EX-99.B.8.62
PARTICIPATION AGREEMENT
AMONG
PORTFOLIO PARTNERS, INC.,
AETNA LIFE INSURANCE AND ANNUITY COMPANY,
AND
AETNA INVESTMENT SERVICES, LLC
THIS AGREEMENT, dated as of the 28TH day of November, 2001, by and among
Portfolio Partners, Inc. (the "Fund"), a management investment company organized
under the laws of the State of Maryland, Aetna Life Insurance and Annuity
Company, a life insurance company organized under the laws of the State of
Connecticut, referred to herein as the "Adviser" in its capacity as investment
adviser to the Fund, and referred to herein as the "Company" in its capacity as
the issuer of variable annuity and variable life insurance contracts, on its own
behalf and on behalf of each separate account of the Company set forth on
Schedule A hereto as may be amended from time to time (each such account
hereinafter referred to as the "Account") and Aetna Investment Services, LLC
(the "Distributor"), a limited liability company organized under the laws of the
State of Delaware.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for (a) separate
accounts established for variable life insurance and variable annuity contracts
(the "Variable Insurance Products") to be offered by insurance companies which
have entered into participation agreements with the Fund, Adviser and
Distributor ("Participating Insurance Companies"); and (b) qualified pension and
retirement plans held outside the separate account context which meet the
definition of retirement plans under Section 401, 404 and 457 of the Internal
Revenue Code and custodial accounts under Section 403(b)(7) and 408 of the
Internal Revenue Code (collectively referred to herein as "Qualified Plans" or
"Qualified Plan").
WHEREAS, the shares of common stock of the Fund are divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets, and each
Portfolio is comprised of one or more classes of shares currently consisting of
the Initial Class, Adviser Class and Service Class;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (the "SEC") 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 Investment Company
Act of 1940, as amended, (the "1940 Act") and Rules 6e-2(b)(15) and
6e3(T)(b)(15) thereunder, if and to the extent necessary to permit shares
of the Fund to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated life insurance
companies, certain investment advisers and qualified pension and retirement
plans, (the "Mixed and Shared Funding Exemptive Order") and the parties to this
Agreement agree to comply with the conditions or undertakings specified in the
Mixed and Shared Funding Exemptive Order to the extent applicable to each such
party;
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the Adviser, which serves as investment adviser to the Designated
Portfolios (as hereinafter defined) of the Fund, is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as amended;
WHEREAS, the Company has registered or will register certain variable
annuity contracts (the "Contracts") under the 1933 Act (except for those
Contracts for which no registration is required);
WHEREAS, the Account is a duly organized, validly existing segregated asset
account, established by the Company under the insurance laws of the State of
Connecticut, to set aside and invest assets attributable to the Contracts;
WHEREAS, the Company has registered the Account as a unit investment trust
under the 1940 Act (except for those Accounts for which no registration is
required);
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable annuity contracts supported wholly or partially by the
Account (the "Contracts");
WHEREAS, the Company provides various administrative and shareholder
services in connection with the investment by Qualified Plans in the Fund under
a separate Selling and Services Agreement with the Fund and the Distributor;
WHEREAS, the Distributor, which serves as distributor to the Fund, is
registered as a broker dealer with the SEC under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed in
Schedule B hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios") on behalf of the Account to fund the
aforesaid Contracts and the Distributor is authorized to sell such shares to the
Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Adviser, and the Distributor agree as follows:
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ARTICLE I. SALE OF FUND SHARES
1.1. The Fund agrees to sell to the Company those shares of the
Designated Portfolios that each Account or the appropriate subaccount of each
Account orders, executing such orders on a daily basis at the net asset value
next computed after receipt and acceptance by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1, the Company
will be the designee of the Fund for receipt of such orders from each Account or
the appropriate subaccount of each Account and receipt by such designee will
constitute receipt by the Fund; provided that the Fund receives notice of such
order by 9:00 a.m. Eastern Time on the next following business day ("T+1").
"Business Day" will mean any day on which the New York Stock Exchange is open
for trading and on which the Fund calculates its net asset value pursuant to the
rules of the SEC.
1.2 The Company will pay for Fund shares on T+1 that an order to
purchase Fund shares is made in accordance with Section 1.1 above. Payment will
be in federal funds transmitted by wire. This wire transfer will occur by 4:00
p.m. Eastern Time.
1.3 The Fund agrees to make shares of the Designated Portfolios
available indefinitely for purchase at the applicable net asset value per share
by Participating Insurance Companies and their separate accounts on those days
on which the Fund calculates its Designated Portfolio net asset value pursuant
to rules of the SEC and the Fund shall use reasonable efforts to calculate such
net asset value on each day the New York Stock Exchange is open for trading;
provided, however, that the Board of Directors of the Fund (the "Fund Board")
may refuse to sell shares of any Portfolio to any person, or suspend or
terminate the offering of shares of any Portfolio if such action is required by
law or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Fund Board, acting in good faith and in light of its fiduciary
duties under federal and any applicable state laws, necessary in the best
interests of the shareholders of such Portfolio.
1.4 On each Business Day on which the Fund calculates its net
asset value, the Company will aggregate and calculate the net purchase or
redemption orders for each Account or the appropriate subaccount of each Account
maintained by the Fund in which contractowner or participant assets are
invested. Net orders will only reflect orders that the Company has received
prior to the close of regular trading on the New York Stock Exchange, Inc. (the
"NYSE") (currently 4:00 p.m., Eastern time) on that Business Day. Orders that
the Company has received after the close of regular trading on the NYSE will be
treated as though received on the next Business Day. Each communication of
orders by the Company will constitute a representation that such orders were
received by it prior to the close of regular trading on the NYSE on the Business
Day on which the purchase or redemption order is priced in accordance with Rule
22c-1 under the 1940 Act. Other procedures relating to the handling of orders
will be in accordance with the prospectus and statement of information of the
relevant Designated Portfolio or with oral or written instructions that the
Distributor or the Fund will forward to the Company from time to time.
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1.5 The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts, qualified pension
and retirement plans or such other persons as are permitted under applicable
provisions of the Internal Revenue Code of 1986, as amended, (the "Internal
Revenue Code"), and regulations promulgated thereunder, the sale to which will
not impair the tax treatment currently afforded the Contracts. No shares of any
Portfolio will be sold to the general public except as set forth in this Section
1.5.
1.6 The Fund agrees to redeem for cash, upon the Company's
request, any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt and acceptance by the Fund or its agent of the request for
redemption. For purposes of this Section 1.7, the Company will be the designee
of the Fund for receipt of requests for redemption from each Account or the
appropriate subaccount of each Account and receipt by such designee will
constitute receipt by the Fund, provided the Fund receives notice of request for
redemption by 9:00 a.m. Eastern Time on the next following Business Day. Payment
will be in federal funds transmitted by wire to the Company's account as
designated by the Company in writing from time to time, by 4 p.m. on the same
Business Day the Fund receives notice of the redemption order from the Company.
The Fund reserves the right to delay payment of redemption proceeds, but in no
event may such payment be delayed longer than the period permitted by the 0000
Xxx. The Fund will not bear any responsibility whatsoever for the proper
disbursement or crediting of redemption proceeds; the Company alone will be
responsible for such action. If notification of redemption is received after
10:00 a.m. Eastern Time, payment for redeemed shares will be made on the next
following Business Day.
1.7 The Company agrees to purchase and redeem the shares of the
Designated Portfolios offered by the then current prospectus and statement of
additional information (SAI) of the Fund in accordance with the provisions of
such prospectus and SAI.
1.8 Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate subaccount of each
Account.
1.9 The Fund will furnish same day notice (by electronic
transmission or telecopier) to the Company of the declaration of any income,
dividends or capital gain distributions payable on each Designated Portfolio's
shares. The Company hereby elects to receive all such dividends and
distributions as are payable on the Designated Portfolio shares in the form of
additional shares of that Designated Portfolio. The Fund will notify the Company
of the number of shares so issued as payment of such dividends and
distributions. The Company reserves the right to revoke this election upon
reasonable prior notice to the Fund and to receive all such dividends and
distributions in cash.
1.10 The Fund will make the net asset value per share for each
Designated Portfolio available to the Company on a daily basis as soon as
reasonably practical after the net asset value per share is calculated and will
use its best efforts to make such net asset value per share available by 6:30
p.m., Eastern Time, but in no event later than 7:00 p.m., Eastern Time, each
Business Day.
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1.11 For purposes of Articles 1 and 4, the Fund or the Adviser
shall be liable to the Company for any amount the Company is required to pay to
contractowners or participants due to (i) an in correct calculation of a Fund's
daily net asset value, dividend rate, or capital gain distribution rate or (ii)
incorrect or late reporting of the daily net asset value, capital gain
distribution rate of a Fund, upon written notification by the Company, with
supporting data, to the Adviser. In addition, the Fund or the Adviser shall be
liable to the Company for systems and out of pocket costs incurred by the
Company in making a contractowner's or participant's account whole, if such
costs or expenses are a result of the Fund'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 p.m. EST of the next business day
after releasing such incorrect information provided the incorrect NAV as well as
the correct NAV for each day that the error occurred is provided. If a mistake
is caused in supplying such information or confirmations, which results in a
reconciliation with incorrect information, the amount required to make a
contractowner's or participant's account whole shall be borne by the party
providing the incorrect information, regardless of when the error is corrected.
1.12
(a) The parties hereto acknowledge that the
arrangement contemplated by this Agreement is not exclusive; the Fund's shares
may be sold to other insurance companies (subject to Section 1.6 hereof) and the
cash value of the Contracts may be invested in other investment companies,
provided, however, that until this Agreement is terminated pursuant to Article
X, the Company shall promote the Designated Portfolios on the same basis as
other funding vehicles available under the Contracts and funding vehicles other
than those listed on Schedule B to this Agreement may be available for the
investment of the cash value of the Contracts.
(b) The Company shall not, without prior notice to the
Adviser and the Distributor (unless otherwise required by applicable law), take
any action to operate the Account as a management investment company under the
1940 Act.
(c) The Company shall not, without prior notice to the
Adviser and the Distributor (unless otherwise required by applicable law),
induce contractowners or participants to change or modify the Fund or change the
Fund's distributor or investment adviser.
(d) The Company shall not, without prior notice to the
Fund, induce contractowners or participants to vote on any matter submitted for
consideration by the shareholders of the Fund in a manner other than as
recommended by the Fund Board.
1.13 In lieu of the applicable provisions set forth in Article 1
above, the parties may agree to provide pricing information, execute orders and
wire payments for purchases and redemptions through National Securities Clearing
Corporation's Fund/SERV system in which case such activities will be governed by
the provisions set forth in an Exhibit to this Agreement.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
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2.1. The Company represents and warrants that the Contracts are
or will be registered under the 1933 Act (except those Contracts which are not
registered because they are properly exempt from registration under the 0000
Xxx) and that the Contracts will be issued and sold in compliance with all
applicable federal and state laws, including state insurance suitability
requirements. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law and
that it has legally and validly established each Account as a separate account
under applicable state law and has registered the Account as a unit investment
trust in accordance with the provisions of the 1940 Act (except to the extent
that such registration is not required) to serve as a segregated investment
account for the Contracts, and that it will maintain such registration for so
long as any Contracts are outstanding. The Company will amend the registration
statement under the 1933 Act for the Contracts and the registration statement
under the 1940 Act for the Account 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 will register and qualify the Contracts for sale
in accordance with the securities laws of the various states only if and to the
extent deemed necessary by the Company.
2.2. The Company represents that the Contracts are currently and
at the time of issuance will to treated as endowment, annuity or life insurance
contracts under applicable provisions of the Internal Revenue Code, and that it
will make every effort to maintain such treatment and that it will notify the
Fund and the Adviser 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.
2.3. The Fund represents and warrants that Fund shares of the
Designated Portfolios sold pursuant to this Agreement will be registered under
the 1933 Act and duly authorized for issuance in accordance with applicable law
and that the Fund is and will remain registered under the 1940 Act for as long
as such shares of the Designated Portfolios are outstanding. The Fund will 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 Fund will register and qualify the shares of the Designated
Portfolios for sale in accordance with the laws of the various states only if
and to the extent deemed advisable by the Fund.
2.4. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code,
and that it will make every effort to maintain such qualification (under
Subchapter M or any successor or similar provision) and that it will notify the
Company immediately upon having a reasonable basis for believing that it has
ceased to so qualify or that it might not so qualify in the future.
2.5. The Fund represents and warrants that in performing the
services described in this Agreement, the Fund will comply with all applicable
laws, rules and regulations. The Fund makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies, objectives and restrictions) complies with the insurance
laws and regulations of any state. The Fund and the Distributor agree that upon
request they will use their best efforts to furnish the information required by
state insurance laws so that the Company can obtain the authority needed to
issue the Contracts in the various states.
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2.6. The Adviser Class Shares of each Portfolio are subject to a
distribution fee, payable to the Distributor pursuant to a Rule 12b-1 Plan
adopted for the Adviser Class in accordance with the 1940 Act. The Rule 12b-1
Plan permits the Distributor to enter into distribution services agreements with
and pay, on behalf of each Adviser Class Portfolio, compensation to certain
securities dealers, brokers, financial institutions or other industry
professionals ("Service Organizations") for providing distribution assistance.
The Adviser Class and Service Class Shares of each Portfolio
are subject to a shareholder servicing fee payable to Service Organizations
pursuant to Shareholder Servicing Plans adopted for the Adviser and Service
Classes. The Fund may enter into shareholder servicing agreements and pay, on
behalf of each Adviser and Service Class Portfolio, compensation to Service
Organizations for providing administrative support services to shareholders.
The Initial Class is not currently subject to a distribution
or shareholder servicing fee.
2.7. The Distributor represents and warrants that it will
distribute the Fund shares of the Designated Portfolios in accordance with all
applicable federal and state securities laws including, without limitation, the
1933 Act, the 1934 Act and the 0000 Xxx.
2.8. The Fund represents that it is lawfully organized and
validly existing under the laws of the State of Maryland and that it does and
will comply in all material respects with applicable provisions of the 0000 Xxx.
2.9. The Distributor represents and warrants that it is and will
remain duly registered under all applicable federal and state securities laws
and that it will perform its obligations for the Fund in accordance in all
material respects with any applicable state and federal securities laws.
2.10. The Fund and the Distributor represent and warrant that all
of their directors, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of the Fund
are and continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond
includes coverage for larceny and embezzlement and is issued by a reputable
bonding company.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Fund or the Distributor will provide the Company, at the
Company's expense, with as many copies of the current Fund prospectus for the
Designated Portfolios as the Company may reasonably request for distribution to
prospective contractowners, participants and applicants. The Fund or the
Distributor will provide, at the Fund's or its affiliate's expense, as many
copies of said prospectus as necessary for distribution to existing
contractowners or participants. The Fund or the Distributor will provide the
copies of said prospectus to the Company or to its mailing agent. If requested
by the Company in lieu thereof, the Fund or the
7
Distributor will provide such documentation, including a computer diskette or a
final copy of a current prospectus set in type at the Fund's or its affiliate's
expense, and such other assistance as is reasonably necessary in order for the
Company at least annually (or more frequently if the Fund prospectus is amended
more frequently) to have the Fund's prospectus and the prospectuses of other
mutual funds in which assets attributable to the Contracts may be invested
printed together in one document, in which case the Fund or its affiliate will
bear its reasonable share of expenses as described above, allocated based on the
proportionate number of pages of the Fund's and other fund's respective portions
of the document.
3.2. The Fund or the Distributor will provide the Company, at the
Company's expense, with as many copies of the statement of additional
information as the Company may reasonably request for distribution to
prospective contractowners, participants and applicants. The Fund or the
Distributor will provide, at the Fund's or its affiliate's expense, as many
copies of said statement of additional information as necessary for distribution
to any existing contractowner or participant who requests such statement or
whenever state or federal law otherwise requires that such statement be
provided. The Fund or the Distributor will provide the copies of said statement
of additional information to the Company or to its mailing agent.
3.3. The Fund or the Distributor, at the Fund's or its
affiliate's expense, will provide the Company or its mailing agent with copies
of its proxy material, if any, reports to shareholders and other communications
to shareholders in such quantity as the Company will reasonably require. The
Company will distribute this proxy material, reports and other communications to
existing contractowners and tabulate the votes. The cost associated with proxy
preparation, group authorization letters, programming for tabulation and
necessary materials (including postage) will be paid by the Fund or its
affiliate.
3.4. If and to the extent required by law the Company will:
(a) solicit voting instructions from contractowners;
(b) vote the shares of the Designated Portfolios held
in the Account in accordance with instructions received from contractowners; and
(c) vote shares of the Designated Portfolios held in
the Account for which no timely instructions have been received, as well as
shares it owns, in the same proportion as shares of such Designated Portfolio
for which instructions have been received from the Company's contractowners;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contractowners. Except as
set forth above, the Company reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the extent permitted by law. The
Company will be responsible for assuring that each of its separate accounts
participating in the Fund calculates voting privileges in a manner consistent
with all legal requirements, including the Mixed and Shared Funding Exemptive
Order.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular, the Fund either will
provide for annual meetings (except insofar
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as the SEC may interpret Section 16 of the 1940 Act not to require such
meetings) or, as the Fund currently intends to comply with Section 16(c) of the
1940 Act (although the fund 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, the Fund 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.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Distributor will provide the Company on a timely basis
with investment performance information for each Designated Portfolio in which
the Company maintains a subaccount of the Account, including total return for
the preceding calendar month and calendar quarter, the calendar year to date,
and the prior one-year, five-year, and ten year (or life of the Fund) periods.
The Company may, based on the SEC mandated information supplied by the
Distributor, prepare communications for contractowners and participants
("Contractowner Materials"). The Company will provide copies of all
Contractowner Materials concurrently with their first use for the Distributor's
internal recordkeeping purposes. It is understood that neither the Distributor
nor any Designated Portfolio will be responsible for errors or omissions in, or
the content of, Contractowner Materials except to the extent that the error or
omission resulted from information provided by or on behalf of the Distributor
or the Designated Portfolio. Any printed information that is furnished to the
Company pursuant to this Agreement other than each Designated Portfolio's
prospectus or statement of additional information (or information supplemental
thereto), periodic reports and proxy solicitation materials is the Distributor's
sole responsibility and not the responsibility of any Designated Portfolio or
the Fund. The Company agrees that the Portfolios, the shareholders of the
Portfolios and the officers and governing Board of the Fund will have no
liability or responsibility to the Company in these respects.
4.2. The Company will not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund other
than the information or representations contained in the registration statement,
prospectus or statement of additional information for Fund 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 Fund, or in published reports for the Fund which are in the public
domain or approved by the Fund or the Distributor for distribution, or in sales
literature or other material provided by the Fund, Adviser or by the
Distributor, except with permission of the Distributor. Any piece of sales
literature or other promotional material intended to be used by the Company
which requires the permission of the Distributor prior to use will be furnished
by Company to the Distributor, or its designee, at least five (5) business days
prior to its use. The Distributor will advise the submitting party in writing
within five (5) business days of its approval or disapproval of such material.
In addition, the Distributor will provide via Excel spreadsheet diskette format
or in electronic transmission to Company at least quarterly portfolio
information necessary to update Fund profiles within seven business days
following the end of each quarter.
Nothing in this Section 4.2 will be construed as preventing the Company or its
employees or agents from giving advice on investment in the Fund.
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4.3. The Fund, the Adviser or the Distributor will furnish, or
will cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company or its Account is
named, at least five (5) business days prior to its use. The Company will advise
the submitting party in writing within five (5) business days of its approval or
disapproval of such material.
4.4. The Fund, the Adviser and the Distributor will not give any
information or make any representations or statements on behalf of the Company
or concerning the Company, each Account, or 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 published reports for each Account or the
Contracts which are in the public domain or approved by the Company for
distribution to contractowners, or in sales literature or other material
provided by the Company, except with permission of the Company. The Company
agrees to respond to any request for approval on a prompt and timely basis.
4.5. At the Company's request, the Fund will provide 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, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Fund or its shares.
4.6. At the Fund's request, the Company will provide to the Fund
at least one complete copy of all registration statements, prospectuses,
statements of additional information, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no action letters, and all amendments to any of the
above, that relate to the Contracts or each Account.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media,
(e.g., on-line networks such as the Internet or other electronic messages),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisements, sales literature, or published article), educational
or training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 0000 Xxx.
4.8. The Fund and the Distributor hereby consent to the Company's
use of the names Aetna Life Insurance and Annuity Company, Portfolio Partners,
Inc., the portfolio names designated on Schedule B or other designated names as
may be used from time to time in connection with the marketing of the Contracts,
subject to the terms of Sections 4.1 and 4.2 of this Agreement. Such consent
will terminate with the termination of this Agreement.
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ARTICLE V. FEES AND EXPENSES
5.1. Except as provided in Article III, and as set forth below,
the Fund, the Adviser and the Distributor will pay no fee or other compensation
to the Company under this Agreement except pursuant to and in accordance with a
plan and related distribution services agreement pursuant to Rule 12b-1 under
the 1940 Act to finance distribution expenses or a shareholder servicing plan
and related shareholder servicing agreement to finance administrative support
services adopted by the Fund on behalf of its respective classes, subject to
obtaining any required exemptive orders or other regulatory approvals.
5.2. All expenses incident to performance by the Fund of this
Agreement will be paid by the Fund to the extent permitted by law. The Fund will
bear the expenses for the cost of registration and qualification of the Fund's
shares; preparation and filing of the Fund's prospectus, statement of additional
information and registration statement, proxy materials and reports; setting in
type and printing the Fund's prospectus; setting in type and printing proxy
materials and reports by it to contractowners and participants (including the
costs of printing a Fund prospectus that constitutes an annual report); the
preparation of all statements and notices required by any federal or state law;
all taxes on the issuance or transfer of the Fund's shares; any expenses
permitted to be paid or assumed by the Fund pursuant to a plan, under Rule 12b-1
under the 1940 Act; and all other expenses set forth in Article III of this
Agreement.
ARTICLE VI. DIVERSIFICATION AND QUALIFICATION
6.1. The Adviser will ensure that the Fund will at all times
invest money from the Contracts in such a manner as to ensure that the Contracts
will be treated as variable annuity contracts under the Internal Revenue Code
and the regulations issued thereunder. Without limiting the scope of the
foregoing, the Fund will comply with Section 817(h) of the Internal Revenue Code
and Treasury Regulation 1.817-5, as amended from time to time, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulation. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps: (a) to notify the Company of such breach; and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Treasury Regulation 1.817-5.
6.2. The Fund represents that it is or will be qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code,
and that it will make every effort to maintain such qualification (under
Subchapter M or any successor or similar provisions) and that it will notify the
Company immediately upon having a reasonable basis for believing that it has
ceased to so qualify or that it might not so qualify in the future.
6.3. The Company represents that the Contracts are currently, and
at the time of issuance shall be, treated as life insurance or annuity insurance
contracts, under applicable provisions of the Internal Revenue Code, and that it
will make every effort to maintain such treatment, and that it will notify the
Fund and the Distributor immediately upon having a reasonable basis for
believing the Contracts have ceased to be so treated or that they might not be
so treated in the future. The Company agrees that any prospectus offering a
contract that is a "modified endowment contract" as that term is defined in
Section 7702A of the Internal Revenue
11
Code (or any successor or similar provision), shall identify such contract as a
modified endowment contract.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Fund Board will monitor the Fund for the existence of
any material irreconcilable conflict between the interests of the contractowners
of all separate accounts investing in the Fund. An irreconcilable material
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 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 Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contractowners; or (f) a decision by an insurer to disregard the voting
instructions of contractowners. The Fund Board shall promptly inform the Company
if it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts
of which it is aware to the Fund Board. The Company will assist the Fund Board
in carrying out its responsibilities under the Mixed and Shared Funding
Exemptive Order, by providing the Fund Board with all information reasonably
necessary for the Fund Board to consider any issues raised. This includes, but
is not limited to, an obligation by the Company to inform the Fund Board
whenever contractowner voting instructions are disregarded.
7.3. If it is determined by a majority of the Fund Board, or a
majority of its disinterested members, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority of
the disinterested Fund Board members), take whatever steps are necessary to
remedy or eliminate the irreconcilable material conflict, up to and including:
(1) withdrawing the assets allocable to some or all of the separate accounts
from the Fund or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the Fund,
or submitting the question whether such segregation should be implemented to a
vote of all affected contractowners and, as appropriate, segregating the assets
of any appropriate group i.e., annuity contractowners, life insurance
contractowners, or variable contractowners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to the
affected contractowners the option of making such a change; and (2) establishing
a new registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contractowner or participant voting
instructions and that decision represents a minority position or would preclude
a majority vote, the Company may be required, at the Fund's election, to
withdraw the Account's investment in the Fund and terminate this Agreement with
respect to each Account; 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 disinterested members of the Fund
Board. Any such withdrawal and termination
12
must take place within six (6) months after the Fund gives written notice that
this provision is being implemented, and until the end of that six month period
the Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Fund Board
informs the Company in writing that it has determined that such decision has
created an irreconcilable material conflict, 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
disinterested members of the Fund Board. Until the end of the foregoing six
month period, the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Section 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Fund Board shall determine whether
any proposed action adequately remedies any irreconcilable material conflict,
but in no event will the Fund be required to establish a new funding medium for
the Contracts. The Company shall not be required by Section 7.3 to establish a
new funding medium for the Contract if an offer to do so has been declined by
vote of a majority of contractowners materially adversely affected by the
irreconcilable material conflict. In the event that the Fund Board determines
that any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Fund 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
disinterested members of the Fund Board.
7.7. If and to the extent the Mixed and Shared Funding Exemptive
Order or any amendment thereto contains terms and conditions different from
Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement, then the Fund,
the Company and/or the Participating Insurance Companies, as appropriate, shall
take such steps as may be necessary to comply with the Mixed and Shared Funding
Exemptive Order, and Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4 and 7.5 of this
Agreement shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in the Mixed and Shared
Funding Exemptive Order or any amendment thereto. 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 Fund
and/or the Participating Insurance Companies, as appropriate, shall take such
steps as may be necessary to comply with Rules 6e2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
3.4, 3.5, 7.1., 7.2, 7.3, 7.4, and 7.5 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.
13
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY.
(a) The Company agrees to indemnify and hold harmless
the Fund, the Adviser, the Distributor, and each person, if any, who controls or
is associated with the Fund, the Adviser or the Distributor within the meaning
of such terms under the federal securities laws and any director, trustee,
officer, partner, employee or agent of the foregoing (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Company) or litigation (including
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 expenses (or actions in
respect thereof) or settlements:
(1) arise out of or are based upon any
untrue statements or alleged untrue statements 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 or the alleged
omission to state therein a material fact required to be stated or necessary to
make such statements not misleading in light of the circumstances in which they
were made; provided that this agreement to indemnify will 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 written information
furnished to the Company by the Fund, the Adviser or the Distributor for use in
the registration statement, prospectus or statement of additional information
for the Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the Contracts or
Fund shares; or
(2) arise out of or as a result of
statements or representations by or on behalf of the Company or wrongful conduct
of the Company or persons under its control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(3) arise out of any untrue statement or
alleged untrue statement of a material fact contained in the Fund registration
statement, prospectus, statement of additional information or sales literature
or other promotional material of the Fund (or amendment or supplement) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make such statements not misleading in light of
the circumstances in which they were made, if such a statement or omission was
made in reliance upon and in conformity with information furnished to the Fund
by or on behalf of the Company or persons under its control; or
(4) arise as a result of any failure by the
Company to provide the services and furnish the materials under the terms of
this Agreement; or
14
(5) arise out of 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 by the Company of this
Agreement;
except to the extent provided in Sections 8.1(b) and 8.3 hereof. This
indemnification will be in addition to any liability that the Company
otherwise may have.
(b) No party will be entitled to indemnification under
Section 8.1(a) to the extent such loss, claim, damage, liability or litigation
is due to the willful misfeasance, bad faith, or gross negligence in the
performance of such party's duties under this Agreement, or by reason of such
party's reckless disregard of its obligations or duties under this Agreement by
the party seeking indemnification.
(c) The Indemnified Parties promptly will notify the
Company of the commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection with the issuance
or sale of the Fund shares or the Contracts or the operation of the Fund.
8.2. INDEMNIFICATION BY THE ADVISER, THE FUND AND THE
DISTRIBUTOR.
(a) The Adviser, the Fund and the Distributor, in each
case solely to the extent relating to such party's responsibilities hereunder,
agree to indemnify and hold harmless the Company and each person, if any, who
controls or is associated with the Company within the meaning of such terms
under the federal securities laws and any director, trustee, officer, partner,
employee or agent of the foregoing (collectively, the "Indemnified Patties" for
purposes of this Section 8.2) against any and all losses, claims, expenses,
damages, liabilities (including amounts paid in settlement with the written
consent of the Adviser) or litigation (including 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 expenses (or actions in respect thereof) or settlements:
(1) 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 Fund or sales literature or other promotional material of the Fund (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 or necessary to make such statements not misleading in
light of the circumstances in which they were made; provided that this agreement
to indemnify will 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 the Adviser, the Distributor or the
Fund by or on behalf of the Company for use in the registration statement,
prospectus or statement of additional information for the Fund or in sales
literature of the Fund (or any amendment or supplement thereto) or otherwise for
use in connection with the sale of the Contracts or Fund shares; or
15
(2) arise out of or as a result of
statements or representations or wrongful conduct of the Adviser, the Fund or
the Distributor or persons under the control of the Adviser, the Fund or the
Distributor respectively, with respect to the sale of the Fund shares; or
(3) arise out of any untrue statement or
alleged untrue statement of a material fact contained in a registration
statement, prospectus, statement of additional information or sales literature
or other promotional material covering the Contracts (or any amendment or
supplement thereto), or the omission or alleged omission to state therein a
material fact required to be stated or necessary to make such statement or
statements not misleading in light of the circumstances in which they were made,
if such statement or omission was made in reliance upon and in conformity with
written information furnished to the Company by the Adviser, the Fund or the
Distributor or persons under the control of the Adviser, the Fund or the
Distributor; or
(4) arise as a result of any failure by the
Fund, the Adviser or the Distributor to provide the services and furnish the
materials under the terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with the diversification
requirements and procedures related thereto specified in Article VI of this
Agreement); or
(5) arise out of or result from any material
breach of any representation and/or warranty made by the Adviser, the Fund or
the Distributor in this Agreement, or arise out of or result from any other
material breach of this Agreement by the Adviser, the Fund or the Distributor;
except to the extent provided in Sections 8.2(b) and 8.3 hereof. This
indemnification will be in addition to any liability that the Fund,
Adviser or the Distributor otherwise may have.
(b) No party will be entitled to indemnification under
Section 8.2(a) to the extent such loss, claim, damage, liability or litigation
is due to the willful misfeasance, bad faith, or gross negligence in the
performance of such party's duties under this Agreement, or by reason of such
party's reckless disregard of its obligations or duties under this Agreement by
the party seeking indemnification.
(c) The Indemnified Parties will promptly notify the
Adviser, the Fund and the Distributor of the commencement of any litigation,
proceedings, complaints or actions by regulatory authorities against them in
connection with the issuance or sale of the Contracts or the operation of the
Account.
8.3. INDEMNIFICATION PROCEDURE.
Any person obligated to provide indemnification under this Article
VIII ("Indemnifying Party" for the purpose of this Section 8.3) will not be
liable under the indemnification provisions of this Article VIII with respect to
any claim made against a party entitled to indemnification under this Article
VIII ("Indemnified Party" for the purpose of this Section 8.3) unless such
Indemnified Party will have notified the Indemnifying Party in writing within a
reasonable time
16
after the summons or other first legal process giving information of the nature
of the claim will have been served upon such Indemnified Party (or after such
party will have received notice of such service on any designated agent), but
failure to notify the Indemnifying Party of any such claim will not relieve the
Indemnifying Party from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of the
indemnification provision of this Article VIII, except to the extent that the
failure to notify results in the failure of actual notice to the Indemnifying
Party and such Indemnifying Party is damaged solely as a result of failure to
give such notice. In case any such action is brought against the Indemnified
Party, the Indemnifying Party will be entitled to participate, at its own
expense, in the defense thereof. The Indemnifying Party also will be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Indemnifying Party to the indemnified Party of the
Indemnifying Party's election to assume the defense thereof, the Indemnified
Party will bear the fees and expenses of any additional counsel retained by it,
and the Indemnifying Party will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation, unless: (a) the Indemnifying Party and the Indemnified Party
will have mutually agreed to the retention of such counsel; or (b) the named
parties to any such proceeding (including any impleaded parties) include both
the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party will not be liable for
any settlement of any proceeding effected without its written consent but if
settled with such consent or if there is a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and against
any loss or liability by reason of such settlement or judgment. A successor by
law of the parties to this Agreement will be entitled to the benefits of the
indemnification contained in this Article VIII. The indemnification provisions
contained in this Article VIII will survive any termination of this Agreement.
8.4. DISTRIBUTOR LIMITATION ON LIABILITY. Notwithstanding the
foregoing, the Distributor shall not be liable to any party to this Agreement
for lost profits, punitive, special, incidental, indirect or consequential
damages.
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 State of Maryland.
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, any Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in accordance
therewith. If, in the future, the Mixed and Shared Funding Exemptive Order
should no longer be necessary under applicable law, then Article VII shall no
longer apply.
17
ARTICLE X. TERMINATION
10.1. This Agreement will terminate:
(a) at the option of any party, with or without cause,
with respect to some or all of the Designated Portfolios, upon sixty (60) days'
advance written notice to the other parties or, if later, upon receipt of any
required exemptive relief or orders from the SEC, unless otherwise agreed in a
separate written agreement among the parties; or
(b) at the option of the Company, upon receipt of the
Company's written notice by the other parties, with respect to any Designated
Portfolio if shares of the Designated Portfolio are not reasonably available to
meet the requirements of the Contracts as determined in good faith by the
Company; or
(c) at the option of the Company, upon receipt of the
Company's written notice by the other parties, with respect to any Designated
Portfolio in the event any of the Designated Portfolio's shares are not
registered, issued or sold in accordance with applicable state and/or Federal
law or such law precludes the use of such shares as the underlying investment
media of the Contracts issued or to be issued by Company; or
(d) at the option of the Fund, upon receipt of the
Fund's written notice by the other parties, upon institution of formal
proceedings against the Company by the NASD, the SEC, the insurance commission
of any state or any other regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts, the administration of
the Contracts, the operation of the Account, or the purchase of the Fund shares,
provided that the Fund determines in its sole judgment, exercised in good faith,
that any such proceeding would have a material adverse effect on the Company's
ability to perform its obligations under this Agreement; or
(e) at the option of the Company, upon receipt of the
Company's written notice by the other parties, upon institution of formal
proceedings against the Fund, Adviser or the Distributor by the NASD, the SEC,
or any state securities or insurance department or any other regulatory body,
provided that the Company determines in its sole judgment, exercised in good
faith, that any such proceeding would have a material adverse effect on the
Fund's or the Distributor's ability to perform its obligations under this
Agreement; or
(f) at the option of the Company, upon receipt of the
Company's written notice by the other parties, if the Fund ceases to qualify as
a Regulated Investment Company under Subchapter M of the Internal Revenue Code,
or under any successor or similar provision, or if the Company reasonably and in
good faith believes that the Fund may fail to so qualify; or
(g) at the option of the Company, upon receipt of the
Company's written notice by the other parties, with respect to any Designated
Portfolio if the Fund fails to meet the diversification requirements specified
in Article VI hereof or if the Company reasonably and in good faith believes the
Fund may fail to meet such requirements; or
18
(h) at the option of any party to this Agreement, upon
written notice to the other parties, upon another party's material breach of any
provision of this Agreement which material breach is not cured within thirty
(30) days of said notice; or
(i) at the option of the Company, if the Company
determines in its sole judgment exercised in good faith, that either the Fund,
the Adviser or the Distributor has suffered a material adverse change in its
business, operations or financial condition since the date of this Agreement or
is the subject of material adverse publicity which is likely to have a material
adverse impact upon the business and operations of the Company, such termination
to be effective sixty (60) days' after receipt by the other parties of written
notice of the election to terminate; or
(j) at the option of the Fund or the Distributor, if
the Fund or the Distributor respectively, determines in its sole judgment
exercised in good faith, that the Company has suffered a material adverse change
in its business, operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity which is likely to
have a material adverse impact upon the business and operations of the Fund or
the Adviser, such termination to be effective sixty (60) days' after receipt by
the other parties of written notice of the election to terminate; or
(k) at the option of the Company or the Fund upon
receipt of any necessary regulatory approvals and/or the vote of the
contractowners having an interest in the Account (or any subaccount) to
substitute the shares of another investment company for the corresponding
Designated Portfolio shares of the Fund in accordance with the terms of the
Contracts for which those Designated Portfolio shares had been selected to serve
as the underlying investment media. The Company will give sixty (60) days' prior
written notice to the Fund of the date of any proposed vote or other action
taken to replace the Fund's shares; or
(l) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable material conflict
exists among the interests of: (1) all contractowners of variable insurance
products of all separate accounts; or (2) the interests of the Participating
Insurance Companies investing in the Fund as set forth in Article VII of this
Agreement; or
(m) at the option of the Fund in the event any of the
Contracts are not issued or sold in accordance with applicable federal and/or
state law. Termination will be effective immediately upon such occurrence
without notice.
10.2. NOTICE REQUIREMENT. No termination of this Agreement will be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties of its intent to terminate, which notice
will set forth the basis for the termination.
10.3. EFFECT OF TERMINATION. Notwithstanding any termination of
this Agreement, the Fund and the Distributor will, at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts."). Specifically, without limitation, the owners of the Existing
Contracts
19
will be permitted to reallocate investments in the Portfolios (as in effect on
such date), redeem investments in the Portfolios and/or invest in the Portfolios
upon the making of additional purchase payments under the Existing Contracts.
10.4. SURVIVING PROVISIONS. Notwithstanding any termination of
this Agreement, each party's obligations under Article VIII to indemnify other
parties will survive and not be affected by any termination of this Agreement.
In addition, each party's obligations under Section 12.7 will survive and not be
affected by any termination of this Agreement. Finally, with respect to Existing
Contracts, all provisions of this Agreement also will survive and not be
affected by any termination of this Agreement.
ARTICLE XI. NOTICES
11.1. Any notice shall be sufficiently given when sent by
registered or certified mail 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 Fund: PORTFOLIO PARTNERS, INC.
c/o Xxxxx Xxxxxx
000 Xxxxxxxxxx Xxxxxx, XX00
Xxxxxxxx, XX 00000
If to the Company: Aetna Life Insurance and Annuity Company
c/o Xxxxxx X. Xxxxxxxxxxx
000 Xxxxxxxxxx Xxxxxx, XX00
Xxxxxxxx, XX 00000
If to the Adviser: Aetna Life Insurance and Annuity Company
c/o Xxxxxx X. Xxxxxxxxxxx
000 Xxxxxxxxxx Xxxxxx, XX00
Xxxxxxxx, XX 00000
If to Distributor: Aetna Investment Services, LLC
c/o Xxxxxx X. Xxxxxxxxxxx
000 Xxxxxxxxxx Xxxxxx, XX00
Xxxxxxxx, XX 00000
ARTICLE XII. MISCELLANEOUS
12.1. All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the directors, officers, partners, employees, agents or shareholders
assume any personal liability for obligations entered into on behalf of the
Fund. No Portfolio or series of the Fund will be liable for the obligations or
liabilities of any other Portfolio or series.
20
12.2. The Fund, the Adviser and the Distributor acknowledge that
the identities of the customers of the Company or any of its affiliates, except
for customers of the Adviser or its affiliates (collectively the "Company
Protected Parties" for purposes of this Section 12.2), information maintained
regarding those customers, and all computer programs and procedures or other
information developed or used by the Company Protected Parties or any of their
employees or agents in connection with the Company's performance of its duties
under this Agreement are the valuable property of the Company Protected Parties.
The Fund, the Adviser and the Distributor agree that if they come into
possession of any list or compilation of the identities of or other information
about the Company Protected Parties' customers, or any other information or
property of the Company Protected Parties, other than such information as is
publicly available or as may be independently developed or compiled by the Fund,
the Adviser or the Distributor from information supplied to them by the Company
Protected Parties' customers who also maintain accounts directly with the Fund,
the Adviser or the Distributor, the Fund, the Adviser and the Distributor will
hold such information or property in confidence and refrain from using,
disclosing or distributing any of such information or other property except: (a)
with the Company's prior written consent; or (b) as required by law or judicial
process. The Company acknowledges that the identities of the customers of the
Fund, the Adviser, the Distributor or any of their affiliates (collectively the
"Adviser Protected Parties" for purposes of this Section 12.2), information
maintained regarding those customers, and all computer programs and procedures
or other information developed or used by the Adviser Protected Parties or any
of their employees or agents in connection with the Fund's, the Adviser's or the
Distributor's performance of their respective duties under this Agreement are
the valuable property of the Adviser Protected Parties. The Company agrees that
if it comes into possession of any list or compilation of the identities of or
other information about the Adviser Protected Parties' customers, or any other
information or property of the Adviser Protected Parties, other than such
information as is publicly available or as may be independently developed or
compiled by the Company from information supplied to them by the Adviser
Protected Parties' customers who also maintain accounts directly with the
Company, the Company will hold such information or property in confidence and
refrain from using, disclosing or distributing any of such information or other
property except: (a) with the Fund's, the Adviser's or the Distributor's prior
written consent; or (b) as required by law or judicial process. Each party
acknowledges that any breach of the agreements in this Section 12.2 would result
in immediate and irreparable harm to the other parties for which there would be
no adequate remedy at law and agree that in the event of such a breach, the
other parties will be entitled to equitable relief by way of temporary and
permanent injunctions, as well as such other relief as any court of competent
jurisdiction deems appropriate.
12.3. 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.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
12.5. If any provision of this Agreement will be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement will not be affected thereby.
21
12.6. This Agreement will not be assigned by any party hereto
without the prior written consent of all the parties.
12.7. Each party to this Agreement will maintain all records
required by law, including records detailing the services it provides. Such
records will be preserved, maintained and made available to the extent required
by law and in accordance with the 1940 Act and the rules thereunder. 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 in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Upon request by the Fund or the Distributor, the Company agrees to promptly make
copies or, if required, originals of all records pertaining to the performance
of services under this Agreement available to the Fund or the Distributor, as
the case may be. The Fund agrees that the Company will have the right to
inspect, audit and copy all records pertaining to the performance of services
under this Agreement pursuant to the requirements of any state insurance
department Each party also agrees to promptly notify the other parties if it
experiences any difficulty in maintaining the records in an accurate and
complete manner. This provision will survive termination of this Agreement.
12.8. Each party represents that the execution and delivery of
this Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate or board action, as applicable,
by such party and when so executed and delivered this Agreement will be the
valid and binding obligation of such party enforceable in accordance with its
terms.
12.9. The parties to this Agreement may amend the schedules to
this Agreement from time to time to reflect changes in or relating to the
Contracts, the Accounts or the Designated Portfolios of the Fund or other
applicable terms of this Agreement.
12.10. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights.
22
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 first
written above.
PORTFOLIO PARTNERS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-----------------------------------
Title: President
-----------------------------------
Date: 11/27/01
-----------------------------------
AETNA LIFE INSURANCE AND
ANNUITY COMPANY
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-----------------------------------
Title: VP
-----------------------------------
Date: 11/27/01
-----------------------------------
AETNA INVESTMENT SERVICES, LLC
By: /s/ Xxxxx Xxxxx
-----------------------------------
Title: Senior Vice President
-----------------------------------
Date: 11/28/01
-----------------------------------
23
SCHEDULE A
SEPARATE ACCOUNT(S)
Aetna Life Insurance and Annuity Company Variable Annuity Account B
Aetna Life Insurance and Annuity Company Variable Annuity Account C
Aetna Life Insurance and Annuity Company Variable Annuity Account D
Aetna Life Insurance and Annuity Company Variable Life Account B
Aetna Life Insurance and Annuity Company Variable Life Account C
24
SCHEDULE B
PORTFOLIO PARTNERS INC.
DESIGNATED PORTFOLIOS
PPI MFS Emerging Equities Portfolio - Initial Class PPI MFS
Emerging Equities Portfolio - Adviser Class PPI MFS Emerging
Equities Portfolio - Service Class..... PPI MFS Research
Growth Portfolio - Initial Class....... PPI MFS Research
Growth Portfolio - Adviser Class....... PPI MFS Research
Growth Portfolio - Service Class....... PPI MFS Capital
Opportunities Portfolio - Initial Class. PPI MFS Capital
Opportunities Portfolio - Adviser Class. PPI MFS Capital
Opportunities Portfolio - Service Class. PPI Xxxxxxx
International Growth Portfolio - Initial Class PPI Xxxxxxx
International Growth Portfolio - Adviser Class PPI Xxxxxxx
International Growth Portfolio - Service Class PPI X. Xxxx
Price Growth Equity Portfolio - Initial Class PPI X. Xxxx
Price Growth Equity Portfolio - Adviser Class PPI X. Xxxx
Price Growth Equity Portfolio - Service Class PPI Xxxxx
Aggressive Growth Portfolio - Initial Class... PPI Xxxxx
Aggressive Growth Portfolio - Adviser Class... PPI Xxxxx
Aggressive Growth Portfolio - Service Class... PPI Xxxxx
Growth Portfolio - Initial Class PPI Xxxxx Growth Portfolio -
Adviser Class PPI Xxxxx Growth Portfolio - Service Class PPI
OpCap Balanced Value Portfolio - Initial Class...... PPI OpCap
Balanced Value Portfolio - Adviser Class...... PPI OpCap
Balanced Value Portfolio - Service Class...... PPI Xxxxxxx
Tactical Asset Allocation Portfolio - Initial Class PPI
Xxxxxxx Tactical Asset Allocation Portfolio - Adviser Class
PPI Xxxxxxx Tactical Asset Allocation Portfolio - Service
Class PPI DSI Enhanced Index Portfolio - Initial Class........
PPI DSI Enhanced Index Portfolio - Adviser Class........ PPI
DSI Enhanced Index Portfolio - Service Class........ PPI
Xxxxxxx Xxxxx(R) Capital Growth Portfolio - Initial Class PPI
Xxxxxxx Sachs(R) Capital Growth Portfolio - Adviser Class PPI
Xxxxxxx Xxxxx(R) Capital Growth Portfolio - Service Class PPI
Salomon Brothers Capital Portfolio - Initial Class.. PPI
Salomon Brothers Capital Portfolio - Adviser Class.. PPI
Salomon Brothers Capital Portfolio - Service Class.. PPI
Salomon Brothers Investors Value Portfolio - Initial Class PPI
Salomon Brothers Investors Value Portfolio - Adviser Class PPI
Salomon Brothers Investors Value Portfolio - Service Class
25
NSCC EXHIBIT
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
As provided in Article 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:
Distributor or the Funds will furnish to the Company 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 (4) 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 the Company 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 the Company or its affiliate.
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, the Company 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 the Company 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 the Company's or its
affiliate's compliance with the foregoing, the Company or its affiliate will be
considered the agent of the Distributor and the Funds, and the Business Day on
which Instructions are received by the Company 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 the Company 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.
The Company 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 the Company 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.
26
NSCC will wire payment for net redemption orders by Fund, in immediately
available funds, to an NSCC settling bank account designated by the Company 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.
With respect to (c) or (d) above, if Distributor does not send a confirmation of
the Company'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. If on
any day the Company 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 to the Company or its affiliate, as applicable, as is
otherwise provided in the Agreement.
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. The Company 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.
27
