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EXHIBIT 9(j)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.
AND
XXXXXXX XXXXX LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
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TABLE OF CONTENTS
DESCRIPTION PAGE
Section 1. Available Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Availability. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Addition, Deletion or Modification of Funds . . . . . . . . . 2
1.3 No Sales to the General Public . . . . . . . . . . . . . . . . 2
Section 2. Processing Transactions . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Timely Pricing and Orders . . . . . . . . . . . . . . . . . . 2
2.2 Timely Payments . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Applicable Price . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Dividends and Distributions . . . . . . . . . . . . . . . . . 4
2.5 Book Entry . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Parties To Cooperate . . . . . . . . . . . . . . . . . . . . . 5
Section 4. Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Tax Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Insurance and Certain Other Laws . . . . . . . . . . . . . . . 7
4.3 Securities Laws . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Notice of Certain Proceedings and Other Circumstances . . . . 9
4.5 MLLIC To Provide Documents; Information About AVIF . . . . . . 9
4.6 AVIF To Provide Documents; Information About MLLIC . . . . . 10
Section 5. Mixed and Shared Funding . . . . . . . . . . . . . . . . . . . . 12
5.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Disinterested Directors . . . . . . . . . . . . . . . . . . 12
5.3 Monitoring for Material Irreconcilable Conflicts . . . . . . 13
5.4 Conflict Remedies . . . . . . . . . . . . . . . . . . . . . 13
5.5 Notice to MLLIC . . . . . . . . . . . . . . . . . . . . . . 15
5.6 Information Requested by Board of Directors . . . . . . . . 15
5.7 Compliance with SEC Rules . . . . . . . . . . . . . . . . . 15
5.8 Other Requirements . . . . . . . . . . . . . . . . . . . . . 15
Section 6. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Events of Termination . . . . . . . . . . . . . . . . . . . 15
6.2 Notice Requirement for Termination . . . . . . . . . . . . . 17
6.3 Funds To Remain Available . . . . . . . . . . . . . . . . . 18
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DESCRIPTION
PAGE
6.4 Survival of Warranties and Indemnifications . . . . . . . . 18
6.5 Continuance of Agreement for Certain Purposes . . . . . . . 18
Section 7. Parties To Cooperate Respecting Termination . . . . . . . . . . . 18
Section 8. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 10. Voting Procedures . . . . . . . . . . . . . . . . . . . . . . . 19
Section 11. Foreign Tax Credits . . . . . . . . . . . . . . . . . . . . . . 20
Section 12. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 20
12.1 Of AVIF and AIM by MLLIC . . . . . . . . . . . . . . . . . . 20
12.2 Of MLLIC by AVIF and AIM . . . . . . . . . . . . . . . . . 22
12.3 Effect of Notice . . . . . . . . . . . . . . . . . . . . . . 25
12.4 Successors . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 13. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 14. Execution in Counterparts . . . . . . . . . . . . . . . . . . . 25
Section 15. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 16. Rights Cumulative . . . . . . . . . . . . . . . . . . . . . . . 25
Section 17. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 18. Parties to Cooperate . . . . . . . . . . . . . . . . . . . . . . 26
SCHEDULE A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SCHEDULE B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SCHEDULE C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 18th day of December,
1996 ("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); A I M Distributors, Inc., a Delaware corporation ("AIM");
and Xxxxxxx Xxxxx Life Insurance Company, an Arkansas life insurance company
("MLLIC"), 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 nine separate series ("Series"),
shares ("Shares") of each of which are registered under the Securities Act of
1933, as amended (the "1933 Act") and are currently sold to one or more
separate accounts of life insurance companies to fund benefits under variable
annuity contracts and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A
hereto as the Parties hereto may amend from time to time (each a "Fund";
reference herein to "AVIF" includes reference to each Fund, to the extent the
context requires) available for purchase by the Accounts; and
WHEREAS, AIM is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, AIM currently serves as the distributor for the Shares; and
WHEREAS, MLLIC 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, MLLIC 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, MLLIC 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
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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, to the extent permitted by applicable insurance laws and
regulations, MLLIC intends to purchase Shares in one or more of the Funds on
behalf of the Accounts to fund the Contracts;
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 MLLIC for purchase and
redemption at net asset value and with no sales charges, subject to the terms
and conditions of this Agreement. The Board of Directors of AVIF may refuse to
sell Shares of any Fund to any person, or suspend or terminate the offering of
Shares of any Fund if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Directors
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, such action is deemed in the best interests of the
shareholders of such Fund.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the 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.
1.3 NO SALES TO THE GENERAL PUBLIC.
AVIF and AIM agree that Shares will be sold only to insurance
companies which have entered into participation agreements with AVIF and their
separate accounts, qualified pension and retirement plans and AIM or its
affiliates. MLLIC will not resell the Shares except to AVIF or its agents.
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) AVIF or its designated agent will use its best efforts to
provide MLLIC with the closing net asset value per Share for each Fund by 5:30
p.m. Central Time on each Business Day.
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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 pursuant to rules of the SEC, and (iii) MLLIC is open for business.
(b) MLLIC 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. MLLIC will perform such Account processing the same Business Day, and
will place corresponding orders to purchase or redeem Shares with AVIF via
facsimile (with receipt confirmed in person by telephone) by 9:00 a.m. Central
Time the following Business Day; provided, however, that AVIF shall provide
additional time to MLLIC in the event that AVIF is unable to meet the 5:30
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 MLLIC.
(c) Each order to purchase or redeem Shares of each Fund will be
netted; provided, however, with respect to payment of the purchase price by
MLLIC and of redemption proceeds by AVIF, MLLIC and AVIF shall net purchase
and redemption orders and shall transmit one (1) net payment in accordance with
Section 2.2, below. Each order to purchase or redeem Shares of each Fund
shall be accompanied or followed by a statement (received no later than 10:00
a.m. Central Time) specifying whether the order results from purchase payments,
transfers from another Subaccount, transfers to another Subaccount, surrenders,
partial withdrawals, routine withdrawals of charges, or requests for other
transactions under Policies (collectively, "Policy Transactions.") AVIF shall
confirm to MLLIC, in a form agreeable to both parties, as soon as practicable
(but AVIF shall use all reasonable efforts to provide same day notice) of the
number of shares and the net asset value per share of each Fund purchased or
sold each day by MLLIC.
(d) If AVIF provides materially incorrect Share net asset value
information (as determined under SEC guidelines), MLLIC 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 MLLIC. Materiality and reprocessing cost
reimbursement shall be determined in accordance with standards established by
the Parties as provided in Schedule B, attached hereto and incorporated herein.
2.2 TIMELY PAYMENTS.
MLLIC will wire payment for net purchases to a custodial account
designated by AVIF by 1:00 p.m. Central Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment in federal
funds for net redemptions to an account designated by MLLIC by 1:00 p.m.
Central Time on the same day as the Order is placed, to the extent practicable,
but in any event within five (5) calendar days after the date the order is
placed in order to enable MLLIC to pay redemption proceeds within the time
specified in Section 22(e) of the 1940 Act or such shorter period of time as
may be required by law.
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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 MLLIC receives prior
to the close of regular trading on the New York Stock Exchange on a Business
Day will be executed at the net asset values of the appropriate Funds next
computed after receipt by AVIF or its designated agent of the orders. For
purposes of this Section 2.3(a), MLLIC shall be the designated agent of AVIF
for receipt of orders relating to Contract transactions on each Business Day
and receipt by such designated agent shall constitute receipt by AVIF; provided
that AVIF receives notice of such orders by 9:00 a.m. Central Time on the next
following Business Day or such later time as computed in accordance with
Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by MLLIC will be
effected at the net asset values of the appropriate Funds next computed
after receipt by AVIF or its designated agent of the order therefor, and such
orders will be irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS.
MLLIC 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 MLLIC 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. MLLIC
reserves the right to revoke this election and to receive all such income
dividends and capital gain distributions in cash. AVIF will use reasonable
efforts to furnish, or cause to be furnished, notice by wire or telephone
(followed by written confirmation) on or prior to the payment date to MLLIC of
any income dividends or capital gain distributions payable on the Shares of any
Fund and will provide information with respect to the number of additional
Shares purchased as a result of any reinvestment of dividends.
2.5 BOOK ENTRY.
Issuance and transfer of AVIF Shares will be by book entry only.
Stock certificates will not be issued to MLLIC. Shares ordered from AVIF will
be recorded in an appropriate title for MLLIC, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached
hereto and made a part hereof, each Party will bear all expenses incident to
its performance under this Agreement.
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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, each Account's
prospectus, statement of additional information and any amendments or
supplements thereto (collectively, the "Account Prospectus"), each Fund's
prospectus, statement of additional information and any amendments or
supplements thereto (collectively, the "Fund Prospectus"), or other materials
of the Accounts or AVIF.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) AVIF represents and warrants that each Fund is currently
qualified and will continue to qualify as a regulated investment company
("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). AVIF will notify MLLIC 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 MLLIC 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 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) MLLIC agrees that if the Internal Revenue Service ("IRS")
asserts in writing in connection with any governmental audit or review of MLLIC
or, to MLLIC's knowledge, of any Policy owner, annuitant or participant under
the Policies (collectively, "Participants"), that any Fund has failed to comply
with the diversification requirements of Section 817(h) of the Code or MLLIC
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) MLLIC shall promptly notify AVIF of such assertion or
potential claim;
(ii) MLLIC shall consult with AVIF as to how to minimize
any liability that may arise as a result of such
failure or alleged failure;
(iii) MLLIC shall use its best efforts to minimize any
liability of AVIF or its affiliates resulting from
such failure, including, without limitation,
demonstrating, pursuant to Treasury Regulations
Section 1.817-5(a)(2), to the Commissioner of the IRS
that such failure was inadvertent;
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(iv) MLLIC shall permit AVIF, its affiliates and their
legal and accounting 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 MLLIC will
retain control of the conduct of such conferences
discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by MLLIC to the
IRS, any Participant or any other claimant in
connection with any of the foregoing proceedings or
contests (including, without limitation, any such
materials to be submitted to the IRS pursuant to
Treasury Regulations Section 1.817-5(a)(2)), (a)
shall be provided by MLLIC to AVIF (together with any
supporting information or analysis) at least ten (10)
Business Days or such shorter period to which the
Parties hereto may agree prior to the day on which
such proposed materials are to be submitted, and (b)
shall not be submitted by MLLIC to any such person
without the express written consent of AVIF which
shall not be unreasonably withheld;
(vi) MLLIC 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 MLLIC) 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) MLLIC 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 MLLIC shall not
be required, after exhausting all administrative
penalties, to appeal any adverse judicial decision
unless AVIF or its affiliates shall have provided an
opinion of independent counsel 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; and
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(viii) AVIF and its affiliates shall have no liability as a
result of such failure or alleged failure if MLLIC
fails to comply with any of the foregoing clauses (i)
through (vii), and such failure could be shown to
have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written
consent to any compromise or settlement of any claim or liability hereunder,
MLLIC may, in its discretion, authorize AVIF or its affiliates to act in the
name of MLLIC 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 MLLIC 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) Subject to Sections 4.1(a) and 4.1(b) hereof, MLLIC
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; MLLIC 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) MLLIC represents and warrants that each Account is a
"segregated asset account" and that, subject to Sections 4.1(a) and 4.1(b)
hereof, 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. MLLIC will
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) AVIF will use its best efforts to comply with any applicable
state insurance laws or regulations, to the extent specifically requested in
writing by MLLIC, including, the furnishing of information not otherwise
available to MLLIC which is required by state insurance law to enable MLLIC to
obtain the authority needed to issue the Contracts in any applicable state.
(b) MLLIC 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 Arkansas and has full corporate power, authority and legal right
to execute, deliver and perform its duties and comply with its obligations
under this Agreement, (ii) it has legally and validly established and maintains
each Account as a segregated asset account under Section 00-00-000 of the
Arkansas 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.
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(c) AVIF represents and warrants that it is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Maryland and has full power, authority, and legal right to execute, deliver,
and perform its duties and comply with its obligations under this Agreement.
(d) AIM represents and warrants that it is a Delaware corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and has full power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under this
Agreement.
4.3 SECURITIES LAWS.
(a) MLLIC 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
Arkansas law, (iii) each Account is and will remain registered under the 1940
Act, to the extent required by the 1940 Act, (iv) each Account does and will
comply in all material respects with the requirements of the 1940 Act and the
rules thereunder, to the extent required, (v) each Account's 1933 Act
registration statement relating to the 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) MLLIC will amend
the registration statement for its Contracts under the 1933 Act and for its
Accounts under the 1940 Act from time to time as required in order to effect
the continuous offering of its Contracts or as may otherwise be required by
applicable law, and (vii) each Account Prospectus will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder.
(b) AVIF and AIM represent and warrant that (i) Shares sold
pursuant to this Agreement will be registered under the 1933 Act to the extent
required by the 1933 Act and duly authorized for issuance and sold in
compliance with all applicable federal and state laws including, without
limitation, the 1933 Act, the 1934 Act, the 1940 Act and Maryland law, (ii)
AVIF is and will remain registered under the 1940 Act to the extent required by
the 1940 Act, (iii) AVIF will amend the registration statement for its Shares
under the 1933 Act and itself under the 1940 Act from time to time as required
in order to effect the continuous offering of its Shares, or as may be required
by applicable law, (iv) AVIF does and will comply in all material respects with
the requirements of the 1940 Act and the rules thereunder, (v) AVIF's 1933 Act
registration statement, together with any amendments thereto, will at all times
comply in all material respects with the requirements of the 1933 Act and rules
thereunder, and (vi) AVIF's Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder.
(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.
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4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF and/or AIM will immediately notify MLLIC of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to AVIF's registration statement
under the 1933 Act or AVIF Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or AVIF Prospectus that may affect the
offering of Shares of AVIF, (iii) the initiation of any proceedings for that
purpose or for any other purpose relating to the registration or offering of
AVIF's Shares, or (iv) any other action or circumstances that may prevent the
lawful offer or sale of Shares of any Fund in any state or jurisdiction,
including, without limitation, any circumstances in which (a) such Shares are
not registered and, in all material respects, issued and sold in accordance
with applicable state and federal law, or (b) such law precludes the use of
such Shares as an underlying investment medium of the Contracts issued or to be
issued by MLLIC. 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) MLLIC 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. MLLIC 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 MLLIC TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) MLLIC 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) MLLIC 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 ten (10)
Business Days prior to its use or such shorter period as the Parties hereto
may, from time to time, agree upon. No such material shall be used if AVIF or
its designated agent objects to such use within ten (10) Business Days after
receipt of such material or such shorter period as the Parties hereto may, from
time to time, agree upon. AVIF hereby designates AIM as the entity
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to receive such sales literature, until such time as AVIF appoints another
designated agent by giving notice to MLLIC in the manner required by Section 9
hereof.
(c) Neither MLLIC nor any of its affiliates, will give any
information or make any representations or statements on behalf of or
concerning AVIF, AIM or their respective 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 or supplemented 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. The parties hereto agree that this Section
4.5 is not intended to designate nor otherwise imply that MLLIC is an
underwriter or distributor of Shares of AVIF.
(d) MLLIC shall adopt and implement procedures reasonably designed
to ensure that information concerning AVIF, AIM and their 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 none of AVIF, AIM or
any of their respective affiliates shall be liable for any losses, damages or
expenses relating to the improper use of such broker only materials.
(e) For the purposes of this Section 4.5, the phrase "sales
literature or other promotional material" includes, but is not limited to,
advertisements and sales literature as defined in applicable rules of the NASD,
the 1933 Act or the 1940 Act, and educational or training materials or other
communications distributed or made generally available to some or all agents or
employees.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT MLLIC.
(a) AVIF will provide to MLLIC 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. AVIF shall provide MLLIC with as much
notice as is reasonably practicable of any proxy solicitation for a Fund and of
any material change in the Fund's Prospectus or registration statement,
particularly any change resulting in a change to the prospectus or registration
statement relating to the Contracts. Where such material changes are for
consideration by the Board of AVIF, such notice requirement of AVIF may be
satisfied by providing MLLIC with a copy of an agenda of the relevant Board of
Directors meeting of AVIF.
(b) AVIF will provide to MLLIC camera ready copies of all AVIF
prospectuses and printed copies, in an amount specified by MLLIC, 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, all in accordance with the
allocations specified in Schedule C. AVIF will provide such copies to MLLIC
in a timely manner so as to enable
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MLLIC to print and distribute such materials within the time required by law to
be furnished to Participants.
(c) AVIF or AIM will provide to MLLIC or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which MLLIC, or any of its affiliates is named, or that
refers to the Contracts, at least ten (10) Business Days prior to its use or
such shorter period as the Parties hereto may, from time to time, agree upon.
No such material shall be used if MLLIC or its designated agent objects to such
use within ten (10) Business Days after receipt of such material or such
shorter period as the Parties hereto may, from time to time, agree upon. MLLIC
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 MLLIC or its affilitates, 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 or
supplemented from time to time; or (ii) in published reports for the Account or
the Contracts that are in the public domain and approved by MLLIC for
distribution; or (iii) in sales literature or other promotional material
approved by MLLIC or its affiliates, except with the express written permission
of MLLIC.
(e) AIM shall adopt and implement procedures reasonably designed
to ensure that information concerning MLLIC, 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 MLLIC, 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 and sales literature as defined in applicable rules of the
NASD, the 1933 Act or the 1940 Act, and educational or training materials or
other communications distributed or made generally available to some or all
agents or employees.
(g) Except as otherwise expressly provided in this Agreement,
neither AVIF, its investment adviser, its principal underwriter, or any
affiliate thereof shall use any trademark, trade name, service xxxx or logo of
MLLIC or any of its affiliates, or any variation of any such trademark, trade
name, service xxxx or logo, without MLLIC's prior written consent, the
granting of which shall be at MLLIC's sole option. Except as otherwise
expressly provided in this Agreement, neither MLLIC nor any affiliate thereof
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 the prior written consent of AVIF or AIM,
the granting of which shall be at the sole option of AVIF, AIM or such
affiliate.
(h) AVIF and AIM agree to provide to MLLIC, as soon as available
under AIM's then applicable guidelines for release, the following information
with respect to each Fund, each as of the
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last Business Day of such calendar month: the Fund's ten (10) largest
portfolio holdings (based on percentage of the Fund's net assets); the five (5)
industry sectors in which the Fund's investments are most heavily weighted; the
relative proportion of the Fund's net assets invested in equity, bond, and cash
instruments, respectively; the broad geographic regions as applicable, in which
the Fund's investments are most heavily weighted; and year-to-date SEC
standard total return performance data. In addition, AVIF and AIM agree to
provide to MLLIC, as soon as available under AIM's then applicable guidelines
for release, the following information with respect to each Fund, each as of
the last Business Day of such quarter: a market commentary from the portfolio
manager of such Fund; a complete list of the Fund's portfolio holdings; and
access to the portfolio manager of such Fund at such portfolio manager's
primary office location for up to thirty (30) minutes per calendar quarter for
purposes of preparing audio and video tapes relating to the Fund's management
and performance (subject to the provisions of this Agreement). Also, AVIF and
AIM agree to provide to MLLIC, within fifteen (15) Business Days after a
request is submitted to AVIF or AIM by MLLIC, the following information with
respect to each Fund, each as of the date or dates specified in such request:
net asset value; net asset value per Share; and other Share information as may
be reasonably requested. AVIF and AIM acknowledge that such information may be
furnished to MLLIC's internal or independent auditors, and to the insurance
departments of the various jurisdictions in which MLLIC does business.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
The SEC has granted an order ("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 MLLIC, 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 Order granted to AVIF. AVIF hereby
notifies MLLIC that it may be appropriate to include in the prospectus pursuant
to which a Contract is offered disclosure regarding the potential risks of
Mixed and Shared Funding.
5.2 DISINTERESTED DIRECTORS.
AVIF agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not interested
persons of AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the
rules thereunder and as modified by any applicable orders of the SEC, except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any director, then the operation of this condition
shall be suspended (a) for a period of forty-five (45) days if the vacancy or
vacancies may be filled by the Board; (b) for a period
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of sixty (60) days if a vote of shareholders is required to fill the vacancy or
vacancies; or (c) for such longer period as the SEC may prescribe by order upon
application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
AVIF agrees that its Board of Directors will monitor for the existence
of any material irreconcilable conflict between the interests of the
Participants in all separate accounts of life insurance companies utilizing
AVIF ("Participating Insurance Companies"), including each Account, and
participants in all qualified retirement and pension plans investing in AVIF
("Participating Plans"). MLLIC agrees to inform the Board of Directors of AVIF
of the existence of or any potential for any such material irreconcilable
conflict of which it is aware. The concept of a "material irreconcilable
conflict" is not defined by the 1940 Act or the rules thereunder, but the
Parties recognize that such a conflict may arise for a variety of reasons,
including, without limitation:
(a) an action by any state insurance or other regulatory
authority;
(b) a change in applicable federal or state insurance, tax or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax or
securities regulatory authorities;
(c) an administrative or judicial decision in any relevant
proceeding;
(d) the manner in which the investments of any Fund are being
managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract Participants or by Participants
of different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to
disregard the voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
MLLIC will assist the Board of Directors in carrying out its
responsibilities by providing the Board of Directors with all information
reasonably necessary for the Board of Directors to consider any issue raised,
including information as to a decision by MLLIC to disregard voting
instructions of Participants. MLLIC'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 of Directors or a majority of the Disinterested Directors
that a material irreconcilable conflict exists, MLLIC will, if it is a
Participating Insurance Company for which a material irreconcilable conflict is
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relevant, at its own expense and to the extent reasonably practicable (as
determined by a majority of the Disinterested Directors), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict,
which steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the
Accounts from AVIF or any Fund and reinvesting such
assets in a different investment medium, including
another Fund of AVIF, or submitting the question whether
such segregation should be implemented to a vote of all
affected Participants and, as appropriate, segregating
the assets of any particular group (e.g., annuity
Participants, life insurance Participants or all
Participants) that votes in favor of such segregation, or
offering to the affected Participants the option of
making such a change; and
(ii) establishing a new registered investment company of the
type defined as a "management company" in Section 4(3) of
the 1940 Act or a new separate account that is operated
as a management company.
(b) If the material irreconcilable conflict arises because of
MLLIC's decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, MLLIC 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 MLLIC that this provision is being implemented, and until such
withdrawal AVIF shall continue to accept and implement orders by MLLIC 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 MLLIC conflicts
with the majority of other state regulators, then MLLIC will withdraw each
Account's investment in AVIF within six (6) months after AVIF's Board of
Directors informs MLLIC 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 MLLIC for the purchase and redemption of
Shares of AVIF. No charge or penalty will be imposed as a result of such
withdrawal.
(d) MLLIC agrees that any remedial action taken by it in resolving
any material irreconcilable conflict will be carried out at its expense and
with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors
will determine whether or not any proposed action adequately remedies any
material irreconcilable conflict. In no event, however, will AVIF or any of
its affiliates be required to establish a new funding medium for any Contracts.
MLLIC 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.
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5.5 NOTICE TO MLLIC.
AVIF will promptly make known in writing to MLLIC the Board of
Directors' determination of the existence of a material irreconcilable
conflict, a description of the facts that give rise to such conflict and the
implications of such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
MLLIC and AVIF (or its investment adviser) will at least annually
submit to the Board of Directors of AVIF such reports, materials or data as the
Board of Directors may reasonably request so that the Board of Directors may
fully carry out the obligations imposed upon it by the provisions hereof or
any exemptive order granted by the SEC to permit Mixed and Shared Funding, and
said reports, materials and data will be submitted at any reasonable time
deemed appropriate by the Board of Directors. All reports received by the
Board of Directors of potential or existing conflicts, and all Board of
Directors actions with regard to determining the existence of a conflict,
notifying Participating Insurance Companies and Participating Plans of a
conflict, and determining whether any proposed action adequately remedies a
conflict, will be properly recorded in the minutes of the Board of Directors or
other appropriate records, and such minutes or other records will be made
available to the SEC upon request.
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which AVIF is serving as an investment medium
for variable life insurance 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 upon six (6) months advance written
notice to the other Parties; or
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(b) at the option of AVIF upon institution of formal proceedings
against MLLIC or its affiliates by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding MLLIC's obligations under this
Agreement or related to the sale of the Contracts, the operation of each
Account, or the purchase of Shares, if, in each case, AVIF reasonably
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on the Fund with respect to which the Agreement is to be terminated; or
(c) at the option of MLLIC upon institution of formal proceedings
against AVIF, AIM, or their respective affiliates by the NASD, the SEC, or any
state insurance regulator or any other regulatory body regarding AVIF's or
AIM's obligations under this Agreement or related to the operation or
management of AVIF or the purchase of AVIF Shares, if, in each case, MLLIC
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 MLLIC, the Accounts, 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 MLLIC; or
(e) upon termination of the corresponding Subaccount's investment
in the Fund pursuant to Section 5 hereof; or
(f) at the option of MLLIC if the Fund ceases to qualify as a RIC
under Subchapter M of the Code or under successor or similar provisions, or if
MLLIC reasonably believes that the Fund may fail to so qualify; or
(g) at the option of MLLIC if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if MLLIC
reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by MLLIC 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 failure to cure a material breach of any
provision of this Agreement within thirty (30) days after written notice
thereof; or
(j) at the option of MLLIC upon receipt of any necessary
regulatory approvals to substitute the shares of another investment company for
Shares of the corresponding Fund in
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accordance with the terms of the Contracts for which those Fund Shares serve as
underlying funding media. MLLIC will give written notice to AVIF immediately
upon filing an application for substitution to substitute Shares of a Fund; or
(k) at the option of AVIF or AIM by written notice to MLLIC if
either AVIF or AIM shall conclude, in its sole judgment exercised in good
faith, that MLLIC or the principal underwriter for the Contracts has suffered a
material adverse change in its business, operations, financial condition, or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(l) at the option of MLLIC by written notice to AVIF or AIM, if
MLLIC shall conclude in its sole judgment exercised in good faith, that AVIF
and/or AIM has suffered a material adverse change in its business, operations,
financial condition, or prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(m) upon the assignment of this Agreement, unless made with the
written consent specified in Section 8 hereof.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until
the Party terminating this Agreement gives prior written notice to the other
Party to this Agreement of its intent to terminate, and such notice shall set
forth the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions
of Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given
at least six (6) months in advance of the effective date of termination unless
a shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions
of Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given
at least ninety (90) days in advance of the effective date of termination
unless a shorter time is agreed to by the Parties hereto;
(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; and
(d) in the event that any termination is based upon the provisions
of Sections 6.1(k), 6.1 (l) or 6.1(m) hereof, such prior written notice shall
be given as soon as possible, but, in any event, at least fifteen (15) days in
advance of the effective date of termination.
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6.3 FUNDS TO REMAIN AVAILABLE.
Except (a) as necessary to implement Participant-initiated
transactions, (b) as required by state insurance laws or regulations, (c) as
required pursuant to Section 5 of this Agreement, or (d) with respect to any
Fund as to which this Agreement has been terminated pursuant to Section 6.1(j)
hereof, MLLIC shall not (i) redeem AVIF Shares attributable to the Contracts
(as opposed to AVIF Shares attributable to MLLIC's assets held in each
Account), or (ii) prevent Participants from allocating payments to or
transferring amounts form a Fund that was otherwise available under the
Contracts, until ninety (90) days after MLLIC shall have notified AVIF of its
intention to do so.
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(a), 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h),
6.1(i), 6.1(j), 6.1(k), 6.1(l), or 6.1(m) 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 later 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 MLLIC
may, by written notice adjust said six (6) month period in the case of a
termination made at its option.
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable assistance
to one another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto. 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 by Section 9 hereof
will be given by means mutually acceptable to the Parties concerned. Each
other notice or communication required or
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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:
XXXXXXX XXXXX INSURANCE GROUP, INC.
Administrative Offices
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
Attn.: Xxxxx X. Xxxxxxxx, Esq.
AIM VARIABLE INSURANCE FUNDS, INC.
00 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn.: Xxxxx X. Xxxxxx, Esq.
A I M DISTRIBUTORS, INC.
00 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn.: Mr. W. Xxxx Xxxxxxxxxx
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Schedule C
hereto, pursuant to Section 3 hereof, MLLIC 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.
MLLIC will vote Shares in accordance with timely instructions received from
Participants. MLLIC will vote Shares that are (a) not attributable to
Participants to whom pass-through voting privileges are extended, or (b)
attributable to Participants, but for which no timely instructions have been
received, in the same proportion as Shares for which said instructions have
been received from Participants, so long as and to the extent that the SEC
continues to interpret the 1940 Act to require pass through voting privileges
for Participants. Subject to applicable law, neither MLLIC 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. MLLIC reserves
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the right to vote shares held in any Account in its own right, to the extent
permitted by law. MLLIC 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 Order obtained by AVIF. AVIF will notify MLLIC
of any changes of interpretations or amendments to the Mixed and Shared Funding
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 directors
and with whatever rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with MLLIC 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 MLLIC.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, MLLIC agrees to indemnify and hold harmless AVIF, its affiliates
(including AIM), and each person, if any, who controls AIM or its affiliates
within the meaning of Section 15 of the 1933 Act, and each of their respective
directors 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 MLLIC) or
actions in respect thereof (including, to the extent reasonable, legal and
other expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or actions are related to the sale or acquisition
of AVIF's Shares and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in any Account's 1933 Act registration statement, any
Account Prospectus, the 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 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
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information furnished to MLLIC 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 MLLIC or its
affiliates and on which such persons have reasonably
relied) or the negligent, illegal or fraudulent conduct
of MLLIC or its affiliates or persons under their
control (including, without limitation, their employees
and "Associated Persons," as that term is defined in
Section (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 or its
affiliates by or on behalf of MLLIC 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 MLLIC 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 MLLIC in this Agreement or arise
out of or result from any other material breach of this
Agreement by MLLIC; or
(v) arise as a result of failure by the Contracts issued by
MLLIC 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.
(b) MLLIC 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.
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(c) MLLIC 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 MLLIC 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 MLLIC of any such action shall not relieve MLLIC 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, MLLIC 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 MLLIC to
such Indemnified Party of MLLIC's election to assume the defense thereof, the
Indemnified Party will cooperate fully with MLLIC and shall bear the fees and
expenses of any additional counsel retained by it, and MLLIC 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 MLLIC 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 MLLIC, its
affiliates, and each person, if any, who controls MLLIC or its affiliates
within the meaning of Section 15 of the 1933 Act and each of their respective
directors 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; insofar as such losses,
claims, damages, liabilities or actions are related to the sale or acquisition
of AVIF's Shares and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in AVIF's 1933 Act registration statement, AVIF
Prospectus or sales literature or advertising of AVIF (or
any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading; provided, that this
agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon
and in conformity with information furnished to AVIF or
its affiliates by or on behalf of MLLIC or its 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
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(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 or AIM or their
respective affiliates and on which such persons have
reasonably relied) or the negligent, illegal or
fraudulent conduct of AVIF or AIM or their respective
affiliates or persons under their control (including,
without limitation, their employees and "Associated
Persons" as that term is defined in Section (q) of
Article I of the NASD By-Laws), in connection with the
sale or distribution of the Contracts or 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 MLLIC 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) 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) or actions in respect thereof (including, to the extent
reasonable, legal and other expenses) to which the Indemnified Parties may
become subject directly or indirectly under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or actions
directly or indirectly result from or arise out of the failure of any Fund to
operate as a regulated investment company in compliance with (i) Subchapter M
of the Code and regulations thereunder, or (ii) Section 817(h) of the Code and
regulations thereunder, including, without limitation, any income taxes and
related penalties, rescission charges, liability under state law to
Participants asserting liability against MLLIC 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 MLLIC of Shares of another investment company
or portfolio for those of any adversely affected Fund as a funding
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medium for each Account that MLLIC 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 MLLIC, 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 their 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 and/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 neither AVIF nor AIM will 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 either AVIF or AIM be liable under the
indemnification provisions contained in this Agreement to any individual or
entity, including, without limitation, MLLIC 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 MLLIC hereunder or by
any Participating Insurance Company under an agreement containing substantially
similar representations, warranties and covenants; (ii) the failure by MLLIC or
any Participating Insurance Company to maintain its segregated asset account
(which invests in any Fund) as a legally and validly established segregated
asset account under applicable state law and as a duly registered unit
investment trust under the provisions of the 1940 Act (unless exempt
therefrom); or (iii) subject to compliance by AVIF with Sections 4.1(a) and
4.1(b) hereof, the failure by MLLIC or any 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.
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12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12.1(c) or 12.2(d) above of participation in or
control of any action by the indemnifying Party will in no event be deemed to
be an admission by the indemnifying Party of liability, culpability or
responsibility, and the indemnifying Party will remain free to contest
liability with respect to the claim among the Parties or otherwise.
12.4 SUCCESSORS.
A successor by law of any Party shall be entitled to the benefits of
the indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Maryland law, without regard for that state's
principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
SECTION 16. RIGHTS CUMULATIVE
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
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SECTION 18. 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.
________________________
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers signing below.
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: /s/ XXXXX X. XXXXXX By: /s/ XXXXXX X. XXXXXX
-------------------------- ------------------------------
Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Assistant Secretary Title: President
A I M DISTRIBUTORS, INC.
Attest: /s/ XXXXX X. XXXXXX By: /s/ W. XXXX XXXXXXXXXX
------------------------- ------------------------------
Name: Xxxxx X. Xxxxxx Name: W. Xxxx Xxxxxxxxxx
------------------------- ------------------------------
Title: Assistant Secretary Title: Senior Vice President
------------------------- ------------------------------
XXXXXXX XXXXX LIFE INSURANCE
COMPANY, on behalf of
itself and its separate
accounts
Attest: /s/ XXXXXX X. XXXXXX, XX. By: /s/ BARRRY X. XXXXXXXX
------------------------- ------------------------------
Name: Xxxxxx X. Xxxxxx, Xx. Name: Xxxxx X. Xxxxxxxx
------------------------- -------------------------------
Vice president Senior Vice President
Title: and Senior Counsel Title: and General Counsel
-------------------------- -------------------------------
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SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
o AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
-------------------------------------
XXXXXXX XXXXX LIFE VARIABLE ANNUITY SEPARATE ACCOUNT A
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
-----------------------------------------
XXXXXXX XXXXX FUNDS RETIREMENT PLUS VARIABLE ANNUITY
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SCHEDULE B
AIM'S PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net
asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered
immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following
thresholds are applied:
a. If the amount of the difference in the erroneous net asset value
and the correct net asset value is less than .5% of the correct
net asset value, AIM will reimburse the affected Fund to the
extent of any loss resulting from the error. No other
adjustments shall be made.
b. If the amount of the difference in the erroneous net asset value
and the correct net asset value is .5% of the correct net asset
value or greater, then AIM will determine the impact of the error
to the affected Fund and shall reimburse such Fund (and/or MLLIC,
as appropriate, such as in the event that the error was not
discovered until after MLLIC 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 MLLIC has not mailed
redemption checks to Participants, MLLIC 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 MLLIC for MLLIC's reprocessing
costs in the amount of $3.00 per contract affected by $10 or more.
The Pricing Policies described herein may be modified by AVIF as approved by
its Board of Directors. AIM agrees to use its best efforts to notify MLLIC at
least five (5) days prior to any such meeting of the Board of Directors of AVIF
to consider such proposed changes.
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SCHEDULE C
EXPENSE ALLOCATIONS
DESCRIPTION MLLIC AIM/AVIF
Registration
------------
Prepare and file registration Account registration statements Fund registration statements
statements(1)
Payment of fees Account fees Fund fees
Prospectuses
-------------
Typesetting Account Prospectuses Fund Prospectuses
Account Prospectuses, and Fund Prospectuses distributed to
Printing Fund Prospectuses (but not for existing Participants(2)
existing Participants)
SAIs
----
Typesetting Account SAIs Fund SAIs
Printing Account SAIs Fund SAIs
Supplements (to Prospectuses
----------------------------
or SAIs
-------
Typesetting and Printing Account Supplements, and Fund Fund Supplements to existing
Supplements (but not for existing Participants(2)
Participants)
____________________
(1) Includes all filings and costs necessary to keep registrations current
and effective; including, without limitation, filing Forms N-SAR and Rule 24F-2
Notices as required by law.
(2) With respect to any AVIF material printed in combination with any
non-AVIF materials, total costs of typesetting and printing shall be prorated as
between AIM/AVIF on the one hand and MLLIC on the other based on (a) the ratio
of the number of pages of the combined prospectus, report, or other document,
for each Fund listed on Schedule A hereto to the total number of pages in such
combined prospectus, report, or other document; and (b) the ratio of the number
of Participants who invest in all Funds of AVIF to the total number of
Participants.
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DESCRIPTION MLLIC AIM/AVIF
Financial Reports
-----------------
Typesetting Account Reports Fund Reports to existing
Participants(2)
Printing Account Reports, and Fund Reports
(not to existing Participants)
Mailing and Distribution
------------------------
To Contract owners Account and Fund Prospectuses,
SAIs, Supplements and Reports
Account and Fund Prospectuses,
To Offerees SAIs, Supplements and Reports
Proxies
-------
Typesetting, printing and Account and Fund Proxies where the Fund Proxies where the matters
mailing of proxy solicitation matters submitted are solely submitted are solely Fund-related
materials and voting Account-related
instruction solicitation
materials and tabulation of Account Proxies even where the
proxies to Participants matters submitted are solely Fund-
related
Other (Sales-Related)
---------------------
Contract owner communication Account-related items and\
Fund-related items
Distribution
Policies
Administration
Account (Policies)
_________________________
(2) With respect to any AVIF material printed in combination with any
non-AVIF materials, total costs of typesetting and printing shall be prorated
as between AIM/AVIF on the one hand and MLLIC on the other based on (a) the
ratio of the number of pages of the combined prospectus, report, or other
document, for each Fund listed on Schedule A hereto to the total number of
pages in such combined prospectus, report, or other document; and (b) the ratio
of the number of Participants who invest in all Funds of AVIF to the total
number of Participants.
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