EXHIBIT 8(d)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.
AND
CITICORP LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
THIS AGREEMENT, made and entered into this 10th day of February, 1995,
by and among AIM VARIABLE INSURANCE FUNDS, INC., an open-end, series, management
investment company ("AVIF"), and CITICORP LIFE INSURANCE COMPANY, an Arizona
corporation (the "Company"), on its own behalf and on behalf of the CITICORP
LIFE VARIABLE ANNUITY SEPARATE ACCOUNT and other segregated asset accounts of
the Company as set forth on Schedule A attached hereto, as the parties hereto
may amend from time to time (each, an "Account," and collectively, the
"Accounts").
WHEREAS, AVIF is a Maryland corporation registered as an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and its shares are registered under the Securities Act
of 1933, as amended (the "1933 Act");
WHEREAS, AVIF is comprised of nine investment portfolios (the "Funds"),
shares of which are currently sold only to insurance company separate accounts
to fund benefits under variable annuity contracts;
WHEREAS, the Funds to be offered by AVIF to the Company and the Accounts
are set forth on Schedule A attached hereto, as the parties hereto may amend
from time to time (each, a "Portfolio," and collectively, the "Portfolios");
WHEREAS, A I M Advisors, Inc. ("AIM Advisors") is duly registered as an
investment adviser under the Investment Advisors Act of 1940, as amended, and
any applicable state securities law, and is AVIF's investment adviser;
WHEREAS, the Company will issue certain variable annuity contracts
("Contracts") and/or variable life insurance policies ("Policies") as set forth
on Schedule A attached hereto, as the parties hereto may amend from time to
time, which Contracts and Policies, if required by applicable law, will be
registered under the 1933 Act;
WHEREAS, each Account is or will be a segregated asset account, duly
organized and validly existing under the laws of the State of Arizona, and
established by resolution of the Board of Directors of the Company to set aside
and invest assets attributable to the Policies that are allocated to the
Accounts;
WHEREAS, the Company has registered or will register the Accounts as
unit investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, A I M Distributors, Inc. (the "Underwriter") is registered as a
broker-dealer with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), and is
a member in good standing of the National Association of Securities Dealers,
Inc., (the "NASD"),
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WHEREAS, Landmark Funds Broker-Dealer Services, Inc. ("Landmark"), the
underwriter for the Policies, is registered as a broker-dealer with the SEC
under the 1934 Act and is a member in good standing of the NASD;
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in one or more of the
Portfolios (the "Shares") on behalf of the Accounts to fund the Contracts and
Policies (hereinafter collectively, the "Policies,"); provided, however, that
Shares will be sold to Accounts funding variable life insurance policies only
following receipt by AVIF of an exemptive order from the SEC permitting AVIF to
be available for investment by separate accounts funding variable life insurance
policies ("Mixed Funding") and by separate accounts of insurance companies
unaffiliated with the Company ("Shared Funding"); and
WHEREAS, AVIF intends to sell such Shares to the Accounts at net asset
value;
NOW, THEREFORE, in consideration of their mutual promises, AVIF, and the
Company, on behalf of itself and the Accounts, agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. AVIF agrees to sell to the Company those shares that the Accounts order
(based on orders placed by owners of Policies (collectively, "Policy owners") on
each Business Day before the time as of which AVIF computes the net asset value
of its Shares on that Business Day, as defined below) and that are available for
purchase by such Accounts, executing such orders on a daily basis at the net
asset value next computed after receipt by AVIF or its designee of the order for
the Shares. For purposes of this Section 1.1 Landmark shall be the designee of
AVIF for receipt of such orders from Policy owners and receipt by such designee
shall constitute receipt by AVIF; provided that AVIF receives notice of such
orders by 9:30 a.m. New York time on the next following Business Day. "Business
Day" shall mean any day on which the New York Stock Exchange (the "NYSE") is
open for trading and on which AVIF calculates its net asset value pursuant to
the rules of the SEC.
1.2. AVIF agrees to make the Shares available indefinitely for purchase at the
applicable net asset value per share by the Company and the Accounts on those
days on which AVIF calculates its net asset value pursuant to rules of the SEC,
and AVIF shall calculate such net asset value on each day on which the NYSE is
open for trading. Notwithstanding the foregoing, the Board of Directors of AVIF
(the "Board") may refuse to sell Shares of any Portfolio to the Company and the
Accounts, or suspend or terminate the offering of the Shares if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of AVIF's
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Board acting in good faith and in light of its fiduciary duties under federal
and any applicable state laws, necessary in the best interest of the
Shareholders of such Portfolio.
1.3. AVIF agrees that it will sell Shares only to insurance companies that have
entered into participation agreements with AVIF (the "Participating Insurance
Companies"), the separate accounts of Participating Insurance Companies,
qualified pension and retirement plans, and AVIF or its affiliates. In the event
AVIF implements Mixed and Shared Funding, AVIF will not sell Shares to any
Participating Insurance Company or separate account thereof unless an agreement
containing provisions substantially the same as Section 2.7 of Article II,
Sections 3.5 and 3.6 of Article III, and Article VII of this Agreement is in
effect to govern such sales. The Company will not resell the Shares except to
AVIF or its agents.
1.4. AVIF agrees to redeem for cash, on the Company's request, any full or
fractional Shares held by the Accounts (based on orders placed by Policy owners
on each Business Day before the time as of which AVIF calculates the net asset
value of its Shares on that Business Day), executing such request at the net
asset value per Share next computed after receipt by AVIF or its designee of the
request for redemption. For purposes of this Section 1.4, the Company shall be
the designee of AVIF for receipt of requests for redemption from Policy owners
and receipt by such designee shall constitute receipt by AVIF, provided that
AVIF receives notice of such request for redemption by 9:30 a.m. New York time
on the next following Business Day.
1.5. Purchase, redemption and exchange orders placed by the Company shall be
placed separately for each Portfolio and shall not be netted. However, with
respect to payment of the purchase price by the Company and of redemption
proceeds by AVIF, the Company and AVIF shall net purchase and redemption orders
with respect to each Portfolio and shall transmit one net payment per Portfolio
in accordance with Section 1.6.
1.6. In the event of net purchases, the Company shall pay for the Shares by 2:00
p.m. New York time on the next Business Day after an order to purchase the
Shares is made in accordance with the provisions of Section 1.1. hereof. In the
event of net redemptions, AVIF shall pay the redemption proceeds by 2:00 p.m.
New York time on the next Business Xxx after an order to redeem the Shares is
made in accordance with the provisions of Section 1.4. hereof, or as soon
thereafter as is reasonably practicable, and in any event within five calendar
days after the date the order is placed in order to enable the Company to pay
redemption proceeds within the time specified in Section 22(e) of the 0000 Xxx.
All such payments shall be in federal funds transmitted by wire.
1.7. Issuance and transfer of the Shares will be by book entry only. Stock
certificates will not be issued to the Company or any Account. The Shares
ordered from AVIF will be recorded in an appropriate title for the Accounts or
the appropriate subaccounts of the Accounts.
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1.8. AVIF shall furnish same day notice (by wire or telephone followed by
written conformation) to the Company of any dividends or capital gain
distributions payable on the Shares. The Company hereby elects to receive all
such dividends and distributions as are payable on a Portfolio's Shares in
additional Shares of that Portfolio. AVIF shall notify the Company of the number
of Shares so issued as payment of such dividends and distributions.
1.9. AVIF shall make the net asset value per share for each Portfolio available
to the Company on each Business Day as soon as reasonably practicable after the
net asset value per Share is calculated and shall use its best efforts to make
such net asset value per Share available by 6:30 p.m. New York time. In the
event that AVIF is unable to meet the 6:30 p.m. time 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 AVIF takes to make the net asset value available to the Company. If AVIF
provides materially incorrect Share net asset value information, the Company
shall be entitled to an adjustment to the number of Shares purchased or redeemed
to reflect the correct net asset value per Share. Any material error in the
calculation or reporting of net asset value per Share, dividend or capital gain
information shall be reported promptly upon discovery to the Company.
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. The Company represents and warrants that the Policies are or will be
registered under the 1933 Act or are exempt from or not subject to registration
thereunder, and that the Policies will be issued, sold, and distributed in
compliance in all material respects with all applicable federal and state laws,
including without limitation the 1933 Act, the 1934 Act, and the 1940 Act. The
Company further represents and warrants that it is an insurance company duly
organized and in good standing under Arizona law and that it has legally and
validly established the Accounts as segregated asset accounts under Arizona law
and has registered or, prior to any issuance or sale of the Policies, will
register the Accounts as unit investment trusts in accordance with the
provisions of the 1940 Act (unless exempt therefrom) to serve as segregated
investment accounts for the Policies, and that it will maintain such
registration for so long as any Policies are outstanding. The Company shall
amend the registration statements under the 1933 Act for the Policies and the
registration statements under the 1940 Act for the Accounts from time to time as
required in order to effect the continuous offering of the Policies or as may
otherwise be required by applicable law. The Company shall register and qualify
the Policies 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. Subject to Article VI, the Company represents and warrants that the
Policies are currently and at the time of issuance will be treated as life
insurance, endowment or annuity contracts
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under applicable provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), that it will make every effort to maintain such treatment and that
it will notify AVIF immediately upon having a reasonable basis for believe that
the Policies have ceased to be so treated or that they might not be so treated
in the future.
2.3. The Company represents and warrants that Landmark, the underwriter for the
Policies, is a member in good standing of the NASD and is a registered
broker-dealer with the SEC. The Company represents and warrants that the Company
and Landmark, will sell and distribute such policies in accordance in all
material respects with all applicable federal and state securities laws,
including without limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.4 AVIF represents and warrants that the Shares sold pursuant to this Agreement
shall be registered under the 1933 Act, that the Shares shall be duly authorized
for issuance and sold in compliance with the laws of the state of Maryland and
all applicable federal and state securities laws and that AVIF is and shall
remain registered as a management investment company under the 1940 Act. AVIF
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. AVIF shall register and qualify the Shares for sale in
accordance with the laws of the various states only if and to the extent it
deems necessary.
2.5. AVIF represents and warrants that the Underwriter is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. AVIF
represents that AVIF and the Underwriter will sell and distribute the Shares in
accordance in all material respects with all applicable state and federal
securities laws, including without limitation the 1933 Act, the 1934 Act, and
the 0000 Xxx.
2.6. AVIF 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 the 1940 Act and any applicable regulations thereunder.
2.7. No less frequently than annually, the Company shall submit to the Board
such reports, material or data as the Board may reasonably request from time to
time so that it may carry out fully the obligations imposed upon it by the
conditions contained in any exemptive application filed in the future by AVIF
pursuant to which the SEC may grant exemptive relief to permit Mixed and Shared
Funding (the "Mixed and Shared Funding Exemptive Order").
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1 AVIF or its designee shall provide the Company such documentation (including
a "camera ready" copy of the current prospectus (describing only the Portfolios
listed in Schedule A hereto)
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for the Shares as set in type or, at the request of the Company, as a diskette
in the form sent to the financial printer) and other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if the
prospectus for the Shares is supplemented or amended) to have the prospectus for
the Policies and the prospectus for the Shares printed together in one document;
the expense of such printing to be borne by the Company. AVIF shall be
responsible for providing the prospectus in the format in which it or AVIF is
accustomed to formatting prospectuses and shall bear the expense of providing
the prospectus in such format (e.g., typesetting expenses), and the Company
shall bear the expense of adjusting or changing the format to conform with any
of its prospectuses.
3.2 The prospectus for the Shares shall state that the statement of additional
information for the Shares is available from AVIF or its designee. AVIF or its
designee, at its expense, shall provide a master of such statement of additional
information suitable for duplication by the Company, at its expense, for
distribution to any owner of a Policy funded by the Shares, to a prospective
purchaser who requests such statement or to an owner of a Policy not funded by
the Shares.
3.3 AVIF or its designee shall provide the Company camera ready copies, if and
to the extent applicable to the Shares, of AVIF's proxy materials, reports to
Shareholders and other communications to Shareholders as the Company shall
reasonably require for distribution to Policy owners. The Company shall, at its
expense, print and distribute such materials to Policy owners.
3.4 Notwithstanding the provisions of Section 3.1., 3.2., and 3.3. above, or of
Article V below, the Company shall pay the expense of printing or providing
documents to the extent such cost is considered a distribution expense.
Distribution expenses would include by way of illustration, but are not limited
to, the printing of the Shares' prospectus or prospectuses for distribution to
prospective purchasers or to owners of existing Policies not funded by such
Shares.
3.5 AVIF hereby notifies the Company that, in the event that AVIF implements
Mixed and Shared Funding, it may be appropriate to include in the prospectus
pursuant to which a Policy is offered disclosure regarding the potential risks
of Mixed and Shared Funding.
3.6 If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Policy owners;
(b) vote the Shares in accordance with timely instructions received
from Policy owners; and
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(c) vote the Shares for which no timely instructions have been
received, as well as Shares it owns, in the same proportion as
the Shares of such Portfolio for which instructions have been
received from Policy owners; so long as and to the extent that
the SEC continues to interpret the 1940 Act to require pass
through voting privileges for Policy owners. The Company will in
no way recommend action in connection with or oppose or interfere
with the solicitation of proxies for the Shares held for such
Policy owners. The Company reserves the right to vote shares held
in any Account in its own right, to the extent permitted by law.
The Company shall be responsible for assuring that each of their
separate accounts holding Shares calculates voting privileges in
a manner consistent with that of other Participating Insurance
Companies or in the manner required by any Mixed and Shared
Funding Exemptive Order that AVIF may obtain in the future. AVIF
will notify the Company of any changes of interpretations or
amendments to any Mixed and Shared Funding Exemptive Order it
obtains in the future.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to AVIF or its
designee, each piece of sales literature or other promotional material in which
AVIF, AIM Advisors, any other investment advisor to AVIF, or any affiliate of
AVIF are named, at least five (5) Business Days prior to its use. No such
material shall be used if AVIF, AIM Advisors or their respective designees
reasonably objects to such use within five (5) Business Days after receipt of
such material.
4.2. The Company shall not give any information or make any representations or
statement on behalf of AVIF, AIM Advisors, any other investment adviser to AVIF,
or any affiliate of AVIF in connection with the sale of the Policies other than
the information or representations contained in the registration statement,
prospectus or statement of additional information for the Shares, as such
registration statement, prospectus and statement of additional information may
be amended or supplemented from time to time, or in reports of proxy statements
prepared by or for AVIF, or in sales literature or other promotional material
approved by AVIF, AIM Advisors, or their respective designees, except with the
permission of AVIF, AIM Advisors, or their respective designees. AVIF agrees,
and shall cause AIM Advisors and their respective designees, to respond to any
request for approval on a prompt and timely basis. The Company shall adopt and
implement procedures reasonably designed to ensure that information concerning
AVIF, AIM Advisors, or any of their affiliates which is intended for use only by
brokers or agents selling the Policies (i.e., information that is not intended
for distribution to Policy owners or prospective Policy owners) is so used, and
neither AVIF, AIM Advisors nor any of their affiliates shall be liable for any
losses, damages or expenses relating to the improper use of such broker only
materials.
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4.3. AVIF or its designee shall furnish, or shall cause to be furnished, to the
Company or its designee, each piece of sales literature or other promotional
materials in which the Company and/or the Accounts is named, at least five (5)
Business Days prior to its use. No such material shall be used if the Company or
its designee reasonably objects to such use within five (5) Business Days after
receipt of such material.
4.4. AVIF shall not give any information or make any representations on behalf
of the Company or concerning the Company, the Accounts, or the Policies in
connection with the sale of the Policies other than the information or
representations contained in a registration statement, prospectus, or statement
of additional information for the Policies, as such registration statement,
prospectus and statement of additional information may be amended or
supplemented from time to time, or in reports for the Accounts, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company. The Company agrees to
respond to any request for approval on a prompt and timely basis. The parties
hereto agree that this Section 4.4. is neither intended to designate nor
otherwise imply that AVIF is an underwriter or distributor of the Policies.
4.5. The Company and AVIF (or their designees) will each provide to the other 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 Accounts or
the Policies, or to AVIF or its Shares, prior to or contemporaneously with the
filing of such document with the SEC or other regulatory authorities. The
Company and AVIF shall also each promptly inform the other of the results of any
examination by the SEC (or other regulatory authorities) that relates to the
Accounts or the Policies, AVIF or its Shares, and the party that was the subject
of the examination shall provide the other party with a copy of relevant
portions of any deficiency letter" or other correspondence or written report
regarding any such examination.
4.6. AVIF will provide the Company with as much notice as is reasonably
practicable of any proxy solicitations for any Portfolio, and of any material
change in AVIF's registration statement. AVIF will cooperate with the Company so
as to enable the Company to solicit proxies from Policy owners to make
corresponding changes to the Policy prospectus, statement of additional
information or registration statement, in an orderly manner. AVIF will make
reasonable efforts to attempt to have changes affecting Policy prospectuses
become effective simultaneously with the annual updates for such prospectuses.
4.7. For purposes of this Article IV and Article VIII, the phrase "sales
literature or other promotional material" includes but is not limited to
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
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and sales literature (such as brochures, circulars, reprints or excerpts or any
other advertisement, sales literature, or published articles), distributed or
made generally available to customers or the public, educational or training
materials or communications distributed or made generally available to some or
all agents or employees.
ARTICLE V. FEES AND EXPENSES
5.1. AVIF shall pay no fee or other compensation to the Company under this
Agreement, and the Company shall pay no fee or other compensation to AVIF,
except that if AVIF or any Portfolio adopts and implements a plan pursuant to
Rile 12b-1 under the 1940 Act to finance distribution and shareholder servicing
expenses, then, subject to obtaining any required exemptive orders or regulatory
approvals, AVIF may make payments to the Company or to the underwriter for the
Policies if and in amounts agreed to by AVIF in writing. The Company, however,
shall, in accordance with the allocation of expenses specified in Articles III
and V hereof, reimburse AVIF for expenses initially paid by AVIF or its designee
but allocated to the Company. In addition, nothing herein shall prevent the
parties hereto from otherwise agreeing to perform, and arranging for appropriate
compensation for, other services relating to the Portfolios and/or to the
Accounts.
5.2. AVIF or its designee shall bear the expenses for the cost of registration
and qualification of the Shares under all applicable federal and state laws,
including preparation and filing of AVIF's registration statement, and payment
of filing fees and registration fees; preparation and filing of AVIF's proxy
materials and reports to Shareholders; setting in type its prospectus and
statement of additional information, including any amendments or supplements
thereto (to the extent provided by and as determined in accordance with Article
III above); setting in type the proxy materials, reports and other
communications to Shareholders (to the extent provided by and as determined in
accordance with Article III above); the preparation of all statements and
notices required of AVIF by any federal or state law with respect to its Shares;
any taxes on the issuance or transfer of the Shares; and any expenses permitted
to be paid or assumed by AVIF pursuant to a plan, if any, under Rule 12b-1 under
the 1940 Act. AVIF shall not bear any expenses of marketing the Policies.
5.3. The Company shall bear the expenses of printing and distributing the
prospectus and statement of additional information, including any amendments or
supplements thereto, relating to Portfolio Shares in connection with existing
Policy owners and new sales of the Policies and of printing and distributing
AVIF's Shareholder proxy materials, reports and other communications to existing
Policy owners. The Company shall bear all expenses associated with the
registration, qualification, and filing of the Policies under applicable federal
securities and state insurance laws; the cost of preparing, printing and
distributing the Policy prospectus
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and statement of additional information; and the cost of preparing, printing and
distributing annual individual account statements for Policy owners as required
by state insurance laws.
ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS
6.1. AVIF, on behalf of each Portfolio, represents and warrants that it will use
every effort to comply with the diversification requirements of Section
817(h)(1) of the Code and Treas. Reg. 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts, as
they may be amended from time to time (and any revenue rulings, revenue
procedures, notices, and other published announcements of the Internal Revenue
Service interpreting these sections) as if those requirements applied directly
to each such Portfolio. In the event that any Portfolio is not so diversified at
the end of any applicable quarter, AVIF will notify the Company and will use
every effort to adequately diversify the Portfolio so as to achieve compliance
within the grace period afforded by Treas. Reg. 1.817-5.
6.2. AVIF represents that each Portfolio will elect to be qualified as a
regulated investment company under Subchapter M or of the Code and that best
efforts will be made to maintain such qualification (under Subchapter M or any
successor or similar provision) and that AVIF or its designee will notify the
Company promptly upon having a reasonable basis for believing that any Portfolio
has ceased to so qualify or that any Portfolio might not so qualify in the
future.
6.3 The Company agrees that if the Internal Revenue Service ("IRS") asserts in
writing in connection with any governmental audit or review of the Company or,
to the Company's knowledge, of any Policy owner, that any Portfolio has failed
to comply with the diversification requirements of section 817(h) of the Code or
the Company otherwise becomes aware of any facts that could give rise to any
claim against AVIF or its affiliates as a result of such a failure or alleged
failure, (i) the Company shall promptly notify AVIF of such assertion or
potential claim; (ii) the Company shall consult with AVIF as to how to minimize
any liability that may arise as a result of such failure or alleged failure;
(iii) the Company shall use its best efforts to minimize any liability of AVIF
or its affiliates resulting from such failure, including, without limitation,
demonstrating, pursuant to Treasury Regulations Section 1.817-5(a)(2), to the
Commissioner of the IRS that such failure was inadvertent; (iv) the Company
shall permit AVIF, its affiliates and their legal and accounting advisors to
participate in any conferences, settlement discussions or other administrative
or judicial proceeding or contests (including judicial appeals thereof) with the
IRS, any Policy owner or any other claimant regarding any claims that could give
rise to liability to AVIF or its affiliates as a result of such a failure or
alleged failure; (v) any written materials to be submitted by the Company to the
IRS, any Policy owner or any other claimant in connection with any of the
foregoing proceedings or contests (including, without limitation, any such
materials to be submitted to the IRS pursuant to Treasury Regulations Section
1.817-5(a)(2)), (a) shall be provided by the Company to AVIF (together with any
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supporting information or analysis) at least ten (10) business days prior to the
day on which such proposed materials are to be submitted and (b) shall not be
submitted by the Company to any such person without the express written consent
of AVIF which shall not be unreasonably withheld; (vi) the Company shall provide
AVIF or its affiliates and their accounting and legal advisors with such
cooperation as AVIF shall reasonably request (including, without limitation, by
permitting AVIF and its accounting and legal advisors to review the relevant
books and records of the Company) in order to facilitate review by AVIF or its
advisors of any written submissions provided to it pursuant to the preceding
clause or its assessment of the validity or amount of any claim against its
arising from such a failure or alleged failure; (vii) the Company shall not with
respect to any claim of the IRS or any Policy owner that would give rise to a
claim against AVIF or its affiliates (a) compromise or settle any claim, (b)
accept any adjustment on audit, or (c) forego any allowable judicial appeals,
without the express written consent of AVIF or its affiliates, which shall not
be unreasonably withheld, provided that the Company shall not be required to
appeal any adverse judicial decision unless AVIF or its affiliates shall have
provided an opinion of independent counsel to the effect that a reasonable basis
exists for taking such appeal; and (viii) AVIF and its affiliates shall have no
liability as a result of such failure or alleged failure if the Company fails to
comply with any of the foregoing clauses (i) through (vii), and such failure
could be shown to have materially contributed to the liability. Should AVIF or
any of its affiliates refuse to give its written consent to any compromise or
settlement of any claim or liability hereunder, the Company may, in its
discretion, authorize AVIF or its affiliates to act in the name of the Company
in, and to control the conduct of, such conferences, discussions, proceedings,
contests or appeals and all administrative or judicial appeals thereof, and in
that event AVIF or its affiliates shall bear the fees and expenses associated
with the conduct of the proceedings that it is so authorized to control;
provided further that in no event shall any liability to the Company exceed the
amount which would have otherwise attached had the proposed settlement or
compromise been accepted by AVIF.
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
7.1. The parties hereto agree that the provisions of this Article VII shall
apply if and only if AVIF implements Mixed and Shared Funding pursuant to an
exemptive order from the SEC or otherwise. AVIF agrees that the Board,
constituted with a majority of disinterested Directors, will monitor each
Portfolio for the existence of any material irreconcilable conflict between the
interests of the variable annuity contract owners and the variable life
insurance policy owners (collectively, "Participants") of the Participating
Insurance Companies investing in AVIF. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
or other regulatory authority; (b) a change in applicable federal or state
insurance, tax or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
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investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
policy Participants or by Participants of different Participating Insurance
Companies; or (f) a decision by a Participating Insurance Company to disregard
the voting instructions of Participants. The Board shall have the sole authority
to determine if a material irreconcilable conflict exists, and such
determination shall be binding on the Company only if approved in the form of a
resolution by a majority of the Board, or a majority of the disinterested
Directors of the Board. The Board will give prompt notice of any such
determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the Board in
carrying out its responsibilities under the conditions set forth in any
exemptive application pursuant to which the SEC has granted the Mixed and Shared
Funding Exemptive Order by providing the Board, as it may reasonably request,
with all information necessary for the Board to consider any issues raised and
agrees that it will be responsible for promptly reporting any potential or
existing conflicts of which it is aware to the Board including, but not limited
to, an obligation by the Company to inform the Board whenever Participant voting
instructions are disregarded. The Company agrees to carry out these
responsibilities with a view only to the interests of the Participants. The
Company also agrees that, if a material irreconcilable conflict arises, it will
at its own cost remedy or eliminate such conflict up to and including (a)
withdrawing the assets allocable to some or all of the Accounts from AVIF or any
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of AVIF, or submitting to a
vote of all affected Participants whether to withdraw assets from AVIF or any
Portfolio and reinvesting such assets in a different investment medium and, as
appropriate, segregating the assets attributable to any appropriate group of
Participants that votes in favor of such segregation, or offering to any of the
affected Participants the option of segregating the assets attributable to their
contracts or policies, and (b) establishing a new registered management
investment company and segregating the assets underlying the Policies, unless a
majority of Policy owners materially adversely affected by the conflict have
voted to decline the offer to establish a new registered management investment
company.
7.3. A majority of the disinterested Directors of the Board shall determine
whether any proposed action by the Company adequately remedies any material
irreconcilable conflict. In the event that the Board determines that any
proposed action does not adequately remedy any material irreconcilable conflict,
the Company will withdraw from investment in AVIF each of the Accounts
designated by the disinterested Directors and terminate this Agreement within
six (6) months after the Board informs the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required to remedy any such material irreconcilable
conflict as determined by a majority of the disinterested Directors of the
Board.
12
7.4 If a material irreconcilable conflict arises because of the Company's
decision to disregard contractowner voting instructions, and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the election of AVIF, to withdraw its Account(s) investments
herein, and no charge or penalty will be imposed as a result of such withdrawal.
Any such withdrawal must take place within six (6) months after AVIF's Board
informs the Company that it has determined that such decision has created a
material irreconcilable conflict, and until such withdrawal AVIF shall continue
to accept and implement orders by the Company for the purchase and redemption of
shares of AVIF.
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 Account's
investment in AVIF within six (6) months after AVIF's Board informs the Company
that it has determined that such decision has created a material irreconcilable
conflict, and until such withdrawal AVIF shall continue to accept and implement
orders by the Company for the purchase and redemption of shares of AVIF.
7.6 The Company agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense and with a
view only to the interests of Policy owners.
7.7 For purposes hereof, a majority of the disinterested Directors will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will AVIF or AIM Advisors be
required to establish a new funding medium for any Policies.
7.8 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 Shared Funding Exemptive
Order, then (a) AVIF and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rule 6e-2
and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable; and (b) Sections 2.7, 3.5, 3.6 and 7.1 through 7.8 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
The Company agrees to indemnify and hold harmless AVIF, AIM Advisors, any
affiliates of AVIF, and each of their respective directors/trustees, officers
and each person, if any, who controls AVIF or AIM Advisors within the meaning of
Section 15 of the 1933 Act, and any agents or employees of the foregoing (each
an "Indemnified Party," or collectively, the "Indemnified Parties" for purposes
of this Section 8.1) against any and all loses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Company)
or expenses (including reasonable counsel fees) to which an Indemnified Party
may become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Shares or the Policies and;
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement,
prospectus or statement of additional information for the Policies or contained
in the Policies or sales literature or other promotional material for the
Policies (or any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reasonable reliance upon and in conformity
with information furnished to the Company or its designee by or on behalf of
AVIF or any affiliate of AVIF for use in the registration statement, prospectus
or statement of additional information for the Policies or in the Policies or
sales literature or other promotional material (or any amendment or supplement)
or otherwise for use in connection with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations (other than
statements or representations contained in the registration statement,
prospectus, statement of additional information or sales literature or other
promotional material of AVIF not supplied by the Company or its designee, or
persons under its control and on which the Company has reasonably relied) or
wrongful conduct of the Company or persons under its control, with respect to
the sale or distribution of the Policies or Shares; or
(c) arise out of any untrue statement or alleged untrue statement of a material
fact contained in the registration statement, prospectus, statement of
additional information, or sales literature or other promotional literature of
AVIF, 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
14
omission was made in reliance upon information furnished to AVIF by or on behalf
of the Company; or
(d) arise out of or result from any material breach of any representation and/or
warranty made by the Company in this Agreement or arise out of or result from
any other material breach of this Agreement by the Company; or
(e) arise as a result of any failure by the Company to provide the services and
furnish the materials under the terms of this Agreement, as limited by and in
accordance with the provisions of this Article VIII.
8.2. Indemnification by AVIF
AVIF 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, and any agents or employees of the
foregoing (each an "Indemnified Party," or collectively, the "Indemnified
Parties" for purposes of this Section 8.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of AVIF) or expenses (including reasonable counsel fees) to which any
Indemnified Party may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Shares or the Policies and:
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement,
prospectus, statement of additional information or sales literature or other
promotional material of AVIF (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission of such alleged statement or omission was made in
reasonable reliance upon and in conformity with information furnished to AVIF,
AIM Advisors, the Underwriter or their respective designees by or on behalf of
the Company for use in the registration statement, prospectus or statement of
additional information for AVIF or in sales literature or other promotional
material for AVIF (or any amendment or supplement) or otherwise for use in
connection with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations (other than
statements or representations contained in the registration statement,
prospectus, statement of additional information or sales literature or other
promotional material for the Policies not supplied by AVIF, AIM Advisors, the
Underwriter or any of their respective designees or persons under their
respective control and on which any such entity has reasonably relied) or
wrongful conduct of
15
AVIF or persons under its control, with respect to the sale or distribution of
the Policies or Shares; or
(c) arise out of or result from any material breach of any representation and/or
warranty made by AVIF in this Agreement or arise out of or result from any other
material breach of this Agreement by AVIF; or
(d) arise out of or result from the materially incorrect or untimely calculation
or reporting of the daily net asset value per share or dividend or capital gain
distribution rate; or
(e) arise as a result of any failure by AVIF to provide the services and furnish
the materials under the terms of the Agreement, as limited by and in accordance
with the provisions of this Article VIII.
8.3. In no event shall AVIF be liable under the indemnification provisions
contained in this Agreement to any individual or entity, including without
limitation, the Company, or any Participating Insurance Company or any Policy
owner, with respect to any losses, claims, damages, liabilities, or expenses
that arise out of or result from (i) a breach of any representation, warranty,
and/or covenant made by the Company hereunder or by any Participating Insurance
Company under an agreement containing substantially similar representations,
warranties and covenants; (ii) the failure by the Company or any Participating
Insurance Company to maintain its segregated asset account (which invests in any
Portfolio) as a legally and validly established segregated asset account under
applicable state law and as a duly registered unit investment trust under the
provisions of the 1940 Act (unless exempt therefrom); or (iii) the failure by
the Company or any Participating Insurance Company to maintain its variable
annuity and/or variable life insurance contracts (with respect to which any
Portfolio serves as an underlying funding vehicle) as life insurance , endowment
or annuity contracts under applicable provisions of the Code.
8.4. Neither the Company nor AVIF shall be liable under the indemnification
provisions contained in this Agreement with respect to any losses, claims,
damages, liabilities or expenses to which an Indemnified Party would otherwise
be subject by reason of such Indemnified Party's willful misfeasance, willful
misconduct, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement.
8.5. Promptly after receipt by an Indemnified Party under this Section 8.5. of
commencement of action, such Indemnified Party will, if a claim in respect
thereof is to be made against the indemnifying party ("Indemnifying Party")
under this section, notify the indemnifying party of the commencement thereof;
but the omission so to notify the Indemnifying Party will not relieve if from
liability which it may have to any Indemnified Party otherwise than under this
Article
16
VIII. In case any such action is brought against any Indemnified Party, and it
notified the Indemnifying Party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, assume the defense thereof, with counsel satisfactory to such Indemnified
Party. After notice from the Indemnifying Party of its intention to assume the
defense of an action, the Indemnified Party shall bear the expenses of any
additional counsel obtained by it, and the Indemnifying Party shall not be
liable to such Indemnified Party under this section for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation.
8.6. Each party agrees promptly to notify the other party of the commencement of
any litigation or proceeding against it or any of its respective officers,
directors, trustees, employees or 1933 Act control persons in connection with
this Agreement, the issuance or sale of the Policies, the operation of the
Accounts, or the sale or acquisition of Shares.
8.7. A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the 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 and
the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. NOTICE OF FORMAL PROCEEDINGS
AVIF and the Company agree that each shall promptly notify the other, in
writing, of the institution of any formal proceedings brought against such party
or its designees by the NASD, the SEC, or any insurance department or any other
regulatory body regarding such party's duties under this Agreement or related to
the sale of the Policies, the operation of the Accounts, or the purchase of the
Shares.
17
ARTICLE XI. TERMINATION
11.1. This Agreement shall terminate with respect to the Accounts, or one, some,
or all Portfolios:
(a) at the option of the Company to the extent that the Shares of Portfolios are
not "appropriate funding vehicles" for the Policies, as reasonably determined by
the Company. Without limiting the generality of the foregoing, the Shares of a
Portfolio would not be "appropriate funding vehicles" if, for example, such
Shares did not meet the diversification or other requirements referred to in
Article VI hereof. Prompt notice of the election to terminate for such cause and
an explanation of such cause shall be furnished to AVIF by the Company; or
(b) at the option of AVIF if the Policies issued by the Company cease to qualify
as annuity contracts or life insurance contracts under the Code (other than by
reason of a Portfolio's noncompliance with Section 817(h) or Subchapter M of the
Code) or if interests in the Accounts under the Policies are not registered,
where required, and, in all material respects, are not issued or sold in
accordance with applicable federal or state law. Prompt notice of the election
to terminate for such cause and an explanation of such cause shall be furnished
to the Company by AVIF; or
(c) at the option of AVIF upon institution of formal proceedings against the
Company by the NASD, the SEC, or any insurance department or any other
regulatory body regarding the Company's duties under this Agreement or related
to the sale of the Policies, the operation of the Accounts, or the purchase of
the Shares; or
(d) at the option of the Company upon institution of formal proceedings against
AVIF by the NASD, the SEC, or any state securities or insurance department or
any other regulatory body regarding AVIF's duties under this Agreement or
related to the sale of the Shares; or
(e) at the option of the Company or AVIF upon receipt of any necessary
regulatory approvals and/or the vote of the Policy owners having an interest in
the Accounts (or any subaccounts) to substitute the shares of another investment
company for the corresponding Portfolio Shares in accordance with the terms of
the Policies for which those Portfolio Shares had been selected to serve as the
underlying investment media. The Company will give thirty (30) day's prior
written notice to AVIF of the date of any proposed vote or other action taken to
replace the Shares; or
(f) at the option of AVIF, upon 30 days' written notice, if the Board of AVIF
determines, in its sole judgment exercised in good faith, that the Company has
suffered a material adverse change in its business, operations, financial
condition, or prospects since the date of this Agreement or is the subject of
material adverse publicity; or
18
(g) at the option of the Company, upon 30 days' written notice, if the Company
determines, in its sole judgment exercised in good faith, that AVIF 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
(h) at the option of any party to this Agreement, upon another party's material
breach of any provision of this Agreement; or
(i) upon assignment of this Agreement, unless made with the written consent of
the parties hereto.
11.2. Unless otherwise specified in Section 11.1, the party terminating the
Agreement shall provide the other at least 30 days notice to the other party.
The notice shall specify the Portfolio or Portfolios, Policies and, if
applicable, the Accounts as to which the Agreement is to be terminated.
11.3. Except as necessary to implement Policy owner initiated transactions, or
as required by state insurance laws or regulations, the Company shall not redeem
the Shares attributable to the Policies (as opposed to the Shares attributable
to the Company's assets held in the Accounts), and the Company shall not prevent
Policy owners from allocating payments to a Portfolio that was otherwise
available under the Policies, until six (6) months after the Company shall have
notified AVIF of its intention to do so and until 24 full calendar months shall
have expired from the date on which an Account first invested in any Portfolio.
11.4. Notwithstanding any termination of this Agreement, AVIF shall, at the
option of the Company, continue to make available additional shares of the
Portfolios pursuant to the terms and conditions of this Agreement, for all
Policies in effect on the effective date of termination of this Agreement (the
"Existing Policies"), except as otherwise provided under Article VII of this
Agreement. Specifically, without limitation, the owners of the Existing Policies
shall be permitted to transfer or reallocate investment under the Policies,
redeem investments in any Portfolio and/or invest in AVIF upon the making of
additional purchase payments under the Existing Policies.
ARTICLE XII. 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
19
may from time to time specify in writing to the other party.
If to AVIF:
AIM Variable Insurance Funds, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 0000
` Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
If to the Company:
Citicorp Insurance Group
Citibank, N.A.
Xxx Xxxxx Xxxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxx, Senior Vice President
General Counsel and Secretary
ARTICLE XIII. MISCELLANEOUS
13.1. Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
Policy owners and all information reasonably identified as confidential in
writing by any other party hereto and, except as permitted by this Agreement or
as otherwise required by applicable law or regulation, shall not disclose,
disseminate or utilize such names and addresses and other confidential
information without the express written consent of the affected party until such
time as it may come into the public domain.
13.2. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
13.3. This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
13.4. If any provisions of this Agreement shall be held or made invalid by court
decision, statute, rule or otherwise, the remainder of the Agreement shall not
be affected thereby,
20
13.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
13.6. Each party hereto shall cooperate with each other party in connection with
inquiries by appropriate governmental authorities (including without limitation
the SEC, the NASD, and state insurance regulators) relating to this Agreement or
the transactions contemplated hereby.
13.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under federal and
state laws.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified above.
AIM VARIABLE INSURANCE FUNDS, INC.
By:
Title: President
CITICORP LIFE INSURANCE COMPANY,
on behalf of itself and
CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
By: /s/Xxxxxxx X. Xxxxxxx
Title: E.V.P.
21
SCHEDULE A
Accounts, Policies and Portfolios Subject To the Participation Agreement
Name of Separate Account and Date
Established by Board of Directors:
Citicorp Life Variable Annuity Separate Account (July 6, 1994)
Policies Funded by Separate Account:
Portfolios Applicable to Policies:
AIM V.I. Capital Appreciation Fund
22
EXPENSE ALLOCATION AGREEMENT
This Agreement is made as of the 10th day of February, 1995 by and
between Citicorp Life Insurance Company, an Arizona corporation ("Citicorp
Life"), First Citicorp Life Insurance Company, a New York Corporation ("First
Citicorp"), A I M Advisors, Inc., a Delaware corporation ("AIM Advisors"), and A
I M Distributors, Inc., a Delaware corporation ("AIM Distributors")
(collectively, the "Parties").
WITNESSETH:
WHEREAS, AIM Advisors and AIM Distributors serve as the investment
adviser and principal underwriter, respectively, of the AIM Variable Insurance
Funds, Inc., a Maryland corporation ("Fund"), which currently consists of nine
separate series (each, a "Portfolio"); and
WHEREAS, Citicorp Life and First Citicorp have each entered into an
agreement, dated February 10, 1995, with the Fund (each, a "Participation
Agreement") pursuant to which the Fund will make shares of each Portfolio listed
from time to time on Schedule A of each Agreement available to Citicorp Life and
First Citicorp at net asset value and with no sales charges, subject to the
terms of the Participation Agreement, to fund benefits under variable annuity
contracts and/or variable life insurance policies (collectively, "Policies") to
be issued by Citicorp Life and First Citicorp; and
WHEREAS, each Participation Agreement provides that the Fund will bear
the costs of preparing, filing with the Securities and Exchange Commission and
setting for printing the Fund's prospectus, statement of additional information,
including any amendments or supplements thereto, periodic reports to
shareholders, Fund proxy material and other shareholder communications
(collectively, the "Fund Materials"), and that the Fund will provide Citicorp
Life and First Citicorp with camera ready or diskette copies of all Fund
Materials; and
WHEREAS, each Participation Agreement provides that Citicorp Life and
First Citicorp shall print in quantity and deliver to existing owners of
Policies ("Policy owners") the Fund Materials, and that the costs of printing in
quantity and delivering to existing Policy owners such Fund Materials will be
borne by Citicorp Life and First Citicorp; and
WHEREAS, each Participation Agreement provides that the expenses of
distributing a Portfolio's shares and the Policies will be borne by Citicorp
Life and First Citicorp; and
WHEREAS, Citicorp Life and First Citicorp will incur various
administrative expenses in connection with the servicing of Policy owners who
have allocated Policy value to a Portfolio, including, but not limited to,
responding to various Policy owner inquiries regarding a Portfolio; and
WHEREAS, the Parties wish to allocate expenses in a manner that is fair
and equitable, and consistent with the best interests of Policy owners; and
WHEREAS, the Parties hereto wish to establish a means for allocating the
expenses that does not entail the expense and inconvenience of separately
identifying and accounting for each item of expense;
NOW THEREFORE in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
1. Expense Allocations.
1.1. Fund Materials.
(a) Subject to Section 2 hereof, Citicorp Life and First Citicorp or
their respective affiliates shall initially bear the costs of printing in
quantity and distributing all Fund Materials required by law to be distributed
to existing Policy owners who have allocated Policy value to a Portfolio.
(b) Subject to Section 2 hereof, Citicorp Life and First Citicorp or
their respective affiliates shall initially bear the costs of printing in
quantity and mailing all Fund Materials to prospective Policy owners.
1.2. Sales Materials.
(a) AIM Advisors and AIM Distributors, as they may allocate between
themselves, shall bear the costs of preparing all sales literature or other
promotional material relating to each Portfolio (collectively, "Fund Sales
Materials").
(b) Subject to Section 2 hereof, Citicorp Life and First Citicorp or
their respective affiliates shall initially bear the costs of printing in
quantity all Fund Sales Materials, and preparing and printing in quantity all
sales literature or other promotional material relating to the Policies
(collectively, "Citicorp Sales Materials").
(c) Subject to Section 2 hereof, Citicorp Life and First Citicorp or
their respective affiliates shall initially bear the costs of mailing all Fund
Sales Materials and Citicorp Sales Materials to prospective Policy owners.
1.3. Policy Owner Servicing.
Subject to Section 2 hereof, Citicorp Life and First Citicorp or their
respective affiliates shall initially bear all costs of servicing Policy owners
who have allocated Policy value to a Portfolio, which servicing shall include,
but is not limited to, responding to various Policy owner inquiries regarding a
Portfolio and recordkeeping relating thereto.
2
2. Reimbursement of Expenses.
(a) AIM Advisors and AIM Distributors, as they may allocate between
themselves, shall pay to Citicorp Life and First Citicorp, on a pro rata basis,
a monthly payment ("Monthly Payment") equal to a percentage of a Portfolio's
average monthly net assets attributable to Policies issued by Citicorp Life and
First Citicorp at the following annual rates:
Annual Rate Average Monthly Net Assets
0.00% Less than $25 million
0.05% $25 million but less than $100 million
0.10% $100 million but less than $250 million
0.15% $250 million or more
(b) For purposes of calculating the amount of the expense reimbursement,
described in (a) above:
(1) the "average monthly net assets" of any Portfolio for any
calendar month shall be equal to the quotient produced by
dividing (i) the sum of the net assets of such Portfolio
determined in accordance with procedures established from time to
time by or under the direction of the Funds' Board of Directors,
for each [business] day of such month, by (ii) the number of such
[business] days; and
(2) the amount of average monthly net assets attributable to
Policies issued Citicorp Life and First Citicorp shall be
aggregated.
(c) Notwithstanding any other provisions to the contrary, AIM Advisors
or AIM Distributors' obligations to make such payments to Citicorp Life or First
Citicorp shall not arise until the month in which assets of the Portfolio
attributable to the Policies issued by Citicorp Life and First Citicorp equal
$25 million, and such payment obligations, once commenced, shall be suspended
with respect to any month during which assets of the Portfolio attributable to
the Policies shall fall below $25 million.
(d) AIM Advisors or AIM Distributors will calculate the payment
contemplated by this Section 2 at the end of each calendar month and will make
such payment to Citicorp Life or First Citicorp within 30 days thereafter. Each
payment will be accompanied by a statement showing the calculation of the
monthly amounts payable by AIM Advisors or AIM Distributors and such other
supporting data as may be reasonably requested by Citicorp Life or First
Citicorp.
(e) The form of payment made by AIM Advisors or AIM Distributors
pursuant to this Section 2 will be cash; provided, however, that AIM Advisors or
AIM Distributors and Citicorp Life and First Citicorp may from time to time
mutually agree in writing to payments by
3
AIM Advisors or AIM Distributors of a portion of the payments made pursuant
to this Section 2 in the form of research services or other forms of payment.
(f) From time to time, the Parties hereto shall review the Monthly
Payment to determine whether it exceeds or is reasonably expected to exceed the
incurred and anticipated costs, over time, of Citicorp Life and First Citicorp
specified in Section 1 hereof. The Parties agree to negotiate in good faith a
reduction to the Monthly Payment as necessary to eliminate any such excess.
3. Term of Agreement.
This Agreement shall continue in effect for so long as the AIM Advisors
or its successor(s) in interest, or any affiliate thereof, continues to perform
in a similar capacity for the Fund, and for so long as any Policy value or any
monies attributable to Citicorp Life and First Citicorp is allocated to a
Portfolio.
4. Termination.
This Agreement may be terminated upon mutual agreement of the Parties
hereto in writing.
5. Amendment.
This Agreement may be amended only upon mutual agreement of the Parties
hereto in writing.
6. Notices.
Notices and communications required to permitted hereby will be given to
the following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
Citicorp Life Insurance Company
000 Xxxxxx Xxxx Xxxxxxxxx
Xxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
First Citicorp Life Insurance Company
Xxx Xxxxx Xxxxxx
Xxxxxx-Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
4
AIM Advisors, Inc. or AIM Distributors, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esquire
7. Applicable Law.
Except insofar as the 1940 Act or other federal laws and regulations may
be controlling, this Agreement will be construed and the provisions hereof
interpreted under and in accordance with Texas law, without regard for that
state's principles of conflict of laws.
8. Execution in Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
9. Severability.
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
10. Rights Cumulative.
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.
11. Headings.
The headings used in this Agreement are for purposes of reference only
and shall not limit or define the meaning of the provisions of this Agreement.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on behalf by and through their duly authorized
officers signing below.
CITICORP LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
Title: E.V.P.
FIRST CITICORP LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
Title: E.V.P.
A I M ADVISORS, INC.
By: /s/
Title: President
A I M DISTRIBUTORS, INC.
By: /s/ Xxxxxxx X. Cenio
Title: President
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