EXHIBIT 99-B.8.57
PARTICIPATION AGREEMENT
EXHIBIT 99-B.8.57
PARTICIPATION AGREEMENT
AMONG
PIONEER VARIABLE CONTRACTS TRUST,
AETNA LIFE INSURANCE AND ANNUITY COMPANY
PIONEER INVESTMENT MANAGEMENT, INC.
AND
PIONEER FUNDS DISTRIBUTOR, INC.
THIS AGREEMENT, made and entered into this first day of July, 2001, by
and among PIONEER VARIABLE CONTRACTS TRUST, a Delaware business trust (the
"Trust"), AETNA LIFE INSURANCE AND ANNUITY COMPANY, a Connecticut life insurance
company (the "Company") on its own behalf and on behalf of each of the
segregated asset accounts of the Company set forth in Schedule A hereto, as may
be amended from time to time (the "Accounts"), PIONEER INVESTMENT MANAGEMENT,
INC., a Delaware corporation ("PIM") and Pioneer Funds Distributor, Inc.
("PFD"), a corporation organized under the laws of The Commonwealth of
Massachusetts.
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and its shares are registered or will be registered under the Securities Act of
1933, as amended (the "1933 Act");
WHEREAS, shares of beneficial interest of the Trust are divided into
several series and classes of shares, each series being designated a "Portfolio"
and representing an interest in a particular managed pool of securities and
other assets;
WHEREAS, the Trust is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts to be offered by insurance companies, including Aetna
Life Insurance and Annuity Company, which have entered into participation
agreements with the Trust (the "Participating Insurance Companies");
WHEREAS, the Trust has obtained an order from the Securities and
Exchange Commission (the "SEC"), dated July 9, 1997 (File No. 812-10494) (the
"Mixed and Shared Funding Exemptive Order") 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 Trust to be sold to and held by variable
annuity and variable life insurance companies that may or may not be affiliated
with one another and qualified pension and retirement plans ("Qualified Plans");
WHEREAS, PIM is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
law, and is the Trust's investment adviser;
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WHEREAS, the Company will issue certain variable annuity and/or
variable life insurance contracts (individually, the "Contract" or,
collectively, the "Contracts") which, if required by applicable law, will be
registered under the 1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated
asset accounts, established by resolution of the Board of Directors of the
Company, to set aside and invest assets attributable to the aforesaid variable
annuity and/or variable life insurance contracts that are allocated to the
Accounts (the Contracts and the Accounts covered by this Agreement, and each
corresponding Portfolio covered by this Agreement in which the Accounts may
invest, is specified in Schedule A attached hereto as may be modified from time
to time);
WHEREAS, the Company has registered or will register the Accounts as
unit investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, the Portfolios offered by the Trust to the Company and the
Accounts are set forth on Schedule A attached hereto;
WHEREAS, Pioneer Funds Distributors, Inc. (the "Underwriter") is
registered as a broker-dealer with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended (hereinafter the
"1934 Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD") and is authorized to sell shares of the
Portfolios to unit investment trusts such as the Accounts;
WHEREAS, Aetna Investment Services, LLC ("AIS"), the underwriter for
the variable annuity and the variable life policies, is registered as a
broker-dealer with the SEC under the 1934 Act and is a member in good standing
of the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in one or more of the
Portfolios specified in Schedule A attached hereto (the "Shares") on behalf of
the Accounts to fund the Contracts, and PFD intends to sell such Shares to the
Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust,
PIM, PFD and the Company agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. PFD and the Company agree to provide pricing information, execute
orders and wire payments for purchases and redemptions of Fund shares
as set forth in this Article I until such time as they mutually agree
to utilize the National Securities Clearing Corporation ("NSCC"). Upon
such mutual agreement, PFD and the Company agree to provide pricing
information, execute orders and wire payments for purchases and
redemptions of Fund shares through NSCC and its subsidiary systems as
set forth in Exhibit I.
1.2 PFD agrees to sell to the Company those Shares which the Accounts
order in accordance with the terms of this Agreement (based on orders
placed by Contract owners or participants on that Business Day, as
defined below) and which are available for purchase by such Accounts.
Each such order will be executed on a daily basis at the net asset
value next computed after receipt by the Trust or its designee of the
order for the Shares. For purposes of this Section 1.2, the Company
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shall be the designee of the Trust for receipt of such orders from
Contract owners or participants and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust or its
designee receives written notice of such orders by the time the Trust
ordinarily calculates its net asset value as described from time to
time in the Trust's prospectus (which as of the date of this Agreement
is 4:00 p.m. New York time on such Business Day. The Company shall
provide written (or facsimile) notice to PFD of a net purchase of Fund
shares by 9:00 a.m. New York time on the following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange,
Inc. (the "NYSE") is open for trading and on which the Trust calculates
its net asset value pursuant to the rules of the SEC.
1.3. PFD agrees to make the Shares available for purchase at the
applicable net asset value per share by the Company and the Accounts on
those days on which the Trust calculates its net asset value in
accordance with the rules of the SEC. Notwithstanding the foregoing,
the Board of Trustees of the Trust (the "Board") may refuse to sell any
Shares to the Company and the Accounts, or suspend or terminate the
offering of the Shares to the Company and the Accounts if such action
is required by law or by regulatory authorities having jurisdiction
over PIM, PFD or the Trust or is, in the sole discretion of the Board
acting in good faith and in light of its fiduciary duties under federal
and any applicable state laws, in the best interest of the Shareholders
of such Portfolio.
1.4. The Trust and PFD will sell Trust shares only to Participating
Insurance Companies and Qualified Plans which have agreed to
participate in the Trust to fund their Separate Accounts and/or
Qualified Plans all in accordance with the requirement of Section
817(h) of the Internal Revenue Code, as amended (the "Code") and the
Treasury regulations thereunder. The Company will not resell the Shares
except to the Trust or its agents.
1.5. The Trust agrees, upon the Company's request, to redeem for cash,
any full or fractional Shares held by the Accounts (based on orders
placed by Contract owners on that Business Day). Each such redemption
request shall be executed on a daily basis at the net asset value next
computed after receipt by the Trust or its designee of the request for
redemption. For purposes of this Section 1.5, the Company shall be the
designee of the Trust for receipt of requests for redemption from
Contract owners or participants and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust or its
designee receives written notice of such request for redemption by the
time the Trust ordinarily calculates its net asset value as described
from time to time in the Trust's prospectus (which as of the date of
this Agreement is 4:00 p.m. New York time on such Business Day). The
Company shall provide written (or facsimile) notice to PFD of a net
redemption of Fund shares no later than 9:00 a.m. New York time on the
following Business Day.
1.6. Each purchase, redemption and exchange order placed by the Company
shall be placed separately for each Portfolio and shall not be netted
with respect to any Portfolio. However, with respect to payment of the
purchase price by the Company and of redemption proceeds by the Trust,
the Company and the Trust shall net purchase and redemption orders with
respect to each Portfolio and shall transmit one net payment for all of
the Portfolios in accordance with Section 1.7 hereof.
1.7. In the event of net purchases, the Company shall pay for the
Shares by 4:00 p.m. New York time on the next Business Day after an
order to purchase the Shares is made in accordance with the provisions
of Section 1.2. hereof. Company shall transmit all such payments in
federal funds by wire. If payment in federal funds for any purchase is
not received or is received by the Trust after 4:00 p.m. on such
Business Day, the Company shall promptly, upon the Trust's request,
reimburse
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the Trust for any charges, costs, fees, interest or other expenses
incurred by the Trust in connection with any advances to, or borrowings
or overdrafts by, the Trust, or any similar expenses (including the
cost of and any loss incurred by the Trust in unwinding any purchase of
securities by the Trust) incurred by the Trust as a result of portfolio
transactions effected by the Trust based upon such purchase request. In
the event of net redemptions, the Trust ordinarily shall pay and
transmit the proceeds of redemptions of Shares by 4:00 p.m. New York
time on the same Business Day on which the netredemption order is
received from the Company in accordance with Section 1.5. hereof,
although the Trust reserves the right to postpone the date of payment
or satisfaction upon redemption consistent with Section 22(e) of the
1940 Act and any rules pomulgated thereunder. Payments for net
redemptions shall be in federal funds transmitted by wire. If payment
in federal funds for any net redemption is not received or is received
by the Company after 4:00 p.m. on such Business Day, the Trust shall
promptly, upon the Company's request, reimburse the Company for any
charges, costs, fees, interest or other expenses incurred by the
Company in connection with any advances to, or borrowings or overdrafts
by, the Company, or any similar expenses incurred by the Company as a
result of its payment of redemption proceeds to Contract owners or
participants prior to receiving the redemption proceeds from the Trust.
1.8. Issuance and transfer of the Shares will be by book entry only.
Stock certificates will not be issued to the Company or the Accounts.
The Shares ordered from the Trust will be recorded in an appropriate
title for the Accounts or the appropriate subaccounts of the Accounts.
1.9. The Trust shall furnish notice (by wire or telephone, followed by
written confirmation) no later than 7:00 p.m. New York time on the
ex-dividend date to the Company of any dividends or capital gain
distributions payable on the Shares. The Company hereby elects to
receive all such dividends and distributions as are payable in cash or
Shares on a Portfolio's Shares in additional Shares of that Portfolio.
The Trust shall notify the Company by the end of the next following
Business Day of the number of Shares so issued as payment of such
dividends and distributions.
1.10. The Trust or its custodian shall make the net asset value per
share for each Portfolio available to the Company on each Business Day
as soon as reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make such net asset value
per share available by 6:00 p.m. New York time, but will in no event
provide such net asset value later than 7:00 p.m. New York time absent
extraordinary circumstances. In the event of extraordinary
circumstances resulting in an anticipated delay past 7:00 p.m., the
Trust or its custodian shall notify the Company no later than 7:00 p.m.
of such anticipated delay. In the event of an error in the computation
of a Portfolio's net asset value per share ("NAV") or any dividend or
capital gain distribution (each, a "pricing error"), PIM or the Trust
shall notify the Company as soon as possible after the discovery of the
error. Such notification may be verbal, but shall be confirmed promptly
in writing in accordance with Article XII of this Agreement. A pricing
error shall be corrected in accordance with the Trust's internal
policies and procedures. If an adjustment is necessary to correct a
material error that occurred through no fault of the Company and such
adjustment has caused Contract owners to receive less than the number
of Shares or redemption proceeds to which they are entitled, the number
of Shares of the applicable Account will be adjusted and the amount of
any underpayments will be paid by the Trust or PIM to the Company for
crediting of such amounts to the Contract owners' accounts. Upon
notification by PIM of any overpayment due to a material error, the
Company shall promptly remit to the Trust or PIM, as appropriate, any
overpayment that has not been paid to Contract owner; however, PIM
acknowledges that the Company does not intend to seek additional
payments form any Contract owner who, because of a pricing error, may
have underpaid for units
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of interest credited to his/her account. The costs of correcting such
adjustments shall be borne by the Trust or PIM unless the Company is at
fault in which case such costs shall be borne by the Company.
Specifically for the purposes of this Section 1.10, PIM shall indemnify
and hold the Company harmless, from the effective date of this
Agreement, against any amount the Company is required to pay to
Contract owners or participants due to: (i) an incorrect calculation of
a Portfolio's daily net asset value, dividend rate, or capital gains
distribution rate or (ii) incorrect or late reporting of the daily net
asset value, dividend rate, or capital gain distribution rate of a
Portfolio, upon written notification by the Company, with supporting
data, to PIM. In addition, PIM shall be liable to the Company for
reasonable systems and out of pocket costs incurred by the Company in
making a Contract owner's or a participant's account whole, if such
costs or expenses are a result of PIM's failure to provide timely or
correct net asset values, dividend and capital gains or financial
information and if such information is not corrected by 4:00 p.m. New
York time of the next business day after releasing such incorrect
information provided the incorrect NAV as well as the correct NAV for
each day that the error occurred is provided. If a mistake is caused in
supplying such information or confirmations, which results in a
reconciliation with incorrect information, the amount required to make
a Contract owner's or a participant's account whole shall be borne by
the party providing the incorrect information, regardless of when the
error is corrected.
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act or are exempt from or not subject to
registration thereunder, and that the Contracts will be issued, sold,
and distributed in compliance in all material respects with all
applicable state and federal laws, including without limitation the
1933 Act, the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the 1940 Act. The Company further represents and warrants
that it (i) is an insurance company duly organized and in good standing
under applicable law; (ii) has legally and validly established each
Account as a segregated asset account under applicable law; (iii) has
registered or, prior to any issuance or sale of the Contracts, will
register the Accounts as unit investment trusts in accordance with the
provisions of the 1940 Act (unless exempt therefrom) to serve as
segregated investment accounts for the Contracts, and (iv) will
maintain such registration for so long as any Contracts are
outstanding. The Company shall amend the registration statements under
the 1933 Act for the Contracts and the registration statements under
the 1940 Act for the Accounts from time to time as required in order to
effect the continuous offering of the Contracts or as may otherwise be
required by applicable law. The Company shall register and qualify the
Contracts for sales in accordance with the securities laws of the
various states only if and to the extent deemed necessary by the
Company. At the time the Company is required to deliver the Trust's
prospectus or statement of additional information to a purchaser of
Shares in accordance with the requirements of federal or state
securities laws, the Company shall distribute to such Contract
purchasers the then current Trust prospectus, as supplemented.
2.2. The Company represents and warrants that the Contracts are
currently and at the time of issuance will be treated as life
insurance, endowment or annuity contract under applicable provisions of
the Code, that it will maintain such treatment and that it will notify
the Trust or PIM immediately upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
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2.3. The Company represents and warrants that AIS, the underwriter for
the individual variable annuity contracts and the variable life
policies, is a member in good standing of the NASD and is a registered
broker-dealer with the SEC. The Company represents and warrants that
the Company and AIS will sell and distribute such contracts and
policies in accordance in all material respects with all applicable
state and federal securities laws, including without limitation the
1933 Act, the 1934 Act, and the 1940 Act and state insurance law
suitability requirements.
2.4. The Trust represents and warrants that the Shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized
for issuance in compliance with the laws of Delaware and that the Trust
is and shall remain registered under the 1940 Act. The Trust shall
amend the registration statement for its Shares under the 1933 Act and
the 1940 Act from time to time as required in order to effect the
continuous offering of its Shares. The Trust shall register and qualify
the Shares for sale in accordance with the laws of the various states
only if and to the extent deemed necessary by the Trust.
2.5. The Trust represents that it is lawfully organized and validly
existing under the laws of the State of Delaware. The Trust further
represents that it has adopted a pursuant to Rule 12b-1 under the 1940
Act and imposes an asset-based charge to finance its distribution
expenses with respect to the Class II shares of certain of the Trust's
Portfolios as permitted by applicable law and regulation.
2.6. PFD represents and warrants that it is a member in good standing
of the NASD and is registered as a broker-dealer with the SEC. PFD
represents that it will sell and distribute the Shares in accordance in
all material respects with all applicable state and federal securities
laws, including without limitation the 1933 Act, the 1934 Act, and the
0000 Xxx.
2.7. PIM represents and warrants that it is and shall remain duly
registered as an investment adviser under the Investment Advisers Act
of 1940, as amended.
2.8. No less frequently than annually, the Company shall submit to the
Board such reports, material or data as the Board may reasonably
request so that it may carry out fully the obligations imposed upon it
by the conditions contained in the Mixed and Shared Funding Exemptive
Order pursuant to which the SEC has granted exemptive relief to permit
mixed and shared funding.
2.9. The Trust and PIM represent and warrant that all of their
respective officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the
Trust are, and shall continue to be at all times, covered by one or
more blanket fidelity bonds or similar coverage for the benefit of the
Trust in an amount not less than the minimal coverage required by Rule
17g-1 under the 1940 Act or related provisions as may be promulgated
form time to time. The aforesaid bonds shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding
company. The Company represents and warrants that all of its respective
officers, employees, and other individuals or entities employed or
controlled by the Company dealing with the money and/or securities of
the Trust are, and shall continue to be at all times, covered by a
blanket fidelity bond or similar coverage in an deemed appropriate by
the Company. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company. The
Company agrees that any amounts received under such bond relating to a
claim arising under this Agreement will be held by the Company for the
benefit of the Trust. The Company agrees to make all reasonable efforts
to maintain such bond and agrees to notify the Trust and PIM in writing
in the event such coverage terminates.
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2.10. The Company represents and warrants, for purposes other than
diversification under Section 817 of the Code, that the Contracts are
currently at the time of issuance and, assuming the Trust meets the
requirements of Article VI, will be treated as annuity contracts under
applicable provisions of the Code, and that it will make every effort
to maintain such treatment and that it will notify the Trust, PFD and
PIM immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they might not be so
treated in the future. In addition, the Company represents and warrants
that each Account is a "segregated asset account" and that interests in
the 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. The Company
will use every effort to continue to meet such definitional
requirements, and it will notify the Trust, PFD and PIM 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. The
Company represents and warrants that it will not purchase Trust shares
with assets derived from tax-qualified retirement plans except,
indirectly, through Contracts purchased in connection with such plans.
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1. At least annually, the Trust or its designee shall provide the
Company, free of charge, with as many copies of the current prospectus
(describing only the Portfolios listed in Schedule A hereto) for the
Shares as the Company may reasonably request for distribution to
existing Contract owners whose Contracts are funded by such Shares. The
Trust or its designee shall provide the Company, at the Company's
expense, with as many copies of the current prospectus for the Shares
as the Company may reasonably request for distribution to prospective
purchasers of Contracts. If requested by the Company in lieu thereof,
the Trust or its designee shall provide such documentation (including a
"camera ready" copy of the new prospectus as set in type or, at the
request of the Company, as a diskette in the form sent to the financial
printer) and other assistance as is reasonably necessary in order for
the parties hereto once each year (or more frequently if the prospectus
for the Shares is supplemented or amended) to have the prospectus for
the Contracts and the prospectus for the Shares printed together in one
document; the expenses of such printing to be apportioned between (a)
the Company and (b) the Trust or its designee in proportion to the
number of pages of the Contract and Shares' prospectuses, taking
account of other relevant factors affecting the expense of printing,
such as covers, columns, graphs and charts; the Trust or its designee
to bear the cost of printing the Trust's prospectus portion of such
document for distribution to owners of existing Contracts funded by the
Shares and the Company to bear the expenses of printing the portion of
such document relating to the Accounts; provided, however, that the
Company shall bear all printing expenses of such combined documents
where used for distribution to prospective purchasers or to owners of
existing Contracts not funded by the Shares. In the event that the
Company requests that the Trust or its designee provides the Trust's
prospectus in a "camera ready," diskette format or other mutually
agreed upon format, the Trust shall be responsible for providing the
prospectus in the format in which it or PIM is accustomed to formatting
prospectuses and shall bear the expense of providing the prospectus in
such format (e.g., typesetting expenses), and the Company shall bear
the expense of adjusting or changing the format to conform with any of
its prospectuses, subject to PIM's approval which shall not be
unreasonably withheld.
3.2. The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from the Trust or
its designee. The Trust or its designee, at its expense, shall print
and provide such statement of additional information to the Company (or
a master of such statement suitable for duplication by the Company) for
distribution to any owner of a Contract
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funded by the Shares. The Trust shall also provide such statement of
additional information to the Company in a mutually agreed upon
electronic format. The Trust or its designee, at the Company's expense,
shall print and provide such statement to the Company (or a master of
such statement suitable for duplication by the Company) for
distribution to a prospective purchaser who requests such statement or
to an owner of a Contract not funded by the Shares.
3.3. The Trust or its designee shall provide the Company free of charge
copies, if and to the extent applicable to the Shares, of the Trust's
proxy materials, reports to Shareholders and other communications to
Shareholders in such quantity as the Company shall reasonably require
for distribution to Contract owners. The cost of distributing such
documents shall be borne the Trust or its designee.
3.4 The Trust or PIM will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Portfolio, and
of any material change in the Trust's registration statement,
particularly any change resulting in change to the registration
statement or prospectus or statement of additional information for any
Account. The Trust and PIM will cooperate with the Company so as to
enable the Company to solicit proxies from Contract owners or to make
changes to its prospectus, statement of additional information or
registration statement, in an orderly manner. The Trust and PIM will
make reasonable efforts to attempt to have changes affecting Contract
prospectuses become effective simultaneously with the annual updates
for such prospectuses. In addition, the Trust or its designee shall
bear the reasonable expense of all of the Company's costs associated
with a proxy for the Trust, including proxy preparation, group
authorization letters, programming for tabulation and necessary
materials (including postage).
3.5. The Trust hereby notifies the Company 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.
3.6. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Contract owners;
(b) vote the Shares in accordance with instructions
received from Contract owners; and
(c) vote the Shares for which no instructions have been
received in the same proportion as the Shares of such
Portfolio for which instructions have been received
from Contract owners;
so long as and to the extent that the SEC continues to interpret the
1940 Act to require pass through voting privileges for variable
contract owners. The Company will in no way recommend action in
connection with or oppose or interfere with the solicitation of proxies
for the Shares held for such Contract owners. The Company reserves the
right to vote shares held in any segregated asset account in its own
right, to the extent permitted by law. Participating Insurance
Companies shall be responsible for assuring that each of their separate
accounts holding Shares calculates voting privileges in the manner
required by the Mixed and Shared Funding Exemptive Order. The Trust and
PIM will notify the Company of any changes of interpretations or
amendments to the Mixed and Shared Funding Exemptive Order.
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ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to PFD
or its designee, each piece of sales literature or other promotional
material in which the Trust, PIM, any other investment adviser to the
Trust, or any affiliate of PIM are named, at least five (5) Business
Days prior to its use. No such material shall be used if PFD or its
designee reasonably objects to such use within five (5) Business Days
after receipt of such material. PFD or its designee shall notify the
Company within five (5) Business Days of receipt of its approval or
disapproval of such materials.
4.2. The Company shall not make any representation on behalf of the
Trust, PIM, any other investment adviser to the Trust or any affiliate
of PIM and shall not give any information on behalf of the Trust, PIM,
any other investment adviser to the Trust, or any affiliate of PIM or
concerning the Trust or any other such entity in connection with the
sale of the Contracts other than the information contained in the
registration statement, prospectus or statement of additional
information for the Shares, as such registration statement, prospectus
and statement of additional information may be amended or supplemented
from time to time, or in reports or proxy statements for the Trust, or
in sales literature or other promotional material approved by the
Trust, PIM, PFD or their respective designees, except with the
permission of the Trust, PIM or their respective designees. The Trust,
PIM, PFD or their respective designees each agrees to respond to any
request for approval on a prompt and timely basis. The Company shall
adopt and implement procedures reasonably designed to ensure that
information concerning the Trust, PIM, PFD or any of their affiliates
which is intended for use only by brokers or agents selling the
Contracts (i.e., information that is not intended for distribution to
Contract owners or prospective Contract owners) is so used, and neither
the Trust, PIM, PFD nor any of their affiliates shall be liable for any
losses, damages or expenses relating to the improper use of such broker
only materials.
4.3. PFD shall furnish, or shall cause to be furnished, to the Company
or its designee, each piece of sales literature or other promotional
material in which the Company and/or the Accounts is named, at least
five (5) Business Days prior to its use. No such material shall be used
if the Company or its designee reasonably objects to such use within
five (5) Business Days after receipt of such material. The Company
shall notify PFD within five (5) Business Days of receipt of its
approval or disapproval of such materials.
4.4. The Trust, PIM and PFD shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Accounts, or the Contracts in connection with the sale of the Contracts
other than the information or representations contained in a
registration statement, prospectus, or statement of additional
information for the Contracts, as such registration statement,
prospectus and statement of additional information may be amended or
supplemented from time to time, or in reports for the Accounts, or in
sales literature or other promotional material approved by the Company
or its designee, except with the permission of the Company. The Company
or its designee agrees to respond to any request for approval on a
prompt and timely basis. The parties hereto agree that this Section
4.4. is neither intended to designate nor otherwise imply that PIM is
an underwriter or distributor of the Contracts.
4.5. The Trust shall provide, or shall cause to be provided, to the
Company at least one complete copy of all registration statements,
prospectuses, statements of additional information, reports, proxy
statements, sales literature and other promotional materials, and all
amendments to any of the above, that relate to the Trust or its Shares,
prior to or contemporaneously with the filing of such document with the
SEC or other regulatory authorities. The Company shall provide, or
cause to be provided, for approval by the Trust, the form of any
disclosure that it intends to use in
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any registration statements, prospectuses, statements of additional
information, and all amendments to any of the above, that relate to the
use of the Portfolios of the Trust as investment options under the
Contracts.
4.6. For purpose of this Article IV and Article VIII, 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, electronic messages or tape recording, videotape display,
signs or billboards, motion pictures, or other public media, including,
for example, on-line networks such as the Internet or other electronic
media), and sales literature (such as brochures, electronic messages,
circulars, reprints or excerpts or any other advertisement, sales
literature, or published articles), distributed or made generally
available to customers or the public, educational or training materials
or communications distributed or made generally available to some or
all agents or employees, and shareholder reports, proxy materials
(including solicitations for voting instructions) and any other
material constituting sales literature or advertising under the NASDR
Conduct Rules, the 1933 Act or the 1940 Act. However, such phrase
"sales literature or other promotional material" shall not include any
material that simply lists the names of Portfolios of the Trust in a
list of investment options.
4.7. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representative of the appropriate regulatory agencies, all records,
data, access to operating procedures that may be reasonably requesting
in connection with compliance and regulatory requirements related to
the Agreement or any party's obligations under this Agreement.
ARTICLE V. FEES AND EXPENSES
5.1. Neither the Trust, PIM nor PFD shall pay any fee or other
compensation to the Company under this Agreement, other than pursuant
to Schedule B attached hereto, and the Company shall pay no fee or
other compensation to the Trust, PIM or PFD under this Agreement.
Notwithstanding the foregoing, the parties hereto will bear certain
expenses under the provisions of this Agreement and shall reimburse
other parties for expenses initially paid by one party but allocated to
another party. In addition, nothing herein shall prevent the parties
hereto from otherwise agreeing to perform, and arranging for
appropriate compensation for, other services relating to the Trust
and/or to the Accounts pursuant to this Agreement.
5.2. The Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable
federal and state laws, including preparation and filing of the Trust's
registration statement, and payment of filing fees and registration
fees; preparation and filing of the Trust's proxy materials and reports
to Shareholders; setting in type and printing its prospectus and
statement of additional information (to the extent provided by and as
determined in accordance with Article III above); setting in type and
printing the proxy materials and reports to Contract owners and
participants (to the extent provided by and as determined in accordance
with Article III above); the preparation of all statements and notices
required of the Trust by any federal or state law with respect to its
Shares; all taxes on the issuance or transfer of the Shares; and the
costs of distributing the Trust's prospectuses, reports to Shareholders
and proxy materials to owners of Contracts and participants funded by
the Shares and any expenses permitted to be paid or assumed by the
Trust pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act.
The Trust shall not bear any expenses of marketing the Contracts.
- 10 -
5.3. The Company shall bear the expenses of distributing the Shares'
prospectus or prospectuses in connection with new sales of the
Contracts. The Company shall bear all expenses associated with the
registration, qualification, and filing of the Contracts under
applicable federal securities and state insurance laws; the cost of
preparing, printing and distributing the Contract prospectus and
statement of additional information; and the cost of preparing,
printing and distributing annual individual account statements for
Contract owners as required by state insurance laws.
5.4. The Company agrees to provide certain administrative services,
specified in Schedule B attached hereto, in connection with the
arrangements contemplated by this Agreement. The parties intend that
the services referred to in the Section 5.4 be recordkeeping,
shareholder communication, and other transaction facilitation and
processing, and related administrative serves and are not the services
of an underwriter or principal underwriter of the Trust and the Company
is not an underwriter for Shares within the meaning of the 1933 Act.
ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS
6.1. The Trust and PIM represent and warrant that each Portfolio of the
Trust in which an Account invests will meet the diversification
requirements of Section 817(h)(1) of the Code and Treas. Reg. 1.817-5,
relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts, as they may be amended from
time to time (and any revenue rulings, revenue procedures, notices, and
other published announcements of the Internal Revenue Service
interpreting these sections), as if those requirements applied directly
to each such Portfolio.
6.2. The Trust and PIM represent that each Portfolio will elect to be
qualified as a Regulated Investment Company under Subchapter M of the
Code and that they will maintain such qualification (under Subchapter M
or any successor or similar provision).
6.3. No Shares of the Trust will be sold directly to the general
public.
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
7.1. The Trust agrees that the Board, constituted with a majority of
disinterested trustees, will monitor each Portfolio of the Trust for
the existence of any material irreconcilable conflict between the
interests of the variable annuity contract owners and the variable life
insurance policy owners of the Company and/or affiliated companies
("contract owners") investing in the Trust. A material irreconcilable
conflict may arise for a variety of reasons, including: (a) an action
by any state insurance 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 interpretive
letter, or any similar action by insurance, tax or securities
regulatory authorities; (c) an administrative or judicial decision in
nay relevant proceeding; (d) the manner in which the investments of any
Portfolio are being managed; (e) a difference in voting instructions
given by variable annuity contract and variable life insurance contract
owners or by contract owners of different Participating Insurance
Companies; or (f) a decision by a Participating Insurance Company to
disregard the voting instructions of contract owners. The Board shall
have the sole authority to determine if a material irreconcilable
conflict exists, and such determination shall be binding on the Company
only if approved in the form of a resolution by a majority of the
Board, or
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a majority of the disinterested trustees of the Board. The Board will
give prompt notice of any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the
Board in carrying out its responsibilities under the conditions set
forth in the Trust's exemptive application pursuant to which the SEC
has granted the Mixed and Shared Funding Exemptive Order by providing
the Board, as it may reasonably request, with all information necessary
for the Board to consider any issues raised and agrees that it will be
responsible for promptly reporting any potential or existing conflicts
of which it is aware to the Board including, but not limited to, an
obligation by the Company to inform the Board whenever contract owner
voting instructions are disregarded. The Company also agrees that, if a
material irreconcilable conflict arises, it will at its own cost remedy
such conflict up to and including (a) withdrawing the assets allocable
to some or all of the Accounts from the Trust or any Portfolio and
reinvesting such assets in a different investment medium, including
(but not limited to) another Portfolio of the Trust, or submitting to a
vote of all affected contract owners whether to withdraw assets from
the Trust or any Portfolio and reinvesting such assets in a different
investment medium and, as appropriate, segregating the assets
attributable to any appropriate group of contract owners (e.g., annuity
contract owners, life insurance owners or variable contract owners of
one or more Participating Insurance Companies) that votes in favor of
such segregation, or offering to any of the affected contract owners
the option of segregating the assets attributable to their contracts or
policies, and (b) establishing a new registered management investment
company and segregating the assets underlying the Contracts, unless a
majority of Contract owners materially adversely affected by the
conflict have voted to decline the offer to establish a new registered
management investment company.
7.3. A majority of the disinterested trustees of the Board shall
determine whether any proposed action by the Company adequately
remedies any material irreconcilable conflict. In the event that the
Board determines that any proposed action does not adequately remedy
any material irreconcilable conflict, the Company will withdraw from
investment in the Trust each of the Accounts designated by the
disinterested trustees and terminate this Agreement within six (6)
months after the Board informs the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination
shall be limited to the extent required to remedy any such material
irreconcilable conflict as determined by a majority of the
disinterested trustees of the Board.
7.4 If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority
vote, the Company may be required, at the Trust's election, to withdraw
the Account's investment in the Trust and terminate this Agreement;
provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the Trust's independent
trustees. Any such withdrawal and termination must take place within
six (6) months after the Trust gives written notice that this provision
is being implemented, and until the end of that six-month period PFD
and the Trust shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the Trust.
7.5. If material irreconcilable conflict arises because of particular
state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company
will withdraw the Account's investment in the Trust and terminate this
Agreement within six (6) months after the Trust's Board informs the
Company in writing that it has determined that such decision has
created a material irreconcilable conflict; provided, however,
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that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Trust's
Board. Until the end of the foregoing six (6) month period, the Trust
and PFD shall continue to accept and implement orders by the Company
for the purchase and redemption of shares of the Trust.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine
whether any proposed action adequately remedies any material
irreconcilable conflict, but in no event will the Trust be required to
establish a new funding medium for the Contracts. The Company shall not
be required by Section 7.2 to establish a new funding medium for the
contracts if an offer to do so has been declined by vote of a majority
of Contract owners affected by the material irreconcilable conflict. In
the event that the Board determines that any proposed action does not
adequately remedy any material irreconcilable conflict, then the
Company will withdraw the Account's investment in the Trust and
terminate this Agreement within six (6) months after the Board informs
the Company in writing of the foregoing determination; provided,
however, that such withdrawal and termination shall be limited to the
extent required by any such material irreconcilable conflict as
determined by a majority of the independent trustees.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the 1940 Act or the rules promulgated thereunder with respect to
mixed or shared funding (as defined in the Mixed and Shared Funding
Exemptive Order) on terms and conditions materially different from
those contained in the Mixed and Shared Funding Exemptive Order, then
(a) the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with
Rule 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.5, 3.6, 7.1, 7.2,
7.3 and 7.7 of this Agreement shall continue in effect only to the
extent that terms and conditions substantially identical to such
Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless the Trust,
PIM, PFD, any affiliates of PIM, and each of their respective
directors, trustees, officers and each person, if any, who controls the
Trust or PIM within the meaning of Section 15 of the 1933 Act, and any
agents or employees of the foregoing (each an "Indemnified Party," or
collectively, the "Indemnified Parties" for purposes of this Section
8.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Company) or expenses (including reasonable counsel fees) to which any
Indemnified Party may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements:
(a) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the registration statement, prospectus
or statement of additional information for the
Contracts or contained in the Contracts or sales
literature or other promotional material for the
Contracts (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the
omission
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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 reasonable reliance upon and in conformity
with information furnished to the Company or its
designee by or on behalf of the Trust, PIM or
PFD for use in the registration statement, prospectus
or statement of additional information for the
Contracts or in the Contracts or sales literature or
other promotional material (or any amendment or
supplement) or otherwise for use in connection with
the sale of the Contracts or Shares; or
(b) arise out of or as a result of statements or
representations not supplied by the Company or its
designee, or persons under its control (other than
statements or representations contained in the
Trust's registration statement, prospectus, statement
of additional information or in sales literature or
other promotional material of the Trust and on which
the Company has reasonably relied) or wrongful
conduct of the Company or persons under its control,
with respect to the sale or distribution of the
Contracts or Shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the
registration statement, prospectus, statement of
additional information, or sales literature or other
promotional literature of the Trust, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statement or statements therein not misleading,
if such statement or omission was made in reliance
upon information furnished to the Trust by or on
behalf of the Company; or
(d) arise out of or result from any material breach of
any representation and/or warranty made by the
Company in this Agreement or arise out of or result
from any other material breach of this Agreement by
the Company; or
(e) arise as a result of any failure by the Company to
perform any of its obligations under this
Agreement;
as limited by and in accordance with the provisions of this Article
VIII.
8.2. INDEMNIFICATION BY PIM AND PFD
PIM and PFD agree to indemnify and hold harmless the Company
and AIS and each of their trustees and officers and each person, if
any, who controls the Company or AIS within the meaning of Section 15
of the 1933 Act, and any agents or employees of the foregoing (each an
"Indemnified Party," or collectively, the "Indemnified Parties" for
purposes of this Section 8.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the
written consent of the Trust) or expenses (including reasonable counsel
fees) to which any Indemnified Party may become subject under any
statute, at common law or otherwise, insofar as
- 14 -
such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition
of the Shares or the Contracts and:
(a) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the registration statement, prospectus,
statement of additional information or sales
literature or other promotional material of the Trust
(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 statement 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 reasonable reliance upon and in
conformity with information furnished to the Trust,
PIM, PFD or their respective designees by or on
behalf of the Company for use in the registration
statement, prospectus or statement of additional
information for the Trust or in sales literature or
other promotional material for the Trust (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Shares;
or
(b) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contract's
registration statement, prospectus, statement of
additional information or in sales literature or
other promotional material for the Contracts not
supplied by the Trust, PIM, PFD or any of their
respective designees or persons under their
respective control and on which any such entity has
reasonably relied) or wrongful conduct of the Trust,
PIM, PFD or persons under their control, with respect
to the sale or distribution of the Contracts or
Shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the
registration statement, prospectus, statement of
additional information, or sales literature or other
promotional literature of the Accounts or relating to
the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein
or necessary to make the statement or statements
therein not misleading, if such statement or
omission was made in reliance upon information
furnished to the Company by or on behalf of the
Trust, PIM or PFD; or
(d) arise out of or result from any material breach of
any representation and/or warranty made by the Trust
in this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to
comply with the diversification requirements
specified in Article VI of this Agreement) or arise
out of or result from any other material breach of
this Agreement by the Trust; or
(e) arise out of or result from the materially incorrect
or untimely calculation or reporting of the daily net
asset value per share or dividend or capital gain
distribution rate; or
(f) arise as a result of any failure by PIM or PFD to
perform any of their respective obligations under
this Agreement;
as limited by and in accordance with the provisions of this Article
VIII.
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8.3. In no event shall the Trust, PIM or PFD be liable under the
indemnification provisions contained in this Agreement to any
individual or entity, including without limitation, the Company, or any
Participating Insurance Company or any Contract owner, 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 the Company hereunder or by any Participating
Insurance Company under an agreement containing substantially similar
representations, warranties and covenants; (ii) the failure by the
Company or any Participating Insurance Company to maintain its
segregated asset account (which invests in any Portfolio) as a legally
and validly established segregated asset account under applicable state
law and as a duly registered unit investment trust under the provisions
of the 1940 Act (unless exempt therefrom); or (iii) the failure by the
Company or any Participating Insurance Company to maintain its variable
annuity and/or variable life insurance contracts (with respect to which
any Portfolio serves as an underlying funding vehicle) as life
insurance, endowment or annuity contracts under applicable provisions
of the Code.
8.4. Neither the Company, the Trust, PIM nor PFD shall be liable under
the indemnification provisions contained in this Agreement with respect
to any losses, claims, damages, liabilities or expenses to which an
Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, willful misconduct, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations
and duties under this Agreement.
8.5. Promptly after receipt by an Indemnified Party under this Section
8.5. of notice of commencement of any action, such Indemnified Party
will, if a claim in respect thereof is to be made against the
indemnifying party under this section, notify the indemnifying party of
the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any Indemnified Party otherwise than under this section. In
case any such action is brought against any Indemnified Party, and it
notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, assume the defense thereof, with counsel
satisfactory to such Indemnified Party. After notice from the
indemnifying party of its intention to assume the defense of an action,
the Indemnified Party shall bear the expenses of any additional counsel
obtained by it, and the indemnifying party shall not be liable to such
Indemnified Party under this section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation.
8.6. A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this
Article VIII. The indemnification provisions contained in this Article
VIII shall survive any termination of this Agreement.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the SEC may grant (including, but not limited to, the
Mixed and Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
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ARTICLE X. NOTICE OF FORMAL PROCEEDINGS OR LITIGATION
The Trust, PIM, PFD and the Company agree that each such party
shall promptly notify the other parties to this Agreement, in writing,
of the institution of any formal proceedings brought against such party
or its designees by the NASD, the SEC, or any insurance department or
any other regulatory body regarding such party's duties under this
Agreement or related to the sale of the Contracts, the operation of the
Accounts, or the purchase of the Shares. Each of the parties further
agrees promptly to notify the other parties of the commencement of any
litigation or proceeding against it or any of its respective officers,
directors, trustees, employees or 1933 Act control persons in
connection with this Agreement, the issuance or sale of the Contracts,
the operation of the Accounts, or the sale or acquisition of Shares.
The indemnification provisions contained in this Article X shall
survive any termination of this Agreement.
ARTICLE XI. TERMINATION
11.1. This Agreement shall terminate with respect to the Accounts,
or one, some, or all Portfolios:
(a) at the option of any party upon three (3) months'
advance written notice delivered to the other
parties; provided, however, that such notice shall
not be given earlier than three (3) months following
the date of this Agreement; or
(b) at the option of the Company to the extent that the
Shares of Portfolios are not reasonably available to
meet the requirements of the Contracts or are not
"appropriate funding vehicles" for the Contracts, as
reasonably determined by the Company. Without
limiting the generality of the foregoing, the Shares
of a Portfolio would not be "appropriate funding
vehicles" if, for example, such Shares did not meet
the diversification or other requirements referred to
in Article VI hereof; or if the Company would be
permitted to disregard Contract owner voting
instructions pursuant to Rule 6e-2 or 6e-3(T) under
the 1940 Act. Prompt notice of the election to
terminate for such cause and an explanation of such
cause shall be furnished to the Trust by the Company;
or
(c) at the option of the Trust, PIM or PFD upon
institution of formal proceedings against the Company
by the NASD, the SEC, or any insurance department or
any other regulatory body regarding the Company's
duties under this Agreement or related to the sale of
the Contracts, the operation of the Accounts, or the
purchase of the Shares; provided that the party
terminating this Agreement under this provision shall
give notice of such termination to the other parties
to this Agreement; or
(d) at the option of the Company upon institution of
formal proceedings against the Trust by the NASD, the
SEC, or any state securities or insurance department
or any other regulatory body regarding the duties of
the Trust, PIM or PFD under this Agreement or related
to the sale of the Shares; provided that the party
terminating this Agreement under this provision shall
give notice of such termination to the other parties
to this Agreement; or
- 17 -
(e) at the option of the Company, the Trust, PIM or PFD
upon receipt of any necessary regulatory approvals
and/or the vote of the Contract owners having an
interest in the Accounts (or any subaccounts) to
substitute the shares of another investment company
for the corresponding Portfolio Shares in accordance
with the terms of the Contracts for which those
Portfolio Shares had been selected to serve as the
underlying investment media. The Company will give
thirty (30) days' prior written notice to the Trust
of the Date of any proposed vote or other action
taken to replace the Shares; or
(f) at the option of the Trust, PIM or PFD by written
notice to the Company, if any one or all of the
Trust, PIM or PFD respectively, shall determine, in
their sole judgment exercised in good faith, that the
Company 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
(g) at the option of the Company by written notice to the
Trust, PIM or PFD, if the Company shall determine, in
its sole judgment exercised in good faith, that the
Trust, PIM or PFD has suffered a material adverse
change in this business, operations, financial
condition or prospects since the date of this
Agreement or is the subject of material adverse
publicity; or
(h) at the option of any party to this Agreement, upon
another unaffiliated party's material breach of any
provision of or representation contained in this.
11.2. The notice shall specify the Portfolio or Portfolios, Contracts
and, if applicable, the Accounts as to which the Agreement is to be
terminated.
11.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1(a) may be exercised
for cause or for no cause.
11.4. Except as necessary to implement Contract owner initiated
transactions, or as required by state insurance laws or regulations,
the Company shall not redeem the Shares attributable to the Contracts
(as opposed to the Shares attributable to the Company's assets held in
the Accounts), and the Company shall not prevent Contract owners from
allocating payments to a Portfolio that was otherwise available under
the Contracts, until thirty (30) days after the Company shall have
notified the Trust of its intention to do so.
11.5. Notwithstanding any termination of this Agreement, the Trust and
PFD shall, at the option of the Company, continue for a period not
exceeding six (6) months to make available additional shares of the
Portfolios pursuant to the terms and conditions of this Agreement, for
all Contracts in effect on the effective date of termination of this
Agreement (the "Existing Contracts"), except as otherwise provided
under Article VII of this Agreement; provided, however, that in the
event of a termination pursuant to Section 11.1. (c), (f) or (h), the
Trust, PIM and PFD shall at their option have the right to terminate
immediately all sales of Shares to the Company. Specifically, without
limitation, the owners of the Existing Contracts shall be permitted to
transfer or reallocate investment under the Contracts, redeem
investments in any Portfolio and/or invest in the Trust upon the making
of additional purchase payments under the Existing Contracts.
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11.6 Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII to indemnify the other parties shall
survive and not be affected by any termination of this Agreement. In
addition, with respect to Existing Contracts, all provisions of this
Agreement shall also survive and not be affected by any termination of
this Agreement
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail, overnight courier or facsimile to the other party at the address
of such party set forth below or at such other address as such party may from
time to time specify in writing to the other party.
If to the Trust:
PIONEER VARIABLE CONTRACTS TRUST
x/x Xxxx xxx Xxxx
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Secretary
If to the Company:
AETNA LIFE INSURANCE AND ANNUITY COMPANY
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx, Counsel
If to PIM:
PIONEER INVESTMENT MANAGEMENT, INC.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxx, Senior Counsel
If to PFD:
PIONEER FUNDS DISTRIBUTOR, INC.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Senior Vice President
ARTICLE XIII. MISCELLANEOUS
-------------
13.1. Subject to the requirement of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and,
except as permitted by this Agreement or as otherwise required by
applicable law or regulation, shall not disclose, disseminate or
utilize such names and addresses and other confidential information
without the
- 19 -
express written consent of the affected party until such time as it may
come into the public domain. Without limiting the foregoing, no party
hereto shall disclose any information that another party has designated
as proprietary.
13.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
13.3. This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the
same instrument.
13.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
13.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
13.6. Each party hereto shall cooperate with each other party in
connection with inquiries by appropriate governmental authorities
(including without limitation the SEC, the NASD, and state insurance
regulators) and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
13.7. 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, which the parties hereto are entitled
to under state and federal laws.
13.8. A copy of the Trust's Certificate of Trust is on file with the
Secretary of State of Delaware. The Company acknowledges that the
obligations of or arising out of this instrument are not binding upon
any of the Trust's trustees, officers, employees, agents or
shareholders individually, but are binding solely upon the assets and
property of the Trust in accordance with its proportionate interest
hereunder. The Company further acknowledges that the assets and
liabilities of each Portfolio are separate and distinct and that the
obligations of or arising out of this instrument are binding solely
upon the assets or property of the Portfolio on whose behalf the Trust
has executed this instrument. The Company also agrees that the
obligations of each Portfolio hereunder shall be several and not joint,
in accordance with its proportionate interest hereunder, and the
Company agrees not to proceed against any Portfolio for the obligations
of another Portfolio.
13.9. Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in a
forum jointly selected by the relevant parties (but if applicable law
requires some other forum, then, such other forum) in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.
13.10. This Agreement of any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of
all parties hereto.
13.11. The Trust, PIM and PFD agree that the obligations assumed by the
Company shall be limited in any case to the Company and its assets and
neither the Trust, PIM nor PFD shall seek satisfaction of any such
obligation from the shareholders of Company, the directors, officers,
employees or agents of the Company, or any of them.
- 20 -
13.12. No provision of the Agreement may be deemed or construed to
modify or supersede any contractual rights, duties, or
indemnifications, as between PIM and the Trust and PFD and the Trust.
13.13. This Agreement, including any Schedules hereto, may be amended
only by a written instrument executed by each party hereto.
- 21 -
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified above.
AETNA LIFE INSURANCE AND ANNUITY COMPANY
By its authorized officer,
By: /s/ Xxxxxx X. Xxxxxxxxxxx
--------------------------
Name: Xxxxxx X. Tilinghast
Title: Vice President
Date: July 1, 0000
XXXXXXX XXXXXXXX XXXXXXXXX XXXXX,
XX BEHALF OF THE PORTFOLIOS
By its authorized officer and not individually,
By: /s/ Xxxxxx X. Xxxxx
-------------------
Xxxxxx X. Xxxxx
Secretary
Date:
PIONEER INVESTMENT MANAGEMENT, INC.
By its authorized officer,
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
----------------
Chief Executive Officer
Date:
- 22 -
SCHEDULE A
ACCOUNTS, CONTRACTS AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
--------------------------------------
AS OF JULY 1, 2001
============================================= =========================================== =======================================
NAME OF SEPARATE
ACCOUNT AND DATE CONTRACTS FUNDED PORTFOLIOS AND
ESTABLISHED BY BOARD OF DIRECTORS BY SEPARATE ACCOUNT CLASS OF SHARES
AVAILABLE TO CONTRACTS
============================================= =========================================== =======================================
VARIABLE ANNUITY ACCOUNT B, ESTABLISHED 1974 VARIABLE ANNUITY PIONEER FUND VCT PORTFOLIO (CLASS I AND
CLASS II)
VARIABLE ANNUITY ACCOUNT C, ESTABLISHED 1974
VARIABLE ANNUITY PIONEER EQUITY-INCOME VCT PORTFOLIO
VARIABLE ANNUITY ACCOUNT D, ESTABLISHED 1974 (CLASS I AND CLASS II)
VARIABLE LIFE ACCOUNT C, ESTABLISHED 1999 VARIABLE ANNUITY PIONEER MID-CAP VALUE VCT PORTFOLIO
(CLASS I AND CLASS II)
VARIABLE LIFE
--------------------------------------------- ------------------------------------------- ---------------------------------------
- 23 -
SCHEDULE B
FEES TO THE COMPANY
-------------------
1. Administrative Services
-----------------------
Administrative services to Contract owners and participants shall be
the responsibility of the Company and shall not be the responsibility of the
Trust or PFD. The Company will provide properly registered and licensed
personnel and any systems needed for all Contract owners servicing and support -
for both fund and annuity and life insurance information and questions,
including:
o Communicate all purchase, withdrawal, and exchange orders it receives from
its customers to PFD;
o Respond to Contract owner and participant inquires;
o Delivery of both Trust and Contract prospectuses as required under
applicable law;
o Entry of initial and subsequent orders;
o Transfer of cash to Portfolios;
o Explanations of Portfolio objectives and characteristics;
o Entry of transfers between Portfolios;
o Portfolio balance and allocation inquires; and
o Provide information to Trust's proxy vendor to enable vendor to mail Trust
proxies.
2. Administrative Service Fees
---------------------------
For the administrative services set forth above, PIM or any of its
affiliates shall pay a servicing fee based on the annual rate of ___% of the
average aggregate net daily assets invested in the Class I Shares of the
Portfolios and ____% of the average aggregate net daily assets invested in the
Class II Shares of the Portfolios through the Accounts at the end of each
calendar quarter. Such payments will be made to the Company within thirty (30)
days after the end of each calendar quarter. Such fees shall be paid quarterly
in arrears. Each payment will be accompanied by a statement showing the
calculation of the fee payable to the Company for the quarter and such other
supporting data as may be reasonably requested by the Company. The Company will
calculate the asset balance on each day on which the fee is to be paid pursuant
to this Agreement with respect to each Portfolio for the purpose of reconciling
its calculation of average aggregate net daily assets with PIM's calculation.
Annually (as of 12/31) or upon reasonable request of PIM, Company will provide
PIM a statement showing the number of subaccounts in each Class of Shares of
each Portfolio as of the most recent calendar quarter end.
3. 12b-1 Distribution Related Fees (Class II Shares Only)
------------------------------------------------------
In accordance with the Portfolios' plans pursuant to Rule 12b-1 under
the Investment Company Act of 1940, PFD will make payments to the Company at an
annual rate of ____% of the average daily net assets invested in the Class II
shares of the Portfolios through the Accounts in each calendar quarter. PFD will
make such payments to the Company within thirty (30) days after the end of each
calendar quarter. Each payment will be accompanied by a statement showing the
calculation of the fee payable to the Company for the quarter and such other
supporting data as may be reasonably requested by the Company. The 12b-1
distribution related fees will be paid to the Company for as long as the
Accounts own any Shares of a Portfolio and (i) distribution services are being
provided pursuant to this Agreement and (ii) a 12b-1 plan is in effect with
respect to such Portfolio.
24
EXHIBIT I
TO
PARTICIPATION AGREEMENT
Procedures for Pricing and Order/Settlement Through National Securities
Clearing Corporation's Mutual Fund Profile System and Mutual Fund
Settlement, Entry and Registration Verification System
1. As provided in Section 1.1 of the Participation Agreement, the parties
hereby agree to provide pricing information, execute orders and wire
payments for purchases and redemptions of Fund shares through National
Securities Clearing Corporation ("NSCC") and its subsidiary systems as
follows:
(a) Distributor or the Funds will furnish to Aetna or its affiliate through
NSCC's Mutual Fund Profile System ("MFPS") (1) the most current net
asset value information for each Fund, (2) a schedule of anticipated
dividend and distribution payment dates for each Fund, which is subject
to change without prior notice, ordinary income and capital gain
dividend rates on the Fund's ex-date, and (3) in the case of fixed
income funds that declare daily dividends, the daily accrual or the
interest rate factor. All such information shall be furnished to Aetna
or its affiliate by 6:30 p.m. Eastern Time on each business day that
the Fund is open for business (each a "Business Day") or at such other
time as that information becomes available. Changes in pricing
information will be communicated to both NSCC and Aetna.
(b) Upon receipt of Fund purchase, exchange and redemption instructions for
acceptance as of the time at which a Fund's net asset value is
calculated as specified in such Fund's prospectus ("Close of Trading")
on each Business Day ("Instructions"), and upon its determination that
there are good funds with respect to Instructions involving the
purchase of Shares, Aetna or its affiliate will calculate the net
purchase or redemption order for each Fund. Orders for net purchases or
net redemptions derived from Instructions received by Aetna or its
affiliate prior to the Close of Trading on any given Business Day will
be sent to the Defined Contribution Interface of NSCC's Mutual Fund
Settlement, Entry and Registration Verification System ("Fund/SERV") by
5:00 a.m. Eastern Time on the next Business Day. Subject to Aetna's or
its affiliate's compliance with the foregoing, Aetna or its affiliate
will be considered the agent of the Distributor and the Funds, and the
Business Day on which Instructions are received by Aetna or its
affiliate in proper form prior to the Close of Trading will be the date
as of which shares of the Funds are deemed purchased, exchanged or
redeemed pursuant to such Instructions. Instructions received in proper
form by Aetna or its affiliate after the Close of Trading on any given
Business Day will be treated as if received on the next following
Business Day. Dividends and capital gains distributions will be
automatically reinvested at net asset value in accordance with the
Fund's then current prospectuses.
(c) Aetna or its affiliate will wire payment for net purchase orders by the
Fund's NSCC Firm Number, in immediately available funds, to an NSCC
settling bank account designated by Aetna or its affiliate no later
than 5:00 p.m. Eastern time on the same Business Day such purchase
orders are communicated to NSCC. For purchases of shares of daily
dividend accrual funds, those shares will not begin to accrue dividends
until the day the payment for those shares is received.
(d) NSCC will wire payment for net redemption orders by Fund, in
immediately available funds, to an NSCC settling bank account
designated by Aetna or its affiliate, by 5:00 p.m. Eastern Time on the
Business Day such redemption orders are communicated to NSCC, except as
provided in a Fund's prospectus and statement of additional
information.
- 25 -
(e) With respect to (c) or (d) above, if Distributor does not send a
confirmation of Aetna's or its affiliate's purchase or redemption order
to NSCC by the applicable deadline to be included in that Business
Day's payment cycle, payment for such purchases or redemptions will be
made the following Business Day.
(f) If on any day Aetna or its affiliate, or Distributor is unable to meet
the NSCC deadline for the transmission of purchase or redemption
orders, it may at its option transmit such orders and make such
payments for purchases and redemptions directly to Distributor or Aetna
or its affiliate, as applicable, as is otherwise provided in the
Agreement.
(g) These procedures are subject to any additional terms in each Fund's
prospectus and the requirements of applicable law. The Funds reserve
the right, at their discretion and without notice, to suspend the sale
of shares or withdraw the sale of shares of any Fund.
2. Aetna or its affiliate, Distributor and clearing agents (if applicable)
are each required to have entered into membership agreements with NSCC and
met all requirements to participate in the MFPS and Fund/SERV systems
before these procedures may be utilized. Each party will be bound by the
terms of their membership agreement with NSCC and will perform any and all
duties, functions, procedures and responsibilities assigned to it and as
otherwise established by NSCC applicable to the MFPS and Fund/SERV system
and the Networking Matrix Level utilized.
3. Except as modified hereby, all other terms and conditions of the
Agreement shall remain in full force and effect. Unless otherwise indicated
herein, the terms defined in the Agreement shall have the same meaning as
in this Exhibit.
- 26 -
