EXHIBIT (8)(g)
ML DRAFT 09/16/02
PARTICIPATION AGREEMENT
AMONG
XXXXXXX XXXXX LIFE INSURANCE COMPANY,
AIM FUNDS GROUP AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT, dated as of the _____ day of _________, 2002, by and
among Xxxxxxx Xxxxx Life Insurance Company (the "Company"), an Arkansas life
insurance company, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (hereinafter referred to individually and collectively as the
"Account"), AIM Funds Group (the "Fund"), a Delaware business trust, and AIM
Distributors, Inc. (the "Underwriter"), a Delaware corporation.
WHEREAS, the shares of beneficial interests 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;
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended, (the "1940 Act")
and shares of the Portfolios are registered under the Securities Act of 1933, as
amended (the "1933 Act");
WHEREAS, AIM Advisors, Inc. (the "Adviser"), a Delaware corporation,
which serves as investment adviser to the Fund, is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as amended;
WHEREAS, the Underwriter, which serves as distributor to the Fund, is
registered as a broker-dealer with the Securities and Exchange Commission (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");
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to
variable annuity contracts set forth in Schedule A hereto, as it may be amended
from time to time by mutual written agreement (the "Contracts");
WHEREAS, each Portfolio issues shares to the general public and to the
separate accounts of insurance companies ("Participating Insurance Companies")
to fund variable annuity contracts sold to certain qualified pension and
retirement plans;
WHEREAS, the Company intends to purchase shares of other open-end
management investment companies that offer shares to the general public to fund
the Contracts;
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WHEREAS, the Fund and the Underwriter know of no reason why shares in
any Portfolio may not be sold to Participating Insurance Companies to fund
variable annuity contracts sold to certain qualified pension and retirement
plans; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios (and
classes thereof) 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 Underwriter is authorized to
sell such shares in the Designated Portfolios, and classes thereof, to the
Account at net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund, and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund has granted to the Underwriter exclusive authority to
distribute the Fund's shares, and has agreed to instruct, and has so instructed,
the Underwriter to make available to the Company for purchase on behalf of the
Account Fund shares of the Designated Portfolios and classes thereof listed on
Schedule B to this Agreement (the "Shares"). Pursuant to such authority and
instructions, and subject to Article IX hereof, the Underwriter agrees to make
the Shares available to the Company for purchase on behalf of the Account, such
purchases to be effected at net asset value in accordance with Section 1.3 of
this Agreement. Notwithstanding the foregoing, the Board of Trustees of the Fund
(the "Board") may suspend or terminate the offering of Shares of any Designated
Portfolio or class thereof, if such action is required by law or by regulatory
authorities having jurisdiction or if, 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, suspension or termination is in the best interests of the
shareholders of such Designated Portfolio.
1.2. The Fund shall redeem, at the Company's request, any full or
fractional Shares held by the Company on behalf of the Account, such redemptions
to be effected at net asset value in accordance with Section 1.3 of this
Agreement. Notwithstanding the foregoing, (i) the Company shall not redeem
Shares attributable to Contract owners except in the circumstances permitted in
Section 9.3 of this Agreement, and (ii) the Fund may delay redemption of Shares
of any Designated Portfolio to the extent permitted by the 1940 Act, and any
rules, regulations, or orders thereunder.
1.3. Purchase and Redemption Procedures
The Fund hereby appoints the Company as an agent of the Fund for the limited
purpose of receiving purchase and redemption requests on behalf of the Account
(but not with respect to any Fund shares that may be held in the general account
of the Company) for the Shares made available hereunder,
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based on allocations of amounts to the Account or subaccounts thereof under the
Contracts and other transactions relating to the Contracts or the Account. All
transactions in Account shares shall be executed through the Omnibus Accounts of
Company's affiliate Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx, Inc. ("Omnibus
Accounts"). Receipt of any such request (or relevant transactional information
therefor) on any day 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
(a "Business Day") by the Company as such limited agent of the Fund prior to the
time that the Fund ordinarily calculates its net asset value as described from
time to time in the Fund Prospectus (which as of the date of execution of this
Agreement is 4:00 p.m. Eastern Time) shall constitute receipt by the Fund on
that same Business Day, provided that the Fund receives notice of such request
by 10 a.m. Eastern Time on the next following Business Day. Company will provide
to the Fund or its designee via the NSCC Fund SERV DCC & S platform (which
utilizes the "as of" record layout within Fund/SERV) one or more files detailing
the instructions received with respect to each Plan prior to 4:00 p.m. ET on the
prior Business Day for each of the Funds. If for any reason Xxxxxxx Xxxxx is
unable to transmit the file(s) with respect to any Business Day, Xxxxxxx Xxxxx
will notify the Fund or its designee by 10:00 a.m. ET on the next following
Business Day.
(b) The Company shall pay for Shares on the same day that it
notifies the Fund of a purchase request for such Shares. Payment for Shares
shall be made in federal funds transmitted to the Fund via the NSCC Fund/SERV
DCC&S platform to be received by the Fund by 6:30 p.m. Eastern Time on the day
the Fund is notified of the purchase request for Shares (unless the Fund
determines and so advises the Company that sufficient proceeds are available
from redemption of Shares of other Designated Portfolios effected pursuant to
redemption requests tendered by the Company on behalf of the Account). Upon
receipt of federal funds transmitted via the NSCC Fund/SERV DCC&S platform, such
funds shall cease to be the responsibility of the Company and shall become the
responsibility of the Fund. Notwithstanding any provision of this Agreement to
the contrary, for purchase and redemption instructions with respect to any
Shares, Company and the Fund will settle the purchase and redemption
transactions referred to herein, via the NSCC Fund/SERV platform settlement
process on the next Business Day following the effective trade date. The Fund
will provide to Company a daily transmission of positions and trading activity
taking place in the Omnibus Accounts using Company's affiliate's proprietary
Inventory Control System ("ICS").
(c) Payment for Shares redeemed by the Account or the
Company shall be made in federal funds transmitted via the NSCC Fund/SERV DCC&S
platform to the Company or any other designated person on the next Business Day
after the Fund is properly notified of the redemption order of such Shares
(unless redemption proceeds are to be applied to the purchase of Shares of other
Designated Portfolios in accordance with Section 1.3(b) of this Agreement),
except that the Fund reserves the right to redeem Shares in assets other than
cash and to delay payment of redemption proceeds to the extent permitted under
Section 22(e) of the 1940 Act and any Rules thereunder, and in accordance with
the procedures and policies of the Fund as
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described in the then current prospectus. The Fund shall not bear any
responsibility whatsoever for the proper disbursement or crediting of redemption
proceeds by the Company; the Company alone shall be responsible for such action.
(d) Any purchase or redemption request for Shares held or to
be held in the Company's general account shall be effected at the closing net
asset value per share next determined after the Fund's receipt of such request
as set forth in Section 1.3(a) herein.
1.4. The Fund shall use its best efforts to make the closing net
asset value per Share for each Designated Portfolio available to the Company by
6:30 p.m. Eastern Time each Business Day via the NSCC Profile 1 platform, and in
any event, as soon as reasonably practicable after the closing net asset value
per Share for such Designated Portfolio is calculated, and shall calculate such
closing net asset value, including any applicable daily dividend factor, in
accordance with the Fund's Prospectus. In the event the Fund is unable to make
the 6:30 p.m. deadline stated herein, it shall provide additional time for the
Company to place orders for the purchase and redemption of Shares. Such
additional time shall be equal to the additional time that the Fund takes to
make the closing net asset value available to the Company. Neither the Fund, any
Designated Portfolio, the Underwriter, nor any of their affiliates shall be
liable for any information provided to the Company pursuant to this Agreement
which information is based on incorrect information supplied by the Company to
the Fund or the Underwriter. Any material error in the calculation or reporting
of the closing net asset value, including any applicable daily dividend factor
per Share shall be reported promptly upon discovery to the Company. In such
event the Company shall be entitled to an adjustment to the number of Shares
purchased or redeemed to reflect the correct closing net asset value, including
any applicable daily dividend factor per Share Any error of a lesser amount
shall be corrected in the next Business Day's net asset value per Share.
1.5. Notwithstanding anything to the contrary contained in this
Agreement, the Fund will make available for purchase by the Company, on its
behalf and on behalf of the Account a class of shares available at net asset
value which are not subject to a contingent deferred sales charge or redemption
fee. In addition, no exchange fees will be applicable to shares of the Funds
purchased by the Company, on its behalf and on behalf of the Account. The Fund
shall furnish notice (via the NSCC Profile II platform to the Company as soon as
reasonably practicable of any income dividends or capital gain distributions
payable on any Shares. The form of payment of dividends and capital gains
distributions will be determined in accordance with the Company's operational
procedures in effect at the time of the payment of such dividend or
distribution. At this time, the Company, on its behalf and on behalf of the
Account, hereby elects to receive all such dividends and distributions as are
payable on any Shares in the form of additional shares of that Designated
Portfolio through a trade processed via the NSCC platform. The Company reserves
the right, on its behalf and on behalf of the Account, to revoke this election
and to receive all such dividends and capital gain distributions in the form of
cash. The parties understand and agree that all transactions of Account shares
contemplated herein shall be executed through the Omnibus Accounts and that
Company's affiliate, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx, Inc. will receive
all such dividends and distributions in the form of cash which Company, in turn,
will
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immediately reinvest in the form of additional Shares of that Designated
Portfolio. The Fund shall notify the Company promptly of the number of Shares so
issued as payment of such dividends and distributions.
1.6. Issuance and transfer of Shares shall be by book entry only and
executed through the Omnibus Accounts. Stock certificates will not be issued to
the Company or the Account. Purchase and redemption orders for Fund shares shall
be recorded in an appropriate ledger for the Account or the appropriate
subaccount of the Account.
1.7 Fund Information.
(a) The Fund will provide (or cause to be provided) to Company the
information set forth in Schedule C hereto. In addition, notwithstanding
anything contained in this Agreement to the contrary, the Fund hereby agrees
that Company may use such information in communications prepared for the
Contracts, including, but not limited to, application, marketing, sales and
other communications materials. The Fund will provide timely notification to
Company of any change to the information described in Part I of Schedule C
including without limitation any change to the CUSIP number or symbol
designation of a Fund. Such notification shall be given to Company at least ten
(10) Business Days prior to the effective date of the change or the effect of
the change with respect to transactions by the Account in any affected Fund
shall be delayed for a reasonable time following notification hereunder.
(b) Notwithstanding anything to the contrary in this Agreement, upon
request, the Fund will provide Company with prospectuses, proxy materials,
financial statements, reports and other materials relating to each Fund
including portfolio composition, holdings, largest sectors and geographical
allocation in sufficient quantity for each Contract owner invested in the Fund.
(c) With the exception of (i) listings of product offerings; (ii)
materials in the public domain (e.g., magazine articles and trade publications);
and (iii) materials used by on an internal basis only, Company agrees not to
furnish or cause to be furnished to any third parties or to display publicly or
publish any information or materials relating to the Funds, except such
materials and information as may be distributed to Company by Fund or approved
for distribution by Fund upon Company's request.
1.8. The parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive; the Fund's shares may be sold to other
investors and the cash value of the Contracts may be invested in other
investment companies.
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ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts (a) are,
or prior to issuance will be, registered under the 1933 Act, or (b) are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company further represents and warrants
that the Contracts will be issued and sold in compliance in all material
respects with all applicable federal securities and state securities and
insurance laws and that the sale of the Contracts shall comply in all material
respects with 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, that it has legally and validly established
the Account prior to any issuance or sale thereof as a segregated asset account
under Arkansas insurance laws, and that it (a) has registered or, prior to any
issuance or sale of the Contracts, will register the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts, or alternatively (b) has not
registered the Account in proper reliance upon an exclusion from registration
under the 1940 Act. The Company shall register and qualify the Contracts or
interests therein as securities in accordance with the laws of the various
states only if and to the extent deemed advisable by the Company.
2.2. The Fund represents and warrants that Shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with applicable state and federal securities
laws and that the Fund is and shall remain registered under the 0000 Xxx. The
Fund 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 Fund shall register and qualify the shares for sale
in accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund, the Adviser, or the Underwriter.
2.3. The Fund and the Underwriter agree to provide the Company with
information necessary to comply with any applicable state insurance laws or
regulations (including the furnishing of information not otherwise available to
the Company which is required by state insurance law to enable the Company to
obtain the authority needed to issue the Contracts in any applicable state, and
including cooperating with the Company in any filings of sales literature for
the Contracts), to the extent notified thereof in writing by the Company.
2.4. The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Delaware and that it does and will
comply in all material respects with the 1940 Act.
2.6. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with any applicable state and federal securities laws.
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2.7. The Fund and the Underwriter represent and warrant that all of
their trustees/directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the Fund are
and shall 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
minimum 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 shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many copies of
the Fund's current prospectus describing only the Classes of the Designated
Portfolios listed on Schedule B as the Company may reasonably request. The Fund
or the Underwriter shall bear the expense of printing copies of the current
prospectus for the Fund that will be distributed to existing Contract owners,
and the Company shall bear the expense of printing copies of the Fund's
prospectus that are used in connection with offering the Contracts issued by the
Company. If requested by the Company in lieu thereof, the Fund shall provide
such documentation (including a final copy of the new prospectus on diskette at
the Fund's or Underwriter's expense) and other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if the
prospectus for the Fund is amended) to have the prospectus for the Contracts and
the Fund's prospectus printed together in one document (such printing of the
Fund's prospectus for existing Contract owners to be at the Fund's or
Underwriter's expense).
3.2. The Fund's prospectus shall state that the current Statement of
Additional Information ("SAI") for the Fund is available, and the Underwriter
(or the Fund), at its expense, shall provide a reasonable number of copies of
such SAI free of charge to the Company for itself and for any owner of a
Contract who requests such SAI.
3.3. The Fund shall provide the Company with information regarding
the Fund's expenses, which information may include a table of fees and related
narrative disclosure for use in any prospectus or other descriptive document
relating to a Contract.
3.4. The Fund, at its or the Underwriter's expense, shall provide the
Company with copies of its proxy material, reports to shareholders, and other
communications to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Shares in accordance with instructions received
from Contract owners; and
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(iii) vote Shares for which no instructions have been received
in the same proportion as Shares of such portfolio for
which instructions have been received,
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 or to the
extent otherwise required by law. The Company will vote Shares held in any
segregated asset account in the same proportion as Shares of such portfolio for
which voting instructions have been received from Contract owners, to the extent
permitted by law.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other promotional
material that the Company develops and in which the Fund (or a Designated
Portfolio thereof) or the Adviser or the Underwriter is named. No such material
shall be used until approved by the Fund or its designee. The Fund or its
designee will be deemed to have approved such sales literature or promotional
material unless the Fund or its designee objects or provides comments to the
Company within ten (10) Business Days after receipt of such material. The Fund
or its designee reserves the right to reasonably object to the continued use of
any such sales literature or other promotional material in which the Fund (or a
Designated Portfolio thereof) or the Adviser or the Underwriter is named, and no
such material shall be used if the Fund or its designee so object.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund or
the Adviser or the Underwriter in connection with the sale of the Contracts
other than the information or representations contained in the registration
statement or prospectus or SAI for the Fund shares, as such registration
statement and prospectus or SAI may be amended or supplemented from time to
time, or in reports or proxy statements for the Fund, or in sales literature or
other promotional material approved by the Fund or its designee or by the
Underwriter, except with the permission of the Fund or the Underwriter or the
designee of either.
4.3. The Fund and the Underwriter, or their designee, shall furnish,
or cause to be furnished, to the Company, each piece of sales literature or
other promotional material that it develops and in which the Company, and/or its
Account, is named. No such material shall be used until approved by the Company.
The Company will be deemed to have approved such sales literature or promotional
material unless the Company objects or provides comments to the Fund, the
Underwriter, or their designee within ten (10) Business Days after receipt of
such material. The Company reserves the right to reasonably object to the
continued use of any such sales literature or other promotional material in
which the Company and/or its Account is named, and no such material shall be
used if the Company so objects.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company, the
Account, or the
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Contracts other than the information or representations contained in a
registration statement and prospectus (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), or SAI for the Contracts, as such
registration statement, prospectus, or SAI may be amended or supplemented from
time to time, or in published reports for the Account which are in the public
domain or approved by the Company for distribution to Contract owners, or in
sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other promotional materials, and all amendments to any of
the above, that relate to the Fund or its shares, promptly after the filing of
such document(s) with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), SAIs, reports, solicitations for voting
instructions, sales literature and other promotional materials, and all
amendments to any of the above, that relate to the Contracts or the Account,
promptly after the filing of such document(s) with the SEC or other regulatory
authorities. The Company shall provide to the Fund and the Underwriter any
complaints received from the Contract owners pertaining to the Fund or the
Designated Portfolio.
4.7. The Fund will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Designated Portfolio,
and of any material change in the Fund's registration statement, particularly
any change resulting in a change to the registration statement or prospectus for
any Account. The Fund will work with the Company so as to enable the Company to
solicit proxies from Contract owners, or to make changes to its prospectus or
registration statement, in an orderly manner. The Fund will make reasonable
efforts to attempt to have changes affecting Contract prospectuses become
effective simultaneously with the annual updates for such prospectuses.
4.8. For purposes of this Article IV, the phrase "sales literature
and other promotional materials" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: 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), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Fund.
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ARTICLE V. Fees and Expenses
5.1. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law, and all taxes on the issuance
or transfer of the Fund's shares.
5.2. The Company shall bear the expenses of distributing the Fund's
prospectus to owners of Contracts issued by the Company and of distributing the
Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Diversification and Qualification
6.1. The Fund represents that it is or will be qualified as a
Regulated Investment Company under Subchapter M of the Code, and that it will
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.
ARTICLE VII. Indemnification
7.1. Indemnification By the Company
7.1(a). The Company agrees to indemnify and hold harmless the
Fund and the Underwriter and each of its trustees/directors and officers, and
each person, if any, who controls the Fund or the Underwriter within the meaning
of Section 15 of the 1933 Act or who is under common control with the
Underwriter (collectively, the "Indemnified Parties" for purposes of this
Section 7.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or
litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statements of any material fact contained in the
registration statement, prospectus (which shall include a
written description of a Contract that is not registered under
the 1933 Act), or SAI for the Contracts or contained in sales
literature for the
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Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Company by or on behalf of the Fund for use in the
registration statement, prospectus or SAI 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
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI, or
sales literature of the Fund not supplied by the Company or
persons under its control) or wrongful conduct of the Company or
its agents or persons under the Company's authorization or
control, with respect to the sale or distribution of the
Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, or sales literature of the Fund 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 statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any material failure by the Company
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
qualification requirements specified in Section 6.1 of this
Agreement); or
(v) 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;
as limited by and in accordance with the provisions of Sections 7.1(b) and
7.1(c) hereof.
7.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of its obligations or
duties under this Agreement.
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7.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company 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.
7.1(d). The Indemnified Parties will promptly notify the Company
of the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Contracts or the operation
of the Fund.
7.2. Indemnification by the Underwriter
7.2(a). The Underwriter agrees to indemnify and hold harmless
the Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 7.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature
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 therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Underwriter or the Fund by or on behalf of the Company for
use in the registration statement, prospectus or SAI for the
Fund or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts
or Fund shares; or
12
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI or
sales literature for the Contracts not supplied by the
Underwriter or persons under their control) or wrongful conduct
of the Fund or the Underwriter or persons under their control,
with respect to the sale or distribution of the Contracts or
Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI or sales literature covering 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 Fund or the
Underwriter; or
(iv) arise as a result of any failure by the Fund or the
Underwriter to provide the services and furnish the materials
under the terms of this Agreement (including a failure of the
Fund, whether unintentional or in good faith or otherwise, to
comply with the qualification requirements specified in Section
6.1 of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or the
Underwriter in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund or the
Underwriter.
as limited by and in accordance with the provisions of Sections 7.2(b) and
7.2(c) and 7.2(d) hereof.
7.2(b) Pricing Errors. The Underwriter will promptly notify
Fund's accountant which is currently State Street Bank and Trust Company and
Company whenever an error is made in the pricing of shares of a Fund and will
indemnify and hold harmless Company (including its officers, directors, and
employees, and any person who is or may be deemed to be a controlling person of
Company) against any and all losses, claims, damages, liabilities or expenses
(including, but not limited to (i) any losses suffered by Company or Contract
owners as a resect if such pricing error, and (ii) any additional reasonable
costs and expenses related to developing computer software specifically for the
price correction, processing overtime and notices to customers) to which we have
become subject insofar as any such loss, claim, damage, liability or expense
arises out of, or is based on, any error made in the pricing of shares of a
Fund. Payment will be made by Underwriter within thirty (30) days of
Underwriter's receipt of an itemized xxxx from Company stating with specificity
the costs of the price correction and the expenses related thereto.
13
7.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
7.2(d). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter 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.
7.2(d). The Indemnified Party will promptly notify the
Underwriter of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
ARTICLE VIII. Applicable Law
8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
8.2. 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 and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE IX. Termination
9.1. This Agreement shall continue in full force and effect until the
first to occur of:
14
(a) termination by any party, for any reason with respect to
some or all Designated Portfolios, by three (3) months
advance written notice delivered to the other parties;
or
(b) termination by the Company by written notice to the Fund
and the Underwriter based upon the Company's
determination that shares of the Fund are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund
and the Underwriter in the event any of the 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 the Company; or
(d) termination by the Fund or the Underwriter in the event
that formal administrative proceedings are instituted
against the Company by the NASD, the SEC, the Insurance
Commissioner, or like official 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 operation of any Account, or the purchase of the
Shares; provided, however, that the Fund or the
Underwriter determines in its sole judgment exercised in
good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of
the Company to perform its obligations under this
Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the
Fund or the Underwriter by the NASD, the SEC, or any
state securities or insurance department, or any other
regulatory body; provided, however, that the Company
determines in its sole judgment exercised in good faith,
that any such administrative proceedings will have a
material adverse effect upon the ability of the Fund or
the Underwriter to perform its obligations under this
Agreement; or
(f) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Designated
Portfolio in the event that such Portfolio ceases to
qualify as a Regulated Investment Company under
Subchapter M as specified in Section 6.1 hereof, or if
the Company reasonably believes that such Portfolio may
fail to so qualify or comply; or
(g) termination by the Fund or the Underwriter by written
notice to the Company, if the Fund or the Underwriter
respectively, shall determine, in their sole judgment
exercised in good faith, that the Company has suffered
15
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
(h) termination by the Company by written notice to the Fund
and the Underwriter, if the Company shall determine, in
its sole judgment exercised in good faith, that the
Fund, the Adviser, or the Underwriter 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
(i) termination by the Company upon any substitution of the
shares of another investment company or series thereof
for Shares in accordance with the terms of the
Contracts, provided that the Company has given at least
45 days prior written notice to the Fund and the
Underwriter of the date of substitution.
9.2. Notwithstanding any termination of this Agreement, the Fund and
the Underwriter shall, at the option of the Company, continue to make available
additional Shares pursuant to the terms and conditions of this Agreement, for
all Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"), unless the Underwriter
requests that the Company seek an order pursuant to Section 26(c) of the 1940
Act to permit the substitution of other securities for the Shares. In the event
that Underwriter requests that Company seek such order due to circumstances not
within Company's control (e.g. mismanagement of the Fund by the Adviser, closing
of the Fund, etc.), Underwriter agrees to split the cost of seeking such an
order, and the Company agrees that it shall reasonably cooperate with the
Underwriter and seek such an order upon request. Specifically, the owners of the
Existing Contracts may be permitted to reallocate investments in the Fund,
redeem investments in the Fund, and/or invest in the Fund upon the making of
additional purchase payments under the existing Contracts (subject to any such
election by the Underwriter). The parties agree that this Section 9.2 shall not
apply to any terminations under Section 9.1(i) of this Agreement.
9.3. The Company shall not redeem Shares attributable to the
Contracts (as opposed to Shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), (iii) upon 45 days
prior written notice to the Fund and Underwriter, as permitted by an order of
the SEC pursuant to Section 26(c) of the 1940 Act, but only if a substitution of
other securities for the Shares is consistent with the terms of the Contracts,
or (iv) as permitted under the terms of the Contract. Upon request, the Company
will promptly furnish to the Fund and the Underwriter reasonable assurance that
any redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contacts,
the Company shall not prevent Contract owners
16
from allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Underwriter 45 days notice of its
intention to do so.
9.4. Notwithstanding any termination of this Agreement, each party's
obligation under Article VII to indemnify the other parties shall survive.
ARTICLE X. Notices
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: AIM Funds Group
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: General Counsel
If to the Company: Xxxxx X. Xxxxxxxx, Esq.
Senior Vice President and General Counsel
Xxxxxxx Xxxxx Life Insurance Company
0 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
If to the Underwriter: AIM Distributors, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: General Counsel
ARTICLE XI. Miscellaneous
11.1. All persons dealing with the Fund must look solely to the
property of the Fund, and in the case of a series company, the respective
Designated Portfolios listed on Schedule B hereto as though each such Designated
Portfolio had separately contracted with the Company and the Underwriter for the
enforcement of any claims against the Fund. The parties agree that neither the
Board, officers, agents, or shareholders of the Fund assume any personal
liability or responsibility for obligations entered into by or on behalf of the
Fund.
11.2. Subject to the requirements 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
17
information reasonably identified as confidential in writing by any other party
hereto and, except as permitted by this Agreement, shall not disclose,
disseminate or utilize such names and addresses and other confidential
information without the express written consent of the affected party until such
time as such information has come into the public domain.
11.3. 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.
11.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5. 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.
11.6. Each party hereto shall cooperate with each other party and all
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.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Arkansas Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable contract
operations of the Company are being conducted in a manner consistent with the
Arkansas variable annuity laws and regulations and any other applicable law or
regulations.
18
11.7. 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.
11.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto.
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 below.
XXXXXXX XXXXX LIFE INSURANCE COMPANY:
By its authorized officer
By:
---------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President & Secretary
Date:
---------------------------------
AIM FUNDS GROUP:
By its authorized officer
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Date:
---------------------------------
AIM DISTRIBUTORS, INC.
By its authorized officer
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Date:
---------------------------------
19
SCHEDULE A
SEPARATE ACCOUNTS OF THE COMPANY
Dated: September 17, 2002
Xxxxxxx Xxxxx Life Variable Annuity Separate Account D
SCHEDULE B
DESIGNATED PORTFOLIOS AND CLASSES
Dated: September 17, 2002
AIM Premier Equity Fund
Designated Portfolios Class
A
SCHEDULE C
FUND MATERIALS
Part I. Fund Description
- The Fund will provide to Company or a common service provider designated
by Company within ten (10) days of the end of each month, the Fund's
average annual return for the 1, 5, and 10 year periods ending the
current month on a Net Asset Value basis.
- The Fund will provide to Company a description of the Fund including
holdings, portfolio composition, largest sectors, geographical
allocation and a statement of objective in a mutually acceptable format.
Part II. Fund Information and Materials
The Fund will provide to Company the following information and materials
on an as needed basis, as requested by Company:
- A supply of materials relating to the Funds (prospectuses, quarterly
reports and other brochures) to include with contract application
sales, marketing and communication materials.
- Specific investment performance information that may be requested
that cannot be obtained from the prospectus. This would include
specific calculations on various performance parameters and will
require an aggressive turnaround time (usually 5 business days).
