.
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. INDEMNIFICATION
12.1 OF AVIF AND AIM BY LIFE COMPANY
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, LIFE COMPANY agrees to indemnify and hold harmless AVIF, AIM, their
affiliates, and each person, if any, who controls AVIF, AIM, or their affiliates
within the meaning of Section 15 of the 1933 Act and each of their respective
trustees and officers, (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 LIFE COMPANY)
or actions in respect thereof (including, to the extent reasonable, legal and
other expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise; provided, the Account owns
shares of the Fund and insofar as such losses, claims, damages, liabilities or
actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any
Account's 1933 Act registration statement, any Account
Prospectus, the Contracts, or sales literature or advertising
for the Contracts (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated therein
20
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 LIFE COMPANY by or on
behalf of AVIF or AIM for use in any Account's 1933 Act
registration statement, any Account Prospectus, the Contracts,
or sales literature or advertising or otherwise for use in
connection with the sale of Contracts or Shares (or any
amendment or supplement to any of the foregoing); or
(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 LIFE COMPANY or its
affiliates and on which such persons have reasonably relied)
or the negligent, illegal or fraudulent conduct of LIFE
COMPANY or its respective affiliates or persons under their
control (including, without limitation, their employees and
"persons associated with a member," as that term is defined in
paragraph (q) of Article I of the NASD's By-Laws), in
connection with the sale or distribution of the Contracts or
Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus, sales literature
or advertising of AVIF, or any amendment or supplement to any
of the foregoing, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon and in
conformity with information furnished to AVIF, AIM or their
affiliates by or on behalf of LIFE COMPANY or its 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 LIFE COMPANY 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 LIFE COMPANY in this Agreement or arise out of or
result from any other material breach of this Agreement by
LIFE COMPANY; or
(v) arise as a result of failure by the Contracts issued by LIFE
COMPANY to qualify as annuity contracts or life insurance
contracts under the Code, otherwise than by reason of any
Fund's failure to comply with Subchapter M or Section 817(h)
of the Code.
21
(b) LIFE COMPANY shall not 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 or AIM.
(c) LIFE COMPANY shall not be liable under this Section 12.1 with
respect to any action against an Indemnified Party unless AVIF or AIM shall have
notified LIFE COMPANY 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 LIFE COMPANY of any such action shall not relieve LIFE COMPANY from
any liability which they may have to the Indemnified Party against whom such
action is brought otherwise than on account of this Section 12.1. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, LIFE COMPANY shall 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
LIFE COMPANY to such Indemnified Party of LIFE COMPANY's election to assume the
defense thereof, the Indemnified Party will cooperate fully with LIFE COMPANY
and shall bear the fees and expenses of any additional counsel retained by it,
and neither LIFE COMPANY 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 LIFE COMPANY BY AVIF AND AIM
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, AVIF and AIM agree to indemnify and hold harmless LIFE COMPANY,
its affiliates, and each person, if any, who controls LIFE COMPANY or its
affiliates within the meaning of Section 15 of the 1933 Act and each of their
respective trustees and officers, (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;
provided, the Account owns shares of the Fund and insofar as such losses,
claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus or sales
literature or advertising of AVIF (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, that this agreement to indemnify shall not apply as
22
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 LIFE COMPANY or its respective
affiliates for use in AVIF's 1933 Act registration statement,
AVIF Prospectus, or in sales literature or advertising or
otherwise for use in connection with the sale of Contracts or
Shares (or any amendment or supplement to any of the
foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in any Account's 1933 Act registration statement,
any Account Prospectus, sales literature or advertising for
the Contracts, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of
AVIF, AIM or their affiliates and on which such persons have
reasonably relied) or the negligent, illegal or fraudulent
conduct of AVIF, AIM or their affiliates or persons under
their control (including, without limitation, their employees
and "persons associated with a member" as that term is defined
in Section (q) of Article I of the NASD By-Laws), in
connection with the sale or distribution of AVIF Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any
Account's 1933 Act registration statement, any Account
Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon and in
conformity with information furnished to LIFE COMPANY or its
affiliates by or on behalf of AVIF or AIM for use in any
Account's 1933 Act registration statement, any Account
Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by AVIF to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement, or any
material breach of any representation and/or warranty made by
AVIF in this Agreement or arise out of or result from any
other material breach of this Agreement by AVIF.
(b) The parties agree that the foregoing indemnification by AVIF shall
not apply to any acts or omissions of AIM. Except to the extent provided in
Sections 12.2(c), 12.2(d) and 12.2(e) hereof, AVIF and AIM agree to indemnify
and hold harmless the Indemnified Parties from and against any and all losses,
claims, damages, liabilities (including amounts paid in settlement thereof with,
the written consent of AVIF and/or AIM) or actions in respect thereof
(including, to the extent reasonable, legal and other expenses) to which the
Indemnified Parties may become subject directly
23
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 LIFE COMPANY pursuant to the Contracts, the costs of
any ruling and closing agreement or other settlement with the IRS, and the cost
of any substitution by LIFE COMPANY of Shares of another investment company or
portfolio for those of any adversely affected Fund as a funding medium for each
Account that LIFE COMPANY reasonably deems necessary or appropriate as a result
of the noncompliance.
(c) Neither AVIF nor AIM shall 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 LIFE COMPANY, each
Account or Participants.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any action against an Indemnified Party unless the Indemnified Party
shall have notified AVIF and/or AIM in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify AVIF or AIM of any such action shall not relieve
AVIF or AIM from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
12.2. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, AVIF and/or AIM will be entitled to participate,
at its own expense, in the defense of such action and also shall be entitled to
assume the defense thereof (which shall include, without limitation, the conduct
of any ruling request and closing agreement or other settlement proceeding with
the IRS), with counsel approved by the Indemnified Party named in the action,
which approval shall not be unreasonably withheld. After notice from AVIF and/or
AIM to such Indemnified Party of AVIF's or AIM's election to assume the defense
thereof, the Indemnified Party will cooperate fully with AVIF and AIM and shall
bear the fees and expenses of any additional counsel retained by it, and AVIF
and AIM 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, LIFE COMPANY 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 LIFE COMPANY hereunder or by any other
Participating Insurance Company under an agreement containing substantially
similar representations, warranties and covenants; (ii) the failure by LIFE
COMPANY or any other Participating Insurance Company to maintain its segregated
asset account (which invests in any Fund) as a legally and validly established
24
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 LIFE COMPANY or any other Participating
Insurance Company to maintain its variable annuity or life insurance contracts
(with respect to which any Fund serves as an underlying funding vehicle) as
annuity contracts or life insurance contracts under applicable provisions of the
Code.
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
13.1 This Agreement will be construed and the provisions hereof
interpreted under and in accordance with Delaware law, without regard for that
state's principles of conflict of laws.
13.2 This Agreement, its terms and definitions, shall be subject to the
provisions of the 1933 Act, the 1934 Act, and the 1940 Act, and the rules and
regulations and rulings thereunder, including such exemptions from those
statutes, rulings and regulations as the SEC may grant.
13.3 For purposes of this Agreement, a Party's obligations hereunder to
comply with "applicable federal and state laws and regulations" shall be limited
to complying with only those federal and state laws and regulations that apply
to it.
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
25
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 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; 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; or (b) as required by
law or judicial process. Each party acknowledges that any breach of the
agreements in this Section 18 would result in immediate and irreparable harm to
the other parties for which there would be no adequate remedy at law and agree
that in the event of such a breach, the other parties will be entitled to
equitable relief by way of temporary and permanent injunctions, as well as such
other relief as any court of competent jurisdiction deems appropriate.
SECTION 19. TRADEMARKS AND FUND NAMES
(a) Except as may otherwise be provided in Section 4 of this Agreement
or a License Agreement among A I M Management Group Inc. and LIFE COMPANY,
neither LIFE COMPANY
26
nor any of its affiliates, shall use any trademark, trade name, service xxxx or
logo of AVIF, AIM or any of their respective affiliates, or any variation of any
such trademark, trade name, service xxxx or logo, without AVIF's or AIM's prior
written consent, the granting of which shall be at AVIF's or AIM's sole option.
(b) Except as otherwise expressly provided in this Agreement, neither
AVIF, its investment adviser, its principal underwriter, or any affiliates
thereof shall use any trademark, trade name, service xxxx or logo of LIFE
COMPANY or any of its, or any variation of any such trademark, trade name,
service xxxx or logo, without LIFE COMPANY's prior written consent, the granting
of which shall be at LIFE COMPANY's sole option.
SECTION 20. PARTIES TO COOPERATE
Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including, without limitation, the
SEC, the NASD and state insurance regulators) and will permit each other and
such authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby. Regardless of which Party
defends a particular claim, the defending party shall give the other parties
written notice of any significant development in the case as soon as possible.
SECTION 21. AMENDMENTS; NEED FOR
No provision of this Agreement may be amended or modified in any manner
except by mutual written agreement executed by all parties hereto. The Parties
shall, from time to time, review this Agreement to determine the extent to which
an amendment thereto may be necessary or appropriate to reflect changes in
applicable law or regulation, and shall cooperate in implementing any such
amendment in a timely manner, it being understood and agreed to that no such
amendment shall take effect except upon mutual written agreement of all Parties
as stated above.
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
Attest: By:
-------------------------- --------------------------------
Name: Name:
---------------------------- ------------------------------
Title: Title:
--------------------------- -----------------------------
A I M DISTRIBUTORS, INC.
Attest: By:
-------------------------- --------------------------------
Name: Name:
---------------------------- ------------------------------
Title: Title:
--------------------------- -----------------------------
NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION, on behalf of itself and
its separate accounts
Attest: By:
-------------------------- --------------------------------
Name: Name:
-------------------------- ----------------------------
Title: Title:
-------------------------- ----------------------------
28
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
-----------------------------------
AIM V.I Real Estate Fund--Series 1 Shares
SEPARATE ACCOUNTS UTILIZING THE FUNDS
-------------------------------------
NYLIAC Corporate Sponsored Valuable Universal Life - Separate Account I
NYLIAC Private Placement Variable Universal Life - Separate Account I
NYLIAC Private Placement Variable Universal Life - Separate Account II
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
-----------------------------------------
Corporate Executive Series Variable Universal Life (CorpExec VUL)
Policy #300-40 and #301-43
CorpExec Private Placement Variable Universal Life
Policy #304-46C (Group) and Policy #304-47 (Individual)
1
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 0.5% 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 LIFE COMPANY, as
appropriate, such as in the event that the error was not discovered
until after LIFE COMPANY processed transactions using the erroneous
net asset value) 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 LIFE COMPANY has not mailed redemption checks
to Participants, LIFE COMPANY 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 LIFE COMPANY for LIFE COMPANY's
reprocessing costs in an amount not to exceed $1.00 per contract affected by $10
or more.
The standards set forth in this Schedule B are based on the Parties'
understanding of the views expressed by the staff of the SEC as of the date of
this Agreement. In the event the views of the SEC staff are later modified or
superseded by SEC or judicial interpretation, the Parties shall amend the
foregoing provisions of this Agreement to comport with the appropriate
applicable standards, on terms mutually satisfactory to all Parties.
1
With respect to the pricing errors described above, this Section shall control
over other indemnification provisions in this Agreement.
The Pricing Policies described herein may be modified by AVIF as approved by its
Board. AIM agrees to use its best efforts to notify LIFE COMPANY at least five
(5) days prior to any such meeting of the Board of AVIF to consider such
proposed changes.
2
SCHEDULE C
EXPENSE ALLOCATIONS
LIFE COMPANY AVIF / AIM
preparing and filing the Account's registration statement Preparing and filing the Fund's registration statement
text composition for Account prospectuses and supplements text composition for Fund prospectuses and supplements,
including versions of these documents to accommodate
various combinations of Funds offered under Separate
Account prospectuses.
text alterations of prospectuses (Account) and supplements text alterations of prospectuses (Fund) and supplements
(Account) (Fund), including versions of these documents to
accommodate various combinations of Funds offered under
Separate Account prospectuses.
printing Account and Fund prospectuses and supplements supplying typeset, camera and/or web-ready AVIF
prospectuses, SAIs and supplements.
text composition and printing Account SAIs text composition and printing Fund SAIs
mailing and distributing Account SAIs to policy mailing and distributing Fund SAIs to policy owners upon
owners upon policy owners request by policy owners request by
mailing and distributing prospectuses (Account and
Fund) and supplements (Account and Fund) to policy owners
of record as required by Federal Securities Laws and to
prospective purchasers
text composition (Account), printing, mailing, and text composition of annual and semi-annual reports
distributing annual and semi-annual reports for Account (Fund)
(Fund and Account as, applicable)
text composition, printing, mailing, distributing, and text composition, printing, mailing, distributing and tabulation
tabulation of proxy statements and voting instruction of proxy statements and voting instruction solicitation materials
solicitation materials to policy owners with respect to to policy owners with respect to proxies related to the Fund
proxies related to the Account
preparation, printing and distributing sales material and
advertising relating to the Funds, insofar as such materials
relate to the Contracts and filing such materials with and
obtaining approval from, the SEC, the NASD, any state
insurance regulatory authority, and any other appropriate
regulatory authority, to the extent required
1
