FORM OF
FUND PARTICIPATION AGREEMENT
among
XXXXXXX RESPONSIBLY INVESTED BALANCED PORTFOLIO
and
XXXXXXX ASSET MANAGEMENT COMPANY, INC.
and
AETNA INSURANCE COMPANY OF AMERICA
Aetna Insurance Company of America (the "Company"), XXXXXXX RESPONSIBLY
INVESTED BALANCED PORTFOLIO (the "Fund") and XXXXXXX ASSET MANAGEMENT COMPANY,
INC. (the "Adviser") hereby agree to an arrangement whereby the Fund shall be
made available to serve as underlying investment media for Variable Annuity or
Variable Life Contracts ("Contracts") to be issued by the Company.
1. Establishment of Accounts; Availability of Fund.
(a) The Company represents that it has established Variable Annuity
Account I and II and may establish such other accounts as may be
set forth in Schedule A attached hereto and as may be amended from
time to time with the mutual consent of the parties hereto (the
"Accounts"), each of which is a separate account under Connecticut
Insurance law, and has registered or will register each of the
Accounts (except for such Accounts for which no such registration
is required) as a unit investment trust under the Investment
Company Act of 1940 (the "1940 Act"), to serve as an investment
vehicle for the Contracts. Each Contract provides for the
allocation of net amounts received by the Company to an Account
for investment in the shares of one or more specified open-end
management investment companies available through that Account as
underlying investment media. Selection of a particular investment
management company and changes therein from time to time are made
by the participant, beneficiary or Contract owner, as applicable
under a particular Contract.
(b) The Adviser represents and warrants that the investments of the
series of the Fund (each designated a "Portfolio") specified in
Schedule B attached hereto (as may be amended from time to time
with the mutual consent of the parties hereto) will at all times
be adequately diversified within the meaning of Section 817(h) of
the Internal Revenue Code of 1986, as amended (the "Code"), and
the Regulations thereunder, and that at all times while this
Agreement is in effect, all beneficial interests will be owned by
one or more insurance companies or by any other party permitted
under Section 1.817-5(f)(3) of the Regulations promulgated under
the Code or by the successor
thereto, or by any other party permitted under a Revenue Ruling or
private letter ruling granted by the Internal Revenue Service.
2. Pricing Information; Orders; Settlement.
(a) The Fund will make Fund shares available to be purchased by the
Company, and will accept redemption orders from the Company, on
behalf of each Account at the net asset value applicable to each
order on those days on which the Fund calculates its net asset
value (a "Business Day"). Fund shares shall be purchased and
redeemed in such quantity and at such time determined by the
Company to be necessary to meet the requirements of those
Contracts for which the Fund serves as underlying investment
media, provided, however, that the Board of Directors of the Fund
(hereinafter the "Directors") may upon reasonable notice to the
Company, 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 Directors,
acting in good faith and in the best interests of the shareholders
of any Portfolio and is acting in compliance with their fiduciary
obligations under federal and/or any applicable state laws.
(b) The Fund will provide to the Company closing net asset value,
dividend and capital gain information at the close of trading each
day that the New York Stock Exchange (the "Exchange") is open
(each such day a "Business Day"), and in no event later than 7:00
p.m. Eastern Standard Time on such Business Day. The Company will
send via facsimile or electronic transmission to the Fund or its
specified agent orders to purchase and/or redeem Fund shares by
10:00 a.m. Eastern Standard Time the following business day.
Payment for net purchases will be wired by the Company to an
account designated by the Fund to coincide with the order for
shares of the Fund.
(c) The Fund hereby appoints the Company as its agent for the limited
purpose of accepting purchase and redemption orders for Fund
shares relating to the Contracts from Contract owners or
participants. Orders from Contract owners, participants or
beneficiaries received from any distributor of the Contracts
(including affiliates of the Company) by the Company, acting as
agent for the Fund, prior to the close of the Exchange on any
given business day will be executed by the Fund at the net asset
value determined as of the close of the Exchange on such Business
Day, provided that the Fund receives written (or facsimile) notice
of such order by 10 a.m. Eastern Standard Time on the next
following Business Day. Any orders received by the Company acting
as agent on such day but after the close of the Exchange will be
executed by the Fund at the net asset value determined as of the
close of the Exchange on the next business day following the day
of receipt of such order, provided that the Fund receives written
(or facsimile) notice of such order by
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10 a.m. Eastern Standard Time within two days following the day of
receipt of such order.
(d) Payments for net redemptions of shares of the Fund will be wired
by the Fund to an account designated by the Company. Payments for
net purchases of the Fund will be wired by the Company to an
account designated by the Fund on the same Business Day the
Company places an order to purchase Fund shares. Payments shall be
in federal funds transmitted by wire.
(e) Each party has the right to rely on information or confirmations
provided by the other party (or by any affiliate of the other
party), and shall not be liable in the event that an error is a
result of any misinformation supplied by the other party.
(f) The Company agrees to purchase and redeem the shares of the
Portfolios named in Schedule B offered by the then current
prospectus and statement of additional information of the Fund in
accordance with the provisions of such prospectus and statement of
additional information. The Company shall not permit any person
other than a Contract owner, participant or beneficiary to give
instructions to the Company which would require the Company to
redeem or exchange shares of the Fund. This provision shall not be
construed to prohibit the Company from substituting shares of
another fund, as permitted by law.
3. Expenses.
(a) Except as otherwise provided in this Agreement, all expenses
incident to the performance by the Fund under this Agreement shall
be paid by the Fund or the Adviser, including the cost of
registration of Fund shares with the Securities and Exchange
Commission (the "SEC") and in states where required. The Fund and
Adviser shall pay no fee or other compensation to the Company
under this Agreement, and the Company shall pay no fee or other
compensation to the Fund or Adviser, except as provided herein and
in Schedule C attached hereto and made a part of this Agreement as
may be amended from time to time with the mutual consent of the
parties hereto. All expenses incident to performance by each party
of its respective duties under this Agreement shall be paid by
that party, unless otherwise specified in this Agreement.
(b) The Fund or the Adviser shall provide to the Company Post Script
files of periodic fund reports to shareholders and other materials
that are required by law to be sent to Contract owners. In
addition, the Fund or the Adviser shall provide the Company with a
sufficient quantity of its prospectuses, statements of additional
information and any supplements to any of these materials, to be
used in connection with the offerings and transactions
contemplated by this
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Agreement. In addition, the Fund shall provide the Company with a
sufficient quantity of its proxy material that is required to be
sent to Contract owners. The Adviser shall be permitted to review
and approve the typeset form of such material prior to such
printing provided such material has been provided by the Adviser
to the Company within a reasonable period of time prior to
typesetting.
(c) In lieu of the Fund's or Adviser's providing printed copies of
prospectuses, statements of additional information and any
supplements to any of these materials, the Company shall have the
right to request that the Fund transmit a copy of such materials
in an electronic format (Post Script files), which the Company may
use to have such materials printed together with similar materials
of other Account funding media that the Company or any distributor
will distribute to existing or prospective Contract owners,
participants or beneficiaries.
4. Representations.
The Company agrees that it and its agents shall not, without the written
consent of the Fund or the Adviser, make representations concerning the Fund, or
its shares except those contained in the then current prospectuses and in
current printed sales literature approved by or deemed approved by the Fund or
the Adviser.
5. Termination.
This Agreement shall terminate as to the sale and issuance of new
Contracts:
(a) at the option of either the Company, the Adviser or the Fund, upon
sixty days advance written notice to the other parties;
(b) at the option of the Company, upon one week advance written notice
to the Adviser and the Fund, if Fund shares are not available for
any reason to meet the requirement of Contracts as determined by
the Company. Reasonable advance notice of election to terminate
shall be furnished by Company;
(c) at the option of either the Company, the Adviser or the Fund,
immediately upon institution of formal proceedings against the
broker-dealer or broker-dealers marketing the Contracts, the
Account, the Company, the Fund or the Adviser by the National
Association of Securities Dealers, Inc. (the "NASD"), the SEC or
any other regulatory body;
(d) upon the determination of the Accounts to substitute for the
Fund's shares the shares of another investment company in
accordance with the terms of the applicable Contracts. The Company
will give 60 days written notice to the Fund and the Adviser of
any decision to replace the Fund's' shares;
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(e) upon assignment of this Agreement, unless made with the written
consent of all other parties hereto;
(f) if Fund shares are not registered, issued or sold in conformance
with Federal law or such law precludes the use of Fund shares as
an underlying investment medium for Contracts issued or to be
issued by the Company. Prompt notice shall be given by the
appropriate party should such situation occur.
6. Continuation of Agreement.
Termination as the result of any cause listed in Section 5 shall not
affect the Fund's obligation to furnish its shares to Contracts then in force
for which its shares serve or may serve as the underlying medium unless such
further sale of Fund shares is prohibited by law or the SEC or other regulatory
body, or is determined by the Directors to be necessary to remedy or eliminate
an irreconcilable conflict pursuant to Section 10 hereof.
7. Advertising Materials; Filed Documents.
(a) Advertising and sales literature with respect to the Fund prepared
by the Company or its agents for use in marketing its Contracts
will be submitted to the Fund or its designee for review before
such material is submitted to any regulatory body for review. No
such material shall be used if the Fund or its designee reasonably
object to such use in writing, transmitted by facsimile within two
business days after receipt of such material.
(b) At the Company's request, the Fund will provide additional copies
of its financials as soon as available to the Company and at least
one complete copy of all registration statements, prospectuses,
statements of additional information, annual and semi-annual
reports, proxy statements and/or all amendments or supplements to
any of the above that relate to the Fund promptly after the filing
of such document with the SEC or other regulatory authorities. At
the Adviser's request, the Company will provide to the Adviser at
least one complete copy of all registration statements,
prospectuses, statements of additional information, annual and
semi-annual reports, proxy statements, and all amendments or
supplements to any of the above that relate to the Account
promptly after the filing of such document with the SEC or other
regulatory authority.
(c) The Fund or the Adviser will provide via Excel spreadsheet
diskette format or in electronic transmission to the Company at
least quarterly portfolio information necessary to update Fund
profiles within seven business days following the end of each
quarter.
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(d) The Fund will reimburse the Company for any incorrect information
provided to the Company under this Section as provided for in
Schedule C.
8. Proxy Voting.
(a) The Company shall provide pass-through voting privileges on Fund
shares held by registered separate accounts to all Contract owners
and participants to the extent the SEC continues to interpret the
1940 Act as requiring such privileges. The Company shall provide
pass-through voting privileges on Fund shares held by unregistered
separate accounts to all Contract owners.
(b) The Company will distribute to Contract owners, participants and
beneficiaries, as appropriate, all proxy material furnished by the
Fund and will vote Fund shares in accordance with instructions
received from such Contract owners, participants and
beneficiaries. If and to the extent required by law, the Company,
with respect to each group Contract and in each Account, shall
vote Fund shares for which no instructions have been received in
the same proportion as shares for which such instructions have
been received. The Company and its agents shall not oppose or
interfere with the solicitation of proxies for Fund shares held
for such Contract owners, participants and beneficiaries.
9. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Fund and the
Adviser, and its directors, officers, employees, agents and each
person, if any, who controls the Fund or its Adviser within the
meaning of the Securities Act of 1933 (the "1933 Act") against any
losses, claims, damages or liabilities to which the Fund or any
such director, officer, employee, agent, or controlling person may
become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages, or liabilities (or actions in respect
thereof) 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 sales literature of the
Company 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, or arise out of or as a result of conduct, statements
or representations (other than statements or representations
contained in the prospectuses or sales literature of the Fund) of
the Company or its agents, with respect to the sale and
distribution of Contracts for which Fund shares are the underlying
investment. The Company will reimburse any legal or other expenses
reasonably incurred by the Fund or any such director, officer,
employee, agent, investment adviser, or controlling person in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such
loss, claim, damage or
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liability arises out of or is based upon (i) an untrue statement
or omission or alleged omission made in such Registration
Statement or prospectus in conformity with written materials
furnished to the Company by the Fund specifically for use therein
or (ii) the willful misfeasance, bad faith, or gross negligence by
the Fund or Adviser in the performance of its duties or the Fund's
or Adviser's reckless disregard of obligations or duties under
this Agreement or to the Company, whichever is applicable. This
indemnity agreement will be in addition to any liability which
Company may otherwise have.
(b) The Fund and the Adviser agree to indemnify and hold harmless the
Company and its directors, officers, employees, agents and each
person, if any, who controls the Company within the meaning of the
1933 Act against any losses, claims, damages or liabilities to
which the Company or any such director, officer, employee, agent
or controlling person may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, prospectuses or sales
literature of the Fund 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 material fact required to be
stated therein or necessary to make the statements therein not
misleading. The Adviser will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer,
employee, agent, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability
or action; provided, however, that the Adviser will not be liable
in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or
omission or alleged omission made in such Registration Statement
or prospectuses which are in conformity with written materials
furnished to the Adviser by the Company specifically for use
therein.
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 9. In case any
such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to
the extent that it may wish to, assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 9
for any legal or other
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expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
10. Potential Conflicts.
(a) The Company has received a copy of an application for exemptive
relief, as amended, filed by the Fund on and with the SEC and the
order issued by the SEC dated ________ (File No. _______) in
response thereto (the "Shared Funding Exemptive Order"). The
Company has reviewed the conditions to the requested relief set
forth in such application for exemptive relief. As set forth in
such application, the Directors will monitor the Fund for the
existence of any material irreconcilable conflict between the
interests of the contractholders of all separate accounts
("Participating Companies") investing in the Fund. An
irreconcilable material conflict may arise for a variety of
reasons, including: (i) an action by any state insurance
regulatory authority; (ii) 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 actions by insurance, tax or securities regulatory
authorities; (iii) an administrative or judicial decision in any
relevant proceeding; (iv) the manner in which the investments of
any portfolio are being managed; (v) a difference in voting
instructions given by variable annuity contractholders and
variable life insurance contractholders; or (vi) a decision by an
insurer to disregard the voting instructions of contractholders.
The Board shall promptly inform the Company if it determines that
an irreconcilable material conflict exists and the implications
thereof.
(b) The Company will report any potential or existing conflicts of
which it is aware to the Directors. The Company will assist the
Directors in carrying out its responsibilities under the Shared
Funding Exemptive Order by providing the Directors with all
information reasonably necessary for the Directors to consider any
issues raised. This includes, but is not limited to, an obligation
by the Company to inform the Directors whenever contractholder
voting instructions are disregarded.
(c) If a majority of the Directors, or a majority of its disinterested
Directors, determines that a material irreconcilable conflict
exists with regard to contractholder investments in a Fund, the
Directors shall give prompt notice to all Participating Companies.
If the Directors determine that the Company is responsible for
causing or creating said conflict, the Company shall at its sole
cost and expense, and to the extent reasonably practicable (as
determined by a majority of the disinterested Directors), take
such action as is necessary to remedy or eliminate the
irreconcilable material conflict. Such necessary action may
include but shall not be limited to:
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(i) withdrawing the assets allocable to the Account from the
Fund and reinvesting such assets in a different investment
medium or submitting the question of whether such
segregation should be implemented to a vote of all affected
contractholders and as appropriate, segregating the assets
of any appropriate group (i.e., annuity contract owners,
life insurance contract owners, or variable contract owners
of one or more Participating Companies) that votes in favor
of such segregation, or offering to the affected
contractholders the option of making such a change; and/or
(ii) establishing a new registered management investment company
or managed separate account.
(d) If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contractholder voting
instructions and said decision represents a minority position or
would preclude a majority vote by all of its contractholders
having an interest in the Fund, the Company at its sole cost, may
be required, at the Directors' election, to withdraw an Account's
investment in the Fund and terminate this Agreement; provided,
however, that such withdrawal and termination shall be limited to
the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested
Directors.
(e) For the purpose of this Section 10, a majority of the
disinterested Directors shall determine whether or not 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 any Contract. The Company shall not be
required by this Section 10 to establish a new funding medium for
any Contract if an offer to do so has been declined by vote of a
majority of the Contract owners, participants or beneficiaries
materially adversely affected by the irreconcilable material
conflict.
11. Miscellaneous.
(a) Amendment and Waiver. Neither this Agreement, nor any provision
hereof, may be amended, waived, discharged or terminated orally,
but only by an instrument in writing signed by all parties hereto.
(b) Notices. All notices and other communications hereunder shall be
given or made in writing and shall be delivered personally, or
sent by telex, telecopier or registered or certified mail, postage
prepaid, return receipt requested, to the party or parties to whom
they are directed at the following addresses, or at such other
addresses as may be designated by notice from such party to all
other parties.
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To the Company:
Aetna Insurance Company of America
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Counsel
To the Fund:
Xxxxxxx Group, Ltd.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000X
Xxxxxxxx, Xxxxxxxx 00000
Attn: Legal Department
Any notice, demand or other communication given in a manner prescribed in
this subsection (b) shall be deemed to have been delivered on receipt.
(c) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
agreement, and any party hereto may execute this Agreement by
signing any such counterpart.
(e) Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be
affected or impaired thereby.
(f) Entire Agreement. This Agreement constitutes the entire agreement
and understanding between the parties hereto and supersedes all
prior agreement and understandings relating to the subject matter
hereof.
(g) Governing Law. This Agreement shall be governed and interpreted in
accordance with the laws of the State of Connecticut.
(h) It is understood by the parties that this Agreement is not an
exclusive arrangement in any respect.
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(i) The terms of this Agreement and the Schedules thereto will be held
confidential by each party except to the extent that either party
or its counsel may deem it necessary to disclose such terms.
12. Limitation on Liability of Trustees, etc.
This Agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his or her capacity as an officer of the Fund and on
behalf of the Advisor by an undersigned officer of the Advisor in his or her
capacity as an officer of the Advisor. Any obligations imposed on the Fund by
this Agreement shall be binding upon the assets and property of the Fund only
and shall not be binding on any Director, officer or shareholder of the Fund
individually.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by their
duly authorized officers effective as of the 1st day of December, 1997.
AETNA INSURANCE COMPANY OF AMERICA
By: ______________________________________
Name:
Title:
Date:
------------------------------------------
XXXXXXX RESPONSIBLY INVESTED
BALANCED PORTFOLIO
By: ______________________________________
Name:
Title:
Date:
------------------------------------------
XXXXXXX ASSET MANAGEMENT
COMPANY, INC.
By: ______________________________________
Name:
Title:
Date:
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Schedule A
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Schedule B
Xxxxxxx Responsibly Invested Balanced Portfolio
13
Schedule C
The following costs, expenses and reimbursements will be paid by the
party indicated:
1. For purposes of Sections 2 and 7, 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 Contract owner's, a participant's or
beneficiary'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 4pm 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 Contract owner's, a participant's or a
beneficiary's account whole shall be borne by the party providing the
incorrect information, regardless of when the error is corrected.
2. For purposes of Section 3, the Fund or the Adviser shall pay for the
cost of typesetting and printing periodic fund reports to shareholders,
prospectuses, prospectus supplements, statements of additional
information and other materials that are required by law to be sent to
Contract owners, participants or beneficiaries as well as the cost of
distributing such materials. The Company shall pay for the cost of
prospectuses and statements of additional information and the
distribution thereof for prospective Contract owners, participants or
beneficiaries. Each party shall be provided with such supporting data
as may reasonably be requested for determining expenses under Section
3.
3. The Fund shall pay all expenses in connection with the provision to the
Company of a sufficient quantity of its proxy material under Section 3.
The cost associated with proxy preparation, group authorization
letters, programming for tabulation and necessary materials (including
postage) will be paid by the Fund.
AETNA INSURANCE COMPANY OF AMERICA
By: __________________________________
Name:
Title:
Date:
-------------------------------------- ----------------------------------
XXXXXXX RESPONSIBILITY INVESTED XXXXXXX ASSET MANAGEMENT
BALANCED PORTFOLIO COMPANY, INC.
By: __________________________________ By:_______________________________
Name: Name:
Title: Title:
Date: Date:
