FUND PARTICIPATION AGREEMENT
by and among
INSURANCE MANAGEMENT SERIES
FEDERATED ADVISORS
and
AETNA INSURANCE COMPANY OF AMERICA
THIS AGREEMENT is made as of the 1st day of July, 1994, by and among
INSURANCE MANAGEMENT SERIES, an open-end management investment company organized
as a Massachusetts business trust (the "Trust"), FEDERATED ADVISORS, an
insurance trust organized under the laws of the state of Delaware ("Adviser"),
and AETNA INSURANCE COMPANY OF AMERICA, a life insurance company organized under
the laws of the State of Connecticut ("AICA"), on its own behalf and on behalf
of each segregated asset account of AICA set forth on Schedule A hereto, as may
be amended from time to time (the "Accounts").
W I T N E S S E T H:
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and has registered
its shares under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, beneficial interests in the Trust are divided into several
series of shares, each series representing an interest in a particular managed
portfolio of securities and other assets set forth in Schedule B hereto, as may
be amended from time to time (the "Portfolios"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established to fund variable annuity contracts and variable life
insurance policies to be offered by unaffiliated insurance companies that have
entered into participation agreements with the Trust (the "Participating
Insurance Companies"); and
WHEREAS, AICA has established the Accounts to serve as investment
vehicles for certain variable annuity contracts or life insurance policies set
forth in Schedule A hereto, as may be amended from time to time ("Contracts").
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I.
Sale of Trust Shares
1.1. The Trust shall make shares of its Portfolios available to the
Accounts at the net asset value next computed after receipt of such purchase
order by the Trust (or its agent), as established in accordance with the
provisions of the then current prospectus of the Trust. Shares of a particular
Portfolio of the Trust shall be ordered in such quantities and at such times as
determined by AICA to be necessary to meet the requirements of the Contracts.
The Trustees of the Trust (the "Trustees") may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering of shares of any
Portfolio if such action is required by law or be regulatory authorities having
jurisdiction or is, in the sole discretion of the Trustees acting in good faith
and in light of their fiduciary duties under federal and any applicable state
laws, necessary in the best interests of the shareholders of such Portfolio.
1.2. The Trust will redeem any full or fractional shares of any Portfolio
when requested by AICA on behalf of an Account at the net asset value next
computed after receipt by the Trust (or its agent) of the request for
redemption, as established in accordance with the provisions of the then current
prospectus of the Trust. The Trust shall make payment for such shares in the
manner established from time to time by the Trust, but in no event shall payment
be delayed for a greater period than is permitted by the 1940 Act.
1.3. AICA will transmit orders from time to time to the Trust for the
purchase of shares of its Portfolios as directed by Contractholders. Orders for
shares of the Portfolios placed by the Company with the Trust by 5:30 p.m.,
Eastern time, on any Business day shall be priced at the net asset value
determined by the Trust as of the end of that Business Day. "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and on
which the Trust calculates its asset value pursuant to the rules of the SEC.
1.4. Purchase orders that are transmitted to the Trust in accordance with
Section 1.3. shall be paid for no later than 3:00 p.m., Eastern time, on the
Business Day following the Business Day that the Trust receives notice of the
order. Payments shall be made in federal funds transmitted by wire to the Trust
or its agent. Upon receipt by the Trust of the federal funds so wired, such
funds shall cease to be the responsibility of AICA and shall become the
responsibility of the Trust for this purpose.
1.5. Issuance and transfer of the Trust's shares will be by book entry
only. Stock certificates will not be issued to AICA or the Accounts. Shares
ordered from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
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1.6. The Trust shall furnish prompt notice to AICA of any income
dividends or capital gain distributions payable on the Trust's shares. AICA
hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Trust shall notify AICA of the number of shares so issued as
payment of such dividends and distributions. AICA may change this election from
time to time.
1.7. In accordance with Section 1.1., the Trust shall calculate the net
asset value of shares of its Portfolios on each Business Day and shall make the
net asset value per share for each Portfolio available to AICA on a daily basis
as soon as reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make such net asset value per share
available by 6:00 p.m., Eastern time.
1.8. The Trust agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified pension
and retirement plans to the extent permitted by the Shared Trust Exemptive
Order. No shares of any Portfolio will be sold directly to the general public.
AICA agrees that Trust shares will be used only for the purposes of funding the
Contracts and Accounts listed in Schedule A.
1.9. The Trust agrees that all Participating Insurance Companies shall
have the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 2.8. and
Article IV.
ARTICLE II.
Obligations of the Parties
2.1. The Trust shall prepare and be responsible for filing with the SEC
and any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of the Trust.
The Trust shall bear the costs of registration and qualification of its shares,
preparation and filing of the documents listed in this Section 2.1. and all
taxes to which an issuer is subject on the issuance and transfer of its shares.
2.2. At the option of AICA, the Trust shall either (a) provide AICA (at
AICA's expense) with as many copies of the Trust's current prospectus, statement
of additional information, annual report, semi-annual report and other
shareholder communications, including any amendments or supplements to any of
the foregoing, as AICA shall reasonably request, or (b) provide AICA with a
camera ready copy of such documents in a form suitable for printing. The Trust
shall provide AICA with a copy of its statement of additional information in a
form suitable for duplication by AICA. The Trust (at its expense) shall provide
AICA with copies of any Trust-sponsored proxy materials in such quantity as AICA
shall reasonably require for distribution to Contract holders.
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2.3. AICA shall bear the costs of printing and distributing the Trust's
prospectus, statement of additional information, shareholder reports and other
shareholder communications to holders of and applicants for Contracts for which
the Trust is serving or is to serve as an investment vehicle. AICA shall bear
the costs of distributing proxy materials (or similar materials such as voting
solicitation instructions) to Contract holders. AICA assumes sole responsibility
for ensuring that such materials are delivered to Contract holders in accordance
with applicable federal and state securities laws.
2.4. The Trust recognizes AICA as the sole shareholder of Trust Shares
purchased in accordance with this Agreement. The Advisor and Trust further
recognize that the Trust will derive substantial savings with respect to its
administrative expenses, including significant reductions in expenses
attributable to postage, shareholder communications, and recordkeeping by virtue
of the Trust's having a sole shareholder rather than multiple shareholders. In
consideration of these administrative savings, the Adviser agrees to pay AICA a
fee equivalent to 15 basis points per annum of the amount invested in the Trust
through the Accounts in accordance with the Agreement (the "Fee").
2.5. The Adviser will calculate the amount of the total Fee to be paid to
AICA at the end of each calendar quarter and will make such payment to AICA
within 30 days thereafter. Each payment will be accompanied by a statement
showing the calculation of the Fee for the relevant calendar quarter and such
other supporting data as may be reasonably requested by AICA.
2.6. AICA agrees and acknowledges that Adviser is the sole owner of the
name and xxxx "Federated" and that all use of any designation comprised in whole
or part of Federated (a "Federated Xxxx") under this Agreement shall inure to
the benefit of Adviser. Except as provided in Section 2.5., AICA shall not use
any Federated Xxxx on its own behalf or on behalf of the Accounts or Contracts
in any registration statement, advertisement, sales literature or other
materials relating to the Accounts or Contracts without the prior written
consent of Adviser. Upon termination of this Agreement for any reason, AICA
shall cease all use of any Federated Xxxx(s) as soon as reasonably practicable.
2.7. AICA shall furnish, or cause to be furnished, to the Trust or its
designee, a copy of each Contract prospectus or statement of additional
information in which the Trust or Adviser is named promptly after the filing of
such document with the SEC or other regulatory authorities. AICA shall furnish,
or shall cause to be furnished, to the Trust or its designee, each piece of
sales literature or other promotional material in which the Trust or its
investment adviser is named, at least five Business Days prior to its use. No
such material shall be used if the Trust or its designee reasonably objects to
such use within five Business Days after receipt of such material.
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2.8. The Trust shall furnish, or cause to be furnished, to AICA at least
one copy of the application for the order, the order, and any amendments
thereto, all prospectuses, statements of additional information, reports, proxy
statements and other voting solicitation materials, all amendments, and
supplements thereto, and any other filings that relate to the Trust or its
shares, promptly after the filing of such document with the SEC or other
regulatory authorities.
2.9. AICA shall not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust or Adviser in
connection with the sale of the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Trust shares (as such registration statement and
prospectus may be amended or supplemented from time to time), reports of the
Trust, Trust-sponsored proxy statements, or in sales literature or other
promotional material approved by the Trust or its designee, except as required
by legal process or regulatory authorities or with the written permission of the
Trust or its designee.
2.10 The Trust shall not give any information or make any representations
or statements on behalf of AICA or concerning AICA, the Accounts or the
Contracts, other than information or representations contained in and accurately
derived from the registration statement or prospectus for the Contracts (as such
registration statement and prospectus may be amended or supplemented from time
to time), or in materials approved by AICA for distribution, including sales
literature or other promotional materials, except as required by legal process
or regulatory authorities or with the written permission of AICA.
2.11. So long as, and to the extent that the SEC interprets the 1940 Act
to require pass-through voting privileges for variable annuity contract and
variable life insurance policy holders, AICA will provide pass-through voting
privileges to holders of Contracts, the assets of which are invested, through
the Accounts, in shares of the Trust. The Trust shall require all Participating
Insurance Companies to calculate voting privileges in the same manner and AICA
shall be responsible for assuring that the Accounts calculate voting privileges
in the manner established by the Trust. With respect to each Account, AICA will
vote shares of the Trust held by the Account and for which no timely voting
instructions from Contract holders are received as well as shares it owns that
are held by that Account, in the same proportion as those shares for which
voting instructions are received. AICA and its agents will not recommend or
oppose or interfere with the solicitation of proxies for Trust shares held by
Contract holders without the prior written consent of the Trust, which consent
may be withheld in the Trust's sole discretion.
ARTICLE III.
Representations and Warranties
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3.1. AICA represents and warrants that it is an insurance company duly
organized and in good standing under the laws of the State of Connecticut and
that it has legally and validly established each Account as a segregated asset
account under such law on the date set forth in Schedule A.
3.2. AICA represents and warrants that it has registered or, prior to any
issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts, or that the Accounts are exempt
from registration.
3.3. AICA represents and warrants that the Contracts will be registered
under the 1933 Act prior to any issuance or sale of the Contracts or that the
Contracts are exempt from registration thereunder; the Contracts will be issued
and sold in compliance in all material respects with all applicable federal and
state laws, and the sale of the Contracts shall comply in all material respects
with state insurance suitability requirements.
3.4. AICA warrants and represents that it is duly authorized to enter
this Agreement and that the Agreement is legal, valid and enforceable against it
except as may be limited by bankruptcy or principles of equity.
3.5. AICA represents and warrants that all its directors, officers and
employees dealing with the money and/or securities of the Trust are, and shall
continue to be at all times, covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust, in an amount not less than $2 million.
The aforesaid bond shall include coverage for larceny and embezzlement and shall
be issued by a reputable bonding company.
3.6. The Trust and Adviser represent and warrant that the Trust is duly
organized and validly existing under the laws of the Commonwealth of
Massachusetts.
3.7. The Trust and Adviser represent and warrant that the Trust received
an order from the SEC that exempts the Trust from certain 1940 Act requirements
and permits Participating Insurance Companies to purchase Trust shares for their
respective separate accounts funding variable annuity contracts and variable
life insurance policies without regard to such requirements (the "Order").
3.8. The Trust and Adviser represent and warrant that the Adviser is duly
organized and validly existing under the laws of the State of Delaware, and is,
and shall remain, duly registered in all material respects under applicable
federal and state securities laws, and further that Adviser shall perform its
obligations for the Trust in compliance in all material respects with such laws.
3.9. The Trust and Adviser represent and warrant that the Trust shares
offered and sold pursuant to this Agreement will be registered under the 1933
Act and the Trust shall be registered under the 1940 Act prior to any issuance
or sale of such shares. The Trust shall amend its registration statement under
the 1933 Act and the 1940 Act from time to
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time as required in order to effect the continuous offering of its shares. The
Trust shall register and qualify its shares for sale in accordance with the laws
of the various states only if and to the extent deemed advisable by the Trust.
3.10. The Trust and Adviser represent and warrant that the investments of
each Portfolio will comply with the diversification requirements set forth in
Section 817(h) of the Internal Revenue Code of 1986, as amended ("Code"), and
the rules and regulations thereunder.
3.11. The Trust and Adviser represent and warrant that each is duly
authorized to enter into this Agreement and the Agreement is legal, valid and
enforceable against each except as may be limited by bankruptcy or principles of
equity.
3.12. The Trust and Adviser represent and warrant that all their
respective Trustees or directors, officers and employees dealing with the money
and/or securities of the Trust are, and shall continue to be at all times,
covered by a blanket fidelity bond or similar coverage for the benefit of the
Trust 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 shall be issued by a reputable bonding company.
ARTICLE IV. Potential Conflicts
4.1. The parties acknowledge that the Trust's shares may be made
available for investment to other Participating Insurance Companies. In such
event, the Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract holders of all
Participating Insurance Companies. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
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 Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Trustees shall promptly inform AICA if they determine that an
irreconcilable material conflict exists and the implications thereof.
4.2. AICA agrees to promptly report any potential or existing conflicts
of which it is aware to the Trustees. AICA will assist the Trustees in carrying
out their responsibilities under the Order by providing the Trustees with all
information reasonably necessary for the Trustees to consider any issues raised
including, but not limited to, information as to a decision by AICA to disregard
Contract holder voting instructions.
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4.3. If it is determined by a majority of the Trustees, or a majority of
disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract holders, AICA shall, in cooperation with other
Participating Insurance Companies whose contract holders are also affected, at
its expense and to the extent reasonably practicable (as determined by the
Trustees) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a) withdrawing the
assets allocable to some or all of the Accounts from the Trust or any Portfolio
and reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Trust, or submitting the question of
whether or not such segregation should be implemented to a vote of all affected
Contract holders, as appropriate, segregating the assets of any appropriate
group (i.e., variable annuity contract holders or variable life insurance policy
holders of one or more Participating Insurance Companies) that votes in favor of
such segregation, or offering to the affected Contract holders the option of
making such a change and (b) establishing a new registered management investment
company or managed separate account.
4.4. If a material irreconcilable conflict arises because of a decision
by AICA to disregard Contract holder voting instructions and that decision
represents a minority position or would preclude a majority vote, AICA may be
required, at the Trust's election, to withdraw the affected Account's investment
in the Trust and terminate this Agreement with respect to such Account;
provided, however, that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as determined
by a majority of the disinterested Trustees. Any such withdrawal and termination
must take place within six (6) months after the Trust gives written notice that
this provision is being implemented. Until the end of such six (6) month period,
the Trust shall continue to accept and implement orders by AICA for the purchase
and redemption of shares of the Trust.
4.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to AICA conflicts with the
majority of other state regulators, AICA will withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account within six (6) months after the Trustees inform AICA in writing that it
has determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested Trustees. Until the end of such
six (6) month period, the Trust shall continue to accept and implement orders by
AICA for the purchase and redemption of shares of the Trust.
4.6. For purposes of Sections 4.3 through 4.6., a majority of the
disinterested Trustees shall determine whether any proposed action adequately
remedies any irreconcilable material conflict, but in no event will AICA be
required to establish a new funding medium for the Contracts if an offer to do
so has been declined by vote of a majority of Contract holders materially
adversely affected by the irreconcilable material conflict. In the event that
the Trustees determine that any proposed action does not
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adequately remedy any irreconcilable material conflict, AICA will withdraw the
Account's investment in the Trust and terminate this Agreement within six (6)
months after the Trustees inform AICA in writing of the foregoing determination;
provided, however, that such withdrawal and termination shall be limited to the
extent required by any such material irreconcilable conflict as determined by a
majority of the disinterested Trustees.
4.7. AICA shall at least annually submit to the Trustees such reports,
materials or data as the Trustees may reasonable request so that the Trustees
may fully carry out the duties imposed upon them by the Order and said reports,
materials and data shall be submitted more frequently if deemed appropriate by
the Trustees.
4.8. If any rule issued under those provisions of the 1940 Act that are
the bases of the Order is revised in any material respect, the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with such revised rule as adopted to the extent it is
applicable.
ARTICLE V.
Indemnification
5.1. AICA agrees to indemnify and hold harmless the Trust and Adviser and
each of its respective Trustees or directors, officers, employees and agents and
each person, if any, who controls the Trust or the Adviser within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Article V.) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of AICA) or
expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
a registration statement or prospectus for the Contracts or
in the Contracts themselves or in sales literature generated
or approved by AICA on behalf of the Contracts or Accounts
(or any amendment or supplement to any of the foregoing)
(collectively, "AICA Documents" for the purposes of this
Article V.), 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
indemnity 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 was accurately
derived from written information furnished to AICA by or on
behalf of the Trust or Adviser for use in AICA Documents
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or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and
accurately derived from Trust Documents as defined in
Section 5.2.(a)) or wrongful conduct of AICA or persons
under its control, with respect to the sale or acquisition
of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2.(a) 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 accurately derived from written
information furnished to the Trust by or on behalf of AICA;
or
(d) arise out of or result from any failure by AICA to provide
the services or furnish the materials required under the
terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by AICA in this
Agreement or arise out of or result from any other material
breach of this Agreement by AICA.
5.2. The Trust and Adviser agree to indemnify and hold harmless AICA and
its directors, officers, employees and agents and each person, if any, who
controls AICA within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Article V.) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Trust) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage, liability or expense
and reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses"), to which the Indemnified Parties may become subject
under any statute or regulation, or at common law or otherwise, insofar as such
Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statement, prospectus or sales literature
for the Trust (or any amendment or supplement thereto)
(collectively, "Trust Documents" for the purposes of this
Article V.), 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
indemnity 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 was accurately
derived from written information furnished to the Trust by
or on behalf of AICA for use in
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Trust Documents or otherwise for use in connection with the
sale of the Contracts of Trust shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and
accurately derived from AICA Documents) or wrongful conduct
of the Trust or persons under its control, with respect to
the sale or acquisition of the Contracts or Trust Shares; or
(c) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in AICA
Documents 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
accurately derived from written information furnished to
AICA by or on behalf of the Trust; or
(d) arise out of or result from any failure by the Trust or
Adviser to provide the services or furnish the materials
required under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Trust.
5.3. Neither AICA nor the Trust or Adviser shall be liable under the
indemnification provisions of Sections 5.1. or 5.2., as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
any Indemnified Party's willful misfeasance, xxxx xxxxx or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
5.4. Neither AICA nor the Trust or Adviser shall be liable under the
indemnification provisions of Sections 5.1. or 5.2., as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the other party or parties in writing within a reasonable
time after the summons, or other first written notification, giving information
concerning the nature of the claim shall have been served upon or otherwise
received by such Indemnified Party (or after such Indemnified Party shall have
received notice of service upon or other notification to any designated agent),
but failure to notify the party or parties against whom indemnification is
sought of any such claim shall not relieve that party from any liability which
it may have to the Indemnified Party in the absence of Sections 5.1. and 5.2.
5.5. In case any such action is brought against the Indemnified Parties,
the indemnifying party or parties shall be entitled to participate, at its or
their own expense, in
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the defense of such action. The indemnifying party or parties also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party or parties named in the action. After notice from the indemnifying
party or parties to the Indemnified Party of an election to assume such defense,
the Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the indemnifying party or parties will not be liable to the
Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such party or parties independently in connection with
the defense hereof other than reasonable costs of investigation.
ARTICLE VI.
Termination
6.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) days'
advance written notice delivered to the other parties; or
(b) termination by AICA by written notice to the Trust and
Adviser with respect to any Portfolio based upon AICA's
determination that shares of such Portfolio are not
reasonably available to meet the needs of the Contracts; or
(c) termination by AICA by written notice to the Trust and
Adviser with respect to any Portfolio in the event any of
the Portfolio's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
AICA; or
(d) termination by AICA by written notice to the Trust and
Adviser with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a regulated investment
company under Subchapter M of the Code or under any
successor or similar provision, or if AICA reasonably
believes the Trust may fail to so qualify; or
(e) termination by AICA by written notice to the Trust and
Adviser with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements of
Section 3.10; or
(f) termination by AICA by written notice to the Trust and
Adviser, if AICA shall determine, in its sole judgment
exercised in good faith, that either the Trust of Adviser
has suffered a material adverse change in its business,
operations, financial condition, or prospects since the date
of this Agreement or is the subject of material adverse
publicity; or
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(g) termination by either the Trust or Adviser by written notice
to AICA, if either one or both of the Trust or Adviser shall
determine, in its sole judgment exercised in good faith,
that AICA has suffered a material adverse change in its
business, operations, financial condition, or prospects
since the date of this Agreement or is the subject of
material adverse publicity.
6.2. Notwithstanding any termination of this Agreement, the Trust shall,
at the option of AICA, continue to make available additional shares of the Trust
(or any Portfolio) pursuant to the terms and conditions of this Agreement for
all Contracts in effect on the effective date of termination of this Agreement;
provided, however, that AICA continues to pay the costs set forth in Section
2.3.
6.3. The provisions of Article V. shall survive the termination of this
Agreement, and the provisions of Article IV. and Section 2.8. shall survive the
termination of this Agreement as long as shares of the Trust are held on behalf
of Contract holders in accordance with Section 6.2.
ARTICLE VII.
Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust or Advisers:
---------------------------
---------------------------
---------------------------
Attention:
If to AICA:
Aetna Insurance Company
of America
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx
Attention: Xxxxx X. Xxxxxxxx
ARTICLE VIII.
Miscellaneous
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8.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
8.4. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Connecticut.
This Agreement shall be subject to the provisions of the 1933 Act, the 1934 Act
and the 1940 Act and the rules and regulations thereunder, including exemptions
from those statutes, rules and regulations as the SEC may grant (including, but
not limited to, the Order) and the terms hereof shall be interpreted and
construed in accordance thereof.
8.5. The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer or agent of the Trust, or holder of
shares of beneficial interest of the Trust shall be personally liable for any
such liabilities.
8.6. Each party shall cooperate with each other party and all appropriate
governmental authorities (including, without limitation, the SEC, the National
Association of Dealers, Inc. and state insurance or securities regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
8.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
8.8. The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the prior written approval of the other
party.
8.10. No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
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IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Agreement as of the date and year first above written.
AETNA LIFE INSURANCE AND INSURANCE MANAGEMENT SERIES
ANNUITY COMPANY
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ J. Xxxxxxxxxxx Xxxxxxx
------------------------- -----------------------------
Name: Xxxxxxx X. Xxxxxx Name: J. Xxxxxxxxxxx Xxxxxxx
Title: Vice President Title: President
FEDERATED ADVISERS
By: /s/ J. Xxxxxxxxxxx Xxxxxxx
-----------------------------
Name: J. Xxxxxxxxxxx Xxxxxxx
Title: President
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SCHEDULE A
Separate Accounts and Associated Contracts
Contracts Funded
Name of Separate Account By Separate Account
------------------------ -------------------
ALIAC Variable Annuity Aetna Growth Plus
Separate Account B Aetna Marathon Plus
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SCHEDULE B
Fee Schedule
Federated will pay to ALIAC 5 basis points on an annualized basis on the
average of the aggregate account values in the Federated managed portion
(Insurance Management Series) of the Contracts listed on Schedule A (the "IMS
Value"). This payment will be made quarterly, within 30 days of the end of each
calendar quarter, commencing once the Federated Funds are charging at their
stated voluntary expense caps or on January 15, 1995, whichever is earlier.
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