EXHIBIT (h)(8)(i)
FIRST AMENDMENT TO FINANCIAL GUARANTY AGREEMENT
FIRST AMENDMENT, dated as of January 14, 2002 (the "Amendment"), to the
Financial Guaranty Agreement, dated as of July 3, 2001 (the "Agreement"), among
MBIA INSURANCE CORPORATION (the "Insurer"), ING PILGRIM INVESTMENTS, LLC
("Pilgrim"), AELTUS INVESTMENT MANAGEMENT, INC. ("Aeltus") and PILGRIM EQUITY
TRUST (the "Fund").
WITNESSETH:
WHEREAS, Pilgrim, Aeltus and the Fund have requested, and, upon this
Amendment becoming effective, the Insurer has agreed, that certain provisions of
the Agreement be amended in the manner provided for in this Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. All capitalized terms defined in the Agreement
and used herein shall have the meanings given to them therein.
2. Amendments to Section 1.1. Section 1.1 of the Agreement is
hereby amended by (a) deleting therefrom the definitions of the following
defined terms in their respective entireties and substituting in lieu thereof
the following new definitions:
`"Asset Allocation Threshold' shall mean, with respect to any
PPF, on any Valuation Date, an amount equal to the Asset Allocation
Test Percentage on such Valuation Date of the sum of (i) the Present
Value of the Aggregate Guarantee Amount with respect to such PPF plus
(ii) the Present Value of Covered Expenses with respect to such PPF on
such Valuation Date; provided, however, that if the Total Net Assets
with respect to such PPF on such Valuation Date is less than or equal
to the sum of (i) the Present Value of the Aggregate Guarantee Amount
with respect to such PPF plus (ii) the Present Value of Covered
Expenses with respect to such PPF, the Asset Allocation Threshold shall
be an amount equal to 100% of the sum of (i) the Present Value of the
Aggregate Guarantee Amount with respect to such PPF plus (ii) the
Present Value of Covered Expenses with respect to such PPF on such
Valuation Date.
`Covered Expense Ratio' shall mean, with respect to any PPF,
on any Valuation Date, the higher of (a) the expense ratio utilized by
the Sub-Adviser in its proprietary asset allocation computer model and
(b) the Lower Covered Expense Ratio with respect to such PPF; provided,
however, that (i) if the percentage of the Total Net Assets of such PPF
on such date allocable to Index Equities and Index Futures according to
the Asset Allocation Test would be greater than 20% and less than 30%
using the Lower Covered Expense Ratio in calculating the Present Value
of Covered Expenses with respect to such PPF on such Valuation Date,
the Covered Expense Ratio will equal the Interpolated Covered Expense
Ratio with respect to such PPF on such Valuation Date or (ii) if the
percentage of the Total Net Assets of such PPF on such date allocable
to Index Equities and Index Futures according to the Asset Allocation
Test would be 20% or less using the Lower Covered Expense Ratio in
calculating the Present Value of Covered Expenses with respect to such
PPF on such Valuation Date, the Covered Expense Ratio will equal the
Higher Covered Expense Ratio with respect to such PPF; and provided,
further that
the Covered Expense Ratio with respect to any PPF having an Aggregate
Guarantee Amount on the Inception Date with respect to such PPF of less
than $25,000,000 will equal the Higher Covered Expense Ratio with
respect to such PPF on any Valuation Date."
and (b) adding the following new defined terms thereto in alphabetical order:
`"Asset Allocation Test Percentage' shall mean, with respect
to any PPF, on any Valuation Date, the greater of (a) 98% and (b) an
amount equal to 1.2 minus the product of (a) 0.2 and (b) the quotient
of the Total Net Assets with respect to such PPF on such Valuation Date
divided by the sum of (i) the Present Value of the Aggregate Guarantee
Amount with respect to such PPF plus (ii) the Present Value of Covered
Expenses with respect to such PPF on such Valuation Date.
`Covered Expense Differential' shall mean, with respect to any
PPF, an amount equal to the Higher Covered Expense Ratio with respect
to such PPF minus the Lower Covered Expense Ratio with respect to such
PPF.
`Equity Percentage' shall mean, with respect to any PPF, on
any Valuation Date, the quotient of the sum of the aggregate Market
Value of the Index Equities and the aggregate Market Value of the Index
Futures held by such PPF on such Valuation Date divided by the Total
Net Assets of such PPF on such Valuation Date.
`Interpolated Covered Expense Ratio" shall mean, with respect
to any PPF, on any Valuation Date, an amount equal to the Higher
Covered Expense Ratio with respect to such PPF plus the product of (a)
two times the Covered Expense Differential with respect to such PPF
minus (b) the product of (x) the Equity Percentage with respect to such
PPF on such Valuation Date and (y) the quotient of the Covered Expense
Differential with respect to such PPF divided by 10%."
3. Amendment to Section 2.1. Section 2.1 is hereby amended by (a)
deleting "December 31, 2003" and inserting "December 31, 2002" in lieu thereof
in the first sentence thereof, (b) deleting "$750,000,000" and inserting
"$2,000,000,000" in lieu thereof in the first sentence thereof and (c) deleting
the words "five years from the issuance date of such Policy" and inserting "the
day immediately preceding the fifth anniversary of the Inception Date with
respect to such PPF" in lieu thereof in clause (ii) of the second sentence
thereof.
4. Amendments to Exhibits H-l and H-2. Exhibits H-l and H-2 to
the Agreement are hereby amended by deleting said Exhibits in their respective
entireties and substituting in lieu thereof new Exhibits H-l and H-2 in the
forms of Annexes 1 and 2, respectively, to this Amendment.
5. Conditions of Effectiveness. This Amendment shall become
effective on the date on which the Insurer, Pilgrim, Aeltus and the Fund shall
have executed and delivered this Amendment.
6. No other Amendments; Confirmation. Except as expressly
amended, modified and supplemented by this Amendment or by any prior amendment,
the provisions of the Agreement are and shall remain in full force and effect.
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7. Governing Law. This Amendment and the rights and obligation of
the parties hereto shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York.
8. Counterparts. This Amendment may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, each of the undersigned have caused this Amendment
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.
MBIA INSURANCE CORPORATION
/s/ Xxxxx X. Xxxxx
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By: Xxxxx X. Xxxxx
Title: Managing Director
ING PILGRIM INVESTMENTS, LLC
/s/ Xxxxxxx X. Xxxxxx
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By: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
AELTUS INVESTMENT MANAGEMENT, INC.
/s/ Xxxx Xxx Xxxxxxxxx
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By: Xxxx Xxx Xxxxxxxxx
Title: Sr. Vice President
PILGRIM EQUITY TRUST
/s/ Xxxxxx X. Naka
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By: Xxxxxx X. Naka
Title: Senior Vice President
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ANNEX 1
FORM OF PRELIMINARY APPLICATION
[NOTE: The Preliminary Application must be delivered to MBIA at least two but
not more than five Business Days before the Inception Date.]
[Date(1)]
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention:
Reference is made to the Financial Guaranty Agreement, dated as of July
3, 2001, among MBIA Insurance Corporation (the "Insurer"), ING Pilgrim
Investments, LLC ("Pilgrim"), Aeltus Investment Management, Inc. ("Aeltus") and
Pilgrim Equity Trust (the "Fund") (the "Financial Guaranty Agreement"; terms
defined therein being used herein as therein defined),. This notice constitutes
a preliminary application for a financial guaranty (the "Policy") with respect
to Pilgrim Principal Protection Fund [_] (the "PPPF") pursuant to Section 2.2 of
the Financial Guaranty Agreement and the Fund hereby requests the issuance of
the Policy under the Financial Guaranty Agreement, and in that connection the
Fund specifies the following information with respect to the Policy requested
hereby:
(A) Name of PPPF: _______________________________
(B) Aggregate amount to be invested in the
PPPF(2):__________________
(C) Sum of initial Aggregate Guarantee Amounts with
respect to each existing
PPPF(3):_____________________________
(D) Inception Date with respect to the
PPPF:________________________________
_________________
(1) Date on or before December 28, 2002 (i.e., two Business Days prior to
the date on which the Insurer's obligation to issue Policies pursuant
to the Financial Guaranty Agreement terminates, as per Section 2.1 of
such Agreement).
(2) Aggregate Guarantee Amount with respect to the PPPF on the Inception
Date will equal the amount entered for line (B) plus (minus) earnings
on such amount during period from the date hereof to and including the
Inception Date, but amount entered on line (B) may not be less than
$10,000,000.
(3) Sum of amounts in clauses (B) and (C) may not exceed $2,000,000,000.
(E) Maturity Date with respect to the
PPF(4):______________________________
The Fund hereby certifies that:
(i) Attached hereto are true complete and correct copies
of each of the Investment Management Agreement with respect to the
PPPF, the Sub-Adviser Agreement with respect to the PPPF, the Expense
Limitation Agreement with respect to the PPPF and the Custodian Service
and Monitoring Agreement with respect to the PPPF duly executed by the
parties thereto;
(ii) Attached hereto is a true complete and correct copy
of the Establishment and Designation of Series and Classes (the
"Establishment and Designation") with respect to the PPPF, certified by
the Secretary of State of the Commonwealth of Massachusetts;
(iii) Attached hereto is a true complete and correct copy
of the Final Prospectus with respect to each Class of Shares of the
PPPF;
(iv) Attached hereto are true complete and correct copies
of the resolutions duly adopted by the Board of Directors of the Fund
authorizing the creation of the PPPF and the filing of the
Establishment and Designation with respect to the PPF and the
execution, delivery and performance of the Investment Management
Agreement with respect to the PPPF, the Expense Limitation Agreement
with respect to the PPPF and the Custodian Service and Monitoring
Agreement with respect to the PPPF, certified by a Secretary or
Assistant Secretary of the Fund;
(v) Attached hereto are true complete and correct copies
of the resolutions duly adopted by the Board of Directors of Pilgrim
authorizing the execution, delivery and performance of the Investment
Management Agreement with respect to the PPPF, the Sub-Adviser
Agreement with respect to the PPPF and the Expense Limitation Agreement
with respect to the PPPF, certified by a Secretary or Assistant
Secretary of Pilgrim;
(vi) Attached hereto are true complete and correct copies
of the resolutions duly adopted by the Board of Directors of Aeltus
authorizing the execution of the Sub-Adviser Agreement with respect to
the PPF and the Expense Limitation Agreement with respect to the PPPF,
certified by a Secretary or Assistant Secretary of Aeltus;
(vii) Attached hereto is a certificate of the Secretary or
Assistant Secretary of Pilgrim as to the incumbency and signature of
the officers or other employees of Pilgrim authorized to sign the
Investment Management Agreement with respect to the PPPF, the
Sub-Adviser Agreement with respect to the PPPF and the Expense
Limitation Agreement
___________________
(4) The date which is the day immediately preceding the fifth anniversary
of the Inception Date.
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with respect to the PPPF, on behalf of Pilgrim, together with evidence
of the incumbency of such Secretary or Assistant Secretary;
(viii) Attached hereto is a certificate of the Secretary or
Assistant Secretary of Aeltus as to the incumbency and signature of the
officers or other employees of Aeltus authorized to sign the
Sub-Adviser Agreement with respect to the PPPF and the Expense
Limitation Agreement with respect to the PPPF, on behalf of Aeltus,
together with evidence of the incumbency of such Secretary or Assistant
Secretary;
(ix) Attached hereto is a certificate of the Secretary or
Assistant Secretary of the Fund as to the incumbency and signature of
the officers or other employees of the Fund authorized to sign the
Investment Management Agreement with respect to the PPPF, the Expense
Limitation Agreement with respect to the PPPF and the Custodian Service
and Monitoring Agreement with respect to the PPF on behalf of the Fund,
together with evidence of the incumbency of such Secretary or Assistant
Secretary.
Very truly yours,
PILGRIM EQUITY TRUST
By: ______________________________
Name:
Title:
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ANNEX 2
FORM OF FINAL APPLICATION
[Date(1)]
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention:
Reference is made to the Financial Guaranty Agreement, dated
as of July 3, 2001, among MBIA Insurance Corporation (the "Insurer"), ING
Pilgrim Investments, LLC ("Pilgrim"), Aeltus Investment Management, Inc.
("Aeltus") and Aetna Series Fund, Inc. (the "Fund") (the "Financial Guaranty
Agreement"; terms defined therein being used herein as therein defined). This
notice constitutes the final application for a financial guaranty (the "Policy")
with respect to Pilgrim Principal Protection Fund [_] (the "PPPF") pursuant to
Section 2.2 of the Financial Guaranty Agreement and the Fund hereby requests the
issuance of the Policy under the Financial Guaranty Agreement, and in that
connection the Fund specifies the following information with respect to the
Policy requested hereby:
(A) Name of PPPF: __________________________
(B) Aggregate Guarantee Amount with respect to PPPF on
Inception Date(2): _____________________
(C) Sum of initial Aggregate Guarantee Amounts with
respect to each existing PPPF(3): ___________________
(D) Inception Date with respect to the PPPF:
______________________
(E) Maturity Date with respect to the PPPF(4):
___________________________
___________________
(1) Date on or before December 31,2002.
(2) Must be for an exact sum which is not less than $10,000,000.
(3) Sum of amounts in clauses (B) and (C) may not exceed $2,000,000,000.
(4) The date which is the day immediately preceding the fifth anniversary
of the Inception Date.
The Fund hereby certifies that:
1. Each of the representations and warranties made by the Fund in
or pursuant to the Transaction Documents shall be true and correct in all
material respects on and as of the date hereof;
2. No Default or Event of Default shall have occurred and be
continuing on the date hereof;
3. No statute, rule, regulation or order shall have been enacted,
entered or deemed applicable by any Government Authority which would make the
transactions contemplated by any of the Transaction Documents illegal or
otherwise prevent the consummation thereof; and
4. Each of the conditions specified in Section 2.3(b) of the
Financial Guaranty Agreement with respect to the Policy has been satisfied.
Very truly yours,
PILGRIM EQUITY TRUST
By: ____________________________
Name:
Title:
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