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EXHIBIT 9(aaa)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.,
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
GUARDIAN INVESTOR SERVICES CORPORATION
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TABLE OF CONTENTS
DESCRIPTION PAGE
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Section 1. Available Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Addition, Deletion or Modification of Funds . . . . . . . . . . . . . . . . . . . . 2
1.3 No Sales to the General Public . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2. Processing Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Timely Pricing and Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Timely Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Applicable Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Book Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Other (Non-Sales-Related) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Other (Sales-Related) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 Parties To Cooperate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4. Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Tax Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Insurance and Certain Other Laws . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.4 Notice of Certain Proceedings and Other Circumstances . . . . . . . . . . . . . . . 10
4.5 Guardian To Provide Documents; Information About AVIF . . . . . . . . . . . . . . . 11
4.6 AVIF To Provide Documents; Information About Guardian . . . . . . . . . . . . . . . 12
Section 5. Mixed and Shared Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Disinterested Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 Monitoring for Material Irreconcilable Conflicts . . . . . . . . . . . . . . . . . 13
5.4 Conflict Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.5 Notice to Guardian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.6 Information Requested by Board of Directors . . . . . . . . . . . . . . . . . . . . 16
5.7 Compliance with SEC Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.8 Other Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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DESCRIPTION PAGE
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Section 6. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.1 Events of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2 Notice Requirement for Termination . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3 Funds To Remain Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 Survival of Warranties and Indemnifications . . . . . . . . . . . . . . . . . . . . 18
6.5 Continuance of Agreement for Certain Purposes . . . . . . . . . . . . . . . . . . . 18
Section 7. Parties To Cooperate Respecting Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 10. Voting Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 11. Foreign Tax Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 12. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
12.1 Of AVIF and AIM by Guardian and GISC . . . . . . . . . . . . . . . . . . . . . . . 20
12.2 Of Guardian and GISC by AVIF and AIM . . . . . . . . . . . . . . . . . . . . . . . 22
12.3 Effect of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.4 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 13. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 14. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 15. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 16. Rights Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 17. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 18. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 19. Trademarks and Fund Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 20. Parties to Cooperate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 2nd day of February,
1998 ("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); A I M Distributors, Inc., a Delaware corporation ("AIM");
The Guardian Insurance & Annuity Company, Inc., a Delaware life insurance
company ("Guardian"), on behalf of itself and each of its segregated asset
accounts listed in Schedule A hereto, as the parties hereto may amend from time
to time (each, an "Account," and collectively, the "Accounts"); and Guardian
Investor Services Corporation, A New York corporation ("GISC"), an affiliate of
Guardian and the principal underwriter of the Contracts (collectively, the
"Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of nine separate series ("Series"),
shares ("Shares") of each of which are registered under the Securities Act of
1933, as amended (the "1933 Act") and are currently sold to one or more
separate accounts of life insurance companies to fund benefits under variable
annuity contracts and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A
hereto as the Parties hereto may amend from time to time (each a "Fund";
reference herein to "AVIF" includes reference to each Fund, to the extent the
context requires) available for purchase by the Accounts; and
WHEREAS, Guardian will be the issuer of certain variable annuity
contracts and variable life insurance contracts ("Contracts") as set forth on
Schedule A hereto, as the Parties hereto may amend from time to time, which
Contracts (hereinafter collectively, the "Contracts"), if required by
applicable law, will be registered under the 1933 Act; and
WHEREAS, Guardian will fund the Contracts through the Accounts, each
of which may be divided into two or more subaccounts ("Subaccounts"; reference
herein to an "Account" includes reference to each Subaccount thereof to the
extent the context requires); and
WHEREAS, Guardian will serve as the depositor of the Accounts, each of
which is registered as a unit investment trust investment company under the
1940 Act (or exempt therefrom), and the security interests deemed to be issued
by the Accounts under the Contracts will be registered as securities under the
1933 Act (or exempt therefrom); and
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WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Guardian intends to purchase Shares in one or more of the Funds on
behalf of the Accounts to fund the Contracts; and
WHEREAS, AIM is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD") and it will sell
and distribute the Shares in accordance with all applicable state and federal
securities laws;
WHEREAS, GISC is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD") and it will sell
and distribute the Contracts in accordance with all applicable state and
federal securities laws;
WHEREAS, each Party hereto represents that it has full power and
authority under applicable law, and has taken all action necessary, to enter
into and perform this Agreement;
WHEREAS, each Party hereto represents that it is not aware of any
pending or threatened litigation matter or claim or regulatory proceeding,
investigation or inquiry involving it or any of its affiliates, the outcome of
which could have a material adverse effect on this Agreement or the
transactions contemplated hereunder.
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY.
AVIF will make Shares of each Fund available to Guardian for purchase
and redemption at net asset value and with no sales charges, subject to the
terms and conditions of this Agreement and the prospectus and statement of
additional information for the Funds. The Board of Directors of AVIF may
refuse to sell Shares of any Fund to any person, or suspend or terminate the
offering of Shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of the
Directors acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, such action is deemed in the best
interests of the shareholders of such Fund.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund,
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AVIF, or its Shares herein shall include a reference to any such additional
Fund. Schedule A, as amended from time to time, is incorporated herein by
reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC.
AVIF represents and warrants that no Shares of any Fund have been or
will be sold to the general public.
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) AVIF or its designated agent will use its best efforts to
provide Guardian with the net asset value per Share for each Fund by 5:30 p.m.
Central Time on each Business Day. As used herein, "Business Day" shall mean
any day on which (i) the New York Stock Exchange is open for regular trading,
(ii) AVIF calculates the Fund's net asset value, and (iii) Guardian is open for
business.
(b) Guardian will use the data provided by AVIF each Business Day
pursuant to paragraph (a) immediately above to calculate Account unit values
and to process transactions that receive that same Business Day's Account unit
values. Guardian will perform such Account processing the same Business Day,
and will place corresponding orders to purchase or redeem Shares with AVIF by
9:00 a.m. Central Time the following Business Day; provided, however, that AVIF
shall provide additional time to Guardian in the event that AVIF is unable to
meet the 5:30 p.m. time stated in paragraph (a) immediately above. Such
additional time shall be equal to the additional time that AVIF takes to make
the net asset values available to Guardian.
(c) With respect to payment of the purchase price by Guardian and
of redemption proceeds by AVIF, Guardian and AVIF shall net purchase and
redemption orders with respect to each Fund and shall transmit one net payment
per Fund in accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value
information (as determined under SEC guidelines), Guardian 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 Guardian.
2.2 TIMELY PAYMENTS.
Guardian will wire payment for net purchases to a custodial account
designated by AVIF by 1:00 p.m. Central Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment for net
redemptions to an account designated by Guardian by 1:00 p.m. Central Time on
the same day as the Order is placed, to the extent practicable, but
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in any event within five (5) calendar days after the date the order is placed
in order to enable Guardian to pay redemption proceeds within the time
specified in Section 22(e) of the 1940 Act or such shorter period of time as
may be required by law.
2.3 APPLICABLE PRICE.
(a) Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and other transactions under
Contracts (collectively, "Contract transactions") and that Guardian receives
prior to the close of regular trading on the New York Stock Exchange on a
Business Day will be executed at the net asset values of the appropriate Funds
next computed after receipt by AVIF or its designated agent of the orders. For
purposes of this Section 2.3(a), Guardian shall be the designated agent of AVIF
for receipt of orders relating to Contract transactions on each Business Day
and receipt by such designated agent shall constitute receipt by AVIF; provided
that AVIF receives notice of such orders by 9:00 a.m. Central Time on the next
following Business Day or such later time as computed in accordance with
Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by Guardian will be
effected at the net asset values of the appropriate Funds next computed after
receipt by AVIF or its designated agent of the order therefor, and such orders
will be irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS.
AVIF will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to Guardian of any income
dividends or capital gain distributions payable on the Shares of any Fund.
Guardian hereby elects to reinvest all dividends and capital gains
distributions in additional Shares of the corresponding Fund at the ex-dividend
date net asset values until Guardian otherwise notifies AVIF in writing, it
being agreed by the Parties that the ex-dividend date and the payment date with
respect to any dividend or distribution will be the same Business Day.
Guardian reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash.
2.5 BOOK ENTRY.
Issuance and transfer of AVIF Shares will be by book entry only.
Stock certificates will not be issued to Guardian. Shares ordered from AVIF
will be recorded in an appropriate title for Guardian, on behalf of its
Account.
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SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided herein, each Party will bear
all expenses incident to its performance under this Agreement.
3.2 REGISTRATION.
(a) AVIF will bear the cost of its registering as a management
investment company under the 1940 Act and registering its Shares under the 1933
Act, and keeping such registrations current and effective; including,
without limitation, the preparation of and filing with the SEC of Forms
N-SAR and Rule 24f-2 Notices with respect to AVIF and its Shares and payment of
all applicable registration or filing fees with respect to any of the
foregoing.
(b) Guardian will bear the cost of registering, to the extent
required, each Account as a unit investment trust under the 1940 Act and
registering units of interest under the Contracts under the 1933 Act and
keeping such registrations current and effective; including, without
limitation, the preparation and filing with the SEC of Forms N- SAR and Rule
24f-2 Notices with respect to each Account and its units of interest and
payment of all applicable registration or filing fees with respect to any of
the foregoing.
3.3 OTHER (NON-SALES-RELATED).
(a) AVIF will bear, or arrange for others to bear, the costs of
preparing, filing with the SEC and setting for printing AVIF's prospectus,
statement of additional information and any amendments or supplements thereto
(collectively, the "AVIF Prospectus"), periodic reports to shareholders, AVIF
proxy material and other shareholder communications.
(b) Guardian will bear the costs of preparing, filing with the SEC
and setting for printing each Account's prospectus, statement of additional
information and any amendments or supplements thereto (collectively, the
"Account Prospectus"), any periodic reports to Contract owners, annuitants,
insureds or participants (as appropriate) under the Contracts (collectively,
"Participants"), voting instruction solicitation material, and other
Participant communications.
(c) Guardian will print in quantity and deliver to existing
Participants the documents described in Section 3.3(b) above. AVIF will bear,
or arrange for others to bear, the costs of printing the Funds' prospectuses,
statement of additional information, proxy materials relating to AVIF and
periodic reports of AVIF.
3.4 OTHER (SALES-RELATED).
Guardian will bear the expenses of distribution. These expenses would
include by way of illustration, but are not limited to, the costs of
distributing to Participants the following
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documents, whether they relate to the Account or AVIF: prospectuses, statements
of additional information, proxy materials and periodic reports. These costs
would also include the costs of preparing, printing, and distributing sales
literature and advertising relating to the Funds, as well as filing such
materials with, and obtaining approval from, the SEC, the NASD, any state
insurance regulatory authority, and any other appropriate regulatory authority,
to the extent required.
3.5 PARTIES TO COOPERATE.
Each Party agrees to cooperate with the others, as applicable, in
arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of AVIF and the Accounts.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) AVIF represents and warrants that each Fund is currently
qualified as a regulated investment company ("RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and represents that it
will use its best efforts to qualify and to maintain qualification of each Fund
as a RIC. AVIF will notify Guardian immediately upon having a reasonable basis
for believing that a Fund has ceased to so qualify or that it might not so
qualify in the future.
(b) AVIF represents that it will use its best efforts to comply
and to maintain each Fund's compliance with the diversification requirements
set forth in Section 817(h) of the Code and Section 1.817-5(b) of the
regulations under the Code. AVIF will notify Guardian immediately upon having
a reasonable basis for believing that a Fund has ceased to so comply or that a
Fund might not so comply in the future. In the event of a breach of this
Section 4.1(b) by AVIF, it will take all reasonable steps to adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Section 1.817-5 of the regulations under the Code.
(c) Guardian agrees that if the Internal Revenue Service ("IRS")
asserts in writing in connection with any governmental audit or review of
Guardian or, to Guardian's knowledge, of any Participant, that any Fund has
failed to comply with the diversification requirements of Section 817(h) of the
Code or Guardian 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) Guardian shall promptly notify AVIF of such
assertion or potential claim (subject to the
Confidentiality provisions of Section 18 as to any
Participant);
(ii) Guardian shall consult with AVIF as to how to
minimize any liability that may arise as a result
of such failure or alleged failure;
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(iii) Guardian 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) Guardian 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 Participant 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; provided, however, that Guardian
will retain control of the conduct of such
conferences discussions, proceedings, contests or
appeals;
(v) any written materials to be submitted by Guardian
to the IRS, any Participant 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 Guardian to AVIF (together
with any supporting information or analysis);
subject to the confidentiality provisions of
Section 18, at least ten (10) business days or such
shorter period to which the Parties hereto agree
prior to the day on which such proposed materials
are to be submitted, and (b) shall not be submitted
by Guardian to any such person without the express
written consent of AVIF which shall not be
unreasonably withheld;
(vi) Guardian 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 Guardian) 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) Guardian shall not with respect to any claim of the
IRS or any Participant 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 administrative
or judicial appeals, without the express written
consent of AVIF or its affiliates, which shall not
be unreasonably withheld, provided that Guardian
shall not be required, after exhausting all
administrative penalties, 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
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provided further that the costs of any such appeal
shall be borne equally by the Parties hereto; and
(viii) AVIF and its affiliates shall have no liability as
a result of such failure or alleged failure if
Guardian 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,
Guardian may, in its discretion, authorize AVIF or its affiliates to act in the
name of Guardian 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, that in no event shall Guardian have any
liability resulting from AVIF's refusal to accept the proposed settlement or
compromise with respect to any failure caused by AVIF. As used in this
Agreement, the term "affiliates" shall have the same meaning as "affiliated
person" as defined in Section 2(a)(3) of the 1940 Act.
(d) Guardian represents and warrants that the Contracts currently
are and will be treated as annuity contracts or life insurance contracts under
applicable provisions of the Code and that it will use its best efforts to
maintain such treatment; Guardian will notify AVIF immediately upon having a
reasonable basis for believing that any of the Contracts have ceased to be so
treated or that they might not be so treated in the future.
(e) Guardian represents and warrants that each Account is a
"segregated asset account" and that interests in each Account are offered
exclusively through the purchase of or transfer into a "variable contract,"
within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. Guardian will use its best efforts to continue to meet
such definitional requirements, and it will notify AVIF immediately upon having
a reasonable basis for believing that such requirements have ceased to be met
or that they might not be met in the future.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) AVIF will use its best efforts to comply with any applicable
state insurance laws or regulations, to the extent specifically requested in
writing by Guardian, including, the furnishing of information not otherwise
available to Guardian which is required by state insurance law to enable
Guardian to obtain the authority needed to issue the Contracts in any
applicable state.
(b) Guardian represents and warrants that (i) it is an insurance
company duly organized, validly existing and in good standing under the laws of
the State of Delaware and has full corporate power, authority and legal right
to execute, deliver and perform its duties and comply with its obligations
under this Agreement, (ii) it has legally and validly established and maintains
each Account as a segregated asset account under Section 2932 of the Delaware
Insurance Code
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and the regulations thereunder, and (iii) the Contracts comply in all material
respects with all other applicable federal and state laws and regulations.
(c) AVIF represents and warrants that it is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Maryland and has full power, authority, and legal right to execute, deliver,
and perform its duties and comply with its obligations under this Agreement.
4.3 SECURITIES LAWS.
(a) Guardian represents and warrants that (i) interests in each
Account pursuant to the Contracts will be registered under the 1933 Act to the
extent required by the 1933 Act, (ii) the Contracts will be duly authorized for
issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and
Delaware law, (iii) each Account is and will remain registered under the 1940
Act, to the extent required by the 1940 Act, (iv) each Account does and will
comply in all material respects with the requirements of the 1940 Act and the
rules thereunder, to the extent required, (v) each Account's 1933 Act
registration statement relating to the Contracts, together with any amendments
thereto, will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder, (vi) Guardian will amend
the registration statement for its Contracts under the 1933 Act and for its
Accounts under the 1940 Act from time to time as required in order to effect
the continuous offering of its Contracts or as may otherwise be required by
applicable law, and (vii) each Account Prospectus will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder.
(b) AVIF represents and warrants that (i) Shares sold pursuant to
this Agreement will be registered under the 1933 Act to the extent required by
the 1933 Act and duly authorized for issuance and sold in compliance with
Maryland law, (ii) AVIF is and will remain registered under the 1940 Act to the
extent required by the 1940 Act, (iii) AVIF will amend the registration
statement for its Shares under the 1933 Act and itself under the 1940 Act from
time to time as required in order to effect the continuous offering of its
Shares, (iv) AVIF does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, (v) AVIF's 1933 Act
registration statement, together with any amendments thereto, will at all times
comply in all material respects with the requirements of the 1933 Act and rules
thereunder, and (vi) AVIF's Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder.
(c) AVIF will at its expense register and qualify its Shares for
sale in accordance with the laws of any state or other jurisdiction if and to
the extent reasonably deemed advisable by AVIF.
(d) AVIF currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it reserves the right to make such payments in the future. To the
extent that it decides to finance distribution expenses
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pursuant to Rule 12b-1, AVIF undertakes to have its Board of Directors, a
majority of whom are not "interested" persons of the Fund, formulate and
approve any plan under Rule 12b-1 to finance distribution expenses.
(e) AVIF represents and warrants that all of its trustees,
officers, employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Fund are and continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Fund in an amount not less than the minimal coverage as required currently
by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated
from time to time. The aforesaid bond includes coverage for larceny and
embezzlement and is issued by a reputable bonding company.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF will immediately notify Guardian of (i) the issuance by
any court or regulatory body of any stop order, cease and desist order, or
other similar order with respect to AVIF's registration statement under the
1933 Act or AVIF Prospectus, (ii) any request by the SEC for any amendment to
such registration statement or AVIF Prospectus that may affect the offering of
Shares of AVIF, (iii) the initiation of any proceedings for that purpose or
for any other purpose relating to the registration or offering of AVIF's
Shares, or (iv) any other action or circumstances that may prevent the lawful
offer or sale of Shares of any Fund in any state or jurisdiction, including,
without limitation, any circumstances in which (a) such Shares are not
registered and, in all material respects, issued and sold in accordance with
applicable state and federal law, or (b) such law precludes the use of such
Shares as an underlying investment medium of the Contracts issued or to be
issued by Guardian. AVIF will make every reasonable effort to prevent the
issuance, with respect to any Fund, of any such stop order, cease and desist
order or similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
(b) Guardian will immediately notify AVIF of (i) the issuance by
any court or regulatory body of any stop order, cease and desist order, or
other similar order with respect to each Account's registration statement under
the 1933 Act relating to the Contracts or each Account Prospectus, (ii) any
request by the SEC for any amendment to such registration statement or Account
Prospectus that may affect the offering of Shares of AVIF, (iii) the initiation
of any proceedings for that purpose or for any other purpose relating to the
registration or offering of each Account's interests pursuant to the Contracts,
or (iv) any other action or circumstances that may prevent the lawful offer or
sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and,
in all material respects, issued and sold in accordance with applicable state
and federal law. Guardian will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order and,
if any such order is issued, to obtain the lifting thereof at the earliest
possible time.
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4.5 GUARDIAN TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) Guardian will provide to AVIF or its designated agent at least
one (1) complete copy of all SEC registration statements, Account Prospectuses,
reports, any preliminary and final voting instruction solicitation material,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to each Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) Guardian will provide to AVIF or its designated agent at least
one (1) complete copy of each piece of sales literature or other promotional
material in which AVIF or any of its affiliates is named, at least five (5)
Business Days prior to its use or such shorter period as the Parties hereto
may, from time to time, agree upon. No such material shall be used if AVIF or
its designated agent objects to such use within five (5) Business Days after
receipt of such material or such shorter period as the Parties hereto may, from
time to time, agree upon. AVIF hereby designates A I M as the entity to
receive such sales literature, until such time as AVIF appoints another
designated agent by giving notice to Guardian in the manner required by Section
9 hereof.
(c) Neither Guardian nor any of its affiliates, will give any
information or make any representations or statements on behalf of or
concerning AVIF or its affiliates in connection with the sale of the Contracts
other than (i) the information or representations contained in the registration
statement, including the AVIF Prospectus contained therein, relating to Shares,
as such registration statement and AVIF Prospectus may be amended from time to
time; or (ii) in reports or proxy materials for AVIF; or (iii) in published
reports for AVIF that are in the public domain and approved by AVIF for
distribution; or (iv) in sales literature or other promotional material
approved by AVIF, except with the express written permission of AVIF.
(d) Guardian shall adopt and implement procedures reasonably
designed to ensure that information concerning AVIF and its affiliates that is
intended for use only by brokers or agents selling the Contracts (i.e.,
information that is not intended for distribution to Participants) ("broker
only materials") is so used, and neither AVIF nor any of its affiliates shall
be liable for any losses, damages or expenses relating to the improper use of
such broker only materials.
(e) For the purposes of this Section 4.5, the phrase "sales
literature or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media, (e.g., on-line networks such as the Internet or other electronic
messages), sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, registration
statements, prospectuses, statements of additional information, shareholder
reports, and proxy materials and any other material constituting sales
literature or advertising under the NASD rules, the 1933 Act or the 1940 Act.
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4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT GUARDIAN.
(a) AVIF will provide to Guardian at least one (1) complete copy
of all SEC registration statements, AVIF Prospectuses, reports, any preliminary
and final proxy material, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to AVIF or the
Shares of a Fund, contemporaneously with the filing of such document with the
SEC or other regulatory authorities.
(b) AVIF will provide to Guardian camera ready or computer
diskette copies of all AVIF prospectuses and printed copies, in an amount
specified by Guardian, of AVIF statements of additional information, proxy
materials, periodic reports to shareholders and other materials required by law
to be sent to Participants who have allocated any Contract value to a Fund.
AVIF will provide such copies to Guardian in a timely manner so as to enable
Guardian, as the case may be, to print and distribute such materials within the
time required by law to be furnished to Participants.
(c) AVIF will provide to Guardian or its designated agent at least
one (1) complete copy of each piece of sales literature or other promotional
material in which Guardian, or any of its respective affiliates is named, or
that refers to the Contracts, at least five (5) Business Days prior to its use
or such shorter period as the Parties hereto may, from time to time, agree
upon. No such material shall be used if Guardian or its designated agent
objects to such use within five (5) Business Days after receipt of such
material or such shorter period as the Parties hereto may, from time to time,
agree upon. Guardian shall receive all such sales literature until such time
as it appoints a designated agent by giving notice to AVIF in the manner
required by Section 9 hereof.
(d) Neither AVIF nor any of its affiliates will give any
information or make any representations or statements on behalf of or
concerning Guardian, each Account, or the Contracts other than (i) the
information or representations contained in the registration statement,
including each Account Prospectus contained therein, relating to the Contracts,
as such registration statement and Account Prospectus may be amended from time
to time; or (ii) in published reports for the Account or the Contracts that are
in the public domain and approved by Guardian for distribution; or (iii) in
sales literature or other promotional material approved by Guardian or its
affiliates, except with the express written permission of Guardian.
(e) AVIF shall cause its principal underwriter to adopt and
implement procedures reasonably designed to ensure that information concerning
Guardian, and its respective affiliates that is intended for use only by
brokers or agents selling the Contracts (i.e., information that is not intended
for distribution to Participants) ("broker only materials") is so used, and
neither Guardian, nor any of its respective affiliates shall be liable for any
losses, damages or expenses relating to the improper use of such broker only
materials.
(f) For purposes of this Section 4.6, the phrase "sales literature
or other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed
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for use in, a newspaper, magazine, or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards, motion
pictures, or other public media, (e.g., on-line networks such as the Internet
or other electronic messages), sales literature (i.e., any written
communication distributed or made generally available to customers or the
public, including brochures, circulars, research reports, market letters, form
letters, seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under the NASD rules, the 1933 Act
or the 1940 Act.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
The SEC has granted an order to AVIF exempting it from certain
provisions of the 1940 Act and rules thereunder so that AVIF may be available
for investment by certain other entities, including, without limitation,
separate accounts funding variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies unaffiliated with Guardian,
and trustees of qualified pension and retirement plans (collectively, "Mixed
and Shared Funding"). The Parties recognize that the SEC has imposed terms and
conditions for such orders that are substantially identical to many of the
provisions of this Section 5. Sections 5.2 through 5.8 below shall apply
pursuant to such an exemptive order granted to AVIF. AVIF hereby notifies
Guardian that, in the event that AVIF implements Mixed and Shared Funding, it
may be appropriate to include in the prospectus pursuant to which a Contract is
offered disclosure regarding the potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED DIRECTORS.
AVIF agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not interested
persons of AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the
Rules thereunder and as modified by any applicable orders of the SEC, except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any director, then the operation of this condition
shall be suspended (a) for a period of forty-five (45) days if the vacancy or
vacancies may be filled by the Board; (b) for a period of sixty (60) days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
AVIF agrees that its Board of Directors will monitor for the existence
of any material irreconcilable conflict between the interests of the
Participants in all separate accounts of life insurance companies utilizing
AVIF ("Participating Insurance Companies"), including each Account, and
participants in all qualified retirement and pension plans investing in AVIF
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("Participating Plans"). Guardian agrees to inform the Board of Directors of
AVIF of the existence of or any potential for any such material irreconcilable
conflict of which it is aware. The concept of a "material irreconcilable
conflict" is not defined by the 1940 Act or the rules thereunder, but the
Parties recognize that such a conflict may arise for a variety of reasons,
including, without limitation:
(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 investments of any Fund are being
managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract Participants or by Participants
of different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard
the voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
Consistent with the SEC's requirements in connection with exemptive
orders of the type referred to in Section 5.1 hereof, Guardian will assist the
Board of Directors in carrying out its responsibilities by providing the Board
of Directors with all information reasonably necessary for the Board of
Directors to consider any issue raised, including information as to a decision
by Guardian to disregard voting instructions of Participants.
5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the
members of the Board of Directors or a majority of the Disinterested Directors
that a material irreconcilable conflict exists, Guardian will, if it is a
Participating Insurance Company for which a material irreconcilable conflict is
relevant, at its own expense and to the extent reasonably practicable (as
determined by a majority of the Disinterested Directors), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict,
which steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of
the Accounts from AVIF or any Fund and reinvesting
such assets in a different investment medium,
including another Fund of AVIF, or submitting the
question whether such
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segregation should be implemented to a vote of all
affected Participants and, as appropriate,
segregating the assets of any particular group
(e.g., annuity Participants, life insurance
Participants or all Participants) that votes in
favor of such segregation, or offering to the
affected Participants the option of making such a
change; and
(ii) establishing a new registered investment company of
the type defined as a "management company" in
Section 4(3) of the 1940 Act or a new separate
account that is operated as a management company.
(b) If the material irreconcilable conflict arises because of
Guardian's decision to disregard Participant voting instructions and that
decision represents a minority position or would preclude a majority vote,
Guardian may be required, at AVIF's election, to withdraw each Account's
investment in AVIF or any Fund. 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 gives notice to Guardian that this provision is being
implemented, and until such withdrawal AVIF shall continue to accept and
implement orders by Guardian for the purchase and redemption of Shares of AVIF.
(c) If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to Guardian
conflicts with the majority of other state regulators, then Guardian will
withdraw each Account's investment in AVIF within six (6) months after AVIF's
Board of Directors informs Guardian 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 Guardian for the purchase and
redemption of Shares of AVIF. No charge or penalty will be imposed as a result
of such withdrawal.
(d) Guardian 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 Participants.
(e) 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 any of
its affiliates be required to establish a new funding medium for any Contracts.
Guardian will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
5.5 NOTICE TO GUARDIAN .
AVIF will promptly make known in writing to Guardian the Board of
Directors' determination of the existence of a material irreconcilable
conflict, a description of the facts that give rise to such conflict and the
implications of such conflict.
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5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
Guardian and AVIF (or its investment adviser) will at least annually
submit to the Board of Directors of AVIF such reports, materials or data as the
Board of Directors may reasonably request so that the Board of Directors may
fully carry out the obligations imposed upon it by the provisions hereof or
any exemptive order granted by the SEC to permit Mixed and Shared Funding, and
said reports, materials and data will be submitted at any reasonable time
deemed appropriate by the Board of Directors. All reports received by the
Board of Directors of potential or existing conflicts, and all Board of
Directors actions with regard to determining the existence of a conflict,
notifying Participating Insurance Companies and Participating Plans of a
conflict, and determining whether any proposed action adequately remedies a
conflict, will be properly recorded in the minutes of the Board of Directors or
other appropriate records, and such minutes or other records will be made
available to the SEC upon request.
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which AVIF is serving as an investment medium
for variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if
applicable, 6e-2 are amended or Rule 6e-3 is adopted to provide exemptive
relief with respect to Mixed and Shared Funding, AVIF agrees that it will
comply with the terms and conditions thereof and that the terms of this Section
5 shall be deemed modified if and only to the extent required in order also to
comply with the terms and conditions of such exemptive relief that is afforded
by any of said rules that are applicable.
5.8 OTHER REQUIREMENTS.
AVIF will require that each Participating Insurance Company and
Participating Plan enter into an agreement with AVIF that contains in substance
the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a),
4.4(b), 4.5(a), 5, and 10 of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a
Fund:
(a) at the option of any party, with or without cause with respect
to the Fund, upon six (6) months advance written notice to the other parties,
or, if later, upon receipt of any required exemptive relief from the SEC,
unless otherwise agreed to in writing by the parties; or
(b) at the option of AVIF upon institution of formal proceedings
against Guardian or its affiliates by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding Guardian's obligations under
this Agreement or related to the sale of the Contracts, the operation of each
Account, or the purchase of Shares, if, in each case, AVIF reasonably
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20
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on the Fund with respect to which the Agreement is to be terminated; or
(c) at the option of Guardian upon institution of formal
proceedings against AVIF, its principal underwriter, or its investment adviser
by the NASD, the SEC, or any state insurance regulator or any other regulatory
body regarding AVIF's obligations under this Agreement or related to the
operation or management of AVIF or the purchase of AVIF Shares, if, in each
case, Guardian reasonably determines that such proceedings, or the facts on
which such proceedings would be based, have a material likelihood of imposing
material adverse consequences on Guardian, or the Subaccount corresponding to
the Fund with respect to which the Agreement is to be terminated; or
(d) at the option of any Party in the event that (i) the Fund's
Shares are not registered and, in all material respects, issued and sold in
accordance with any applicable federal or state law, or (ii) such law precludes
the use of such Shares as an underlying investment medium of the Contracts
issued or to be issued by Guardian; or
(e) upon termination of the corresponding Subaccount's investment
in the Fund pursuant to Section 5 hereof; or
(f) at the option of Guardian if the Fund ceases to qualify as a
RIC under Subchapter M of the Code or under successor or similar provisions, or
if Guardian reasonably believes that the Fund may fail to so qualify; or
(g) at the option of Guardian if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if
Guardian reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by Guardian
cease to qualify as annuity contracts or life insurance contracts under the
Code (other than by reason of the Fund's noncompliance with Section 817(h) or
Subchapter M of the Code) or if interests in an Account under the Contracts are
not registered, where required, and, in all material respects, are not issued
or sold in accordance with any applicable federal or state law; or
(i) upon another Party's material breach of any provision of this
Agreement.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until
the Party terminating this Agreement gives prior written notice to the other
Party to this Agreement of its intent to terminate, and such notice shall set
forth the basis for such termination. Furthermore:
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(a) in the event that any termination is based upon the provisions
of Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given
at least six (6) months in advance of the effective date of termination unless
a shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions
of Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given
at least ninety (90) days in advance of the effective date of termination
unless a shorter time is agreed to by the Parties hereto; and
(c) in the event that any termination is based upon the provisions
of Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior
written notice shall be given as soon as possible within twenty-four (24) hours
after the terminating Party learns of the event causing termination to be
required.
6.3 FUNDS TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, AVIF will, at the
option of Guardian, continue to make available additional shares of the Fund
pursuant to the terms and conditions of this Agreement, for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts."). Specifically, without limitation, the
owners of the Existing Contracts will be permitted to reallocate investments in
the Fund (as in effect on such date), redeem investments in the Fund and/or
invest in the Fund upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 6.3 will not apply to
any terminations under Section 5 and the effect of such terminations will be
governed by Section 5 of this Agreement.
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications will survive the termination of
this Agreement.
6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any Fund
pursuant to Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i)
hereof, this Agreement shall nevertheless continue in effect as to any Shares
of that Fund that are outstanding as of the date of such termination (the
"Initial Termination Date"). This continuation shall extend to the earlier of
the date as of which an Account owns no Shares of the affected Fund or a date
(the "Final Termination Date") six (6) months following the Initial Termination
Date, except that Guardian may, by written notice shorten said six (6) month
period in the case of a termination pursuant to Sections 6.1(d), 6.1(f),
6.1(g), 6.1(h) or 6.1(i).
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SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable assistance
to one another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such
steps may include combining the affected Account with another Account,
substituting other mutual fund shares for those of the affected Fund, or
otherwise terminating participation by the Contracts in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the
written consent of each other Party.
SECTION 9. NOTICES
Notices and communications required or permitted by Section 9 hereof
will be given by means mutually acceptable to the Parties concerned. Each
other notice or communication required or permitted by this Agreement 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:
AIM VARIABLE INSURANCE FUNDS, INC.
A I M DISTRIBUTORS, INC.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
GUARDIAN INVESTOR SERVICES CORPORATION
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Xx. Xxxx X. Xxxxx
Executive Vice President
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SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3
hereof, Guardian will distribute all proxy material furnished by AVIF to
Participants to whom pass-through voting privileges are required to be extended
and will solicit voting instructions from Participants. Guardian will vote
Shares in accordance with timely instructions received from Participants.
Guardian will vote Shares that are (a) not attributable to Participants to whom
pass-through voting privileges are extended, or (b) attributable to
Participants, but for which no timely instructions have been received, in the
same proportion as Shares for which said instructions have been received from
Participants, so long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass through voting privileges for Participants.
Neither Guardian nor any of its affiliates will in any way recommend action in
connection with or oppose or interfere with the solicitation of proxies for the
Shares held for such Participants. Guardian reserves the right to vote shares
held in any Account in its own right, to the extent permitted by law. Guardian
shall be responsible for assuring that each of its Accounts holding Shares
calculates voting privileges in a manner consistent with that of other
Participating Insurance Companies or in the manner required by the Mixed and
Shared Funding exemptive order obtained by AVIF. AVIF will notify Guardian of
any changes of interpretations or amendments to Mixed and Shared Funding
exemptive order it has obtained. AVIF will comply with all provisions of the
1940 Act requiring voting by shareholders, and in particular, AVIF either will
provide for annual meetings (except insofar as the SEC may interpret Section 16
of the 1940 Act not to require such meetings) or will comply with Section 16(c)
of the 1940 Act (although AVIF is not one of the trusts described in Section
16(c) of that Act) as well as with Sections 16(a) and, if and when applicable,
16(b). Further, AVIF will act in accordance with the SEC's interpretation of
the requirements of Section 16(a) with respect to periodic elections of
directors and with whatever rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with Guardian concerning any
decision to elect or not to elect pursuant to Section 853 of the Code to pass
through the benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF AVIF AND AIM BY GUARDIAN AND GISC.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, Guardian and GISC agree to indemnify and hold harmless AVIF, its
affiliates (including AIM), and each person, if any, who controls AVIF or its
affiliates within the meaning of Section 15 of the 1933 Act and each of their
respective directors and officers, (collectively, the "Indemnified Parties" for
purposes of this Section 12.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
Guardian and GISC) or actions in respect thereof
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(including, to the extent reasonable, legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise; provided, the Account owns shares of the Fund and insofar as
such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in any Account's 1933 Act registration statement, any
Account Prospectus, the Contracts, or sales literature
or advertising for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading; provided, that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in conformity
with information furnished to Guardian or GISC by or on
behalf of AVIF or AIM for use in any Account's 1933 Act
registration statement, any Account Prospectus, the
Contracts, or sales literature or advertising or
otherwise for use in connection with the sale of
Contracts or Shares (or any amendment or supplement to
any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or
representations contained in AVIF's 1933 Act
registration statement, AVIF Prospectus, sales
literature or advertising of AVIF, or any amendment or
supplement to any of the foregoing, not supplied for use
therein by or on behalf of Guardian, GISC or their
respective affiliates and on which such persons have
reasonably relied) or the negligent, illegal or
fraudulent conduct of Guardian, GISC or their respective
affiliates or persons under their control (including,
without limitation, their employees and "Associated
Persons," as that term is defined in paragraph (m) of
Article I of the NASD's By-Laws), in connection with the
sale or distribution of the Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in AVIF's 1933 Act registration statement, AVIF
Prospectus, sales literature or advertising of AVIF, or
any amendment or supplement to any of the foregoing, or
the omission or alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading if such a
statement or omission was made in reliance upon and in
conformity with information furnished to AVIF or its
affiliates by Guardian, GISC or their respective
affiliates for use in AVIF's 1933 Act registration
statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to
any of the foregoing; or
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(iv) arise as a result of a material failure by Guardian or
GISC to perform the obligations, provide the services
and furnish the materials required of them under the
terms of this Agreement, or any material breach of any
representation and/or warranty made by Guardian or GISC
in this Agreement or arise out of or result from any
other material breach of this Agreement by Guardian or
GISC; or
(v) arise as a result of failure by the Contracts issued by
Guardian to qualify as annuity contracts or life
insurance contracts under the Code, otherwise than by
reason of any Fund's failure to comply with Subchapter
M or Section 817(h) of the Code.
(b) Neither Guardian nor GISC shall be liable under this Section
12.1 with respect to any losses, claims, damages, liabilities or actions to
which an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties (i) under this Agreement, or (ii)
to AVIF.
(c) Neither Guardian nor GISC shall be liable under this Section
12.1 with respect to any action against an Indemnified Party unless AVIF or AIM
shall have notified Guardian and GISC in writing within a reasonable time after
the summons or other first legal process giving information of the nature of
the action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify Guardian and GISC of any such action shall not
relieve Guardian and GISC from any liability which they may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this Section 12.1. Except as otherwise provided herein, in case any such
action is brought against an Indemnified Party, Guardian and GISC shall be
entitled to participate, at their own expense, in the defense of such action
and also shall be entitled to assume the defense thereof, with counsel approved
by the Indemnified Party named in the action, which approval shall not be
unreasonably withheld. After notice from Guardian or GISC to such Indemnified
Party of Guardian's or GISC's election to assume the defense thereof, the
Indemnified Party will cooperate fully with Guardian and GISC and shall bear
the fees and expenses of any additional counsel retained by it, and neither
Guardian nor GISC will be liable to such Indemnified Party under this Agreement
for any legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof, other than reasonable
costs of investigation.
12.2 OF GUARDIAN AND GISC BY AVIF AND AIM.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, AVIF and AIM agree to indemnify and hold harmless Guardian,
GISC, their respective affiliates, and each person, if any, who controls
Guardian, GISC or their respective affiliates within the meaning of Section 15
of the 1933 Act and each of their respective directors and officers,
(collectively, the "Indemnified Parties" for purposes of this Section 12.2)
against any and all losses, claims,
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damages, liabilities (including amounts paid in settlement with the written
consent of AVIF and/or AIM ) or actions in respect thereof (including, to the
extent reasonable, legal and other expenses), to which the Indemnified Parties
may become subject under any statute, regulation, at common law, or otherwise;
provided, the Account owns shares of the Fund and insofar as such losses,
claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in AVIF's 1933 Act registration statement, AVIF
Prospectus or sales literature or advertising 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 statements therein not
misleading; provided, that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in conformity
with information furnished to AVIF or its affiliates by
or on behalf of Guardian, GISC or their respective
affiliates for use in AVIF's 1933 Act registration
statement, AVIF Prospectus, or in sales literature or
advertising or otherwise for use in connection with the
sale of Contracts or Shares (or any amendment or
supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or
representations contained in any Account's 1933 Act
registration statement, any Account Prospectus, sales
literature or advertising for the Contracts, or any
amendment or supplement to any of the foregoing, not
supplied for use therein by or on behalf of AVIF or AIM
or their respective affiliates and on which such
persons have reasonably relied) or the negligent,
illegal or fraudulent conduct of AVIF or AIM or their
respective affiliates or persons under its control
(including, without limitation, their employees and
"Associated Persons" as that Term is defined in Section
(n) of Article 1 of the NASD By-Laws), in connection
with the sale or distribution of AVIF Shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in any Account's 1933 Act registration statement, any
Account Prospectus, sales literature or advertising
covering the Contracts, or any amendment or supplement
to any of the foregoing, or the omission or alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, if such statement or omission
was made in reliance upon and in conformity with
information furnished to Guardian, GISC or their
respective affiliates by AVIF or AIM for use in any
Account's 1933 Act registration statement, any Account
Prospectus, sales
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literature or advertising covering the Contracts, or
any amendment or supplement to any of the foregoing; or
(iv) arise as a result of a material failure by AVIF to
perform the obligations, provide the services and
furnish the materials required of it under the terms of
this Agreement, or 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.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, AVIF and AIM agree to indemnify and hold harmless the
Indemnified Parties from and against any and all losses, claims, damages,
liabilities (including amounts paid in settlement thereof with, the written
consent of AVIF) or actions in respect thereof (including, to the extent
reasonable, legal and other expenses) to which the Indemnified Parties may
become subject directly or indirectly under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or actions
directly or indirectly result from or arise out of the failure of any Fund to
operate as a regulated investment company in compliance with (i) Subchapter M
of the Code and regulations thereunder, or (ii) Section 817(h) of the Code and
regulations thereunder, including, without limitation, any income taxes and
related penalties, rescission charges, liability under state law to
Participants asserting liability against Guardian pursuant to the Contracts,
the costs of any ruling and closing agreement or other settlement with the IRS,
and the cost of any substitution by Guardian of Shares of another investment
company or portfolio for those of any adversely affected Fund as a funding
medium for each Account that Guardian reasonably deems necessary or appropriate
as a result of the noncompliance.
(c) Neither AVIF nor AIM shall be liable under this Section 12.2
with respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of such Indemnified Party's reckless disregard of its
obligations and duties (i) under this Agreement, or (ii) to Guardian, GISC,
each Account or Participants.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2
with respect to any action against an Indemnified Party unless the Indemnified
Party shall have notified AVIF and /or AIM in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify AVIF or AIM of any such action shall not relieve
AVIF or AIM from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
12.2. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, AVIF and/or AIM will be entitled to participate,
at their own expense, in the defense of such action and also shall be entitled
to assume the defense thereof (which shall include, without limitation, the
conduct of any ruling request and closing agreement or other settlement
proceeding with the IRS), with counsel approved by the Indemnified Party
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named in the action, which approval shall not be unreasonably withheld. After
notice from AVIF and/or AIM to such Indemnified Party of AVIF's or AIM's
election to assume the defense thereof, the Indemnified Party will cooperate
fully with AVIF and AIM and shall bear the fees and expenses of any additional
counsel retained by it, and neither AVIF nor AIM will be liable to such
Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in connection
with the defense thereof, other than reasonable costs of investigation.
(e) In no event shall either AVIF or AIM be liable under the
indemnification provisions contained in this Agreement to any individual or
entity, including, without limitation, Guardian, GISC or any other
Participating Insurance Company or any Participant, 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 Guardian or
GISC hereunder or by any Participating Insurance Company under an agreement
containing substantially similar representations, warranties and covenants;
(ii) the failure by Guardian or any Participating Insurance Company to maintain
its segregated asset account (which invests in any Fund) 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 Guardian or any
Participating Insurance Company to maintain its variable annuity or life
insurance contracts (with respect to which any Fund serves as an underlying
funding vehicle) as annuity contracts or life insurance contracts under
applicable provisions of the Code.
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12.1(c) or 12.2(d) above of participation in or
control of any action by the indemnifying Party will in no event be deemed to
be an admission by the indemnifying Party of liability, culpability or
responsibility, and the indemnifying Party will remain free to contest
liability with respect to the claim among the Parties or otherwise.
12.4 SUCCESSORS.
A successor by law of any Party shall be entitled to the benefits of
the indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Maryland law, without regard for that state's
principles of conflict of laws.
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SECTION 14. 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.
SECTION 15. 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.
SECTION 16. 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.
SECTION 17. HEADINGS
The Table of Contents and 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.
SECTION 18. CONFIDENTIALITY
AVIF acknowledges that the identities of the customers of Guardian or
any of its affiliates (collectively, the "Guardian Protected Parties" for
purposes of this Section 18), information maintained regarding those customers,
and all computer programs and procedures or other information developed by the
Guardian Protected Parties or any of their employees or agents in connection
with Guardian's performance of its duties under this Agreement are the valuable
property of the Guardian Protected Parties. AVIF agrees that if it comes into
possession of any list or compilation of the identities of or other information
about the Guardian Protected Parties' customers, or any other information or
property of the Guardian Protected Parties, other than such information as may
be independently developed or compiled by AVIF from information supplied to it
by the Guardian Protected Parties' customers who also maintain accounts
directly with AVIF, AVIF will hold such information or property in confidence
and refrain from using, disclosing or distributing any of such information or
other property except: (a) with Guardian's prior written consent; or (b) as
required by law or judicial process. Guardian acknowledges that the identities
of the customers of AVIF or any of its affiliates (collectively the "AVIF
Protected Parties" for purposes of this Section 18), information maintained
regarding those customers, and all computer programs and procedures or other
information developed by the AVIF Protected Parties or any of their employees
or agents in connection with AVIF's performance of its duties under this
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Agreement are the valuable property of the AVIF Protected Parties. Guardian
agrees that if it comes into possession of any list or compilation of the
identities of or other information about the AVIF Protected Parties' customers
or any other information or property of the AVIF Protected Parties, other than
such information as may be independently developed or compiled by Guardian from
information supplied to it by the AVIF Protected Parties' customers who also
maintain accounts directly with Guardian, Guardian will hold such information
or property in confidence and refrain from using, disclosing or distributing
any of such information or other property except: (a) with AVIF's prior written
consent; or (b) as required by law or judicial process. Each party
acknowledges that any breach of the agreements in this Section 18 would result
in immediate and irreparable harm to the other parties for which there would be
no adequate remedy at law and agree that in the event of such a breach, the
other parties will be entitled to equitable relief by way of temporary and
permanent injunctions, as well as such other relief as any court of competent
jurisdiction deems appropriate.
SECTION 19. TRADEMARKS AND FUND NAMES
(a) A I M Management Group Inc. ("AIM" or "licensor"), an
affiliate of AVIF, owns all right, title and interest in and to the name,
trademark and service xxxx "AIM" and such other tradenames, trademarks and
service marks as may be set forth on Schedule B, as amended from time to time
by written notice from AIM to Guardian (the "AIM licensed marks" or the
"licensor's licensed marks") and is authorized to use and to license other
persons to use such marks. Guardian and its affiliates are hereby granted a
non-exclusive license to use the AIM licensed marks in connection with
Guardian's performance of the services contemplated under this Agreement,
subject to the terms and conditions set forth in this Section 19.
(b) The grant of license to Guardian and its affiliates ( the
"licensee") shall terminate automatically upon termination of this Agreement.
Upon automatic termination, the licensee shall cease to use the licensor's
licensed marks, except that Guardian shall have the right to continue to
service any outstanding Contracts bearing any of the AIM licensed marks. Upon
AIM's elective termination of this license, Guardian and its affiliates shall
immediately cease to issue any new annuity or life insurance contracts bearing
any of the AIM licensed marks and shall likewise cease any activity which
suggests that it has any right under any of the AIM licensed marks or that it
has any association with AIM, except that Guardian shall have the right to
continue to service outstanding Contracts bearing any of the AIM licensed
marks.
(c) The licensee shall obtain the prior written approval of the
licensor for the public release by such licensee of any materials bearing the
licensor's licensed marks. The licensor's approvals shall not be unreasonably
withheld.
(d) During the term of this grant of license, a licensor may
request that a licensee submit samples of any materials bearing any of the
licensor's licensed marks which were previously approved by the licensor but,
due to changed circumstances, the licensor may wish to reconsider. If, on
reconsideration, or on initial review, respectively, any such samples fail to
meet
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with the written approval of the licensor, then the licensee shall immediately
cease distributing such disapproved materials. The licensor's approval shall
not be unreasonably withheld, and the licensor, when requesting reconsideration
of a prior approval, shall assume the reasonable expenses of withdrawing and
replacing such disapproved materials. The licensee shall obtain the prior
written approval of the licensor for the use of any new materials developed to
replace the disapproved materials, in the manner set forth above.
(e) The licensee hereunder: (i) acknowledges and stipulates that,
to the best of the knowledge of the licensee, the licensor's licensed marks are
valid and enforceable trademarks and/or service marks and that such licensee
does not own the licensor's licensed marks and claims no rights therein other
than as a licensee under this Agreement; (ii) agrees never to contend otherwise
in legal proceedings or in other circumstances; and (iii) acknowledges and
agrees that the use of the licensor's licensed marks pursuant to this grant of
license shall inure to the benefit of the licensor.
SECTION 20. PARTIES TO COOPERATE
Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including, without limitation, the
SEC, the NASD and state insurance regulators) and will permit each other and
such authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
____________________________________________
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers signing below.
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: /s/ XXXXX X. XXXXXX By: /s/ XXXXXX X. XXXXXX
------------------------- ------------------------------
Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Assistant Secretary Title: President
A I M DISTRIBUTORS, INC.
Attest: /s/ XXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXX
------------------------- ------------------------------
Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxx
Assistant Secretary Title: President
THE GUARDIAN INSURANCE & ANNUITY
COMPANY, INC., on behalf of itself
and its Separate Accounts
Attest: /s/ XXXXX XXXXX By: /s/ XXXX X. XXXXX
------------------------- ------------------------------
Name: Xxxxx Xxxxx Name: Xxxx X. Xxxxx
------------------------- ------------------------------
Title: Counsel Title: Executive Vice President
------------------------- ------------------------------
GUARDIAN INVESTOR SERVICES
CORPORATION
Attest: /s/ XXXXX XXXXX By: /s/ XXXX X. XXXXX
------------------------- ------------------------------
Name: Xxxxx Xxxxx Name: Xxxx X. Xxxxx
------------------------- ------------------------------
Title: Counsel Title: President
------------------------- ------------------------------
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SCHEDULE A
CONTRACT SEPARATE ACCOUNT FUNDS AVAILABLE
-------- ---------------- ---------------
Park Avenue Life Separate Account K AIM V.I. Capital Appreciation Fund
AIM V.I. Value Fund
Park Avenue VUL Separate Account M AIM V.I. Capital Appreciation Fund
AIM V.I. Value Fund
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SCHEDULE B
o AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Value Fund
o AIM and Design
[AIM LOGO APPEARS HERE]
31
