As filed with the Securities and Exchange Commission on February 12, 2002
1933 Act Registration No. 33-57340
1940 Act Registration No. 811-7452
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
------ ------
Post-Effective Amendment No. 22 X
------ ------
|
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 22 X
------- -----
(Check appropriate box or boxes.)
|
Copy to:
Nancy L. Martin, Esquire
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b) on (date) pursuant
---- to paragraph (b)
X 60 days after filing pursuant to paragraph (a)(1) on (date) ---- pursuant to paragraph (a)(1)
If appropriate, check the following:
This post-effective amendment designates a new effective date for a ----- previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
Series I Shares
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Premier Equity Fund
Shares of the funds are currently offered only to insurance company separate accounts. The investment objective(s) of each fund are described under the heading "Investment Objectives and Strategies."
PROSPECTUS
MAY 1, 2002
This prospectus contains important
information about the Series I class
shares ("Series I shares") of each
fund. Please read it before
investing and keep it for future
reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this Prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the
AIM V.I. Money Market Fund will be
able to maintain a stable net asset
value of $1.00 per share.
Investments in the funds:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
|
----------------------------
AIM VARIABLE INSURANCE FUNDS
----------------------------
|
INVESTMENT OBJECTIVES AND STRATEGIES 1 ------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUNDS 6 ------------------------------------------------ PERFORMANCE INFORMATION 10 Annual Total Returns 18 Performance Tables 18 FUND MANAGEMENT 23 ------------------------------------------------ The Advisors 23 Advisor Compensation 23 Portfolio Managers 23 OTHER INFORMATION 26 ------------------------------------------------ Purchase and Redemption of Shares 26 Pricing of Shares 26 Taxes 26 Dividends and Distributions 26 Share Classes 26 Future Fund Closure 26 FINANCIAL HIGHLIGHTS 27 ------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The investment objective(s) and policies of each fund may be changed by the Board of Trustees without shareholder approval. Any percentage limitations with respect to assets of a fund are applied at the time of purchase.
AIM V.I. AGGRESSIVE GROWTH FUND
The fund's investment objective is to achieve long-term growth of capital.
The fund seeks to meet its objective by investing primarily in common stocks, convertible bonds, convertible preferred stocks and warrants of small- and medium-sized companies whose earnings the fund's portfolio managers expect to grow more than 15% per year. The fund may also invest up to 25% of its total assets in foreign securities.
The portfolio managers focus on companies they believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. BALANCED FUND
The fund's investment objective is to achieve as high a total return as possible, consistent with preservation of capital.
The fund seeks to meet its objective by investing in a broadly diversified portfolio of common stocks, preferred stocks, convertible securities and bonds. The fund normally invests a minimum of 30% and a maximum of 70% of its total assets in equity securities and a minimum of 30% and a maximum of 70% of its total assets in non-convertible debt securities. The fund may also invest up to 25% of its total assets in convertible securities. The fund may also invest up to 25% of its total assets in foreign securities.
In selecting the percentages of assets to be invested in equity or debt securities, the portfolio managers consider such factors as general market and economic conditions, as well as trends, yields, interest rates and changes in fiscal and monetary policies. The portfolio managers will primarily purchase equity securities for growth of capital and debt securities for income purposes. However, the portfolio managers will focus on companies whose securities have the potential for both growth of capital and income generation. The portfolio managers consider whether to sell a particular security when they believe that security no longer has that potential.
AIM V.I. BASIC VALUE FUND
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing, normally, at least 65% of its total assets in equity securities of U.S. issuers that have market capitalizations of greater than $500 million and that the portfolio managers believe to be undervalued in relation to long-term earning power or other factors.
The fund may also invest up to 35% of its total assets in equity securities of U.S. issuers that have market capitalizations of less than $500 million and in investment-grade non-convertible debt securities, U.S. government securities and high-quality money market instruments, all of which are issued by U.S. issuers. The fund may also invest up to 25% of its total assets in foreign securities.
In selecting investments, the portfolio managers seek to identify those companies whose prospects and growth potential are undervalued by investors and that provide the potential for attractive returns. The portfolio managers allocate investments among fixed-income securities based on their views as to the best values then available in the marketplace. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. BLUE CHIP FUND
The fund's primary investment objective is long-term growth of capital with a secondary objective of current income.
The fund seeks to meet its objectives by investing, normally, at least 80% of its net assets in blue chip companies. The fund considers a blue chip company to be [large and medium sized companies (i.e., companies which fall in the largest 85% of market capitalization of publicly traded companies listed in the United States) with leading market positions and which possess strong financial characteristics, as described below:
- Market characteristics--Companies, which occupy (or in AIM's judgment have the potential to occupy) leading market positions that are expected to be maintained or enhanced over time. Market leaders can be identified within an industry as those companies which have (i) superior growth prospects compared with other companies in the same industry; (ii) possession of proprietary technology with the potential to bring about major changes within an industry; and/or (iii) leading sales within an industry, or the potential to become a market leader.
- Financial characteristics--Companies that possess at least one of the
following attributes: (i) faster earnings growth than its competitors and the
market in general; (ii) higher profit margins relative to its competitors;
(iii) strong cash flow relative to its competitors; and/or (iv) a balance
sheet with relatively low debt and a high return on equity relative to its
competitors].
In complying with the 80% requirement, the fund will invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and ADRs. The portfolio managers con-
sider whether to sell a particular security when they believe the security no longer has that potential. The fund may invest in United States government securities and high-quality debt securities when the portfolio managers believe securities other than marketable equity securities offer the opportunity for long-term growth of capital and current income. The fund may also invest up to 25% of its total assets in foreign securities.
AIM V.I. CAPITAL APPRECIATION FUND
The fund's investment objective is growth of capital.
The fund seeks to meet its objective by investing principally in common stocks of companies the portfolio managers believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes. The fund may also invest up to 25% of its total assets in foreign securities.
AIM V.I. CAPITAL DEVELOPMENT FUND
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing primarily in securities, including common stocks, convertible securities and bonds, of small- and medium-sized companies. The fund may also invest up to 25% of its total assets in foreign securities.
Among factors which the portfolio managers may consider when purchasing these securities are: (1) the growth prospects for a company's products; (2) the economic outlook for its industry; (3) a company's new product development; (4) its operating management capabilities; (5) the relationship between the price of the security and its estimated fundamental value; (6) relevant market, economic and political environments; and (7) financial characteristics, such as balance sheet analysis and return on assets. The portfolio managers consider whether to sell a particular security when any one of these factors materially changes.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs and brokerage commissions, both of which can lower the actual return on your investment.
AIM V.I. CORE EQUITY FUND (FORMERLY, AIM V.I. GROWTH AND INCOME FUND)
The fund's primary investment objective is growth of capital with a secondary objective of current income.
The fund seeks to meet its objectives by investing, normally, at least 80% of its net assets in equity securities, including convertible securities, of established companies that have long-term above-average growth in earnings and dividends, and growth companies that the portfolio managers believe have the potential for above-average growth in earnings and dividends. In complying with this 80% requirement, the fund's investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and ADRs. The fund may also invest up to 25% of its total assets in foreign securities. For risk management purposes, the fund may hold a portion of its assets in cash or the following liquid assets: money market instruments, shares of affiliated money market funds, or high-quality debt instruments.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing in securities of companies that are likely to benefit from changing demographic, economic and lifestyle trends. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants of companies within a broad range of market capitalizations. The fund may also invest up to 25% of its total assets in foreign securities.
The portfolio managers purchase securities of companies that have experienced, or that they believe have the potential for, above-average, long-term growth in revenues and earnings. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential.
AIM V.I. DIVERSIFIED INCOME FUND
The fund's investment objective is to achieve a high level of current income.
The fund seeks to meet its objective by investing primarily in (1) domestic and foreign corporate debt securities; (2) U.S. Government securities, including U.S. Government agency mortgage-backed securities; (3) securities issued by foreign governments, their agencies or instrumentalities; and (4) lower-quality debt securities, i.e., "junk bonds," of U.S. and foreign companies. The fund's assets will normally be invested in each of these four sectors, however, the fund may invest up to 100% of its total assets in U.S. Government securities.
The fund may invest up to 50% of its total assets in foreign securities, including securities of issuers located in developing countries. Developing countries are those countries that are in the initial stages of their industrial cycles. The fund may invest up to 25% of its total assets in government securities of any one foreign country. The fund may also invest up to 10% of its total assets in equity securities and convertible debt securities of U.S. and foreign companies. The fund may invest in debt obligations issued by certain supranational entities, such as the World Bank.
The portfolio managers focus on securities that they believe have favorable prospects for current income, whether denominated in the U.S. dollar or in other currencies. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. GLOBAL UTILITIES FUND
The fund's investment objective is to achieve a high total return.
The fund seeks to meet its objective by investing, normally, at least 80% of its net assets in domestic and foreign public utility companies. Public utility companies include companies that produce or supply electricity, natural gas, water, sanitary services, and telephone or telegraph, cable, satellite or other communication or information transmission services, as well as holding companies which derive at least 40% of their revenues from utility-related activities and companies that provide advanced technologies for use by the utilities industry. In complying with the 80% requirement, the fund will invest primarily in marketable equity securities, including convertible securities, and debt securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, which may include warrants, futures, options, exchange-traded funds and ADRs. The fund may also invest in non-utility securities, but generally will invest in securities of companies that derive revenues from utility-related activities such as providing services, equipment or fuel sources to utilities. Such companies may include those that provide maintenance services to electric, telephone or natural gas utilities, companies that provide energy sources such as coal or uranium, fuel service and equipment companies, companies that provide pollution control for water utilities, and companies that build pipelines or turbines which help produce electricity.
The fund may invest up to 80% of its total assets in foreign securities,
including securities of issuers located in developing countries. Developing
countries are those countries that are in the initial stages of their industrial
cycles. The fund will normally invest in the securities of companies located in
at least four different countries, including the United States. The fund may
invest a significant amount of its assets in the securities of U.S. issuers. The
fund may invest up to 25% of its total assets in convertible securities. The
fund may also invest up to 25% of its total assets in non-convertible bonds. The
fund may invest up to 10% of its total assets in lower-quality debt securities,
i.e., "junk bonds."
The fund is a non-diversified portfolio. With respect to 50% of its total assets, it is permitted to invest more than 5% of its assets in the securities of any one issuer. The portfolio managers focus on securities that have favorable prospects for high total return. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions the fund may invest up to 100% of its total assets in securities of U.S. issuers.
AIM V.I. GOVERNMENT SECURITIES FUND
The fund's investment objective is to achieve a high level of current income consistent with reasonable concern for safety of principal.
The fund seeks to meet its objective by investing, normally, at least 80% of
its net assets in debt securities issued, guaranteed or otherwise backed by the
U.S. Government. In complying with the 80% requirement, the fund's investments
may include investments in synthetic instruments. Synthetic instruments are
investments that have economic characteristics similar to the fund's direct
investments, and may include futures and options. The fund may invest in
securities of all maturities issued or guaranteed by the U.S. Government or its
agencies and instrumentalities, including: (1) U.S. Treasury obligations, and
(2) obligations issued or guaranteed by U.S. Government agencies and
instrumentalities and supported by (a) the full faith and credit of the U.S.
Treasury, (b) the right of the issuer to borrow from the U.S. Treasury, or (c)
the credit of the agency or instrumentality. The fund intends to maintain a
dollar-weighted average portfolio maturity of between three and ten years. The
fund may invest in high-coupon U.S. Government agency mortgage-backed
securities, which consist of interests in underlying mortgages with maturities
of up to thirty years. The fund may also invest up to 20% of its net assets in
foreign securities.
The portfolio managers focus on securities that they believe have favorable prospects for current income, consistent with their concern for safety of principal. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. GROWTH FUND
The fund's investment objective is to seek growth of capital.
The fund seeks to meet its objective by investing principally in seasoned and better capitalized companies considered to have strong earnings momentum. The fund may also invest up to 25% of its total assets in foreign securities.
The portfolio managers focus on companies that have experienced above-average growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs and brokerage commissions, both of which can lower the actual return on your investment.
AIM V.I. HIGH YIELD FUND
The fund's investment objective is to achieve a high level of current income.
The fund seeks to meet its objective by investing, normally, at least 80% of its net assets in non-investment grade debt securities, i.e., "junk bonds". The fund considers a bond to be a junk bond if it is rated Ba or lower by Moody's Investors Service, Inc. or BB or lower by Standard & Poor's. The fund will invest principally in junk bonds rated B or above by Moody's Investors Services, Inc. or Standard & Poor's Rating Services or deemed by the portfolio managers to be of comparable quality. The fund may also invest in preferred stock. The fund may invest up to 25% of its total assets in foreign securities. In complying with the 80% requirement, the fund's investments may include investments in synthetic instruments. Synthetic instruments are
investments that have economic characteristics similar to the fund's direct investments, which may include futures and options.
Although the portfolio managers focus on debt securities that they believe have favorable prospects for high current income, they also consider the possibility of growth of capital of the security. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs and brokerage commissions, both of which can lower the actual return on your investment.
AIM V.I. INTERNATIONAL GROWTH FUND (FORMERLY, AIM V.I. INTERNATIONAL EQUITY FUND)
The fund's investment objective is to provide long-term growth of capital.
The fund seeks to meet its objective by investing in a diversified portfolio of international equity securities whose issuers are considered to have strong earnings momentum. The fund intends to invest at least 70% of its total assets in marketable equity securities of foreign companies that are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter market. The fund will normally invest in companies located in at least four countries outside of the United States, emphasizing investment in companies in the developed countries of Western Europe and the Pacific Basin. The fund may invest up to 20% of its total assets in securities of issuers located in developing countries, i.e., those that are in the initial stages of their industrial cycles. The fund may invest up to 20% of its total assets in securities exchangeable for or convertible into equity securities of foreign companies.
The portfolio managers focus on companies that have experienced above-average, long-term growth in earnings and have strong prospects for future growth. In selecting countries in which the fund will invest, the portfolio managers also consider such factors as the prospect for relative economic growth among countries or regions, economic or political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. MID CAP CORE EQUITY FUND (FORMERLY, AIM V.I. MID CAP EQUITY FUND)
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing, normally, at least 80% of its net assets in equity securities, including convertible securities, of mid-cap companies. The fund considers a company to be a mid-cap company if it has a market capitalization, at the time of purchase, within the range of market capitalizations of companies, based on the trailing 12-month average, included in the Russell Midcap--Registered Trademark-- Index. In complying with the 80% requirement, the fund's investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, which may include warrants, futures, options, exchange-traded funds and ADRs.
The fund may invest up to 20% of its net assets in equity securities of companies in other market capitalization ranges or in investment-grade debt securities. The Fund may also invest up to 25% of its total assets in foreign securities.
In selecting investments, the portfolio managers seek to identify those
companies that are, in their view, undervalued relative to current or projected
earnings, or the current market value of assets owned by the company. The
primary emphasis of the portfolio managers' search for undervalued equity
securities is in four categories: (1) out-of-favor cyclical growth companies;
(2) established growth companies that are undervalued compared to historical
relative valuation parameters; (3) companies where there is early but tangible
evidence of improving prospects which are not yet reflected in the value of the
companies' equity securities; and (4) companies whose equity securities are
selling at prices that do not yet reflect the current market value of their
assets. The portfolio managers consider whether to sell a particular security
when any of these factors materially change.
AIM V.I. MONEY MARKET FUND
The fund's investment objective is to provide as high a level of current income as is consistent with the preservation of capital and liquidity.
The fund seeks to meet its objective by investing only in high-quality U.S. dollar-denominated short-term obligations, including:
- securities issued by the U.S. Government or its agencies
- foreign government obligations
- bankers' acceptances, certificates of deposit, and time deposits from U.S. or foreign banks
- repurchase agreements
- commercial paper
- taxable municipal securities
- master notes
- cash equivalents
The fund may invest up to 50% of its total assets in U.S. dollar-denominated securities of foreign issuers. The fund may invest up to 100% of its total assets in obligations issued by banks.
The portfolio managers focus on securities that they believe have favorable prospects for current income, consistent with their concerns for preservation of capital and liquidity. The portfolio managers usually hold portfolio securities to maturity, but may sell a particular security when they deem it advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash or shares of affiliated money market funds. As a result, the fund may not achieve its investment objective.
AIM V.I. NEW TECHNOLOGY FUND (FORMERLY, AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND)
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing, normally, at least 80% of its net assets in technology and science companies that the portfolio managers believe are likely to benefit from new or innovative products, services or processes. Such companies include those that develop, manufacture, or sell computer and electronic components and equipment, software, semiconductors, Internet technology, communications services and equipment, mobile communications, broadcasting, healthcare and medical technology, and biotechnology and medical devices. In complying with the 80% requirement, the fund will invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, which may include warrants, futures, options, exchange-traded funds and ADRs. While the fund will invest without regard to market capitalization, the fund expects to invest a significant portion of its assets in securities of small cap companies. Under normal conditions, the top 10 holdings may comprise up to one third of the fund's total assets. The fund may also invest up to 25% of its total assets in foreign securities.
In analyzing specific companies for possible investment, the portfolio
managers ordinarily look for several of the following characteristics:
above-average per share earnings growth; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research; product
development and marketing; development of new technologies; efficient service;
pricing flexibility; strong management; and general operating characteristics
that will enable the companies to compete successfully in their respective
markets. The portfolio managers consider whether to sell a particular security
when any of these factors materially changes.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment.
AIM V.I. PREMIER EQUITY FUND (FORMERLY, AIM V.I. VALUE FUND)
The fund's investment objective is to achieve long-term growth of capital. Income is a secondary objective.
The fund seeks to meet its objectives by investing, normally, at least 80% of its net assets in equity securities, including convertible securities. In complying with the 80% requirement, the fund's investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and ADRs. The fund also may invest in preferred stocks and debt instruments that have prospects for growth of capital. The fund also may invest up to 25% of its total assets in foreign securities.
The portfolio managers focus on undervalued equity securities of (1) out-of-favor cyclical growth companies; (2) established growth companies that are undervalued compared to historical relative valuation parameters; (3) companies where there is early but tangible evidence of improving prospects that are not yet reflected in the price of the company's equity securities; and (4) companies whose equity securities are selling at prices that do not reflect the current market value of their assets and where there is reason to expect realization of this potential in the form of increased equity values. The portfolio managers consider whether to sell a particular security when they believe the company no longer fits into any of the above categories.
ALL FUNDS (EXCEPT AIM V.I. MONEY MARKET FUND)
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, each fund may temporarily hold all or a portion of its assets in cash or liquid assets.
A larger cash position or liquid assets could also detract from the achievement of the funds' objective(s), but could also reduce the funds' exposure in the event of a market downturn.
AIM V.I. AGGRESSIVE GROWTH FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to common stocks of smaller companies, whose prices may go up and down more than common stocks of larger, more-established companies. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more-established companies, it may be difficult or impossible for the fund to sell securities at a desirable price.
AIM V.I. BALANCED FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from the fund may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Interest rate increases may cause the price of a debt security to decrease; the longer a debt security's duration, the more sensitive it is to this risk. The issuer of a security may default or otherwise be unable to honor a financial obligation.
The values of convertible securities in which the fund invests may also be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest or dividends, their values may fall if interest rates rise. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
AIM V.I. BASIC VALUE FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity. This is especially true with respect to common stocks of smaller companies, whose prices may go up and down more than common stocks of larger, more-established companies. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more-established companies, it may be difficult or impossible for the fund to sell securities in the fund at a desirable price.
AIM V.I. BLUE CHIP FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer of the stock, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
AIM V.I. CAPITAL APPRECIATION FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to common stocks of smaller companies, whose prices may go up and down more than common stocks of larger, more-established companies. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more-established companies, it may be difficult or impossible for the fund to sell securities at a desirable price.
AIM V.I. CAPITAL DEVELOPMENT FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to common stocks of smaller companies, whose prices may go up and down more than common stocks of larger, more-established companies. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more-established companies, it may be difficult or impossible for the fund to sell securities in the fund at a desirable price.
AIM V.I. CORE EQUITY FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in
which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of small- and medium-sized companies, whose prices may go up and down more than the prices of equity securities of larger, more established companies. Also, since equity securities of small- and medium-sized companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the fund to sell securities at a desired price.
The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
AIM V.I. DIVERSIFIED INCOME FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases may cause the price of a debt security to decrease. The longer a debt security's duration, the more sensitive it is to this risk. Junk bonds are less sensitive to this risk than are higher-quality bonds. Some of the securities purchased by the fund are not guaranteed by the U.S. Government. The agency or instrumentality issuing such security may default or otherwise be unable to honor a financial obligation.
Compared to higher-quality debt securities, junk bonds involve greater risk of default or price changes due to changes in the credit quality of the issuer because they are generally unsecured and may be subordinated to other creditors' claims. The value of junk bonds often fluctuates in response to company, political or economic developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. During those times the bonds could be difficult to value or sell at a fair price. Credit ratings on junk bonds do not necessarily reflect their actual market risk.
U.S. Government agency mortgage-backed securities provide a higher coupon at the time of purchase than current prevailing market interest rates. The fund may purchase such securities at a premium, which means that a faster principal prepayment rate than expected will reduce both the market value of and income from such securities.
The prices of equity securities fluctuate in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
AIM V.I. GLOBAL UTILITIES FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from the fund may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Interest rate increases may cause the price of a debt security to decrease; the longer a debt security's duration, the more sensitive it is to this risk. The issuer of a security may default or otherwise be unable to honor a financial obligation.
The value of the fund's shares is particularly vulnerable to factors affecting the utility company industry, such as substantial economic, operational, competitive, or regulatory changes. Such changes may, among other things, increase compliance costs or the costs of doing business. In addition, increases in fuel, energy and other prices have historically limited the growth potential of utility companies. Because the fund focuses its investments in the public utility industry, the value of your shares may rise and fall more than the value of shares of a fund that invests more broadly.
Because it is non-diversified, the fund may invest in fewer issuers than if it were a diversified fund. The value of the fund's shares may vary more widely, and the fund may be subject to greater investment and credit risk, than if the fund invested more broadly.
AIM V.I. GOVERNMENT SECURITIES FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from
your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases can cause the price of a debt security to decrease. The longer a debt security's duration, the more sensitive it is to this risk. The prices of high-coupon U.S. Government agency mortgage-backed securities fall more slowly when interest rates rise than do prices of other fixed-rate securities. Some of the securities purchased by the fund are not guaranteed by the U.S. Government. The agency or instrumentality issuing such security may default or otherwise be unable to honor a financial obligation.
High-coupon U.S. Government agency mortgage-backed securities provide a higher coupon at the time of purchase than current prevailing market interest rates. The fund may purchase such securities at a premium. If the securities experience a faster principal prepayment rate than expected, both the market value of, and income from, such securities will decrease.
AIM V.I. GROWTH FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
AIM V.I. HIGH YIELD FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases can cause the price of a debt security to decrease. Junk bonds are less sensitive to this risk than are higher-quality bonds.
Compared to higher-quality debt securities, junk bonds involve greater risk of default or price changes due to changes in the credit quality of the issuer because they are generally unsecured and may be subordinated to other creditors' claims. The value of junk bonds often fluctuates in response to company, political or economic growth developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. During those times, the bonds could be difficult to value or to sell at a fair price. Credit ratings on junk bonds do not necessarily reflect their actual market risk.
AIM V.I. INTERNATIONAL GROWTH FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
AIM V.I. MID CAP CORE EQUITY FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity.
AIM V.I. MONEY MARKET FUND
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. Additionally, the fund's yield will vary as the short-term securities in its portfolio mature and the proceeds are reinvested in securities with different interest rates.
The following factors could reduce the fund's income and/or share price:
- interest rates could rise sharply, causing the value of the fund's securities, and share price, to drop
- any of the fund's holdings could have its credit rating downgraded or could default
- the risks generally associated with concentrating investments in the banking industry, such as interest rate risk, credit risk and regulatory developments relating to the banking and financial services industries
- the risks generally associated with U.S. dollar-denominated foreign investments, including political and economic upheaval, seizure or nationalization of deposits, imposition of taxes or other restrictions on the payment of principal and interest.
AIM V.I. NEW TECHNOLOGY FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general
economic conditions, interest rates, investor perceptions, and market liquidity. This is especially true with respect to equity securities of small- and medium-sized companies, whose prices may go up and down more than the prices of equity securities of larger, more established companies. Also, since many equity securities of small- and medium-sized companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the fund to sell securities at a desired price.
Because the fund focuses its investments in the technology and science industries, the value of your fund shares may rise and fall more than the value of shares of a fund that invests more broadly.
The value of the fund's shares is particularly vulnerable to factors affecting the technology and science industries, such as substantial government regulations and the need for governmental approvals, dependency on consumer and business acceptance as new technologies evolve, and large and rapid price movements resulting from, among other things, fierce competition in these industries. Additional factors affecting the technology and science industries and the value of your shares include rapid obsolescence of products and services, short product cycles, and aggressive pricing. Many technology and science companies are small and at an early state of development and, therefore, may be subject to risks such as limited product lines, markets, and financial and managerial resources.
The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
Because a large percentage of the fund's assets may be invested in a limited number of securities, a change in the value of these securities could significantly affect the value of your investment in the fund.
The fund may participate in the initial public offering (IPO) market in some market cycles. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly increase the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may decrease the fund's total return.
AIM V.I. PREMIER EQUITY FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
ALL FUNDS (EXCEPT AIM V.I. MONEY MARKET FUND)
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devaluated their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures.
To the extent the funds hold cash or liquid assets rather than equity securities, the funds may not achieve their investment objective(s).
ALL FUNDS
If the seller of a repurchase agreement in which the fund invests defaults on its obligation or declares bankruptcy, the fund may experience delays in selling the securities underlying the repurchase agreement. As a result, the fund may incur losses arising from decline in the value of those securities, reduced levels of income and expenses of enforcing its rights.
The bar charts and tables shown below provide an indication of the risks of investing in each fund. A fund's past performance is not necessarily an indication of its future performance. All performance shown assumes the reinvestment of dividends and capital gains. The bar charts and performance tables shown below do not reflect charges at the separate account level. If they did, the performance shown would be lower.
SEC Rules do not allow us to provide a bar chart and performance table for funds that do not have at least a full calendar year of performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999.................................... 44.67%
2000.................................... 2.60%
2001.................................... -26.06%
|
During the periods shown in the bar chart, the highest quarterly return was 29.55% (quarter ended December 31, 1999) and the lowest quarterly return was -24.54% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999.................................... 19.31%
2000.................................... -4.20%
2001.................................... -11.42%
|
During the periods shown in the bar chart, the highest quarterly return was 15.67% (quarter ended December 31, 1999) and the lowest quarterly return was -11.97% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000.................................... -8.18%
2001.................................... -22.54%
|
During the periods shown in the bar chart, the highest quarterly return was 12.52% (quarter ended December 31, 2001) and the lowest quarterly return was -19.83% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... 2.50%
1995.................................... 35.69%
1996.................................... 17.58%
1997.................................... 13.50%
1998.................................... 19.30%
1999.................................... 44.61%
2000.................................... -10.91%
2001.................................... -23.28%
|
During the periods shown in the bar chart, the highest quarterly return was 35.78% (quarter ended December 31, 1999) and the lowest quarterly return was -23.09% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999.................................... 29.10%
2000.................................... 9.25%
2001.................................... -8.08%
|
During the periods shown in the bar chart, the highest quarterly return was 29.66% (quarter ended December 31, 1999) and the lowest quarterly return was 19.39% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1995.................................... 33.86%
1996.................................... 19.94%
1997.................................... 25.72%
1998.................................... 27.68%
1999.................................... 34.25%
2000.................................... -14.56%
2001.................................... -22.83%
|
During the periods shown in the bar chart, the highest quarterly return was 26.48% (quarter ended December 31, 1998) and the lowest quarterly return was -21.54% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000.................................... -17.90%
2001.................................... -31.91%
|
During the periods shown in the bar chart, the highest quarterly return was 23.67% (quarter ended December 31, 2001) and the lowest quarterly return was -31.55% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... -5.07%
1995.................................... 19.02%
1996.................................... 10.19%
1997.................................... 9.39%
1998.................................... 3.58%
1999.................................... -1.92%
2000.................................... 0.69%
2001.................................... 3.59%
|
During the periods shown in the bar chart, the highest quarterly return was 5.54% (quarter ended June 30, 1995) and the lowest quarterly return was -3.16% (quarter ended March 31, 1994).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1995.................................... 26.74%
1996.................................... 12.07%
1997.................................... 21.63%
1998.................................... 16.49%
1999.................................... 33.56%
2000.................................... -2.28%
2001.................................... -27.93%
|
During the periods shown in the bar chart, the highest quarterly return was 25.88% (quarter ended December 31, 1999) and the lowest quarterly return was -15.76% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... -3.73%
1995.................................... 15.56%
1996.................................... 2.29%
1997.................................... 8.16%
1998.................................... 7.73%
1999.................................... -1.32%
2000.................................... 10.12%
2001.................................... 6.41%
|
During the periods shown in the bar chart, the highest quarterly return was 5.48% (quarter ended June 30, 1995) and the lowest quarterly return was -2.82% (quarter ended March 31, 1994).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... -2.48%
1995.................................... 34.77%
1996.................................... 18.09%
1997.................................... 26.87%
1998.................................... 34.12%
1999.................................... 35.24%
2000.................................... -20.49%
2001.................................... -33.88%
|
During the periods shown in the bar chart, the highest quarterly return was 27.80% (quarter ended December 31, 1998) and the lowest quarterly return was -27.44% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999.................................... 10.52%
2000.................................... -19.01%
2001.................................... -5.00%
|
During the periods shown in the bar chart, the highest quarterly return was 7.13% (quarter ended December 31, 2001) and the lowest quarterly return was -14.05% (quarter ended December 31, 2000).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... -1.61%
1995.................................... 17.24%
1996.................................... 20.05%
1997.................................... 6.94%
1998.................................... 15.49%
1999.................................... 55.04%
2000.................................... -26.40%
2001.................................... -23.53%
|
During the periods shown in the bar chart, the highest quarterly return was 41.88% (quarter ended December 31, 1999) and the lowest quarterly return was -16.60% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... 3.64%
1995.................................... 5.70%
1996.................................... 4.95%
1997.................................... 5.13%
1998.................................... 5.06%
1999.................................... 4.66%
2000.................................... 5.83%
2001.................................... 3.61%
|
During the periods shown in the bar chart, the highest quarterly return was 1.49% (quarter ended December 31, 2000) and the lowest quarterly return was 0.51% (quarter ended December 31, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... 7.15%
1995.................................... 23.66%
1996.................................... 19.34%
1997.................................... 14.56%
1998.................................... 22.11%
1999.................................... 106.52%
2000.................................... -36.29%
2001.................................... -47.47%
|
During the periods shown in the bar chart, the highest quarterly return was 63.10% (quarter ended December 31, 1999) and the lowest quarterly return was -50.03% (quarter ended March 31, 2001). For periods prior to October 15, 1999, the performance shown relates to a predecessor fund. In addition, for periods prior to May 1, 2000 performance shown above relates to the fund before changing its investment strategy to emphasize securities of companies in the technology industry as well as the telecommunications industry. Effective May 1, 2001, the fund changed its investment strategy to increase its emphasis on the technology industry and decrease its emphasis on the telecommunications industry.
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... 4.04%
1995.................................... 36.25%
1996.................................... 15.02%
1997.................................... 23.69%
1998.................................... 32.41%
1999.................................... 29.90%
2000.................................... -14.65%
2001.................................... -12.56%
|
During the periods shown in the bar chart, the highest quarterly return was 27.04% (quarter ended December 31, 1998) and the lowest quarterly return was -15.58% (quarter ended September 30, 2001).
PERFORMANCE TABLES
The following performance tables compare the fund's Series I shares' performance (except AIM V.I. Money Market Fund) to that of broad-based securities market indices. The AIM V.I. Money Market Fund's Series I share's performance table reflects the fund's performance over the periods indicated.
AIM V.I. AGGRESSIVE GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- AIM V.I. Aggressive Growth Fund (26.03)% 2.30% 05/01/98 Russell 2500--Trademark-- Index(1) 1.22% 4.82%(2) 04/30/98(2) --------------------------------------------------------------------------------- |
(1) The Russell 2500--Trademark-- Index measures the performance of the 2,500 smallest companies in the Russell 3000--Registered Trademark-- Index, which represents approximately 17% of the total market capitalization of the Russell 3000--Registered Trademark-- Index.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. BALANCED FUND
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- AIM V.I. Balanced Fund (11.42)% 3.74% 05/01/98 Standard & Poor's 500 Index(1) (11.88)% 2.20%(2) 04/30/98(2) --------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. BLUE CHIP FUND
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- AIM V.I. Blue Chip Fund (22.54)% (15.63)% 12/29/99 Russell 1000--Registered Trademark-- Index(1) (12.45)% (10.15)%(2) 12/31/99(2) --------------------------------------------------------------------------------- |
(1) The Russell 1000--Registered Trademark-- Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 1,000 largest companies in the Russell 3000--Registered Trademark-- Index, which measures the performance of the 3,000 largest U.S. companies based on total market capitalization.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. CAPITAL APPRECIATION FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund (23.28)% 6.00% 11.75% 05/05/93 Standard & Poor's 500 Index(1) (11.88)% 10.70% 13.85%(2) 04/30/93(2) ------------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the fund's Series I shares.
AIM V.I. CAPITAL DEVELOPMENT FUND
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE -------------------------------------------------------------------------------- AIM V.I. Capital Development Fund (8.08)% 5.07% 05/01/98 Russell 2500(TM) Index(1) 1.22% 4.82%(2) 04/30/98(2) -------------------------------------------------------------------------------- |
(1) The Russell 2500(TM) Index measures the performance of the 2,500 smallest companies in the Russell 3000(R) Index, which represents approximately 17% of the total market capitalization of the Russell 3000(R) Index.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. CORE EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------- AIM V.I. Core Equity Fund (22.83)% 7.28% 11.36% 05/02/94 Standard & Poor's 500 Index(1) (11.88)% 10.70% 15.02%(2) 04/30/94(2) ------------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- AIM V.I. Dent Demographic Trends Fund (31.91)% (25.17)% 12/29/99 Russell 3000--Registered Trademark-- Index(1) (11.46)% (9.48)%(2) 12/31/99(2) --------------------------------------------------------------------------------- |
(1) The Russell 3000--Registered Trademark-- Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 3,000 largest U.S. companies based on total market capitalization.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. DIVERSIFIED INCOME FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------------------- AIM V.I. Diversified Income Fund 3.59% 3.00% 5.04% 05/05/93 Lehman Aggregate Bond Index(1) 8.44% 7.43% 6.91%(2) 04/30/93(2) ----------------------------------------------------------------------------------------- |
(1) The Lehman Aggregate Bond Index is an unmanaged index generally considered
representative of treasury issues, agency issues, corporate bond issues and
mortgage-backed securities.
(2) The average annual total return given is since the date closest to the
inception date of the fund's Series I shares.
AIM V.I. GLOBAL UTILITIES FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------- AIM V.I. Global Utilities Fund (27.93)% 5.91% 8.26% 05/02/94 Standard & Poor's 500 Index(1) (11.88)% 10.70% 15.02%(3) 04/30/94(3) Lipper Utility Fund Index(2) (21.35)% 7.80% 9.03%(3) 04/30/94(3) ------------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(2) Lipper Utility Fund Index measures the performance of the 30 largest utilities funds charted by Lipper Inc., an independent mutual fund performance monitor.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. GOVERNMENT SECURITIES FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------------------------------------- AIM V.I. Government Securities Fund 6.41% 6.15% 5.49% 05/05/93 Lehman Intermediate Government Bond Index(1) 8.42% 7.06% 6.33%(2) 04/30/93(2) ------------------------------------------------------------------------------------------- |
(1) The Lehman Intermediate Government Bond Index is an unmanaged composite
generally considered representative of intermediate publicly issued debt of
U.S. Government agencies and quasi-federal corporations, and corporate debt
guaranteed by the U.S. Government.
(2) The average annual total return given is since the date closest to the
inception date of the fund's Series I shares.
AIM V.I. GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------------------------------------- AIM V.I. Growth Fund (33.88)% 3.88% 8.81% 05/05/93 Standard & Poor's 500 Index(1) (11.88)% 10.70% 13.85%(2) 04/30/93(2) ------------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. HIGH YIELD FUND
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- AIM V.I. High Yield Fund (5.00)% (6.36)% 05/01/98 Lehman High Yield Index(1) 5.28% (0.10)%(2) 04/30/98(2) --------------------------------------------------------------------------------- |
(1) The Lehman High Yield Index is an index that includes all fixed-income securities having a maximum quality rating of Ba1 (including defaulted issues), a minimum amount outstanding of $100 million, and at least one year to maturity.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. INTERNATIONAL GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------------------------------------- AIM V.I. International Growth Fund (23.53)% 1.51% 6.85% 05/05/93 Morgan Stanley Capital International EAFE Index(1) (21.44)% 0.89% 4.27%(2) 04/30/93(2) -------------------------------------------------------------------------------------------- |
(1) The Morgan Stanley Capital International Europe, Australasia and Far East Index measures performance of global stock markets in 20 developed countries.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. MONEY MARKET FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------------------------------------- AIM V.I. Money Market Fund 3.61% 4.86% 4.63% 05/05/93 ------------------------------------------------------------------------------------------ |
The AIM V.I. Money Market Fund's seven day yield on December 31, 2001 was 1.52%. For the current seven day yield, call (800) 347-4246.
AIM V.I. NEW TECHNOLOGY FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------------------------------------- AIM V.I. New Technology Fund(1) (47.47)% (0.67)% (6.41)% 10/18/93 Standard & Poor's 500 Index(2) (11.88)% (10.70)% (13.71)%(3) 10/31/93(3) ------------------------------------------------------------------------------------------ |
(1) For periods prior to October 15, 1999, the performance shown relates to a predecessor fund. In addition, for periods prior to May 1, 2000, performance shown above relates to the fund before changing its investment strategy to include securities of companies in the technology industry. Effective May 1, 2001, the fund changed its investment strategy to increase its emphasis on the technology industry and decrease its emphasis on the telecommunications industry.
(2) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(3) The average annual total return given is since the date closest to the
inception date of the fund's Series I shares.
AIM V.I. PREMIER EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund (12.56)% 9.69% 13.41% 05/05/93 Standard & Poor's 500 Index(1) (11.88)% 10.70% 13.85%(2) 04/30/93(2) ------------------------------------------------------------------------------------------ |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the fund's Series I shares.
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as each fund's investment advisor. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of each fund's operations and provides investment advisory services to the funds, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the funds. H.S. Dent Advisors, Inc. (the subadvisor) serves as the subadvisor for AIM V.I. Dent Demographic Trends Fund, and is located at 6515 Gwin Road, Oakland, California 94611. The subadvisor is responsible for providing the advisor with macroeconomic, thematic, demographic, lifestyle trends and sector research, custom reports and investment and market capitalization recommendations for the fund. The subadvisor has acted as an investment advisor for the AIM V.I. Dent Demographic Trends Fund since 1999.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the funds, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2001, the advisor received compensation from the following funds as a percentage of each fund's average daily net assets as follows:
ADVISORY
FUND FEE
---- --------
AIM V.I. Aggressive Growth Fund %
AIM V.I. Balanced Fund %
AIM V.I. Basic Value Fund %
AIM V.I. Blue Chip Fund %
AIM V.I. Capital Appreciation Fund %
AIM V.I. Capital Development Fund %
AIM V.I. Core Equity Fund %
AIM V.I. Dent Demographic Trends Fund %
AIM V.I. Diversified Income Fund %
AIM V.I. Global Utilities Fund %
AIM V.I. Government Securities Fund %
AIM V.I. Growth Fund %
AIM V.I. High Yield Fund %
AIM V.I. International Growth Fund %
AIM V.I. Mid Cap Core Equity Fund %
AIM V.I. Money Market Fund %
AIM V.I. New Technology Fund %
AIM V.I. Premier Equity Fund %
|
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of each fund's portfolio are as follows:
AIM V.I. AGGRESSIVE GROWTH FUND
- Ryan E. Crane, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1994.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1989.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst for Prudential Securities.
AIM V.I. BALANCED FUND
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1992.
- Claude C. Cody, IV, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1992.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management.
- Craig A. Smith, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1989.
- Meggan M. Walsh, Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1991.
AIM V.I. BASIC VALUE FUND
- Matthew W. Seinsheimer, Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1998. From 1995 to 1998, he was Portfolio Manager for American Indemnity Company.
- Michael J. Simon, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2001. From 1996 to 2001, he was equity analyst and portfolio manager for Luther King Capital Management.
- Bret W. Stanley, Senior Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1998. From 1994 to 1998, he was Vice President and Portfolio Manager for Van Kampen American Capital Asset Management, Inc.
AIM V.I. BLUE CHIP FUND
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1995.
- Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1986.
AIM V.I. CAPITAL APPRECIATION FUND
- David P. Barnard, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1982.
- Ryan E. Crane, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1994.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1989.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst for Prudential Securities.
- Kenneth A. Zschappel, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1990.
AIM V.I. CAPITAL DEVELOPMENT FUND
- Edgar M. Larsen, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1996.
- Paul J. Rasplicka, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1994.
AIM V.I. CORE EQUITY FUND
- Ronald S. Sloan, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
- Michael Yellen, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1994.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
- Edgar M. Larsen, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1996.
- Lanny H. Sachnowitz, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1987.
AIM V.I. DIVERSIFIED INCOME FUND
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1992.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management.
- Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1992.
AIM V.I. GLOBAL UTILITIES FUND
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 1994 and has been associated with the advisor and/or its affiliates since 1992.
- Claude C. Cody, IV, Senior Portfolio Manager, who has been responsible for the fund since 1994 and has been associated with the advisor and/or its affiliates since 1992.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management.
- Craig A. Smith, Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1989.
- Meggan M. Walsh, Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1991.
AIM V.I. GOVERNMENT SECURITIES FUND
- Laurie F. Bignac, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1992.
- Clint Dudley, Portfolio Manager, who has been responsible for the fund since 2001 and has been associated with the advisor and/or its affiliates since 1998. Prior to 1998, he was a full time student.
- Scot W. Johnson, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1994.
- Karen Dunn Kelley, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1989.
- Lyman Missimer III, Senior Portfolio Manager, who has been responsible for the fund since 2001 and has been affiliated with the advisor and/or its affiliates since 1995.
AIM V.I. GROWTH FUND
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1995.
- Lanny H. Sachnowitz, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1987.
AIM V.I. HIGH YIELD FUND
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1992.
- Peter Ehret, Senior Portfolio Manager, who has been responsible for the fund since 2001 and has been associated with the advisor and/or its affiliates since 2001. From 1992 to 2001, he was director of high yield research and portfolio manager for Van Kampen Investment Advisory Corp.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management.
- Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1992.
- Craig A. Smith, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1989.
AIM V.I. INTERNATIONAL GROWTH FUND
- A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1989.
- Jason T. Holzer, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1996.
- Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1994.
- Barrett K. Sides, Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1990.
AIM V.I. MID CAP CORE EQUITY FUND
- Paul J. Rasplicka, Senior Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1994.
- Robert A. Shelton, Senior Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1995.
- Ronald S. Sloan, Senior Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
AIM V.I. NEW TECHNOLOGY FUND
- David P. Barnard, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1982.
- Abel Garcia, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 2000. From 1984 to 2000, he was a Senior Portfolio Manager for Waddell & Reed.
- Robert Lloyd, Portfolio Manager, who has been responsible for the fund since 2001 and has been associated with the advisor and/or its affiliates since 2000. From 1997 to 2000, he was a trader with American Electric Power.
AIM V.I. PREMIER EQUITY FUND
- Joel E. Dobberpuhl, Senior Portfolio Manager, who has been responsible for the fund since 1993, and has been associated with the advisor and/or its affiliates since 1990.
- Evan G. Harrel, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1998. From 1994 to 1998, he was Vice President and portfolio manager of Van Kampen American Capital Asset Management, Inc. and portfolio manager for various growth and equity funds.
- Robert A. Shelton, Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1995.
PURCHASE AND REDEMPTION OF SHARES
Each fund ordinarily effects orders to purchase and redeem shares at the fund's
next computed net asset value after it receives an order. Life insurance
companies participating in each fund serve as the fund's designee for receiving
orders of separate accounts that invest in the fund.
Shares of the funds are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated life insurance
companies funding variable annuity contracts and variable life insurance
policies. The funds currently offers shares only to insurance company separate
accounts. In the future, the funds may offer them to pension and retirement
plans that qualify for special federal income tax treatment. Due to differences
in tax treatment and other considerations, the interests of variable contract
owners investing in separate accounts investing in the funds, and the interests
of plan participants investing in the funds, may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one separate account investing in a fund could cause owners of contracts and policies funded through another separate account to lose their tax-deferred status, unless remedial actions were taken. The Board of Trustees of the funds will monitor for the existence of any material conflicts and determine what action, if any, should be taken. A fund's net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account (or plan) withdrawing because of a conflict.
PRICING OF SHARES
Each of the funds prices its shares based on its net asset value. The funds, except AIM V.I. Money Market Fund, value portfolio securities for which market quotations are readily available at market value. The funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM V.I. Money Market Fund values all of its securities based on the amortized cost method. The funds, except AIM V.I. Money Market Fund, value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the New York Stock Exchange (NYSE), events occur that materially affect the value of the security, the funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Trustees. The effect of using fair value pricing is that a fund's net asset value will be subject to the judgment of the Board of Trustees or its designee instead of being determined by the market. Because some of the funds may invest in securities that are primarily listed on foreign exchanges, the value of those funds' shares may change on days when the separate account will not be able to purchase or redeem shares. The fund determines the net asset value of its shares as of the close of the customary trading session of the NYSE on each day the NYSE is open for business.
TAXES
The amount, timing and character of distributions to the separate account may be
affected by special tax rules applicable to certain investments purchased by the
funds. Holders of variable contracts should refer to the prospectus for their
contracts for information regarding the tax consequences of owning such
contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
Each fund other than AIM V.I. Money Market Fund generally declares and pays dividends, if any, annually to separate accounts of participating life insurance companies. AIM V.I. Money Market Fund generally declares on each business day and pays any dividends daily. All of the fund's distributions will consist primarily of capital gains, except for AIM V.I. Diversified Income Fund, AIM V.I. Government Securities Fund, AIM V.I. High Yield Fund and AIM V.I. Money Market Fund which will consist primarily of ordinary income.
CAPITAL GAINS DISTRIBUTIONS
Each fund other than AIM V.I. Money Market Fund generally distributes long-term and short-term capital gains, if any, annually to separate accounts of participating life insurance companies. AIM V.I. Money Market Fund may distribute net realized short-term gains, if any, more frequently.
At the election of participating life insurance companies, dividends and distributions are automatically reinvested at net asset value in shares of that fund.
SHARE CLASSES
Each fund has two classes of shares, Series I and Series II. Each class is identical except that Series II has a distribution plan or "Rule 12b-1 Plan" that is described in the prospectus relating to the Series II shares.
FUTURE FUND CLOSURE
Due to the sometime limited availability of common stocks of small-cap companies that meet the investment criteria for AIM V.I. Aggressive Growth Fund, the fund may periodically suspend or limit the offering of its shares and it will be closed to new participants when fund assets reach $200 million.
During closed periods, the fund will accept additional investments from existing participants.
The financial highlights table is intended to help you understand the financial performance of each fund's Series I shares. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in each fund (assuming reinvestment of all dividends and distributions).
The table shows the financial highlights for a share of each fund outstanding during each of the fiscal years (or periods) indicated.
This information has been audited by [ ] whose report, along with the fund's financial statements, is included in each fund's annual report, which is available upon request.
MAY 1
YEAR ENDED DECEMBER 31, (DATE OPERATIONS
------------------------------------- COMMENCED) THROUGH
2001(a) 2000(a) 1999(a) DECEMBER 31, 1998
-------- -------- ------- ------------------
Net asset value, beginning of period $ 14.25 $ 9.85 $10.00
---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10) (0.04) 0.04
---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.47 4.44 (0.14)
===========================================================================================================================
Total from investment operations 0.37 4.40 (0.10)
===========================================================================================================================
Less distributions from net investment income -- -- (0.05)
===========================================================================================================================
Net asset value, end of period $ 14.62 $ 14.25 $ 9.85
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(b) 2.60% 44.67% (0.94)%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $103,181 $17,326 $4,399
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.16% 1.19% 1.16%(d)
---------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.26% 2.42% 4.62%(d)
===========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.59)% (0.41)% 0.96%(d)
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate 65% 89% 30%
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total return is not annualized for periods less than one year. Total return does not reflect charges at the separate account level.
(c) Ratios are based on average daily net assets of $ .
(d) Annualized.
MAY 1
YEAR ENDED DECEMBER 31, (DATE OPERATIONS
----------------------------------- COMMENCED) THROUGH
2001(a) 2000(a) 1999(a) DECEMBER 31, 1998
------- ------- ------- ------------------
Net asset value, beginning of period $13.04 $11.14 $ 10.00
-----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.37 0.31 0.12
-----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.93) 1.83 1.18
=======================================================================================================================
Total from investment operations (0.56) 2.14 1.30
=======================================================================================================================
Less distributions:
Dividends from net investment income (0.02) (0.17) (0.14)
-----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.07) (0.02)
=======================================================================================================================
Total distributions (0.02) (0.24) (0.16)
=======================================================================================================================
Net asset value, end of period $12.46 $13.04 $ 11.14
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return(b) (4.28)% 19.31% 13.02%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $85,693 $48,307 $10,343
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.10% 1.21% 1.18%(d)
-----------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.10% 1.31% 2.83%(d)
=======================================================================================================================
Ratio of net investment income to average net assets 2.80% 2.66% 3.71%(d)
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate 49% 57% 9%
_______________________________________________________________________________________________________________________
=======================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total return is not annualized for periods less than one year. Total return
does not reflect charges at the separate account level.
(c) Ratios are based on average daily net assets of $ .
(d) Annualized.
SEPTEMBER 10
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $10.00(a)
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income --
--------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) --
================================================================================
Total from investment operations --
================================================================================
Less distributions paid from net investment income --
--------------------------------------------------------------------------------
Net asset value, end of period $10.00
________________________________________________________________________________
================================================================================
Total return(d) --
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,000
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers %(c)
--------------------------------------------------------------------------------
Without fee waivers %(c)
================================================================================
Ratio of net investment income to average net assets %(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate --
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Annualized.
(d) Total return is not annualized for periods less than one year. Total return does not reflect charges at the separate account level.
YEAR ENDED DECEMBER 29
DECEMBER 31, (DATE OPERATIONS
--------------------- COMMENCED) THROUGH
2001(a) 2000(a) DECEMBER 31, 1999
------- ------- ------------------
Net asset value, beginning of period $10.00 $10.00
---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02 --
---------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.84) --
=========================================================================================================
Total from investment operations (0.82) --
=========================================================================================================
Less distributions paid from net investment income 0.00 --
=========================================================================================================
Net asset value, end of period $ 9.18 $10.00
_________________________________________________________________________________________________________
=========================================================================================================
Total return(d) (8.18)% --
_________________________________________________________________________________________________________
=========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $29,787 $1,000
_________________________________________________________________________________________________________
=========================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.31% 1.30%(c)
---------------------------------------------------------------------------------------------------------
Without fee waivers 2.13% 12.49%(c)
=========================================================================================================
Ratio of net investment income to average net assets 0.07% 3.07%(c)
_________________________________________________________________________________________________________
=========================================================================================================
Portfolio turnover rate 15% --
_________________________________________________________________________________________________________
=========================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Annualized.
(d) Total return does not reflect charges at the separate account level.
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
2001 2000 1999 1998 1997
---------- ---------- ---------- -------- --------
Net asset value, beginning of period $ 35.58 $ 25.20 $ 21.75 $ 19.43
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05) (0.02) 0.02 0.03
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.79) 11.17 4.12 2.58
=========================================================================================================================
Total from investment operations (3.84) 11.15 4.14 2.61
=========================================================================================================================
Less distributions:
Dividends from net investment income -- (0.02) (0.04) (0.02)
-------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.90) (0.75) (0.65) (0.27)
=========================================================================================================================
Total distributions (0.90) (0.77) (0.69) (0.29)
=========================================================================================================================
Net asset value, end of period $ 30.84 $ 35.58 $ 25.20 $ 21.75
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) (10.91)% 44.61% 19.30% 13.51%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,534,209 $1,131,217 $647,248 $522,642
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets 0.82% 0.73% 0.67% 0.68%
=========================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.17)% (0.06)% 0.11% 0.18%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 98% 65% 83% 65%
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
(a) Ratios are based on average daily net assets of $ .
(b) Total return does not reflect charges at the separate account level.
MAY 1
YEAR ENDED DECEMBER 31, (DATE OPERATIONS
----------------------------------- COMMENCED) THROUGH
2001(a) 2000(a) 1999(a) DECEMBER 31, 1998(a)
------- ------- ------- --------------------
Net asset value, beginning of period $11.89 $ 9.21 $10.00
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) (0.03) 0.03
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.11 2.71 (0.78)
=========================================================================================================================
Total from investment operations 1.10 2.68 (0.75)
=========================================================================================================================
Less distributions from net investment income -- -- (0.04)
=========================================================================================================================
Net asset value, end of period $12.99 $11.89 $ 9.21
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) 9.25% 29.10% (7.51)%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $74,874 $11,035 $3,172
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.19% 1.23% 1.21%(d)
-------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.38% 3.42% 5.80%(d)
=========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.07)% (0.32)% 0.62%(d)
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 110% 132% 45%
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year. Total
return does not reflect charges at the separate account level.
(c) Ratios are based on average daily net assets of $ .
(d) Annualized.
AIM V.I. CORE EQUITY FUND
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
2001(A) 2000(A) 1999(A) 1998(A) 1997
---------- ---------- ---------- ---------- --------
Net asset value, beginning of period $ 31.59 $ 23.75 $ 18.87 $ 15.03
--------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01 0.06 0.26 0.13
--------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (4.56) 8.05 4.95 3.74
==============================================================================================================
Total from investment operations (4.55) 8.11 5.21 3.87
==============================================================================================================
Less distributions:
Dividends from net investment income (0.04) (0.16) (0.09) (0.01)
--------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.81) (0.11) (0.24) (0.02)
==============================================================================================================
Total distributions (0.85) (0.27) (0.33) (0.03)
==============================================================================================================
Net asset value, end of period $ 26.19 $ 31.59 $ 23.75 $ 18.87
______________________________________________________________________________________________________________
==============================================================================================================
Total return(c) (14.56)% 34.25% 27.68% 25.72%
______________________________________________________________________________________________________________
==============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,514,262 $2,443,264 $1,262,059 $639,113
______________________________________________________________________________________________________________
==============================================================================================================
Ratio of expenses to average net assets 0.85% 0.77% 0.65% 0.69%
==============================================================================================================
Ratio of net investment income to average net
assets 0.04% 0.22% 1.34% 1.15%
______________________________________________________________________________________________________________
==============================================================================================================
Portfolio turnover rate 75% 93% 140% 135%
______________________________________________________________________________________________________________
==============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level.
DECEMBER 29
YEAR ENDED (DATE OPERATIONS
DECEMBER 31, COMMENCED) THROUGH
--------------------- DECEMBER 31,
2001(a) 2000(a) 1999
------- ------- ------------------
Net asset value, beginning of period $10.00 $10.00
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (0.07) --
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.72) --
============================================================================================================
Total from investment operations (1.79) --
============================================================================================================
Less distributions from net investment income 0.00 --
============================================================================================================
Net asset value, end of period $ 8.21 $10.00
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) (17.90)% --
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $41,300 $1,000
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.40% 1.40%(d)
------------------------------------------------------------------------------------------------------------
Without fee waivers 1.63% 12.58%(d)
============================================================================================================
Ratio of net investment income (loss) to average net assets (0.69)% 2.96%(d)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 92% --
____________________________________________________________________________________________________________
============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year. Total
return does not reflect charges at the separate account level.
(c) Ratios are based on average daily net assets of $ .
(d) Annualized.
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
2001(a) 2000(a) 1999 1998 1997
------- ------- ------- ------- -------
Net asset value, beginning of period $ 10.06 $ 10.94 $ 11.29 $ 10.33
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.76 0.64 0.75 0.73
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.69) (0.85) (0.35) 0.24
============================================================================================================================
Total from investment operations 0.07 (0.21) 0.40 0.97
============================================================================================================================
Less distributions:
Dividends from net investment income (0.64) (0.67) (0.57) (0.01)
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.18) --
============================================================================================================================
Total distributions (0.64) (0.67) (0.75) (0.01)
============================================================================================================================
Net asset value, end of period $ 9.49 $ 10.06 $ 10.94 $ 11.29
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(c) 0.80% (1.92)% 3.58% 9.39%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $83,722 $99,509 $96,445 $89,319
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 0.90%(b) 0.83% 0.77% 0.80%
============================================================================================================================
Ratio of net investment income to average net assets 7.84%(b) 7.20% 6.99% 6.90%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 74% 83% 50% 52%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level.
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
2001(a) 2000(a) 1999(a) 1998 1997
------- ------- ------- ------- -------
Net asset value, beginning of period $ 22.80 $ 17.36 $ 15.26 $ 12.55
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.29 0.32 0.35 0.32
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.80) 5.49 2.15 2.40
============================================================================================================================
Total from investment operations (0.51) 5.81 2.50 2.72
============================================================================================================================
Less distributions:
Dividends from net investment income (0.23) (0.37) (0.28) --
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.90) -- (0.12) (0.01)
============================================================================================================================
Total distributions (1.13) (0.37) (0.40) (0.01)
============================================================================================================================
Net asset value, end of period $ 21.16 $ 22.80 $ 17.36 $ 15.26
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(d) (2.28)% 33.56% 16.49% 21.63%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $49,536 $39,772 $28,134 $22,079
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 1.10% 1.14% 1.11% 1.28%
============================================================================================================================
Ratio of net investment income to average net assets 1.23% 1.72% 2.46% 2.81%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 50% 45% 32% 28%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level.
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
2001(a) 2000(a) 1999(a) 1998(a) 1997
------- ------- ------- ------- -------
Net asset value, beginning of period $ 10.63 $ 11.18 $ 10.67 $ 9.87
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.66 0.63 0.63 0.59
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.41 (0.78) 0.20 0.22
============================================================================================================================
Total from investment operations 1.07 (0.15) 0.83 0.81
============================================================================================================================
Less dividends from net investment income (0.54) (0.40) (0.32) (0.01)
============================================================================================================================
Net asset value, end of period $ 11.16 $ 10.63 $ 11.18 $ 10.67
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(c) 10.12% (1.32)% 7.73% 8.16%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $84,002 $70,761 $58,185 $33,800
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets (including interest
expense): 0.97% 0.90% 0.76% 0.87%
============================================================================================================================
Ratio of expenses to average net assets (excluding interest
expense): 0.85% 0.80% 0.76% 0.87%
============================================================================================================================
Ratio of net investment income to average net assets 6.03% 5.75% 5.70% 5.85%
============================================================================================================================
Ratio of interest expense to average net assets 0.12% 0.10% -- --
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 87% 41% 78% 66%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level.
YEAR ENDED DECEMBER 31,
----------------------------------------------------
2001 2000 1999(a) 1998 1997
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 32.25 $ 24.80 $ 19.83 $ 16.25
------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.03 0.01 0.08 0.08
------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (6.60) 8.63 6.57 4.27
======================================================================================================
Total from investment operations (6.57) 8.64 6.65 4.35
======================================================================================================
Less distributions:
Dividends from net investment income 0.00 (0.06) (0.09) (0.09)
------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.87) (1.13) (1.59) (0.68)
======================================================================================================
Total distributions (0.87) (1.19) (1.68) (0.77)
======================================================================================================
Net asset value, end of period $ 24.81 $ 32.25 $ 24.80 $ 19.83
______________________________________________________________________________________________________
======================================================================================================
Total return(c) (20.49)% 35.24% 34.12% 26.87%
______________________________________________________________________________________________________
======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $879,182 $704,096 $371,915 $258,852
______________________________________________________________________________________________________
======================================================================================================
Ratio of expenses to average net assets 0.83% 0.73% 0.72% 0.73%
======================================================================================================
Ratio of net investment income to average net
assets 0.11% 0.04% 0.41% 0.54%
______________________________________________________________________________________________________
======================================================================================================
Portfolio turnover rate 162% 101% 133% 132%
______________________________________________________________________________________________________
======================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level.
MAY 1
YEAR ENDED DECEMBER 31, (DATE OPERATIONS
----------------------------------- COMMENCED) THROUGH
2001 2000 1999(a) DECEMBER 31, 1998
------- ------- ------- ------------------
Net asset value, beginning of period $ 9.02 $ 8.84 $10.00
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.91 1.03 0.39
--------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.64) (0.10) (1.15)
==========================================================================================================================
Total from investment operations (1.73) 0.93 (0.76)
==========================================================================================================================
Less distributions from net investment income (0.94) (0.75) (0.40)
==========================================================================================================================
Net asset value, end of period $ 6.35 $ 9.02 $ 8.84
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) (19.14)% 10.52% (7.61)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $26,151 $25,268 $7,966
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.13% 1.14% 1.13%(d)
--------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.19% 1.42% 2.50%(d)
==========================================================================================================================
Ratio of net investment income to average net assets 11.44% 11.07% 9.75%(d)
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate 72% 127% 39%
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total return is not annualized for periods less than one year. Total return
does not reflect charges at the separate account level.
(c) Ratios are based on average daily net assets of $ .
(d) Annualized.
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
2001 2000 1999(a) 1998 1997
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 29.29 $ 19.62 $ 17.13 $ 16.36
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.18 0.08 0.15 0.10
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (7.88) 10.59 2.50 1.03
============================================================================================================================
Total from investment operations (7.70) 10.67 2.65 1.13
============================================================================================================================
Less distributions:
Dividends from net investment income (0.06) (0.19) (0.16) (0.08)
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (1.41) (0.81) -- (0.28)
============================================================================================================================
Total distributions (1.47) (1.00) (0.16) (0.36)
============================================================================================================================
Net asset value, end of period $ 20.12 $ 29.29 $ 19.62 $ 17.13
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(c) (26.40)% 55.04% 15.49% 6.94%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $437,336 $454,060 $240,314 $211,023
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 1.02% 0.97% 0.91% 0.93%
============================================================================================================================
Ratio of net investment income to average net assets 0.83% 0.38% 0.80% 0.68%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 88% 97% 76% 57%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level.
SEPTEMBER 10
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income --
--------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) --
================================================================================
Total from investment operations --
================================================================================
Less distributions paid from net investment income --
--------------------------------------------------------------------------------
Net asset value, end of period $10.00
________________________________________________________________________________
================================================================================
Total return(d) --
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,000
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers %(c)
--------------------------------------------------------------------------------
Without fee waivers %(c)
================================================================================
Ratio of net investment income to average net assets %(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate --
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Annualized.
(d) Total return is not annualized for periods less than one year. Total return
does not reflect charges at the separate account level.
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
2001 2000 1999 1998 1997
------- ------- ------- ------- -------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.06 0.05 0.05 0.05
----------------------------------------------------------------------------------------------------------------------------
Less distributions from net investment income (0.06) (0.05) (0.05) (0.05)
============================================================================================================================
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) 5.83% 4.66% 5.06% 5.14%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $73,864 $95,152 $64,090 $58,635
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 0.71% 0.60% 0.58% 0.59%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of net investment income to average net assets 5.66%(a) 4.59% 4.94% 5.01%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Ratios are based on average daily net assets of $ .
(b) Total return does not reflect charges at the separate account level.
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2001 2000 1999 1998 1997
------- ------- -------- ------- -------
Net asset value, beginning of period $ 32.96 $ 20.66 $ 18.40 $ 18.14
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.20 (0.14) (0.01) (0.02)
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (11.05) 18.46 3.99 2.59
============================================================================================================================
Total from investment operations (10.85) 18.32 3.98 2.57
============================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (3.58) (6.02) (1.72) (2.31)
============================================================================================================================
Total distributions (3.58) (6.02) (1.72) (2.31)
============================================================================================================================
Net asset value, end of period $ 18.53 $ 32.96 $ 20.66 $ 18.40
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) (36.29)% 106.52% 22.11% 14.56%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $69,310 $108,428 $69,459 $68,186
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.31% 1.27% 1.17% 1.11%
----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.31% 1.27% 1.18% 1.16%
============================================================================================================================
Ratio of net investment income (loss) to average net
assets 0.74% (0.62)% (0.04)% (0.10)%
============================================================================================================================
Ratio of interest expense to average net assets -- 0.01% 0.01% --
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 131% 124% 73% 91%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Ratios are based on average daily net assets of $ .
(b) Total return does not reflect charges at the separate account level.
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
2001(a) 2000(a) 1999(a) 1998 1997
---------- ---------- ---------- ---------- --------
Net asset value, beginning of period $ 33.50 $ 26.25 $ 20.83 $ 17.48
-------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.04 0.06 0.09 0.08
-------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (4.94) 7.76 6.59 4.05
===============================================================================================================================
Total from investment operations (4.90) 7.82 6.68 4.13
===============================================================================================================================
Less distributions:
Dividends from net investment income (0.04) (0.09) (0.13) (0.19)
-------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (1.26) (0.48) (1.13) (0.59)
===============================================================================================================================
Total distributions (1.30) (0.57) (1.26) (0.78)
===============================================================================================================================
Net asset value, end of period $ 27.30 $ 33.50 $ 26.25 $ 20.83
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(c) (14.68)% 29.90% 32.41% 23.69%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,746,161 $2,383,367 $1,221,384 $690,841
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets 0.84% 0.76% 0.66% 0.70%
===============================================================================================================================
Ratio of net investment income to average net
assets 0.12% 0.20% 0.68% 1.05%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 62% 62% 100% 127%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level.
[THIS PAGE INTENTIONALLY LEFT BLANK]
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about each fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about each fund's investments. The funds' annual report also discusses the market conditions and investment strategies that significantly affected each fund's performance during its last fiscal year.
If you wish to obtain free copies of the funds' current SAI, please send a written request to A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or call (800) 410-4246.
You also can review and obtain copies of the funds' SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
SEC 1940 Act file number: 811-7452 ---------------------------------- [AIM LOGO APPEARS HERE] www.aimfunds.com VI-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
Series II Shares
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Premier Equity Fund
Shares of the funds are currently offered only to insurance company separate accounts. The investment objective(s) of each fund are described under the heading "Investment Objectives and Strategies."
PROSPECTUS
MAY 1, 2002
This prospectus contains important
information about the Series II
class shares ("Series II shares") of
each fund. Please read it before
investing and keep it for future
reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this Prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the
AIM V.I. Money Market Fund will be
able to maintain a stable net asset
value of $1.00 per share.
Investments in the funds:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
|
----------------------------
|
INVESTMENT OBJECTIVES AND STRATEGIES 1 ----------------------------------------------- PRINCIPAL RISKS OF INVESTING IN THE FUNDS 6 ----------------------------------------------- PERFORMANCE INFORMATION 10 ----------------------------------------------- Annual Total Returns 10 Performance Tables 19 FUND MANAGEMENT 25 ----------------------------------------------- The Advisors 25 Advisor Compensation 25 Portfolio Managers 25 OTHER INFORMATION 28 ----------------------------------------------- Purchase and Redemption of Shares 28 Pricing of Shares 28 Taxes 28 Dividends and Distributions 28 Share Classes 28 Distribution Plan 28 Future Fund Closure 28 FINANCIAL HIGHLIGHTS 29 ----------------------------------------------- OBTAINING ADDITIONAL INFORMATION Back Cover ----------------------------------------------- |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The investment objective(s) and policies of each fund may be changed by the Board of Trustees without shareholder approval. Any percentage limitations with respect to assets of a fund are applied at the time of purchase.
AIM V.I. AGGRESSIVE GROWTH FUND
The fund's investment objective is to achieve long-term growth of capital.
The fund seeks to meet its objective by investing primarily in common stocks, convertible bonds, convertible preferred stocks and warrants of small- and medium-sized companies whose earnings the fund's portfolio managers expect to grow more than 15% per year. The fund may also invest up to 25% of its total assets in foreign securities.
The portfolio managers focus on companies they believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. BALANCED FUND
The fund's investment objective is to achieve as high a total return as possible, consistent with preservation of capital.
The fund seeks to meet its objective by investing in a broadly diversified portfolio of common stocks, preferred stocks, convertible securities and bonds. The fund normally invests a minimum of 30% and a maximum of 70% of its total assets in equity securities and a minimum of 30% and a maximum of 70% of its total assets in non-convertible debt securities. The fund may also invest up to 25% of its total assets in convertible securities. The fund may also invest up to 25% of its total assets in foreign securities.
In selecting the percentages of assets to be invested in equity or debt securities, the portfolio managers consider such factors as general market and economic conditions, as well as trends, yields, interest rates and changes in fiscal and monetary policies. The portfolio managers will primarily purchase equity securities for growth of capital and debt securities for income purposes. However, the portfolio managers will focus on companies whose securities have the potential for both growth of capital and income generation. The portfolio managers consider whether to sell a particular security when they believe that security no longer has that potential.
AIM V.I. BASIC VALUE FUND
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing, normally, at least 65% of its net assets in equity securities of U.S. issuers that have market capitalizations of greater than $500 million and that the portfolio managers believe to be undervalued in relation to long-term earning power or other factors.
The fund may also invest up to 35% of its total assets in equity securities of U.S. issuers that have market capitalizations of less than $500 million and in investment-grade non-convertible debt securities, U.S. government securities and high-quality money market instruments, all of which are issued by U.S. issuers. The fund may also invest up to 25% of its total assets in foreign securities.
In selecting investments, the portfolio managers seek to identify those companies whose prospects and growth potential are undervalued by investors and that provide the potential for attractive returns. The portfolio managers allocate investments among fixed-income securities based on their views as to the best values then available in the marketplace. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. BLUE CHIP FUND
The fund's primary investment objective is long-term growth of capital with a secondary objective of current income.
The fund seeks to meet its objectives by investing, normally, at least 80% of its net assets in blue chip companies. The fund considers a blue chip company to be [large and medium sized companies (i.e., companies which fall in the largest 85% of market capitalization of publicly traded companies listed in the United States) with leading market positions and which possess strong financial characteristics, as described below:
- Market characteristics--Companies, which occupy (or in AIM's judgment have the potential to occupy) leading market positions that are expected to be maintained or enhanced over time. Market leaders can be identified within an industry as those companies which have (i) superior growth prospects compared with other companies in the same industry; (ii) possession of proprietary technology with the potential to bring about major changes within an industry; and/or (iii) leading sales within an industry, or the potential to become a market leader.
- Financial characteristics--Companies that possess at least one of the
following attributes: (i) faster earnings growth than its competitors and the
market in general; (ii) higher profit margins relative to its competitors;
(iii) strong cash flow relative to its competitors; and/or (iv) a balance
sheet with relatively low debt and a high return on equity relative to its
competitors].
In complying with the 80% requirement, the fund will invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options,
exchange-traded funds and ADRs. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential. The fund may invest in United States government securities and high-quality debt securities when the portfolio managers believe securities other than marketable equity securities offer the opportunity for long-term growth of capital and current income. The fund may also invest up to 25% of its total assets in foreign securities.
AIM V.I. CAPITAL APPRECIATION FUND
The fund's investment objective is growth of capital.
The fund seeks to meet its objective by investing principally in common stocks of companies the portfolio managers believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes. The fund may also invest up to 25% of its total assets in foreign securities.
AIM V.I. CAPITAL DEVELOPMENT FUND
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing primarily in securities, including common stocks, convertible securities and bonds, of small- and medium-sized companies. The fund may also invest up to 25% of its total assets in foreign securities.
Among factors which the portfolio managers may consider when purchasing these securities are: (1) the growth prospects for a company's products; (2) the economic outlook for its industry; (3) a company's new product development; (4) its operating management capabilities; (5) the relationship between the price of the security and its estimated fundamental value; (6) relevant market, economic and political environments; and (7) financial characteristics, such as balance sheet analysis and return on assets. The portfolio managers consider whether to sell a particular security when any one of these factors materially changes.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs and brokerage commissions, both of which can lower the actual return on your investment.
AIM V.I. CORE EQUITY FUND (FORMERLY, AIM V.I. GROWTH AND INCOME FUND)
The fund's primary investment objective is growth of capital with a secondary objective of current income.
The fund seeks to meet its objectives by investing, normally, at least 80% of its net assets in equity securities, including convertible securities, of established companies that have long-term above-average growth in earnings and dividends, and growth companies that the portfolio managers believe have the potential for above-average growth in earnings and dividends. In complying with this 80% requirement, the fund's investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and ADRs. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential. The fund may also invest up to 25% of its total assets in foreign securities. For risk management purposes, the fund may hold a portion of its assets in cash or the following liquid assets: money market instruments, shares of affiliated money market funds, or high-quality debt investments.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing in securities of companies that are likely to benefit from changing demographic, economic and lifestyle trends. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants of companies within a broad range of market capitalizations. The fund may also invest up to 25% of its total assets in foreign securities.
The portfolio managers purchase securities of companies that have experienced, or that they believe have the potential for, above-average, long-term growth in revenues and earnings. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential.
AIM V.I. DIVERSIFIED INCOME FUND
The fund's investment objective is to achieve a high level of current income.
The fund seeks to meet its objective by investing primarily in (1) domestic and foreign corporate debt securities; (2) U.S. Government securities, including U.S. Government agency mortgage-backed securities; (3) securities issued by foreign governments, their agencies or instrumentalities; and (4) lower-quality debt securities, i.e., "junk bonds," of U.S. and foreign companies. The fund's assets will normally be invested in each of these four sectors, however the fund may invest up to 100% of its total assets in U.S. Government securities.
The fund may invest up to 50% of its total assets in foreign securities, including securities of issuers located in developing countries. Developing countries are those countries that are in the initial stages of their industrial cycles. The fund may invest up to 25% of its total assets in government securities of any one foreign country. The fund may also invest up to 10% of its total assets in equity securities and convertible debt securities of U.S. and foreign companies. The fund may invest in debt obligations issued by certain supranational entities, such as the World Bank.
The portfolio managers focus on securities that they believe have favorable prospects for current income, whether denominated in the U.S. dollar or in other currencies. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. GLOBAL UTILITIES FUND
The fund's investment objective is to achieve a high total return.
The fund seeks to meet its objective by investing, normally, at least 80% of its net assets in domestic and foreign public utility companies. Public utility companies include companies that produce or supply electricity, natural gas, water, sanitary services, and telephone or telegraph, cable, satellite or other communication or information transmission services, as well as holding companies which derive at least 40% of their revenues from utility-related activities and companies that provide advanced technologies for use by the utilities industry. In complying with the 80% requirement, the fund will invest primarily in marketable equity securities, including convertible securities, and debt securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, which may include warrants, futures, options, exchange-traded funds and ADRs. The fund may also invest in non-utility securities, but generally will invest in securities of companies that derive revenues from utility-related activities such as providing services, equipment or fuel sources to utilities. Such companies may include those that provide maintenance services to electric, telephone or natural gas utilities, companies that provide energy sources such as coal or uranium, fuel service and equipment companies, companies that provide pollution control for water utilities, and companies that build pipelines or turbines which help produce electricity.
The fund may invest up to 80% of its total assets in foreign securities,
including securities of issuers located in developing countries. Developing
countries are those countries that are in the initial stages of their industrial
cycles. The fund will normally invest in the securities of companies located in
at least four different countries, including the United States. The fund may
invest a significant amount of its assets in the securities of U.S. issuers. The
fund may invest up to 25% of its total assets in convertible securities. The
fund may also invest up to 25% of its total assets in non-convertible bonds. The
fund may invest up to 10% of its total assets in lower-quality debt securities,
i.e., "junk bonds."
The fund is a non-diversified portfolio. With respect to 50% of its total assets, it is permitted to invest more than 5% of its assets in the securities of any one issuer. The portfolio managers focus on securities that have favorable prospects for high total return. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions the fund may invest up to 100% of its total assets in securities of U.S. issuers.
AIM V.I. GOVERNMENT SECURITIES FUND
The fund's investment objective is to achieve a high level of current income consistent with reasonable concern for safety of principal.
The fund seeks to meet its objective by investing, normally, at least 80% of
its net assets in debt securities issued, guaranteed or otherwise backed by the
U.S. Government. In complying with the 80% requirement, the fund's investments
may include investments in synthetic instruments. Synthetic instruments are
investments that have economic characteristics similar to the fund's direct
investments, and may include futures and options. The fund may invest in
securities of all maturities issued or guaranteed by the U.S. Government or its
agencies and instrumentalities, including: (1) U.S. Treasury obligations, and
(2) obligations issued or guaranteed by U.S. Government agencies and
instrumentalities and supported by (a) the full faith and credit of the U.S.
Treasury, (b) the right of the issuer to borrow from the U.S. Treasury, or (c)
the credit of the agency or instrumentality. The fund intends to maintain a
dollar-weighted average portfolio maturity of between three and ten years. The
fund may invest in high-coupon U.S. Government agency mortgage-backed
securities, which consist of interests in underlying mortgages with maturities
of up to thirty years. The fund may also invest up to 20% of its net assets in
foreign securities.
The portfolio managers focus on securities that they believe have favorable prospects for current income, consistent with their concern for safety of principal. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. GROWTH FUND
The fund's investment objective is to seek growth of capital.
The fund seeks to meet its objective by investing principally in seasoned and better capitalized companies considered to have strong earnings momentum. The fund may also invest up to 25% of its total assets in foreign securities.
The portfolio managers focus on companies that have experienced above-average growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs and brokerage commissions, both of which can lower the actual return on your investment.
AIM V.I. HIGH YIELD FUND
The fund's investment objective is to achieve a high level of current income.
The fund seeks to meet its objective by investing, normally, at least 80% of its net assets in non-investment grade debt securities, i.e., "junk bonds". The fund considers a bond to be a
junk bond if it is rated Ba or lower by Moody's Investors Service, Inc. or BB or lower by Standard & Poor's. The fund will invest principally in junk bonds rated B or above by Moody's Investors Services, Inc. or Standard & Poor's Rating Services or deemed by the portfolio managers to be of comparable quality. The fund may also invest in preferred stock. The fund may invest up to 25% of its total assets in foreign securities. In complying with the 80% requirement, the fund's investments may include investments in synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, which may include futures and options.
Although the portfolio managers focus on debt securities that they believe have favorable prospects for high current income, they also consider the possibility of growth of capital of the security. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs and brokerage commissions, both of which can lower the actual return on your investment.
AIM V.I. INTERNATIONAL GROWTH FUND (FORMERLY, AIM V.I. INTERNATIONAL EQUITY FUND)
The fund's investment objective is to provide long-term growth of capital.
The fund seeks to meet its objective by investing in a diversified portfolio of international equity securities whose issuers are considered to have strong earnings momentum. The fund intends to invest at least 70% of its total assets in marketable equity securities of foreign companies that are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter market. The fund will normally invest in companies located in at least four countries outside of the United States, emphasizing investment in companies in the developed countries of Western Europe and the Pacific Basin. The fund may invest up to 20% of its total assets in securities of issuers located in developing countries, i.e., those that are in the initial stages of their industrial cycles. The fund may invest up to 20% of its total assets in securities exchangeable for or convertible into equity securities of foreign companies.
The portfolio managers focus on companies that have experienced above-average, long-term growth in earnings and have strong prospects for future growth. In selecting countries in which the fund will invest, the portfolio managers also consider such factors as the prospect for relative economic growth among countries or regions, economic or political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. MID CAP CORE EQUITY FUND (FORMERLY, AIM V.I. MID CAP EQUITY FUND)
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing, normally, at least 80% of its net assets in equity securities, including convertible securities, of mid-cap companies. The fund considers a company to be a mid-cap company if it has a market capitalization, at the time of purchase, within the range of market capitalizations of companies, based on the trailing 12-month average, included in the Russell Midcap(R) Index. In complying with the 80% requirement, the fund's investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, which may include warrants, futures, options, exchange-traded funds and ADRs.
The fund may invest up to 20% of its net assets in equity securities of companies in other market capitalization ranges or in investment-grade debt securities. The fund may also invest up to 25% of its total assets in foreign securities.
In selecting investments, the portfolio managers seek to identify those
companies that are, in their view, undervalued relative to current or projected
earnings, or the current market value of assets owned by the company. The
primary emphasis of the portfolio managers' search for undervalued equity
securities is in four categories: (1) out-of-favor cyclical growth companies;
(2) established growth companies that are undervalued compared to historical
relative valuation parameters; (3) companies where there is early but tangible
evidence of improving prospects which are not yet reflected in the value of the
companies' equity securities; and (4) companies whose equity securities are
selling at prices that do not yet reflect the current market value of their
assets. The portfolio managers consider whether to sell a particular security
when any of these factors materially change.
AIM V.I. MONEY MARKET FUND
The fund's investment objective is to provide as high a level of current income as is consistent with the preservation of capital and liquidity.
The fund seeks to meet its objective by investing only in high-quality U.S. dollar-denominated short-term obligations, including:
- securities issued by the U.S. Government or its agencies
- foreign government obligations
- bankers' acceptances, certificates of deposit, and time deposits from U.S. or foreign banks
- repurchase agreements
- commercial paper
- taxable municipal securities
- master notes
- cash equivalents
The fund may invest up to 50% of its total assets in U.S. dollar-denominated securities of foreign issuers. The fund may invest up to 100% of its total assets in obligations issued by banks.
The portfolio managers focus on securities that they believe have favorable prospects for current income, consistent with their concerns for preservation of capital and liquidity. The portfolio managers usually hold portfolio securities to maturity, but may sell a particular security when they deem it advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash or shares of affiliated money market funds. As a result, the fund may not achieve its investment objective.
AIM V.I. NEW TECHNOLOGY FUND (FORMERLY, AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND)
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing, normally, at least 80% of its net assets in technology and science companies that the portfolio managers believe are likely to benefit from new or innovative products, services or processes. Such companies include those that develop, manufacture, or sell computer and electronic components and equipment, software, semiconductors, Internet technology, communications services and equipment, mobile communications, broadcasting, healthcare and medical technology, and biotechnology and medical devices. In complying with the 80% requirement, the fund will invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, which may include warrants, futures, options, exchange-traded funds and ADRs. While the fund will invest without regard to market capitalization, the fund expects to invest a significant portion of its assets in securities of small cap companies. Under normal conditions, the top 10 holdings may comprise up to one third of the fund's total assets. The fund may also invest up to 25% of its total assets in foreign securities.
In analyzing specific companies for possible investment, the portfolio
managers ordinarily look for several of the following characteristics:
above-average per share earnings growth; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research; product
development and marketing; development of new technologies; efficient service;
pricing flexibility; strong management; and general operating characteristics
that will enable the companies to compete successfully in their respective
markets. The portfolio managers consider whether to sell a particular security
when any of these factors materially changes.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment.
AIM V.I. PREMIER EQUITY FUND (FORMERLY, AIM V.I. VALUE FUND)
The fund's investment objective is to achieve long-term growth of capital. Income is a secondary objective.
The fund seeks to meet its objectives by investing, normally, at least 80% of its net assets in equity securities, including convertible securities. In complying with the 80% requirement, the fund's investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and ADRs. The fund also may invest in preferred stocks and debt instruments that have prospects for growth of capital. The fund also may invest up to 25% of its total assets in foreign securities.
The portfolio managers focus on undervalued equity securities of (1) out-of-favor cyclical growth companies; (2) established growth companies that are undervalued compared to historical relative valuation parameters; (3) companies where there is early but tangible evidence of improving prospects that are not yet reflected in the price of the company's equity securities; and (4) companies whose equity securities are selling at prices that do not reflect the current market value of their assets and where there is reason to expect realization of this potential in the form of increased equity values. The portfolio managers consider whether to sell a particular security when they believe the company no longer fits into any of the above categories.
ALL FUNDS (EXCEPT AIM V.I. MONEY MARKET FUND)
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, each fund may temporarily hold all or a portion of its assets in cash, or liquid assets.
A larger cash position or liquid assets could detract from the achievement of the funds' objective(s), but could also reduce the funds' exposure in the event of a market downturn.
AIM V.I. AGGRESSIVE GROWTH FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to common stocks of smaller companies, whose prices may go up and down more than common stocks of larger, more-established companies. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more-established companies, it may be difficult or impossible for the fund to sell securities at a desirable price.
AIM V.I. BALANCED FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from the fund may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Interest rate increases may cause the price of a debt security to decrease; the longer a debt security's duration, the more sensitive it is to this risk. The issuer of a security may default or otherwise be unable to honor a financial obligation.
The values of convertible securities in which the fund invests may also be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest or dividends, their values may fall if interest rates rise. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
AIM V.I. BASIC VALUE FUND
There is a risk you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the values of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity. This is especially true with respect to common stocks of smaller companies, whose prices may go up and down more than common stocks of larger, more-established companies. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more-established companies, it may be difficult or impossible for the fund to sell securities at a desirable price.
AIM V.I. BLUE CHIP FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer of the stock, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
AIM V.I. CAPITAL APPRECIATION FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to common stocks of smaller companies, whose prices may go up and down more than common stocks of larger, more-established companies. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more-established companies, it may be difficult or impossible for the fund to sell securities at a desirable price.
AIM V.I. CAPITAL DEVELOPMENT FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to common stocks of smaller companies, whose prices may go up and down more than common stocks of larger, more-established companies. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more-established companies, it may be difficult or impossible for the fund to sell securities in the fund at a desirable price.
AIM V.I. CORE EQUITY FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in
which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of small- and medium-sized companies, whose prices may go up and down more than the prices of equity securities of larger, more established companies. Also, since equity securities of small- and medium-sized companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the fund to sell securities at a desired price.
The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
AIM V.I. DIVERSIFIED INCOME FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases may cause the price of a debt security to decrease. The longer a debt security's duration, the more sensitive it is to this risk. Junk bonds are less sensitive to this risk than are higher-quality bonds. Some of the securities purchased by the fund are not guaranteed by the U.S. Government. The agency or instrumentality issuing such security may default or otherwise be unable to honor a financial obligation.
Compared to higher-quality debt securities, junk bonds involve greater risk of default or price changes due to changes in the credit quality of the issuer because they are generally unsecured and may be subordinated to other creditors' claims. The value of junk bonds often fluctuates in response to company, political or economic developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. During those times the bonds could be difficult to value or sell at a fair price. Credit ratings on junk bonds do not necessarily reflect their actual market risk.
U.S. Government agency mortgage-backed securities provide a higher coupon at the time of purchase than current prevailing market interest rates. The fund may purchase such securities at a premium, which means that a faster principal prepayment rate than expected will reduce both the market value of and income from such securities.
The prices of equity securities fluctuate in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
AIM V.I. GLOBAL UTILITIES FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from the fund may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Interest rate increases may cause the price of a debt security to decrease; the longer a debt security's duration, the more sensitive it is to this risk. The issuer of a security may default or otherwise be unable to honor a financial obligation.
The value of the fund's shares is particularly vulnerable to factors affecting the utility company industry, such as substantial economic, operational, competitive, or regulatory changes. Such changes may, among other things, increase compliance costs or the costs of doing business. In addition, increases in fuel, energy and other prices have historically limited the growth potential of utility companies. Because the fund focuses its investments in the public utility industry, the value of your shares may rise and fall more than the value of shares of a fund that invests more broadly.
Because it is non-diversified, the fund may invest in fewer issuers than if it were a diversified fund. The value of the fund's shares may vary more widely, and the fund may be subject to greater investment and credit risk, than if the fund invested more broadly.
AIM V.I. GOVERNMENT SECURITIES FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from
your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases can cause the price of a debt security to decrease. The longer a debt security's duration, the more sensitive it is to this risk. The prices of high-coupon U.S. Government agency mortgage-backed securities fall more slowly when interest rates rise than do prices of other fixed-rate securities. Some of the securities purchased by the fund are not guaranteed by the U.S. Government. The agency or instrumentality issuing such security may default or otherwise be unable to honor a financial obligation.
High-coupon U.S. Government agency mortgage-backed securities provide a higher coupon at the time of purchase than current prevailing market interest rates. The fund may purchase such securities at a premium. If the securities experience a faster principal prepayment rate than expected, both the market value of, and income from, such securities will decrease.
AIM V.I. GROWTH FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
AIM V.I. HIGH YIELD FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases can cause the price of a debt security to decrease. Junk bonds are less sensitive to this risk than are higher-quality bonds.
Compared to higher-quality debt securities, junk bonds involve greater risk of default or price changes due to changes in the credit quality of the issuer because they are generally unsecured and may be subordinated to other creditors' claims. The value of junk bonds often fluctuates in response to company, political or economic growth developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. During those times, the bonds could be difficult to value or to sell at a fair price. Credit ratings on junk bonds do not necessarily reflect their actual market risk.
AIM V.I. INTERNATIONAL GROWTH FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
AIM V.I. MID CAP CORE EQUITY FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity.
AIM V.I. MONEY MARKET FUND
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. Additionally, the fund's yield will vary as the short-term securities in its portfolio mature and the proceeds are reinvested in securities with different interest rates.
The following factors could reduce the fund's income and/or share price:
- interest rates could rise sharply, causing the value of the fund's securities, and share price, to drop
- any of the fund's holdings could have its credit rating downgraded or could default
- the risks generally associated with concentrating investments in the banking industry, such as interest rate risk, credit risk and regulatory developments relating to the banking and financial services industries
- the risks generally associated with U.S. dollar-denominated foreign investments, including political and economic upheaval, seizure or nationalization of deposits, imposition of taxes or other restrictions on the payment of principal and interest.
AIM V.I. NEW TECHNOLOGY FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions, and
market liquidity. This is especially true with respect to equity securities of small- and medium-sized companies, whose prices may go up and down more than the prices of equity securities of larger, more established companies. Also, since many equity securities of small- and medium-sized companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the fund to sell securities at a desired price.
Because the fund focuses its investments in the technology and science industries, the value of your fund shares may rise and fall more than the value of shares of a fund that invests more broadly.
The value of the fund's shares is particularly vulnerable to factors affecting the technology and science industries, such as substantial government regulations and the need for governmental approvals, dependency on consumer and business acceptance as new technologies evolve, and large and rapid price movements resulting from, among other things, fierce competition in these industries. Additional factors affecting the technology and science industries and the value of your shares include rapid obsolescence of products and services, short product cycles, and aggressive pricing. Many technology and science companies are small and at an early state of development and, therefore, may be subject to risks such as limited product lines, markets, and financial and managerial resources.
The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
Because a large percentage of the fund's assets may be invested in a limited number of securities, a change in the value of these securities could significantly affect the value of your investment in the fund.
The fund may participate in the initial public offering (IPO) market in some market cycles. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly increase the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may decrease the fund's total return.
AIM V.I. PREMIER EQUITY FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
ALL FUNDS (EXCEPT AIM V.I. MONEY MARKET FUND)
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devaluated their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures.
To the extent the funds hold cash or liquid assets rather than equity or long-term fixed income securities, the funds may not achieve their investment objective(s).
ALL FUNDS
If the seller of a repurchase agreement in which the fund invests defaults on its obligation or declares bankruptcy, the fund may experience delays in selling the securities underlying the repurchase agreement. As a result, the fund may incur losses arising from decline in the value of those securities, reduced levels of income and expenses of enforcing its rights.
The bar charts and tables shown below provide an indication of the risks of investing in each fund. A fund's past performance is not necessarily an indication of its future performance. All performance shown assumes the reinvestment of dividends and capital gains. The bar charts and performance tables shown below do not reflect charges at the separate account level. If they did, the performance shown would be lower.
Series II shares were first offered July 16, 2001. The performance shown for periods prior to December 31, 2001 reflects the historical results of the Series I class of shares ("Series I shares"), which are not offered by this prospectus. The Series I and Series II shares invest in the same portfolio of securities and will have substantially similar performance, except to the extent that the expenses borne by each share class differ. Series II shares have higher expenses (and therefore lower performance) resulting from its Rule 12b-1 plan, which provides for a maximum fee equal to an annual rate of 0.25% (expressed as a percentage of average daily net assets of each fund).
SEC Rules do not allow us to provide a bar chart and performance table for
funds that do not have at least a full calendar year of performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999.................................... 44.67%
2000.................................... 2.60%
2001.................................... -26.06%
|
During the periods shown in the bar chart, the highest quarterly return was 29.55% (quarter ended December 31, 1999) and the lowest quarterly return was -24.54% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999.................................... 19.31%
2000.................................... -4.20%
2001.................................... -11.42%
|
During the periods shown in the bar chart, the highest quarterly return was 15.67% (quarter ended December 31, 1999) and the lowest quarterly return was -11.97% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000.................................... -8.18%
2001.................................... -22.54%
|
During the period shown in the bar chart, the highest quarterly return was 12.52% (quarter ended December 31, 2001) and the lowest quarterly return was -19.83% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... 2.50%
1995.................................... 35.69%
1996.................................... 17.58%
1997.................................... 13.50%
1998.................................... 19.30%
1999.................................... 44.61%
2000.................................... -10.91%
2001.................................... -23.28%
|
During the periods shown in the bar chart, the highest quarterly return was 35.78% (quarter ended December 31, 1999) and the lowest quarterly return was -23.09% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999.................................... 29.10%
2000.................................... 9.25%
2001.................................... -8.08%
|
During the periods shown in the bar chart, the highest quarterly return was 29.66% (quarter ended December 31, 1999) and the lowest quarterly return was -19.39% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1995.................................... 33.86%
1996.................................... 19.94%
1997.................................... 25.72%
1998.................................... 27.68%
1999.................................... 34.25%
2000.................................... -14.56%
2001.................................... -22.83%
|
During the periods shown in the bar chart, the highest quarterly return was 26.48% (quarter ended December 31, 1998) and the lowest quarterly return was -21.54% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000.................................... -17.90%
2001.................................... -31.91%
|
During the periods shown in the bar chart, the highest quarterly return was 23.67% (quarter ended December 31, 2001) and the lowest quarterly return was -31.55% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... -5.07%
1995.................................... 19.02%
1996.................................... 10.19%
1997.................................... 9.39%
1998.................................... 3.58%
1999.................................... -1.92%
2000.................................... 0.69%
2001.................................... 3.59%
|
During the periods shown in the bar chart, the highest quarterly return was 5.54% (quarter ended June 30, 1995) and the lowest quarterly return was -3.16% (quarter ended March 31, 1994).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1995.................................... 26.74%
1996.................................... 12.07%
1997.................................... 21.63%
1998.................................... 16.49%
1999.................................... 33.56%
2000.................................... -2.28%
2001.................................... -27.93%
|
During the periods shown in the bar chart, the highest quarterly return was 25.88% (quarter ended December 31, 1999) and the lowest quarterly return was -15.76% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... -3.73%
1995.................................... 15.56%
1996.................................... 2.29%
1997.................................... 8.16%
1998.................................... 7.73%
1999.................................... -1.32%
2000.................................... 10.12%
2001.................................... 6.41%
|
During the periods shown in the bar chart, the highest quarterly return was 5.48% (quarter ended June 30, 1995) and the lowest quarterly return was -2.82% (quarter ended March 31, 1994).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... -2.48%
1995.................................... 34.77%
1996.................................... 18.09%
1997.................................... 26.87%
1998.................................... 34.12%
1999.................................... 35.24%
2000.................................... -20.49%
2001.................................... -33.88%
|
During the periods shown in the bar chart, the highest quarterly return was 27.80% (quarter ended December 31, 1998) and the lowest quarterly return was -27.44% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999.................................... 10.52%
2000.................................... -19.01%
2001.................................... -5.00%
|
During the periods shown in the bar chart, the highest quarterly return was 7.13% (quarter ended December 31, 2001) and the lowest quarterly return was -14.05% (quarter ended December 31, 2000).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... -1.61%
1995.................................... 17.24%
1996.................................... 20.05%
1997.................................... 6.94%
1998.................................... 15.49%
1999.................................... 55.04%
2000.................................... -26.40%
2001.................................... -23.53%
|
During the periods shown in the bar chart, the highest quarterly return was 41.88% (quarter ended December 31, 1999) and the lowest quarterly return was -16.60% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... 3.64%
1995.................................... 5.70%
1996.................................... 4.95%
1997.................................... 5.13%
1998.................................... 5.06%
1999.................................... 4.66%
2000.................................... 5.83%
2001.................................... 3.61%
|
During the periods shown in the bar chart, the highest quarterly return was 1.49% (quarter ended December 31, 2000) and the lowest quarterly return was 0.51% (quarter ended December 31, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994.................................... 7.15%
1995.................................... 23.66%
1996.................................... 19.34%
1997.................................... 14.56%
1998.................................... 22.11%
1999.................................... 106.52%
2000.................................... -36.29%
2001.................................... -47.47%
|
During the periods shown in the bar chart, the highest quarterly return was 63.10% (quarter ended December 31, 1999) and the lowest quarterly return was -50.03% (quarter ended March 31, 2001). For periods prior to October 15, 1999, the performance shown relates to a predecessor fund. In addition, for periods prior to May 1, 2000 performance shown above relates to the fund before changing its investment strategy to emphasize securities of companies in the technology industry as well as the telecommunications industry. Effective May 1, 2001, the fund changed its investment strategy to increase its emphasis on the technology industry and decrease its emphasis on the telecommunications industry.
The following bar chart shows changes in the performance of the fund's shares from year to year.
Annual
Year Ended Total
December 31 Returns
----------- -------
1994.................................... 4.04%
1995.................................... 36.25%
1996.................................... 15.02%
1997.................................... 23.69%
1998.................................... 32.41%
1999.................................... 29.90%
2000.................................... -14.65%
2001.................................... -12.56%
|
During the periods shown in the bar chart, the highest quarterly return was 27.04% (quarter ended December 31, 1998) and the lowest quarterly return was 15.58% (quarter ended September 30, 2001).
PERFORMANCE TABLES
The following performance tables compare the fund's Series I shares' performance to that of broad-based securities market indices. The AIM V.I. Money Market Fund's Series I share's performance table reflects the fund's performance over the periods indicated. The performance tables reflect the historical results of the Series I shares through December 31, 2001, and not the Series II shares, which were first offered on July 16, 2001. The Series II shares have higher expenses resulting from its Rule 12b-1 plan, which would lower the performance shown.
AIM V.I. AGGRESSIVE GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- AIM V.I. Aggressive Growth Fund (26.06)% 2.30% 05/01/98 Russell 2500(TM) Index(1) (1.22)% 4.82%(2) 04/30/98(2) --------------------------------------------------------------------------------- |
(1) The Russell 2500(TM) Index measures the performance of the 2,500 smallest companies in the Russell 3000--Registered Trademark-- Index, which represents approximately 17% of the total market capitalization of the Russell 3000--Registered Trademark-- Index.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. BALANCED FUND
AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- AIM V.I. Balanced Fund (11.42)% 3.74% 05/01/98 Standard & Poor's 500 Index(1) (11.88)% 2.20%(2) 04/30/98(2) --------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. BLUE CHIP FUND
AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- AIM V.I. Blue Chip Fund (22.54)% (15.63)% 12/29/99 Russell 1000--Registered Trademark-- Index(1) (12.45)% (10.15)%(2) 12/31/99(2) --------------------------------------------------------------------------------- |
(1) The Russell 1000--Registered Trademark-- Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 1,000 largest companies in the Russell 3000--Registered Trademark-- Index, which measures the performance of the 3,000 largest U.S. companies based on total market capitalization.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. CAPITAL APPRECIATION FUND
AVERAGE ANNUAL TOTAL RETURNS ----------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund (23.28)% 6.00% 11.75% 05/05/93 Standard & Poor's 500 Index(1) (11.88)% 10.70% 13.85%(2) 04/30/93(2) ----------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. CAPITAL DEVELOPMENT FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE ------------------------------------------------------------------------------- AIM V.I. Capital Development Fund (8.08)% 5.07% 05/01/98 Russell 2500(TM) Index(1) 1.22% 4.82%(2) 04/30/98(2) ------------------------------------------------------------------------------- |
(1) The Russell 2500(TM) Index measures the performance of the 2,500 smallest companies in the Russell 3000--Registered Trademark-- Index, which represents approximately 17% of the total market capitalization of the Russell 3000--Registered Trademark-- Index.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. CORE EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS ----------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------------------- AIM V.I. Core Equity Fund (22.83)% 7.28% 11.36% 05/02/94 Standard & Poor's 500 Index(1) (11.88)% 10.70% 15.02%(2) 04/30/94(2) ----------------------------------------------------------------------------------------- |
(1)The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(2)The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- AIM V.I. Dent Demographic Trends Fund (31.91)% (25.17)% 12/29/99 Russell 3000(R) Index(1) (11.46)% (9.48)%(2) 12/31/99(2) --------------------------------------------------------------------------------- |
(1) The Russell 3000--Registered Trademark-- Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 3,000 largest U.S. companies based on total market capitalization.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. DIVERSIFIED INCOME FUND
AVERAGE ANNUAL TOTAL RETURNS ----------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------------------- AIM V.I. Diversified Income Fund 3.59% 3.00% 5.04% 05/05/93 Lehman Aggregate Bond Index(1) 8.44% 7.43% 6.91%(2) 04/30/93(2) ----------------------------------------------------------------------------------------- |
(1) The Lehman Aggregate Bond Index is an unmanaged index generally considered representative of treasury issues, agency issues, corporate bond issues and mortgage-backed securities.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. GLOBAL UTILITIES FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------- AIM V.I. Global Utilities Fund (27.93)% 5.91% 8.26% 05/02/94 Standard & Poor's 500 Index(1) (11.88)% 10.70% 15.02%(3) 04/30/94(3) Lipper Utility Fund Index(2) (21.35)% 7.80% 9.03%(3) 04/30/94(3) ------------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) Lipper Utility Fund Index measures the performance of the 30 largest
utilities funds charted by Lipper Inc., an independent mutual funds
performance monitor.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. GOVERNMENT SECURITIES FUND
AVERAGE ANNUAL TOTAL RETURNS ----------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------------------- AIM V.I. Government Securities Fund 6.41% 6.15% 5.49% 05/05/93 Lehman Intermediate Government Bond Index(1) 8.42% 7.06% 6.33%(2) 04/30/93(2) ----------------------------------------------------------------------------------------- |
(1) The Lehman Intermediate Government Bond Index is an unmanaged composite generally considered representative of intermediate publicly issued debt of U.S. Government agencies and quasi-federal corporations, and corporate debt guaranteed by the U.S. Government.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------- AIM V.I. Growth Fund (33.88)% 3.88% 8.81% 05/05/93 Standard & Poor's 500 Index(1) (11.88)% 10.70% 13.85%(2) 04/30/93(2) ------------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. HIGH YIELD FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE ------------------------------------------------------------------------------- AIM V.I. High Yield Fund (5.00)% (6.36)% 05/01/98 Lehman High Yield Index(1) 5.28% (0.10)%(2) 04/30/98(2) ------------------------------------------------------------------------------- |
(1) The Lehman High Yield Index is an index that includes all fixed-income securities having a maximum quality rating of Ba1 (including defaulted issues), a minimum amount outstanding of $100 million, and at least one year to maturity.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. INTERNATIONAL GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------- AIM V.I. International Growth Fund (23.53)% 1.51% 6.85% 05/05/93 Morgan Stanley Capital International EAFE Index(1) (21.44)% 0.89% 4.27%(2) 04/30/93(2) ------------------------------------------------------------------------------------------- |
(1) The Morgan Stanley Capital International Europe, Australasia and Far East Index measures performance of global stock markets in 20 developed countries.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. MONEY MARKET FUND
AVERAGE ANNUAL TOTAL RETURNS ----------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------------------- AIM V.I. Money Market Fund 3.61% 4.86% 4.63% 05/05/93 ----------------------------------------------------------------------------------------- |
The AIM V.I. Money Market Fund's seven day yield on December 31, 2001 was 1.52%. For the current seven day yield, call (800) 347-4246.
AIM V.I. NEW TECHNOLOGY FUND
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE -------------------------------------------------------------------------------------------- AIM V.I. New Technology Fund(1) (47.47)% (0.67)% (6.41)% 10/18/93 Standard & Poor's 500 Index(2) (11.88)% (10.70)% (13.71)%(3) 10/31/93(3) -------------------------------------------------------------------------------------------- |
(1) For periods prior to October 15, 1999, the performance shown relates to a predecessor fund. In addition, for periods prior to May 1, 2000, performance shown above relates to the fund before changing its investment strategy to include securities of companies in the technology industry. Effective May 1, 2001, the fund changed its investment strategy to increase its emphasis on the technology industry and decrease its emphasis on the telecommunications industry.
(2) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
AIM V.I. PREMIER EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund (12.56)% 9.69% 13.41% 05/05/93 Standard & Poor's 500 Index(1) (11.88)% 10.70% 13.85%(2) 04/30/93(2) ------------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as each fund's investment advisor. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of each fund's operations and provides investment advisory services to the funds, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the funds. H.S. Dent Advisors, Inc. (the subadvisor) serves as the subadvisor for AIM V.I. Dent Demographic Trends Fund, and is located at 6515 Gwin Road, Oakland, California 94611. The subadvisor is responsible for providing the advisor with macroeconomic, thematic, demographic, lifestyle trends and sector research, custom reports and investment and market capitalization recommendations for the fund. The subadvisor has acted as an investment advisor for the AIM V.I. Dent Demographic Trends Fund since 1999.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the funds, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2001, the advisor received compensation from the following funds as a percentage of each fund's average daily net assets as follows:
ADVISORY
FUND FEE
---- --------
AIM V.I. Aggressive Growth Fund %
AIM V.I. Balanced Fund %
AIM V.I. Basic Value Fund
AIM V.I. Blue Chip Fund %
AIM V.I. Capital Appreciation Fund %
AIM V.I. Capital Development Fund %
AIM V.I. Core Equity Fund %
AIM V.I. Dent Demographic Trends Fund %
AIM V.I. Diversified Income Fund %
AIM V.I. Global Utilities Fund %
AIM V.I. Government Securities Fund %
AIM V.I. Growth Fund %
AIM V.I. High Yield Fund %
AIM V.I. International Growth Fund %
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund %
AIM V.I. New Technology Fund %
AIM V.I. Premier Equity Fund %
|
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of each fund's portfolio are as follows:
AIM V.I. AGGRESSIVE GROWTH FUND
- Ryan E. Crane, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1994.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1989.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst for Prudential Securities.
AIM V.I. BALANCED FUND
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1992.
- Claude C. Cody, IV, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1992.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management.
- Craig A. Smith, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1989.
- Meggan M. Walsh, Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1991.
AIM V.I. BASIC VALUE FUND
- Matthew W. Seinsheimer, Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1998. From 1995 to 1998, he was Portfolio Manager for American Indemnity Company.
- Michael J. Simon, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2001. From 1996 to 2001, he was equity analyst and portfolio manager for Luther King Capital Management.
- Bret W. Stanley, Senior Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1998. From 1994 to 1998, he was Vice President and Portfolio Manager for Van Kampen American Capital Asset Management, Inc.
AIM V.I. BLUE CHIP FUND
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1995.
- Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1986.
AIM V.I. CAPITAL APPRECIATION FUND
- David P. Barnard, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1982.
- Ryan E. Crane, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1994.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1989.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst for Prudential Securities.
- Kenneth A. Zschappel, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1990.
AIM V.I. CAPITAL DEVELOPMENT FUND
- Edgar M. Larsen, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1996.
- Paul J. Rasplicka, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1994.
AIM V.I. CORE EQUITY FUND
- Ronald S. Sloan, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
- Michael Yellen, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1994.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
- Edgar M. Larsen, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1996.
- Lanny H. Sachnowitz, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1987.
AIM V.I. DIVERSIFIED INCOME FUND
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1992.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management.
- Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1992.
AIM V.I. GLOBAL UTILITIES FUND
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 1994 and has been associated with the advisor and/or its affiliates since 1992.
- Claude C. Cody, IV, Senior Portfolio Manager, who has been responsible for the fund since 1994 and has been associated with the advisor and/or its affiliates since 1992.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management.
- Craig A. Smith, Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1989.
- Meggan M. Walsh, Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1991.
AIM V.I. GOVERNMENT SECURITIES FUND
- Laurie F. Bignac, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1992.
- Clint Dudley, Portfolio Manager, who has been responsible for the fund since 2001 and has been associated with the advisor and/or its affiliates since 1998. Prior to 1998, he was a full time student.
- Scot W. Johnson, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1994.
- Karen Dunn Kelley, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1989.
- Lyman Missimer III, Senior Portfolio Manager, who has been responsible for the fund since 2001 and has been affiliated with the advisor and/or its affiliates since 1995.
AIM V.I. GROWTH FUND
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1995.
- Lanny H. Sachnowitz, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1987.
AIM V.I. HIGH YIELD FUND
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1992.
- Peter Ehret, Senior Portfolio Manager, who has been responsible for the fund since 2001 and has been associated with the advisor and/or its affiliates since 2001. From 1992 to 2001, he was director of high yield research and portfolio manager for Van Kampen Investment Advisory Corp.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management.
- Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1992.
- Craig A. Smith, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1989.
AIM V.I. INTERNATIONAL GROWTH FUND
- A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1989.
- Jason T. Holzer, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1996.
- Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1994.
- Barrett K. Sides, Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1990.
AIM V.I. MID CAP CORE EQUITY FUND
- Paul J. Rasplicka, Senior Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1994.
- Robert A. Shelton, Senior Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1995.
- Ronald S. Sloan, Senior Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
AIM V.I. NEW TECHNOLOGY FUND
- David P. Barnard, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1982.
- Abel Garcia, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 2000. From 1984 to 2000, he was a Senior Portfolio Manager for Waddell & Reed.
- Robert Lloyd, Portfolio Manager, who has been responsible for the fund since 2001 and has been associated with the advisor and/or its affiliates since 2000. From 1997 to 2000, he was a trader with American Electric Power.
AIM V.I. PREMIER EQUITY FUND
- Joel E. Dobberpuhl, Senior Portfolio Manager, who has been responsible for the fund since 1993, and has been associated with the advisor and/or its affiliates since 1990.
- Evan G. Harrel, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1998. From 1994 to 1998, he was Vice President and portfolio manager of Van Kampen American Capital Asset Management, Inc. and portfolio manager for various growth and equity funds.
- Robert A. Shelton, Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1995.
PURCHASE AND REDEMPTION OF SHARES
Each fund ordinarily effects orders to purchase and redeem shares at the fund's
next computed net asset value after it receives an order. Life insurance
companies participating in each fund serve as the fund's designee for receiving
orders of separate accounts that invest in the fund.
Shares of the funds are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated life insurance
companies funding variable annuity contracts and variable life insurance
policies. The funds currently offers shares only to insurance company separate
accounts. In the future, the funds may offer them to pension and retirement
plans that qualify for special federal income tax treatment. Due to differences
in tax treatment and other considerations, the interests of variable contract
owners investing in separate accounts investing in the funds, and the interests
of plan participants investing in the funds, may conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one separate account investing in a fund could cause owners of contracts and policies funded through another separate account to lose their tax-deferred status, unless remedial actions were taken. The Board of Trustees of the funds will monitor for the existence of any material conflicts and determine what action, if any, should be taken. A fund's net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account (or plan) withdrawing because of a conflict.
PRICING OF SHARES
Each of the funds prices its shares based on its net asset value. The funds,
except AIM V.I. Money Market Fund, value portfolio securities for which market
quotations are readily available at market value. The funds value short-term
investments maturing within 60 days at amortized cost, which approximates market
value. AIM V.I. Money Market Fund values all of its securities based on the
amortized cost method. The funds, except AIM V.I. Money Market Fund, value all
other securities and assets at their fair value. Securities and other assets
quoted in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day. In addition, if, between the time trading ends on a
particular security and the close of the customary trading session of the New
York Stock Exchange (NYSE), events occur that materially affect the value of the
security, the funds may value the security at its fair value as determined in
good faith by or under the supervision of the Board of Trustees. The effect of
using fair value pricing is that a fund's net asset value will be subject to the
judgment of the Board of Trustees or its designee instead of being determined by
the market. Because some of the funds may invest in securities that are
primarily listed on foreign exchanges, the value of those funds' shares may
change on days when the separate account will not be able to purchase or redeem
shares. The fund determines the net asset value of its shares as of the close of
the customary trading session of the NYSE on each day the NYSE is open for
business.
TAXES
The amount, timing and character of distributions to the separate account may be
affected by special tax rules applicable to certain investments purchased by the
funds. Holders of variable contracts should refer to the prospectus for their
contracts for information regarding the tax consequences of owning such
contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
Each fund other than AIM V.I. Money Market Fund generally declares and pays dividends, if any, annually to separate accounts of participating life insurance companies. AIM V.I. Money Market Fund generally declares on each business day and pays any dividends daily. All of the fund's distributions will consist primarily of capital gains, except for AIM V.I. Diversified Income Fund, AIM V.I. Government Securities Fund, AIM V.I. High Yield Fund and AIM V.I. Money Market Fund which will consist primarily of ordinary income.
CAPITAL GAINS DISTRIBUTIONS
Each fund other than AIM V.I. Money Market Fund generally distributes long-term
and short-term capital gains, if any, annually to separate accounts of
participating life insurance companies. AIM V.I. Money Market Fund may
distribute net realized short-term gains, if any, more frequently.
At the election of participating life insurance companies, dividends and
distributions are automatically reinvested at net asset value in shares of that
fund.
SHARE CLASSES
Each fund has two classes of shares, Series I and Series II. Each class is
identical except that Series II has a distribution plan or "Rule 12b-1 Plan"
which is described in this prospectus.
DISTRIBUTION PLAN
The funds have adopted a distribution or "Rule 12b-1" plan for their Series II
shares. The plan allows the funds to pay distribution fees to life insurance
companies and others to promote the sale and distribution of Series II shares.
The plan provides for a maximum fee equal to an annual rate of 0.25% (expressed
as a percentage of average daily net assets of each fund). Because the funds pay
these fees out of their assets on an ongoing basis, over time these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
FUTURE FUND CLOSURE
Due to the sometime limited availability of common stocks of small-cap companies
that meet the investment criteria for AIM V.I. Aggressive Growth Fund, the fund
may periodically suspend or limit the offering of its shares and it will be
closed to new participants when fund assets reach $200 million.
During closed periods, the fund will accept additional investments from
existing participants.
The financial highlights table is intended to help you understand the financial performance of each fund's Series II shares. Certain information reflects financial results for a single Series II share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in each fund (assuming reinvestment of all dividends and distributions).
The table shows the financial highlights for a share of each fund outstanding during each of the fiscal years (or periods) indicated.
This information has been audited by [ ], whose report, along with the fund's financial statements, is included in each fund's annual report, which is available upon request.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $10.00
----------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.04
----------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.14)
==================================================================================
Total from investment operations (0.10)
==================================================================================
Less distributions from net investment income (0.05)
==================================================================================
Net asset value, end of period $ 9.85
__________________________________________________________________________________
==================================================================================
Total return(b) (0.94)%
__________________________________________________________________________________
==================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $4,399
__________________________________________________________________________________
==================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.16%(d)
----------------------------------------------------------------------------------
Without fee waivers 4.62%(d)
==================================================================================
Ratio of net investment income (loss) to average net assets 0.96%(d)
__________________________________________________________________________________
==================================================================================
Portfolio turnover rate 30%
__________________________________________________________________________________
==================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total return is not annualized for periods less than one year. Total return does not reflect charges at the separate account level and these charges would reduce the total return figures for all periods shown.
(c) Ratios are based on average daily net assets of $ .
(d) Annualized.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $ 10.00
----------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.12
----------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.18
==================================================================================
Total from investment operations 1.30
==================================================================================
Less distributions:
Dividends from net investment income (0.14)
----------------------------------------------------------------------------------
Distributions from net realized gains (0.02)
==================================================================================
Total distributions (0.16)
==================================================================================
Net asset value, end of period $ 11.14
__________________________________________________________________________________
==================================================================================
Total return(b) 13.02%
__________________________________________________________________________________
==================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $10,343
__________________________________________________________________________________
==================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.18%(d)
----------------------------------------------------------------------------------
Without fee waivers 2.83%(d)
==================================================================================
Ratio of net investment income to average net assets 3.71%(d)
__________________________________________________________________________________
==================================================================================
Portfolio turnover rate 9%
__________________________________________________________________________________
==================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total return is not annualized for periods less than one year. Total return
does not reflect charges at the separate account level and these charges
would reduce the total return figures for all periods shown.
(c) Ratios are based on average daily net assets of $ .
(d) Annualized.
SEPTEMBER 10,
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $10.00(a)
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income --
--------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) --
================================================================================
Total from investment operations --
================================================================================
Less distributions paid from net investment income --
================================================================================
Net asset value, end of period $10.00
________________________________________________________________________________
================================================================================
Total return(d) --
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,000
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers (c)
--------------------------------------------------------------------------------
Without fee waivers (c)
================================================================================
Ratio of net investment income to average net assets (c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate --
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Annualized.
(d) Total return is not annualized for periods less than one year. Total return does not reflect charges at the separate account level.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $10.00
----------------------------------------------------------------------------------
Income from investment operations:
Net investment income --
----------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) --
==================================================================================
Total from investment operations --
==================================================================================
Less distributions paid from net investment income --
==================================================================================
Net asset value, end of period $10.00
__________________________________________________________________________________
==================================================================================
Total return(d) --
__________________________________________________________________________________
==================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,000
__________________________________________________________________________________
==================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.30%(c)
----------------------------------------------------------------------------------
Without fee waivers 12.49%(c)
==================================================================================
Ratio of net investment income to average net assets 3.07%(c)
__________________________________________________________________________________
==================================================================================
Portfolio turnover rate --
__________________________________________________________________________________
==================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Annualized.
(d) Total return does not reflect charges at the separate account level and
these charges would reduce the total return figures for all periods shown.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $
----------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
----------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
==================================================================================
Total from investment operations
==================================================================================
Less distributions:
Dividends from net investment income
----------------------------------------------------------------------------------
Distributions from net realized gains
==================================================================================
Total distributions
==================================================================================
Net asset value, end of period $
__________________________________________________________________________________
==================================================================================
Total return(b) %
__________________________________________________________________________________
==================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $
__________________________________________________________________________________
==================================================================================
Ratio of expenses to average net assets %
==================================================================================
Ratio of net investment income (loss) to average net assets %
__________________________________________________________________________________
==================================================================================
Portfolio turnover rate %
__________________________________________________________________________________
==================================================================================
|
(a) Ratios are based on average daily net assets of $ .
(b) Total return does not reflect charges at the separate account level and these charges would reduce the total return figures for all periods shown.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001(a)
--------------------
Net asset value, beginning of period $10.00
------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.03
------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.78)
====================================================================================
Total from investment operations (0.75)
====================================================================================
Less distributions from net investment income (0.04)
====================================================================================
Net asset value, end of period $ 9.21
____________________________________________________________________________________
====================================================================================
Total return(b) (7.51)%
____________________________________________________________________________________
====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,172
____________________________________________________________________________________
====================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.21%(d)
------------------------------------------------------------------------------------
Without fee waivers 5.80%(d)
====================================================================================
Ratio of net investment income (loss) to average net assets 0.62%(d)
____________________________________________________________________________________
====================================================================================
Portfolio turnover rate 45%
____________________________________________________________________________________
====================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year. Total
return does not reflect charges at the separate account level and these
charges would reduce the total return figures for all periods shown.
(c) Ratios are based on average daily net assets of $ .
(d) Annualized.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001(a)
--------------------
Net asset value, beginning of period $
------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
====================================================================================
Total from investment operations
====================================================================================
Less distributions:
Dividends from net investment income
------------------------------------------------------------------------------------
Distributions from net realized gains
====================================================================================
Total distributions
====================================================================================
Net asset value, end of period $
____________________________________________________________________________________
====================================================================================
Total return(c) %
____________________________________________________________________________________
====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $
____________________________________________________________________________________
====================================================================================
Ratio of expenses to average net assets %
====================================================================================
Ratio of net investment income to average net assets %
____________________________________________________________________________________
====================================================================================
Portfolio turnover rate %
____________________________________________________________________________________
====================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level and these charges would reduce the total return figures for all periods shown.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $10.00
-------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss --
-------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) --
=====================================================================================
Total from investment operations --
=====================================================================================
Less distributions from net investment income --
=====================================================================================
Net asset value, end of period $10.00
_____________________________________________________________________________________
=====================================================================================
Total return(b) --
_____________________________________________________________________________________
=====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,000
_____________________________________________________________________________________
=====================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.40%(d)
-------------------------------------------------------------------------------------
Without fee waivers 12.58%(d)
=====================================================================================
Ratio of net investment income (loss) to average net assets 2.96%(d)
_____________________________________________________________________________________
=====================================================================================
Portfolio turnover rate --
_____________________________________________________________________________________
=====================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year. Total
return does not reflect charges at the separate account level and these
charges would reduce the total return figures for all periods shown.
(c) Ratios are based on average daily net assets of $ .
(d) Annualized.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $
-------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
-------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=====================================================================================
Total from investment operations
=====================================================================================
Less distributions:
Dividends from net investment income
-------------------------------------------------------------------------------------
Distributions from net realized gains
=====================================================================================
Total distributions
=====================================================================================
Net asset value, end of period $
_____________________________________________________________________________________
=====================================================================================
Total return(c) %
_____________________________________________________________________________________
=====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $
_____________________________________________________________________________________
=====================================================================================
Ratio of expenses to average net assets %
=====================================================================================
Ratio of net investment income to average net assets %
_____________________________________________________________________________________
=====================================================================================
Portfolio turnover rate %
_____________________________________________________________________________________
=====================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level and these charges would reduce the total return figures for all periods shown.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $
-------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
-------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=====================================================================================
Total from investment operations
=====================================================================================
Less distributions:
Dividends from net investment income
-------------------------------------------------------------------------------------
Distributions from net realized gains
=====================================================================================
Total distributions
=====================================================================================
Net asset value, end of period $
_____________________________________________________________________________________
=====================================================================================
Total return(c) %
_____________________________________________________________________________________
=====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $
_____________________________________________________________________________________
=====================================================================================
Ratio of expenses to average net assets %
=====================================================================================
Ratio of net investment income to average net assets %
_____________________________________________________________________________________
=====================================================================================
Portfolio turnover rate %
_____________________________________________________________________________________
=====================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level and these charges would reduce the total return figures for all periods shown.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $
-------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
-------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
=====================================================================================
Total from investment operations
=====================================================================================
Less dividends from net investment income
=====================================================================================
Net asset value, end of period $
_____________________________________________________________________________________
=====================================================================================
Total return(c) %
_____________________________________________________________________________________
=====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $
_____________________________________________________________________________________
=====================================================================================
Ratio of expenses to average net assets (including interest
expense): %
=====================================================================================
Ratio of expenses to average net assets (excluding interest
expense): %
=====================================================================================
Ratio of net investment income to average net assets %
=====================================================================================
Ratio of interest expense to average net assets %
_____________________________________________________________________________________
=====================================================================================
Portfolio turnover rate %
_____________________________________________________________________________________
=====================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level and these charges would reduce the total return figures for all periods shown.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $
-------------------------------------------------------------------------------------
Income from investment operations:
Net investment income
-------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized)
=====================================================================================
Total from investment operations
=====================================================================================
Less distributions:
Dividends from net investment income
-------------------------------------------------------------------------------------
Distributions from net realized gains
=====================================================================================
Total distributions
=====================================================================================
Net asset value, end of period $
_____________________________________________________________________________________
=====================================================================================
Total return(c) %
_____________________________________________________________________________________
=====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $
_____________________________________________________________________________________
=====================================================================================
Ratio of expenses to average net assets %
=====================================================================================
Ratio of net investment income to average net assets %
_____________________________________________________________________________________
=====================================================================================
Portfolio turnover rate %
_____________________________________________________________________________________
=====================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level and
these charges would reduce the total return figures for all periods shown.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $10.00
-------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.39
-------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (1.15)
=====================================================================================
Total from investment operations (0.76)
=====================================================================================
Less distributions from net investment income (0.40)
=====================================================================================
Net asset value, end of period $ 8.84
_____________________________________________________________________________________
=====================================================================================
Total return(b) (7.61)%
_____________________________________________________________________________________
=====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $7,966
_____________________________________________________________________________________
=====================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.13%(d)
-------------------------------------------------------------------------------------
Without fee waivers 2.50%(d)
=====================================================================================
Ratio of net investment income to average net assets 9.75%(d)
_____________________________________________________________________________________
=====================================================================================
Portfolio turnover rate 39%
_____________________________________________________________________________________
=====================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total return is not annualized for periods less than one year. Total return
does not reflect charges at the separate account level and these charges
would reduce the total return figures for all periods shown.
(c) Ratios are based on average daily net assets of $ .
(d) Annualized.
SEPTEMBER 10
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income
--------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
================================================================================
Total from investment operations
================================================================================
Less distributions:
Dividends from net investment income
--------------------------------------------------------------------------------
Distributions from net realized gains
================================================================================
Total distributions
================================================================================
Net asset value, end of period $
________________________________________________________________________________
================================================================================
Total return(c) %
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets %
================================================================================
Ratio of net investment income to average net assets %
________________________________________________________________________________
================================================================================
Portfolio turnover rate %
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level and these charges would reduce the total return figures for all periods shown.
SEPTEMBER 10
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income --
--------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) --
================================================================================
Total from investment operations --
================================================================================
Less distributions paid from net investment income --
================================================================================
Net asset value, end of period $10.00
________________________________________________________________________________
================================================================================
Total return(d) --
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,000
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers (c)
--------------------------------------------------------------------------------
Without fee waivers (c)
================================================================================
Ratio of net investment income to average net assets (c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate --
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Annualized.
(d) Total return is not annualized for periods less than one year. Total return does not reflect charges at the separate account level.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $
----------------------------------------------------------------------------------
Income from investment operations:
Net investment income
----------------------------------------------------------------------------------
Less distributions from net investment income
==================================================================================
Net asset value, end of period $
__________________________________________________________________________________
==================================================================================
Total return(b) %
__________________________________________________________________________________
==================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $
__________________________________________________________________________________
==================================================================================
Ratio of expenses to average net assets %
__________________________________________________________________________________
==================================================================================
Ratio of net investment income to average net assets %
__________________________________________________________________________________
==================================================================================
|
(a) Ratios are based on average daily net assets of $ .
(b) Total return does not reflect charges at the separate account level and
these charges would reduce the total return figures for all periods shown.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $
----------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)
----------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
==================================================================================
Total from investment operations
==================================================================================
Less distributions:
Dividends from net investment income
----------------------------------------------------------------------------------
Distributions from net realized gains
==================================================================================
Total distributions
==================================================================================
Net asset value, end of period $
__________________________________________________________________________________
==================================================================================
Total return(b) %
__________________________________________________________________________________
==================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $
__________________________________________________________________________________
==================================================================================
Ratio of expenses to average net assets:
With fee waivers %
----------------------------------------------------------------------------------
Without fee waivers %
==================================================================================
Ratio of net investment income (loss) to average net assets %
==================================================================================
Ratio of interest expense to average net assets %
__________________________________________________________________________________
==================================================================================
Portfolio turnover rate %
__________________________________________________________________________________
==================================================================================
|
(a) Ratios are based on average daily net assets of $ .
(b) Total return does not reflect charges at the separate account level and these charges would reduce the total return figures for all periods shown.
JULY 16
(DATE OPERATIONS
COMMENCED) THROUGH
DECEMBER 31, 2001
------------------
Net asset value, beginning of period $
----------------------------------------------------------------------------------
Income from investment operations:
Net investment income
----------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized)
==================================================================================
Total from investment operations
==================================================================================
Less distributions:
Dividends from net investment income
----------------------------------------------------------------------------------
Distributions from net realized gains
==================================================================================
Total distributions
==================================================================================
Net asset value, end of period $
__________________________________________________________________________________
==================================================================================
Total return(c) %
__________________________________________________________________________________
==================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $
__________________________________________________________________________________
==================================================================================
Ratio of expenses to average net assets %
==================================================================================
Ratio of net investment income to average net assets %
__________________________________________________________________________________
==================================================================================
Portfolio turnover rate %
__________________________________________________________________________________
==================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $ .
(c) Total return does not reflect charges at the separate account level and these charges would reduce the total return figures for all periods shown.
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about each fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about each fund's investments. The funds' annual report also discusses the market conditions and investment strategies that significantly affected each fund's performance during its last fiscal year.
If you wish to obtain free copies of the funds' current SAI, please send a written request to A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or call (800) 410-4246.
You also can review and obtain copies of the funds' SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
[AIM LOGO APPEARSHERE] www.aimfunds.com VI-PRO-2 INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
STATEMENT OF
ADDITIONAL INFORMATION
AIM VARIABLE INSURANCE FUNDS
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
THIS STATEMENT OF ADDITIONAL INFORMATION RELATES TO EACH PORTFOLIO OF AIM
VARIABLE INSURANCE FUNDS LISTED BELOW. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUSES FOR THE FUNDS LISTED BELOW. YOU MAY OBTAIN A COPY OF ANY PROSPECTUS FOR ANY FUND LISTED BELOW FROM AN AUTHORIZED DEALER OR BY WRITING TO:
A I M FUND SERVICES, INC.
P.O. BOX 4739
HOUSTON, TEXAS 77210-4739
OR BY CALLING (800) 347-4246
THIS STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 2002, RELATES TO THE FOLLOWING PROSPECTUSES DATED MAY 1, 2002, FOR THE SERIES I AND SERIES II SHARES OF EACH OF THE FOLLOWING FUNDS:
FUND DATED
---- -----
AIM V.I. AGGRESSIVE GROWTH FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. BALANCED FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V. I. BASIC VALUE FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. BLUE CHIP FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. CAPITAL APPRECIATION FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. CAPITAL DEVELOPMENT FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. CORE EQUITY FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. DIVERSIFIED INCOME FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. GLOBAL UTILITIES FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. GOVERNMENT SECURITIES FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. GROWTH FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. HIGH YIELD FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. INTERNATIONAL GROWTH FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. MID CAP CORE EQUITY FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. MONEY MARKET FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. NEW TECHNOLOGY FUND
SERIES I 5/1/02
SERIES II 5/1/02
AIM V.I. PREMIER EQUITY FUND
SERIES I 5/1/02
SERIES II 5/1/02
|
AIM VARIABLE INSURANCE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION ABOUT THE TRUST...............................................................................1
Fund History.............................................................................................1
Shares of Beneficial Interest............................................................................1
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS..........................................................3
Classification...........................................................................................3
Investment Strategies and Risks..........................................................................3
Equity Investments..............................................................................9
Foreign Investments.............................................................................9
Debt Investments...............................................................................11
Other Investments..............................................................................15
Investment Techniques..........................................................................16
Derivatives....................................................................................21
MANAGEMENT OF THE TRUST..........................................................................................30
Board of Trustees.......................................................................................30
Management Information..................................................................................30
Compensation............................................................................................32
Retirement Plan For Trustees...................................................................32
Deferred Compensation Agreements...............................................................32
Codes of Ethics.........................................................................................33
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..............................................................33
INVESTMENT ADVISORY AND OTHER SERVICES...........................................................................33
Investment Advisor......................................................................................33
Service Agreements......................................................................................36
Other Service Providers.................................................................................36
BROKERAGE ALLOCATION AND OTHER PRACTICES.........................................................................37
Brokerage Transactions..................................................................................37
Commissions.............................................................................................37
Brokerage Selection.....................................................................................38
Regular Brokers or Dealers..............................................................................39
Allocation of Portfolio Transactions....................................................................39
PURCHASE AND REDEMPTION OF SHARES................................................................................40
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................44
Tax Matters.............................................................................................45
DISTRIBUTION OF SECURITIES.......................................................................................46
Distribution Plan.......................................................................................46
Distributor.............................................................................................48
CALCULATION OF PERFORMANCE DATA..................................................................................48
|
APPENDICES: RATINGS OF DEBT SECURITIES......................................................................................A-1 DIRECTORS AND OFFICERS..........................................................................................B-1 TRUSTEE COMPENSATION TABLE......................................................................................C-1 CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.............................................................D-1 MANAGEMENT FEES.................................................................................................E-1 ADMINISTRATIVE SERVICES FEES....................................................................................F-1 BROKERAGE COMMISSIONS...........................................................................................G-1 DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF SECURITIES OF REGULAR BROKERS OR DEALERS ...............H-1 AMOUNTS PAID TO AIM DISTRIBUTORS, INC. PURSUANT TO DISTRIBUTIONS PLAN...........................................I-1 ALLOCATION OF ACTUAL FEES PAID PURSUANT TO DISTRIBUTION PLANS...................................................J-1 PERFORMANCE DATA................................................................................................K-1 FINANCIAL STATEMENTS.............................................................................................FS |
GENERAL INFORMATION ABOUT THE TRUST
FUND HISTORY
AIM Variable Insurance Funds (the "Trust") is a Delaware business trust which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company. The Trust currently consists of eighteen separate portfolios: AIM V.I. Aggressive Growth Fund, AIM V.I. Balanced Fund, AIM V.I. Basic Value Fund, AIM V.I. Blue Chip Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Capital Development Fund, AIM V.I. Core Equity Fund, AIM V.I. Dent Demographic Trends Fund, AIM V.I. Diversified Income Fund, AIM V.I. Global Utilities Fund, AIM V.I. Government Securities Fund, AIM V.I. Growth Fund, AIM V.I. High Yield Fund, AIM V.I. International Growth Fund, AIM V.I. Mid Cap Core Equity Fund, AIM V.I. Money Market Fund, AIM V.I. New Technology Fund and AIM V.I. Premier Equity Fund (each a "Fund" and collectively, the "Funds"). Under the Agreement and Declaration of Trust, dated December 7, 1999, (the "Trust Agreement"), the Board of Trustees is authorized to create new series of shares without the necessity of a vote of shareholders of the Trust.
The Trust was originally organized on January 22, 1993, as a Maryland corporation. AIM V.I. New Technology Fund acquired all the assets and assumed all the liabilities of G.T. Global Variable Telecommunications Fund, a series portfolio of G.T. Global Variable Investment Trust, a Delaware business trusts on October 15, 1999. Prior to May 1, 2000 the AIM V.I. New Technology Fund was named the AIM V.I. Telecommunications Fund. Prior to May 1, 2001, the New Technology Fund was named the AIM V.I. Telecommunications and Technology Fund. All historical financial information of AIM V.I. Technology Fund prior to October 15, 1999 relates to the predecessor fund. Each of the other Funds commenced operations as a series of the Trust. The Trust reorganized as a Delaware business trust on May 1, 2000. All of the Funds, except AIM V.I. Basic Value Fund and AIM V.I. Mid Cap Core Equity Fund, were included in the reorganization. All historical financial and other information contained in this Statement of Additional Information for periods prior to May 1, 2000 relating to these Funds (or a class thereof) is that of the predecessor funds (or the corresponding class thereof). Prior to May 1, 2002, AIM V.I. Core Equity Fund was known as AIM V.I. Growth and Income Fund, AIM V.I International Growth Fund was known as AIM V.I. International Equity Fund, AIM V.I. Mid Cap Core Equity Fund was known as AIM V.I. Mid Cap Equity Fund and AIM V.I. Premier Equity Fund was known as AIM V.I. Value Fund.
SHARES OF BENEFICIAL INTEREST
Shares of beneficial interest of the Trust are redeemable at their net asset value at the option of the shareholder or at the option of the Trust in certain circumstances.
The Trust allocates moneys and other property it receives from the issue or sale of shares of each of its series of shares, and all income, earnings and profits from such issuance and sales, subject only to the rights of creditors, to the appropriate Fund. These assets constitute the underlying assets of each Fund, are segregated on the Trust's books of account, and are charged with the expenses of such Fund and its respective classes. The Trust allocates any general expenses of the Trust not readily identifiable as belonging to a particular Fund by or under the direction of the Board of Trustees, primarily on the basis of relative net assets, or other relevant factors.
Each Fund offers Series I and Series II shares. Each share of each Fund represents an equal proportionate interest in that Fund with each other share and is entitled to such dividends and distributions out of the income belonging to such Fund as are declared by the Board. Each Fund offers two separate classes of shares: Series I shares and Series II shares. Each such class represents interests in the same portfolio of investments. Differing expenses will result in differing net asset values and dividends and distributions. Upon any liquidation of the Trust, shareholders of each class are entitled to share pro rata in the net assets belonging to the applicable Fund allocable to such class available for distribution after satisfaction of outstanding liabilities of the Fund allocable to such class.
The Trust is not required to hold annual or regular meetings of shareholders. Meetings of shareholders of a Fund or Series will be held from time to time to consider matters requiring a vote of such shareholders in accordance with the requirements of the 1940 Act, state law or the provisions of the Trust Agreement. It is not expected that shareholder meetings will be held annually.
The Trust understands that insurance company separate accounts owning shares of the Funds will vote their shares in accordance with the instructions received from owners of insurance company separate accounts ("Contract owners"), annuitants and beneficiaries. Fund shares held by a registered separate account as to which no instructions have been received will be voted for or against any proposition, or in abstention, in the same proportion as the shares of that separate account as to which instructions have been received. Fund shares held by a registered separate account that are not attributable to Contracts will also be voted for or against any proposition in the same proportion as the shares for which voting instructions are received by that separate account. If an insurance company determines, however, that it is permitted to vote any such shares of the Funds in its own right, it may elect to do so, subject to the then current interpretation of the 1940 Act and the rules thereunder.
Each share of a Fund has the same voting, dividend, liquidation and other rights, however, each class of shares of a Fund is subject to different class-specific expenses. Only shareholders of a specific class may vote on matters relating to that class' distribution plan.
Except as specifically noted above, shareholders of each Fund are entitled to one vote per share (with proportionate voting for fractional shares), irrespective of the relative net asset value of the shares of a Fund. However, on matters affecting an individual Fund or class of shares, a separate vote of shareholders of that Fund or class is required. Shareholders of a Fund or class are not entitled to vote on any matter which does not affect that Fund or class but that requires a separate vote of another Fund or class. An example of a matter that would be voted on separately by shareholders of each Fund is the approval of the advisory agreement with A I M Advisors, Inc. ("AIM"), and an example of a matter that would be voted on separately by shareholders of each class of shares is approval of the distribution plans. When issued, shares of each Fund are fully paid and nonassessable, have no preemptive or subscription rights, and are freely transferable. There are no conversion rights. Shares do not have cumulative voting rights, which means that in situations in which shareholders elect trustees, holders of more than 50% of the shares voting for the election of trustees can elect all of the trustees of the Trust, and the holders of less than 50% of the shares voting for the election of trustees will not be able to elect any trustees.
Under Delaware law, shareholders of a Delaware business trust shall be entitled to the same limitations of liability extended to shareholders of private for-profit corporations. There is a remote possibility, however, that shareholders could, under certain circumstances, be held liable for the obligations of the Trust to the extent the courts of another state which does not recognize such limited liability were to apply the laws of such state to a controversy involving such obligations. The Trust Agreement disclaims shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or the trustees to all parties, and each party thereto must expressly waive all rights of action directly against shareholders of the Trust. The Trust Agreement provides for indemnification out of the property of a Fund for all losses and expenses of any shareholder of such Fund held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss due to shareholder liability is limited to circumstances in which a Fund is unable to meet its obligations and the complaining party is not held to be bound by the disclaimer.
The trustees and officers of the Trust will not be liable for any act, omission or obligation of the Trust or any Trustee or officer; however, a trustee or officer is not protected against any liability to the Trust or to the shareholders to which a trustee or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office with the Trust ("Disabling Conduct"). The Trust Agreement provides for indemnification by the Trust of the trustees, the officers and employees or agents of the Trust, provided that such persons
have not engaged in Disabling Conduct. The Trust Agreement also authorizes the purchase of liability insurance on behalf of trustees and officers.
SHARE CERTIFICATES. Shareholders of the Funds do not have the right to demand or require the Trust to issue share certificates, although the Trust in its sole discretion may issue them.
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS
CLASSIFICATION
The Trust is an open-end management investment company. Each of the Funds other than AIM V.I. Global Utilities Fund is "diversified" for purposes of the 1940 Act.
INVESTMENT STRATEGIES AND RISKS
The tables on the following pages identifies various securities and investment techniques used by AIM in managing the Funds. The tables have been marked to indicate those securities and investment techniques that AIM may use to manage a Fund. A Fund might not use all of these techniques at any one time. A Fund's transactions in a particular security or use of a particular technique is subject to limitations imposed by a Fund's investment objective, policies and restrictions described in that Fund's Prospectus and/or this Statement of Additional Information, as well as federal securities laws. The Funds' investment objectives, policies, strategies and practices are non-fundamental unless otherwise indicated. A more detailed description of the securities and investment techniques, as well as the risks associated with those securities and investment techniques that the Funds utilize, follows the table. The descriptions of the securities and investment techniques in this section supplement the discussion of principal investment strategies contained in each Fund's Prospectus; where a particular type of security or investment technique is not discussed in a Fund's Prospectus, that security or investment technique is not a principal investment strategy.
The Board of Trustees of the Trust reserves the right to change any of these non-fundamental investment policies, strategies or practices without shareholder approval. However, shareholders will be notified before any material change in the investment policies becomes effective.
AIM VARIABLE INSURANCE FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
EQUITY FUNDS
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
AIM
V.I.
AIM V.I. AIM AIM V.I. AIM V.I. DENT AIM
AGGRES- AIM V.I. V.I. CAPITAL CAPITAL AIM V.I. DEMO- V.I.
SIVE BASIC BLUE APPRECI- DEVELOP- CORE GRAPHIC GLOBAL
GROWTH VALUE CHIP ATION MENT EQUITY TRENDS UTILITIES
FUND FUND FUND FUND FUND FUND FUND FUND FUND
----------- ---------- -------- ------------- ---------- ---------- --------- ---------
SECURITY/ INVESTMENT
TECHNIQUE
---------------------------------------------------------------------------------------------------------------
EQUITY INVESTMENTS
---------------------------------------------------------------------------------------------------------------
Common Stock X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Preferred Stock X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Convertible
Securities X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Alternative Entity
Securities X X X X X X X X
---------------------------------------------------------------------------------------------------------------
FOREIGN INVESTMENTS
---------------------------------------------------------------------------------------------------------------
Foreign Securities X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Foreign Exchange
Transactions X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Foreign Government X
Obligations
---------------------------------------------------------------------------------------------------------------
DEBT INVESTMENTS
---------------------------------------------------------------------------------------------------------------
Liquid Investments X X X X X X X X
---------------------------------------------------------------------------------------------------------------
OTHER INVESTMENTS
---------------------------------------------------------------------------------------------------------------
REITs X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Other Investment
Companies X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Defaulted Securities
---------------------------------------------------------------------------------------------------------------
INVESTMENT TECHNIQUES
---------------------------------------------------------------------------------------------------------------
Delayed Delivery
Transactions X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
When-Issued
Securities X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Short Sales X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Margin Transactions
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
---------------------- ---------- -------------- ----------- ----------- -----------
AIM V.I. AIM V.I. AIM V.I.
INTER- MID CAP NEW AIM V.I.
AIM V.I. NATIONAL CORE TECH- PREMIER
GROWTH GROWTH EQUITY NOLOGY EQUITY
FUND FUND FUND FUND FUND FUND
---------- -------------- ----------- ----------- -----------
SECURITY/ INVESTMENT
TECHNIQUE
------------------------------------------------------------------------------------
EQUITY INVESTMENTS
------------------------------------------------------------------------------------
Common Stock X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Preferred Stock X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Convertible X X X X X
Securities
---------------------- ---------- -------------- ----------- ----------- -----------
Alternative Entity
Securities X X X X X
------------------------------------------------------------------------------------
FOREIGN INVESTMENTS
------------------------------------------------------------------------------------
Foreign Securities X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Foreign Exchange
Transactions X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Foreign Government
Obligations
------------------------------------------------------------------------------------
DEBT INVESTMENTS
------------------------------------------------------------------------------------
Liquid Investments X X X X X
------------------------------------------------------------------------------------
OTHER INVESTMENTS
------------------------------------------------------------------------------------
REITs X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Other Investment
Companies X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Defaulted Securities
------------------------------------------------------------------------------------
INVESTMENT TECHNIQUES
------------------------------------------------------------------------------------
Delayed Delivery
Transactions X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
When-Issued
Securities X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Short Sales X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Margin Transactions
---------------------- ---------- -------------- ----------- ----------- -----------
|
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
AIM
V.I.
AIM V.I. AIM AIM V.I. AIM V.I. DENT AIM
AGGRES- AIM V.I. V.I. CAPITAL CAPITAL AIM V.I. DEMO- V.I.
SIVE BASIC BLUE APPRECI- DEVELOP- CORE GRAPHIC GLOBAL
GROWTH VALUE CHIP ATION MENT EQUITY TRENDS UTILITIES
FUND FUND FUND FUND FUND FUND FUND FUND FUND
----------- ---------- -------- ------------- ---------- ---------- --------- ---------
SECURITY/ INVESTMENT
TECHNIQUE
---------------------------------------------------------------------------------------------------------------
INVESTMENT TECHNIQUES (CONT'D.)
---------------------------------------------------------------------------------------------------------------
Swap Agreements X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Interfund Loans X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Borrowing X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Lending Portfolio
Securities X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Illiquid Securities X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Rule 144A Securities X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Unseasoned Issuers X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Special Situations X
---------------------------------------------------------------------------------------------------------------
DERIVATIVES
---------------------------------------------------------------------------------------------------------------
Equity-Linked
Derivatives X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Put Options X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Call Options X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Straddles X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Warrants X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Futures Contracts
and Options on
Futures Contracts X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Forward Currency
Contracts X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
Cover X X X X X X X X
---------------------- ----------- ---------- -------- ------------- ---------- ---------- --------- ---------
---------------------- ---------- -------------- ----------- ----------- -----------
AIM V.I. AIM V.I. AIM V.I.
INTER- MID CAP NEW AIM V.I.
AIM V.I. NATIONAL CORE TECH- PREMIER
GROWTH GROWTH EQUITY NOLOGY EQUITY
FUND FUND FUND FUND FUND FUND
---------- -------------- ----------- ----------- -----------
SECURITY/ INVESTMENT
TECHNIQUE
------------------------------------------------------------------------------------
INVESTMENT TECHNIQUES (CONT'D.)
------------------------------------------------------------------------------------
Swap Agreements X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Interfund Loans X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Borrowing X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Lending Portfolio
Securities X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Illiquid Securities X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Rule 144A Securities X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Unseasoned Issuers X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Special Situations
------------------------------------------------------------------------------------
DERIVATIVES
------------------------------------------------------------------------------------
Equity-Linked
Derivatives X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Put Options X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Call Options X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Straddles X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Warrants X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Futures Contracts
and Options on
Futures Contracts X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Forward Currency
Contracts X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
Cover X X X X X
---------------------- ---------- -------------- ----------- ----------- -----------
|
AIM VARIABLE INSURANCE FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
OTHER FUNDS
----------------------- ------------- ------------- ----------------- ------------- ----------------
AIM V.I. AIM V.I. AIM V.I. AIM V.I.
BALANCED DIVERSIFIED GOVERNMENT HIGH YIELD AIM V.I. MONEY
FUND FUND INCOME FUND SECURITIES FUND FUND MARKET FUND
------------- ------------- ----------------- ------------- ----------------
SECURITY/ INVESTMENT
TECHNIQUE
----------------------------------------------------------------------------------------------------
EQUITY INVESTMENTS
----------------------------------------------------------------------------------------------------
Common Stock X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Preferred Stock X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Convertible Securities X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Alternative Entity X X X
Securities
----------------------------------------------------------------------------------------------------
FOREIGN INVESTMENTS
----------------------------------------------------------------------------------------------------
Foreign Securities X X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Foreign Exchange
Transactions X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Foreign Government
Obligations X X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Foreign Bank
Obligations X X X X X
----------------------------------------------------------------------------------------------------
DEBT INVESTMENTS
----------------------------------------------------------------------------------------------------
U.S. Government
Obligations X X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Money Market
Instruments X X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Mortgage-Backed and
Asset-Backed
Securities X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Collateralized
Mortgage Obligations X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Bank Instruments X X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Commercial Instruments X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Participation Loan
Interests X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Investment Grade
Corporate Debt
Obligations X X X X X
----------------------------------------------------------------------------------------------------
|
AIM VARIABLE INSURANCE FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
OTHER FUNDS
----------------------- ------------- ------------- ----------------- ------------- ----------------
AIM V.I. AIM V.I. AIM V.I. AIM V.I.
BALANCED DIVERSIFIED GOVERNMENT HIGH YIELD AIM V.I. MONEY
FUND FUND INCOME FUND SECURITIES FUND FUND MARKET FUND
------------- ------------- ----------------- ------------- ----------------
SECURITY/ INVESTMENT
TECHNIQUE
----------------------------------------------------------------------------------------------------
DEBT INVESTMENTS (CONT'D)
----------------------------------------------------------------------------------------------------
Junk Bonds X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Taxable Municipal
Securities X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Municipal Lease
Obligations
----------------------------------------------------------------------------------------------------
OTHER INVESTMENTS
----------------------------------------------------------------------------------------------------
REITs X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Other Investment
Companies X X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Defaulted Securities X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Variable or Floating
Rate Instruments X X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Zero-Coupon and
Pay-in-Kind Securities X X X X
----------------------------------------------------------------------------------------------------
INVESTMENT TECHNIQUES
----------------------------------------------------------------------------------------------------
Delayed Delivery
Transactions X X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
When-Issued Securities X X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Short Sales X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Swap Agreements X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Interfund Loans X X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Borrowing X X X X X
----------------------------------------------------------------------------------------------------
INVESTMENT TECHNIQUES (CONT'D)
----------------------------------------------------------------------------------------------------
Lending Portfolio
Securities X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Repurchase Agreements X X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
|
AIM VARIABLE INSURANCE FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
OTHER FUNDS
----------------------- ------------- ------------- ----------------- ------------- ----------------
AIM V.I. AIM V.I. AIM V.I. AIM V.I.
BALANCED DIVERSIFIED GOVERNMENT HIGH YIELD AIM V.I. MONEY
FUND FUND INCOME FUND SECURITIES FUND FUND MARKET FUND
------------- ------------- ----------------- ------------- ----------------
SECURITY/ INVESTMENT
TECHNIQUE
----------------------------------------------------------------------------------------------------
Reverse Repurchase
Agreements X X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Dollar Rolls X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Illiquid Securities X X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Rule 144A Securities X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Unseasoned Issuers X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Standby Commitments
----------------------------------------------------------------------------------------------------
DERIVATIVES
----------------------------------------------------------------------------------------------------
Equity-Linked
Derivatives X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Put Options X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Call Options X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Straddles X X [ ] [ ]
----------------------- ------------- ------------- ----------------- ------------- ----------------
Warrants X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Futures Contracts and
Options on Futures
Contracts X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Forward Contracts X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
Cover X X X X
----------------------- ------------- ------------- ----------------- ------------- ----------------
|
Equity Investments
COMMON STOCK. Common stock is issued by companies principally to raise cash for business purposes and represents a residual interest in the issuing company. A Fund participates in the success or failure of any company in which it holds stock. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
Preferred Stock. Preferred stock, unlike common stock, often offers a stated dividend rate payable from a corporation's earnings. If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as call/redemption provisions prior to maturity, a negative feature when interest rates decline. Dividends on some preferred stock may be "cumulative," requiring all or a portion of prior unpaid dividends to be paid before dividends are paid on the issuer's common stock. Preferred stock also generally has a preference over common stock on the distribution of a corporation's assets in the event of liquidation of the corporation, and may be "participating," which means that it may be entitled to a dividend exceeding the stated dividend in certain cases. In some cases an issuer may offer auction rate preferred stock, which means that the interest to be paid is set by auction and will often be reset at stated intervals. The rights of preferred stocks on the distribution of a corporation's assets in the event of a liquidation are generally subordinate to the rights associated with a corporation's debt securities.
CONVERTIBLE SECURITIES. Convertible securities include bonds, debentures, notes, preferred stocks and other securities that may be converted into a prescribed amount of common stock or other equity securities at a specified price and time. The holder of convertible securities is entitled to receive interest paid or accrued on debt, or dividends paid or accrued on preferred stock, until the security matures or is converted.
The value of a convertible security depends on interest rates, the yield of similar nonconvertible securities, the financial strength of the issuer and the seniority of the security in the issuer's capital structure. Convertible securities may be illiquid, and may be required to convert at a time and at a price that is unfavorable to the Fund.
The Funds will invest in a convertible debt security based primarily on the characteristics of the equity security into which it converts, and without regard to the credit rating of the convertible security (even if the credit rating is below investment grade). To the extent that a Fund invests in convertible debt securities with credit ratings below investment grade, such securities may have a higher likelihood of default, although this may be somewhat offset by the convertibility feature. See also "Junk Bonds" below.
ALTERNATIVE ENTITY SECURITIES. Companies that are formed as limited partnerships, limited liability companies, business trusts or other non-corporate entities may issue equity securities that are similar to common or preferred stock of corporations.
Foreign Investments
FOREIGN SECURITIES. Foreign securities are equity or debt securities issued by issuers outside the United States. For all Funds except AIM V.I. International Growth Fund, the term "foreign securities" includes securities in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other securities representing underlying securities of foreign issuers. Depositary Receipts are typically issued by a bank or trust company and evidence ownership of underlying securities issued by foreign corporations.
Each Fund may invest in foreign securities as described in the Prospectus. Investments by a Fund in foreign securities, whether denominated in U.S. dollars or foreign currencies, may entail all of the risks set forth below. Investments by a Fund in ADRs, EDRs or similar securities also may entail some or all of the risks described below.
Currency Risk. The value of the Funds' foreign investments will be affected by changes in currency exchange rates. The U.S. dollar value of a foreign security decreases when the value of the U.S. dollar rises against the foreign currency in which the security is denominated, and increases when the value of the U.S. dollar falls against such currency.
Political and Economic Risk. The economies of many of the countries in which the Funds may invest may not be as developed as the United States' economy and may be subject to significantly different forces. Political or social instability, expropriation or confiscatory taxation, and limitations on the removal of funds or other assets could also adversely affect the value of the Funds' investments.
Regulatory Risk. Foreign companies are not registered with the Securities and Exchange Commission ("SEC") and are generally not subject to the regulatory controls imposed on United States issuers and, as a consequence, there is generally less publicly available information about foreign securities than is available about domestic securities. Foreign companies are not subject to uniform accounting, auditing and financial reporting standards, corporate governance practices and requirements comparable to those applicable to domestic companies. Income from foreign securities owned by the Funds may be reduced by a withholding tax at the source, which tax would reduce dividend income payable to the Funds' shareholders.
Market Risk. The securities markets in many of the countries in which the Funds invest will have substantially less trading volume than the major United States markets. As a result, the securities of some foreign companies may be less liquid and experience more price volatility than comparable domestic securities. Increased custodian costs as well as administrative costs (such as the need to use foreign custodians) may be associated with the maintenance of assets in foreign jurisdictions. There is generally less government regulation and supervision of foreign stock exchanges, brokers and issuers which may make it difficult to enforce contractual obligations. In addition, transaction costs in foreign securities markets are likely to be higher, since brokerage commission rates in foreign countries are likely to be higher than in the United States.
On January 1, 1999, certain members of the European Economic and Monetary Union ("EMU"), established a common European currency known as the "euro" and each member's local currency became a denomination of the euro. It is anticipated that each participating country (currently, Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain) will replace its local currency with the euro by July 1, 2002. The anticipated replacement of existing currencies with the euro on July 1, 2002 could cause market disruptions before or after July 2002 and could adversely affect the value of securities held by a Fund.
Risks of Developing Countries. AIM V.I. Diversified Income Fund, AIM V.I. Global Utilities Fund and AIM V.I. International Growth Fund may invest in securities of companies domiciled in developing countries. Investments in developing countries present risks greater than, and in addition to, those presented by investments in foreign issuers in general. A number of developing countries restrict, to varying degrees, foreign investment in stocks. Repatriation of investment income, capital, and the proceeds of sales by foreign investors may require governmental registration and/or approval in some developing countries. A number of the currencies of developing countries have experienced significant declines against the U.S. dollar in recent years, and devaluation may occur subsequent to investments in these currencies by a Fund. Inflation and rapid fluctuations in inflation rates have had and may continue to have negative effects on the economies and securities markets of certain emerging market countries. Many of the developing securities markets are relatively small, are less diverse, have low trading volumes, suffer periods of relative illiquidity, and are characterized by significant price volatility. There is a risk in developing countries that a future economic or political crisis could lead to price controls, forced mergers of companies, expropriation or confiscatory taxation, seizure, nationalization, or creation of government monopolies, any of which may have a detrimental effect on the Fund's investments.
FOREIGN EXCHANGE TRANSACTIONS. Foreign exchange transactions include direct purchases of futures contracts with respect to foreign currency, and contractual agreements to purchase or sell a
specified currency at a specified future date (up to one year) at a price set at the time of the contract. Such contractual commitments may be forward contracts entered into directly with another party or exchange traded futures contracts.
Each Fund (except AIM V.I. Money Market Fund) has authority to deal in foreign exchange between currencies of the different countries in which it will invest as a hedge against possible variations in the foreign exchange rates between those currencies. A Fund may commit the same percentage of its total assets to foreign exchange hedges as it can invest in foreign securities.
The Funds may utilize either specific transactions ("transaction hedging") or portfolio positions ("position hedging") to hedge foreign currency exposure through foreign exchange transactions. Transaction hedging is the purchase or sale of foreign currency with respect to specific receivables or payables of a Fund accruing in connection with the purchase or sale of its portfolio securities, the sale and redemption of shares of the Fund, or the payment of dividends and distributions by the Fund. Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions (or underlying portfolio security positions, such as in an ADR) denominated or quoted in a foreign currency. Additionally, foreign exchange transactions may involve some of the risks of investments in foreign securities.
FOREIGN GOVERNMENT OBLIGATIONS. Debt securities issued by foreign
governments involve the risks discussed above with respect to foreign
securities. Additionally, the issuer of the debt or the governmental authorities
that control repayment of the debt may be unwilling or unable to pay interest or
repay principal when due. Political or economic changes or the balance of trade
may affect a country's willingness or ability to service its debt obligations
[Periods of economic uncertainty may result in the volatility of market prices
of sovereign debt obligations, especially debt obligations issued by the
government of developing countries.]
Debt Investments
U.S. GOVERNMENT OBLIGATIONS. Obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities include bills, notes and bonds issued by the U.S. Treasury, as well as "stripped" or "zero coupon" U.S. Treasury obligations representing future interest or principal payments on U.S. Treasury notes or bonds. Stripped securities are sold at a discount to their "face value," and may exhibit greater price volatility than interest-bearing securities since investors receive no payment until maturity. Obligations of certain agencies and instrumentalities of the U.S. Government, such as the Government National Mortgage Association ("GNMA"), are supported by the full faith and credit of the U.S. Treasury; others, such as those of the Federal National Mortgage Association ("FNMA"), are supported by the right of the issuer to borrow from the Treasury; others, such as those of the Student Loan Marketing Association ("SLMA"), are supported by the discretionary authority of the U.S. Government to purchase the agency's obligations; still others, though issued by an instrumentality chartered by the U.S. Government, like the Federal Farm Credit Bureau ("FFCB"), are supported only by the credit of the instrumentality. The U.S. Government may choose not to provide financial support to U.S. Government-sponsored agencies or instrumentalities IF IT IS NOT LEGALLY OBLIGATED TO DO SO.
MONEY MARKET INSTRUMENTS AND MATURITIES. Money market instruments in which the Funds will invest will be "First Tier Securities" as defined in Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time. A First-Tier Security is generally a security with a remaining maturity of 397 calendar days or less that has been rated by the Requisite NRSROs in the highest short-term rating category, or a security issued by an issuer that has received a rating by the Requisite NRSROs in the highest short-term rating category with respect to a class of debt obligations (or any debt obligation within that class). First Tier Securities include unrated securities deemed by the Fund's investment adviser to be of comparable quality to such rated securities. A rated security includes a guarantee that has received a short-term rating from a NRSRO, or a guarantee issued by a guarantor that has received a short-term rating from a NRSRO with respect to a class of debt obligations (or any debt obligation within that class). To be a First Tier Security, if a security is subject to a guarantee, the guarantee generally must have received a rating from a NRSRO or be issued by a guarantor that has received a rating with respect to a
class of debt obligations (or any debt obligation within that class) that is comparable in priority or security to the guarantee. Asset backed securities, other than those substantially all of whose qualifying assets consist of obligations of one or more municipal issuers, must have received a rating from a NRSRO to be First Tier Securities. The term "Requisite NRSRO" means (a) any two nationally recognized statistical rating organizations (NRSROs) that have issued a rating with respect to a security or class of debt obligations of an issuer, or (b) if only one NRSRO has issued a rating with respect to such security or issuer at the time the Fund acquires the security, that NRSRO.
AIM V.I. Money Market Fund will attempt to maintain a constant net asset value per share of $1.00 and, to this end, values its assets by the amortized cost method and rounds the per share net asset value of its shares in compliance with applicable rules and regulations. Accordingly, the Fund invests only in securities having remaining maturities of 397 days or less and maintains a dollar weighted average portfolio maturity of 90 days or less. The maturity of a security held by the Fund is determined in compliance with applicable rules and regulations. Certain securities bearing interest at rates that are adjusted prior to the stated maturity of the instrument or that are subject to redemption or repurchase agreements are deemed to have maturities shorter than their stated maturities.
FOREIGN BANK OBLIGATIONS. The AIM V.I. Money Market Fund may invest in Eurodollar obligations (i.e., U.S. dollar-denominated obligations issued by a foreign branch of a domestic bank), Yankee dollar obligations (i.e., U.S. dollar-denominated obligations issued by a domestic branch of a foreign bank) and obligations of foreign branches of foreign banks. The AIM Money Market Fund will limit its aggregate investments in foreign bank obligations, including Eurodollar obligations and Yankee dollar obligations, to 50% of its total assets at the time of purchase, provided that there is no limitation upon the Fund's investments in (a) Eurodollar obligations, if the domestic parent of the foreign branch issuing the obligation is unconditionally liable in the event that the foreign branch for any reason fails to pay on the Eurodollar obligation; and (b) Yankee dollar obligations, if the U.S. branch of the foreign bank is subject to the same regulation as U.S. banks. Eurodollar, Yankee dollar and other foreign bank obligations include time deposits, which are non-negotiable deposits maintained in a bank for a specified period of time at a stated interest rate. For a discussion of the risks pertaining to investments in foreign securities, see "Risk Factors" in this Statement of Additional Information.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. Mortgage-backed securities are mortgage-related securities issued or guaranteed by the U.S. Government, its agencies and instrumentalities, or issued by nongovernment entities. Mortgage-related securities represent pools of mortgage loans assembled for sale to investors by various government agencies such as GNMA and government-related organizations such as FNMA and the Federal Home Loan Mortgage Corporation ("FHLMC"), as well as by nongovernment issuers such as commercial banks, savings and loan institutions, mortgage bankers and private mortgage insurance companies. Although certain mortgage-related securities are guaranteed by a third party or otherwise similarly secured, the market value of the security, which may fluctuate, is not so secured.
There are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related securities and among the securities they issue. Mortgage-related securities issued by GNMA include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as to the timely payment of principal and interest. That guarantee is backed by the full faith and credit of the U.S. Treasury. GNMA is a corporation wholly owned by the U.S. Government within the Department of Housing and Urban Development. Mortgage-related securities issued by FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes") and are guaranteed as to payment of principal and interest by FNMA itself and backed by a line of credit with the U.S. Treasury. FNMA is a government-sponsored entity wholly owned by public stockholders. Mortgage-related securities issued by FHLMC include FHLMC Mortgage Participation Certificates (also known as "Freddie Macs") guaranteed as to payment of principal and interest by FHLMC itself and backed by a line of credit with the U.S. Treasury. FHLMC is a government-sponsored entity wholly owned by public stockholders.
Other asset-backed securities are structured like mortgage-backed securities, but instead of mortgage loans or interests in mortgage loans, the underlying assets may include such items as motor vehicle installment sales or installment loan contracts, leases of various types of real and personal property, and receivables from credit card agreements. Regular payments received in respect of such securities include both interest and principal. Asset-backed securities typically have no U.S. Government backing. Additionally, the ability of an issuer of asset-backed securities to enforce its security interest in the underlying assets may be limited.
If a Fund purchases a mortgage-backed or other asset-backed security at a premium, that portion may be lost if there is a decline in the market value of the security whether resulting from changes in interest rates or prepayments in the underlying collateral. As with other interest-bearing securities, the prices of such securities are inversely affected by changes in interest rates. However, though the value of a mortgage-backed or other asset-backed security may decline when interest rates rise, the converse is not necessarily true, since in periods of declining interest rates the mortgages and loans underlying the securities are prone to prepayment, thereby shortening the average life of the security and shortening the period of time over which income at the higher rate is received. When interest rates are rising, though, the rate of prepayment tends to decrease, thereby lengthening the period of time over which income at the lower rate is received. For these and other reasons, a mortgage-backed or other asset-backed security's average maturity may be shortened or lengthened as a result of interest rate fluctuations and, therefore, it is not possible to predict accurately the security's return.
BANK INSTRUMENTS.
Bankers' Acceptances -- A bill of exchange or time draft drawn on and accepted by a commercial bank. It is used by corporations to finance the shipment and storage of goods and to furnish dollar exchange. Maturities are generally six months or less.
Certificates of Deposit -- A negotiable interest-bearing instrument with a specific maturity. Certificates of deposit are issued by banks and savings and loan institutions in exchange for the deposit of funds and normally can be traded in the secondary market, prior to maturity.
Time Deposits -- A non-negotiable receipt issued by a bank in exchange for the deposit of funds. Like a certificate of deposit, it earns a specified rate of interest over a definite period of time; however, it cannot be traded in the secondary market.
Eurodollar Obligations -- A Eurodollar obligation is a U.S. dollar-denominated obligation issued by a foreign branch of a domestic bank.
Yankee Dollar Obligations -- A Yankee dollar obligation is a U.S. dollar-denominated obligation issued by a domestic branch of a foreign bank.
COMMERCIAL INSTRUMENTS.
Commercial Paper -- The term used to designate unsecured short-term promissory notes issued by corporations and other entities. Maturities on these issues vary from a few days to nine months.
Variable Rate Master Demand Notes -- Variable rate master demand notes are unsecured demand notes that permit investment of fluctuating amounts of money at variable rates of interest pursuant to arrangements with issuers who meet the applicable quality criteria. The interest rate on a variable rate master demand note is periodically redetermined according to a prescribed formula. Although there is no secondary market in master demand notes, the payee may demand payment of the principal amount of the note on relatively short notice. All variable rate master demand notes acquired by the AIM V.I. Money Market Fund will be payable within a prescribed notice period not to exceed seven days.
Investment Grade Corporate Debt Obligations. Each Fund may invest in U.S. dollar-denominated debt obligations issued or guaranteed by U.S. corporations or U.S. commercial banks, U.S. dollar-denominated
obligations of foreign issuers and debt obligations of foreign issuers denominated in foreign currencies. Such debt obligations include, among others, bonds, notes, debentures and variable rate demand notes. In choosing corporate debt securities on behalf of a Fund, its investment adviser may consider (i) general economic and financial conditions; (ii) the specific issuer's (a) business and management, (b) cash flow, (c) earnings coverage of interest and dividends, (d) ability to operate under adverse economic conditions, (e) fair market value of assets, and (f) in the case of foreign issuers, unique political, economic or social conditions applicable to such issuer's country; and, (iii) other considerations deemed appropriate.
PARTICIPATION LOAN INTERESTS. AIM V.I. Money Market Fund may purchase participations in corporate loans. Participation loan interests generally will be acquired from a commercial bank or other financial institution (a "Lender") or from other holders of a participation loan interest (a "Participant"). The purchase of a participation loan interest either from a Lender or a Participant will not result in any direct contractual relationship with the borrowing company ("the Borrower"). Instead, the Fund will be required to rely on the Lender or the Participant that sold the participation loan interest both for the enforcement of the Fund's rights against the Borrower and for the receipt and processing of payments due to the Fund under the loans. The Fund is thus subject to the credit risk of both the Borrower and a Participant. Participation loan interests are generally subject to restrictions on resale. The Fund considers participation loan interests to be illiquid and therefore subject to the Fund's percentage limitation for investments in illiquid securities.
INVESTMENT GRADE CORPORATE DEBT OBLIGATIONS. Each Fund may invest in U.S. dollar-denominated debt obligations issued or guaranteed by U.S. corporations or U.S. commercial banks, U.S. dollar-denominated obligations of foreign issuers and debt obligations of foreign issuers denominated in foreign currencies. Such debt obligations include, among others, bonds, notes, debentures and variable rate demand notes. In choosing corporate debt securities on behalf of a Fund, its investment adviser may consider (i) general economic and financial conditions; (ii) the specific issuer's (a) business and management, (b) cash flow, (c) earnings coverage of interest and dividends, (d) ability to operate under adverse economic conditions, (e) fair market value of assets, and (f) in the case of foreign issuers, unique political, economic or social conditions applicable to such issuer's country; and, (iii) other considerations deemed appropriate.
JUNK BONDS. Junk bonds are lower-rated or non-rated debt securities. Junk bonds are considered speculative with respect to their capacity to pay interest and repay principal in accordance with the terms of the obligation. While generally providing greater income and opportunity for gain, non-investment grade debt securities are subject to greater risks than higher-rated securities.
Companies that issue junk bonds are often highly leveraged, and may not have more traditional methods of financing available to them. During an economic downturn or recession, highly leveraged issuers of high yield securities may experience financial stress, and may not have sufficient revenues to meet their interest payment obligations. Economic downturns tend to disrupt the market for junk bonds, lowering their values, and increasing their price volatility. The risk of issuer default is higher with respect to junk bonds because such issues are generally unsecured and are often subordinated to other creditors of the issuer.
The credit rating of a junk bond does not necessarily address its market value risk, and ratings may from time to time change to reflect developments regarding the issuer's financial condition. The lower the rating of a junk bond, the more speculative its characteristics.
The AIM V.I. Global Utilities Fund may have difficulty selling certain junk bonds because they may have a thin trading market. The lack of a liquid secondary market may have an adverse effect on the market price and each Fund's ability to dispose of particular issues and may also make it more difficult for each Fund to obtain accurate market quotations of valuing these assets. In the event a Fund experiences an unexpected level of net redemptions, the Fund could be forced to sell its junk bonds at an unfavorable price. Prices of junk bonds have been found to be less sensitive to fluctuations in interest rates, and
more sensitive to adverse economic changes and individual corporate developments than those of higher-rated debt securities.
Descriptions of debt securities ratings are found in Appendix A.
TAXABLE MUNICIPAL SECURITIES. Taxable municipal securities are debt securities issued by or on behalf of states and their political subdivisions, the District of Columbia, and possessions of the United States, the interest on which is not exempt from federal income tax.
Other Investments
REAL ESTATE INVESTMENT TRUSTS ("REITS"). REITs are trusts that sell equity or debt securities to investors and use the proceeds to invest in real estate or interests therein. A REIT may focus on particular projects, such as apartment complexes, or geographic regions, such as the southeastern United States, or both.
To the extent consistent with their respective investment objectives and policies, each Fund other than AIM V.I. Money Market Fund may invest up to 15% of its total assets in equity and/or debt securities issued by REITs.
To the extent that a Fund has the ability to invest in REITs, the Fund could conceivably own real estate directly as a result of a default on the securities it owns. A Fund, therefore, may be subject to certain risks associated with the direct ownership of real estate including difficulties in valuing and trading real estate, declines in the value of real estate, risks related to general and local economic conditions, adverse changes in the climate for real estate, environmental liability risks, increases in property taxes and operating expenses, changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values, the appeal of properties to tenants, and increases in interest rates.
In addition to the risks described above, equity REITs may be affected by any changes in the value of the underlying property owned by the trusts, while mortgage REITs may be affected by the quality of any credit extended. Equity and mortgage REITs are dependent upon management skill, are not diversified, and are therefore subject to the risk of financing single or a limited number of projects. Such trusts are also subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to maintain an exemption from the 1940 Act. Changes in interest rates may also affect the value of debt securities held by a Fund. By investing in REITs indirectly through a Fund, a shareholder will bear not only his/her proportionate share of the expenses of the Fund, but also, indirectly, similar expenses of the REITs.
DEFAULTED SECURITIES. The Funds may invest in defaulted securities. In
order to enforce its rights in defaulted securities, The Funds may be required
to participate in various legal proceedings or take possession of and manage
assets securing the issuer's obligations on the defaulted securities. This could
increase a Fund's operating expenses and adversely affect its net asset value.
[The ability of a holder of a defaulted tax-exempt security to enforce the terms
of that security in a bankruptcy proceeding may be more limited than would be
the case with respect to securities of private issuers.] Any investments by the
Funds in defaulted securities will also be considered illiquid securities
subject to the limitations described herein, unless AIM determines that such
defaulted securities are liquid under guidelines adopted by the Board of
Trustees.
VARIABLE OR FLOATING RATE INSTRUMENTS. The Funds may invest in Municipal Securities which have variable or floating interest rates which are readjusted on set dates (such as the last day of the month or calendar quarter) in the case of variable rates or whenever a specified interest rate change occurs in the case of a floating rate instrument. Variable or floating interest rates generally reduce changes in the market price of Municipal Securities from their original purchase price because, upon readjustment, such rates approximate market rates. Accordingly, as interest rates decrease or increase, the potential for capital appreciation or depreciation is less for variable or floating rate Municipal Securities than for fixed rate obligations. Many Municipal Securities with variable or floating interest rates
purchased by a Fund are subject to payment of principal and accrued interest (usually within seven days) on the Fund's demand. The terms of such demand instruments require payment of principal and accrued interest by the issuer, a guarantor, and/or a liquidity provider. All variable or floating rate instruments will meet the applicable quality standards of a Fund. AIM will monitor the pricing, quality and liquidity of the variable or floating rate Municipal Securities held by the Funds.
AIM High Income Municipal Fund may invest in inverse floating rate obligations or residual interest bonds, or other obligations or certificates related to such securities which have similar features. These types of obligations generally have floating or variable interest rates that move in the opposite direction of short-term interest rates, and generally increase or decrease in value in response to changes in short-term interest rates at a rate which is a multiple (typically two) of the rate at which long-term fixed rate tax-exempt securities increase or decrease in response to such changes. As a result, such obligations have the effect of providing investment leverage and may be more volatile than long-term fixed rate tax-exempt securities.
ZERO-COUPON AND PAY-IN-KIND SECURITIES. AIM High Income Municipal Fund may, but does not currently intend to, invest in zero-coupon or pay-in-kind securities. These securities are debt securities that do not make regular cash interest payments. Zero-coupon securities are sold at a deep discount to their face value. Pay-in-kind securities pay interest through the issuance of additional securities. Because zero-coupon and pay-in-kind securities do not pay current cash income, the price of these securities can be volatile when interest rates fluctuate. While these securities do not pay current cash income, federal tax law requires the holders of zero-coupon and pay-in-kind securities to include in income each year the portion of the original issue discount (or deemed discount) and other non-cash income on such securities accrued during that year. In order to qualify as a "regulated investment company" under the Internal Revenue Code of 1986, as amended (the "Code") and to avoid certain excise taxes, AIM High Income Municipal Fund may be required to distribute a portion of such discount and income, and may be required to dispose of other portfolio securities, which could occur during periods of adverse market prices, in order to generate sufficient cash to meet these distribution requirements.
OTHER INVESTMENT COMPANIES. With respect to a Fund's purchase of shares of another investment company, including Affiliated Money Market Funds (defined below), the Fund will indirectly bear its proportionate share of the advisory fees and other operating expenses of such investment company. The Funds have obtained an exemptive order from the SEC allowing them to invest in money market funds that have AIM or an affiliate of AIM as an investment advisor (the "Affiliated Money Market Funds"), provided that investments in Affiliated Money Market Funds do not exceed 25% of the total assets of the investing Fund.
The following restrictions apply to investments in other investment companies other than Affiliated Money Market Funds (defined below): (i) a Fund may not purchase more than 3% of the total outstanding voting stock of another investment company; (ii) a Fund may not invest more than 5% of its total assets in securities issued by another investment company; and (iii) a Fund may not invest more than 10% of its total assets in securities issued by other investment companies other than Affiliated Money Market Funds.
Investment Techniques
DELAYED DELIVERY TRANSACTIONS. Delayed delivery transactions involve commitments by a Fund to dealers or issuers to acquire or sell securities at a specified future date beyond the customary settlement for such securities. These commitments may fix the payment price and interest rate to be received or paid on the investment. A Fund may purchase securities on a delayed delivery to the extent it can anticipate having available cash on settlement date. Delayed delivery agreements will not be used as a speculative or leverage technique.
Investment in securities on a delayed delivery basis may increase a Fund's exposure to market fluctuation and may increase the possibility that the Fund will incur short-term gains subject to federal taxation or short-term losses if the Fund must engage in portfolio transactions in order to honor a delayed
delivery commitment. Until the settlement date, a Fund will segregate liquid assets of a dollar value sufficient at all times to make payment for the delayed delivery transactions. Such segregated liquid assets will be marked-to-market daily, and the amount segregated will be increased if necessary to maintain adequate coverage of the delayed delivery commitments. No additional delayed delivery agreements or when-issued commitments (as described below) will be made by a Fund if, as a result, more than 25% of the Fund's total assets would become so committed.
The delayed delivery securities, which will not begin to accrue interest or dividends until the settlement date, will be recorded as an asset of a Fund and will be subject to the risk of market fluctuation. The purchase price of the delayed delivery securities is a liability of a Fund until settlement. Absent extraordinary circumstances, a Fund will not sell or otherwise transfer the delayed delivery basis securities prior to settlement.
AIM V.I. Government Securities Fund may enter into buy/sell back transactions (a form of delayed delivery agreement). In a buy/sell back transaction, the Fund enters a trade to sell securities at one price and simultaneously enters a trade to buy the same securities at another price for settlement at a future date.
WHEN-ISSUED SECURITIES. Purchasing securities on a "when-issued" basis means that the date for delivery of and payment for the securities is not fixed at the date of purchase, but is set after the securities are issued. The payment obligation and, if applicable, the interest rate that will be received on the securities are fixed at the time the buyer enters into the commitment. A Fund will only make commitments to purchase such securities with the intention of actually acquiring such securities, but the Fund may sell these securities before the settlement date if it is deemed advisable.
Securities purchased on a when-issued basis and the securities held in a Fund's portfolio are subject to changes in market value based upon the public's perception of the creditworthiness of the issuer and, if applicable, changes in the level of interest rates. Therefore, if a Fund is to remain substantially fully invested at the same time that it has purchased securities on a when-issued basis, there will be a possibility that the market value of the Fund's assets will fluctuate to a greater degree. Furthermore, when the time comes for the Fund to meet its obligations under when-issued commitments, the Fund will do so by using then available cash flow, by sale of the segregated liquid assets, by sale of other securities or, although it would not normally expect to do so, by directing the sale of the when-issued securities themselves (which may have a market value greater or less than the Fund's payment obligation).
Investment in securities on a when-issued basis may increase a Fund's exposure to market fluctuation and may increase the possibility that the Fund will incur short-term gains subject to federal taxation or short-term losses if the Fund must engage in portfolio transactions in order to honor a when-issued commitment. A Fund will employ techniques designed to reduce such risks. If a Fund purchases a when-issued security, the Fund's custodian bank will segregate liquid assets in an amount equal to the when-issued commitment. If the market value of such segregated assets declines, additional liquid assets will be segregated on a daily basis so that the market value of the segregated assets will equal the amount of the Fund's when-issued commitments. No additional delayed delivery agreements (as described above) or when-issued commitments will be made by a Fund if, as a result, more than 25% of the Fund's total assets would become so committed.
SHORT SALES. In a short sale, a Fund does not immediately deliver the securities sold and does not receive the proceeds from the sale. A Fund is said to have a short position in the securities sold until it delivers the securities sold, at which time it receives the proceeds of the sale. A Fund will make a short sale, as a hedge, when it believes that the price of a security may decline, causing a decline in the value of a security owned by the Fund or a security convertible into or exchangeable for such security, or when the Fund does not want to sell the security it owns, because it wishes to defer recognition of gain or loss for federal income tax purposes. In such case, any future losses in a Fund's long position should be reduced by a gain in the short position. Conversely, any gain in the long position should be reduced by a loss in the short position. The extent to which such gains or losses are reduced will depend upon the amount of the security sold short relative to the amount a Fund owns, either directly or indirectly, and, in the case where the Fund owns convertible securities, changes in the conversion premium. In determining the number of shares to be sold short against a Fund's position in a convertible security, the anticipated fluctuation in the conversion premium is considered. A Fund may also make short sales to generate additional income from the investment of the cash proceeds of short sales.
A Fund will only make short sales "against the box," meaning that at all times when a short position is open, the Fund owns an equal amount of such securities or securities convertible into or exchangeable, without payment of any further consideration, for securities of the same issue as, and equal in amount to, the securities sold short. To secure its obligation to deliver the securities sold short, a Fund will segregate with its custodian an equal amount to the securities sold short or securities convertible into or exchangeable for such securities. A Fund may pledge no more than 10% of its total assets as collateral for short sales at any time.
MARGIN TRANSACTIONS. None of the Funds will purchase any security on margin, except that each Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities. The payment by a Fund of initial or variation margin in connection with futures or related options transactions will not be considered the purchase of a security on margin.
SWAP AGREEMENTS. Each Fund other than AIM V.I. Money Market Fund, may enter into interest rate, index and currency exchange rate swap agreements for purposes of attempting to obtain a particular desired return at a lower cost to the Fund than if it had invested directly in an instrument that yielded that desired return. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard "swap" transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or "swapped" between the parties are calculated with respect to a "notional amount," i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a "basket" of securities representing a particular index. Commonly used swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or "cap"; interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified level, or "floor"; and interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels.
The "notional amount" of the swap agreement is only a fictive basis on which to calculate the obligations which the parties to a swap agreement have agreed to exchange. Most swap agreements entered into by a Fund would calculate the obligations of the parties to the agreement on a "net basis." Consequently, a Fund's obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the "net amount"). Obligations under a swap agreement will be accrued daily (offset against amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by segregating liquid assets, to avoid any potential leveraging of the Fund. A Fund will not enter into a swap agreement with any single party if the net amount owned to or to be received under existing contracts with that party would exceed 5% of the Fund's total assets. For a
discussion of the tax considerations relating to swap agreements, see "Dividends, Distributions and Tax Matters - Swap Agreements."
INTERFUND LOANS. Each Fund may lend up to 15% of its net assets to other AIM Funds and each Fund may borrow from other AIM Funds to the extent permitted under such Fund's investment restrictions. During temporary or emergency periods, the percentage of a Fund's net assets that may be loaned to other AIM Funds may be increased as permitted by the SEC. If any interfund loans are outstanding, a Fund cannot make any additional investments. If a Fund has borrowed from other AIM Funds and has aggregate borrowings from all sources that exceed 10% of such Fund's total assets, such Fund will secure all of its loans from other AIM Funds. The ability of a Fund to lend its securities to other AIM Funds is subject to certain other terms and conditions.
BORROWING. Each Fund may borrow money to a limited extent for temporary or emergency purposes. If there are unusually heavy redemptions because of changes in interest rates or for any other reason, a Fund may have to sell a portion of its investment portfolio at a time when it may be disadvantageous to do so. Selling fund securities under these circumstances may result in a lower net asset value per share or decreased dividend income, or both. The Trust believes that, in the event of abnormally heavy redemption requests, the Fund's borrowing ability would help to mitigate any such effects and could make the forced sale of their portfolio securities less likely.
LENDING PORTFOLIO SECURITIES. Each Fund except AIM V.I. Money Market Fund may lend its portfolio securities (principally to broker-dealers) where such loans are callable at any time and are continuously secured by segregated collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash, letters of credit, or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Each Fund may lend portfolio securities to the extent of one-third of its total assets.
The Fund would continue to receive the income on loaned securities and would, at the same time, earn interest on the loan collateral or on the investment of any cash collateral. A Fund will not have the right to vote securities while they are being lent, but it can call a loan in anticipation of an important vote. Any cash collateral pursuant to these loans would be invested in short-term money market instruments or Affiliated Money Market Funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned increases and the collateral is not increased accordingly or in the event of default by the borrower. The Fund could also experience delays and costs in gaining access to the collateral.
REPURCHASE AGREEMENTS. Repurchase agreements are agreements under which a Fund acquires ownership of a security from a broker-dealer or bank that agrees to repurchase the security at a mutually agreed upon time and price (which is higher than the purchase price), thereby determining the yield during the Fund's holding period. A Fund may, however, enter into a "continuing contract" or "open" repurchase agreement under which the seller is under a continuing obligation to repurchase the underlying obligation from the Fund on demand and the effective interest rate is negotiated on a daily basis. Each of the Funds may engage in repurchase agreement transactions involving the types of securities in which it is permitted to invest.
If the seller of a repurchase agreement fails to repurchase the security in accordance with the terms of the agreement, the Fund might incur expenses in enforcing its rights, and could experience losses, including a decline in the value of the underlying security and loss of income. The securities underlying a repurchase agreement will be marked to market every business day so that the value of such securities is at least equal to the investment value of the repurchase agreement, including any accrued interest thereon.
The Funds have obtained an exemptive order from the SEC allowing them to invest their cash balances in joint accounts for the purpose of investing in repurchase agreements with maturities not to exceed 60 days, and in certain other money market instruments with remaining maturities not to exceed 90 days. Repurchase agreements are considered loans by a Fund under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. Reverse repurchase agreements are
agreements that involve the sale of securities held by a Fund to financial
institutions such as banks and broker-dealers, with an agreement that the Fund
will repurchase the securities at an agreed upon price and date. A Fund may
employ reverse repurchase agreements (i) for temporary emergency purposes, such
as to meet unanticipated net redemptions so as to avoid liquidating other
portfolio securities during unfavorable market conditions; (ii) to cover
short-term cash requirements resulting from the timing of trade settlements; or
(iii) to take advantage of market situations where the interest income to be
earned from the investment of the proceeds of the transaction is greater than
the interest expense of the transaction. At the time it enters into a reverse
repurchase agreement, a Fund will segregate liquid assets having a dollar value
equal to the repurchase price, and will subsequently continually monitor the
account to ensure that such equivalent value is maintained at all times. Reverse
repurchase agreements involve the risk that the market value of securities to be
purchased by the Fund may decline below the price at which it is obligated to
repurchase the securities, or that the other party may default on its
obligation, so that the Fund is delayed or prevented from completing the
transaction. Reverse repurchase agreements are considered borrowings by a Fund
under the 1940 Act.
DOLLAR ROLLS. A dollar roll involves the sale by a fund of a mortgage security to a financial institution such as a broker-dealer or a bank, with an agreement to repurchase a substantially similar (i.e., same type, coupon and maturity) security at an agreed upon price and date. The mortgage securities that are repurchased will bear the same interest rate as those sold, but will generally be collateralized by different pools of mortgages with different prepayment histories. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal payments on the securities sold. Proceeds of the sale will be invested in short-term instruments, and the income from these investments, together with any additional fee income received on the sale, could generate income for the Fund exceeding the yield on the sold security.
Dollar roll transactions involve the risk that the market value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to repurchase under the agreement. In the event the buyer of securities under a dollar roll transaction files for bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities.
At the time the Fund enters into a dollar roll, it will segregate liquid assets having a dollar value equal to the repurchase price, and will monitor the account to ensure that such equivalent value is maintained. The Fund typically enters into dollar roll transactions to enhance the Fund's return either on an income or total return basis or to manage prepayment risk. Dollar rolls are considered borrowings by a Fund under the 1940 Act.
ILLIQUID SECURITIES. Illiquid securities are securities that cannot be disposed of within seven days in the normal course of business at the price at which they are valued. Illiquid securities may include securities that are subject to restrictions on resale because they have not been registered under the Securities Act of 1933 (the "1933 Act"). Restricted securities may, in certain circumstances, be resold pursuant to Rule 144A, and thus may or may not constitute illiquid securities.
Each Fund, except AIM V.I. Money Market Fund, may invest up to 15% of its net assets in securities that are illiquid. AIM V.I. Money Market Fund may invest up to 10% of its net assets in securities that are illiquid. Limitations on the resale of restricted securities may have an adverse effect on their marketability, which may prevent a Fund from disposing of them promptly at reasonable prices. A Fund may have to bear the expense of registering such securities for resale, and the risk of substantial delays in effecting such registrations.
RULE 144A SECURITIES. Rule 144A securities are securities which, while privately placed, are eligible for purchase and resale pursuant to Rule 144A under the 1933 Act. This Rule permits certain qualified institutional buyers, such as the Funds, to trade in privately placed securities even though such
securities are not registered under the 1933 Act. AIM, under the supervision of
the Board of Trustees, will consider whether securities purchased under Rule
144A are illiquid and thus subject to the Funds' restriction on investment in
illiquid securities. Determination of whether a Rule 144A security is liquid or
not is a question of fact. In making this determination AIM will consider the
trading markets for the specific security taking into account the unregistered
nature of a Rule 144A security. In addition, AIM could consider the (i)
frequency of trades and quotes; (ii) number of dealers and potential purchasers;
(iii) dealer undertakings to make a market; and (iv) nature of the security and
of market place trades (for example, the time needed to dispose of the security,
the method of soliciting offers and the mechanics of transfer). AIM will also
monitor the liquidity of Rule 144A securities and, if as a result of changed
conditions, AIM determines that a Rule 144A security is no longer liquid, AIM
will review a Fund's holdings of illiquid securities to determine what, if any,
action is required to assure that such Fund complies with its restriction on
investment in illiquid securities. Investing in Rule 144A securities could
increase the amount of each Fund's investments in illiquid securities if
qualified institutional buyers are unwilling to purchase such securities.
UNSEASONED ISSUERS. Investments in the equity securities of companies having less than three years' continuous operations (including operations of any predecessor) involve more risk than investments in the securities of more established companies because unseasoned issuers have only a brief operating history and may have more limited markets and financial resources. As a result, securities of unseasoned issuers tend to be more volatile than securities of more established companies.
SPECIAL SITUATIONS. A special situation arises when, in the opinion of the Fund's management, the securities of a particular company will, within a reasonably estimable period of time, be accorded market recognition at an appreciated value solely by reason of a development applicable to that company, and regardless of general business conditions or movements of the market as a whole. Developments creating special situations might include things such as liquidations, reorganizations, recapitalizations, mergers, material litigation, technical breakthroughs and new management or management policies. Although large and well known companies may be involved, special situations more often involve comparatively small or unseasoned companies. Investments in unseasoned companies and special situations often involve much greater risk than is inherent in ordinary investment securities
Derivatives
The Funds may each invest in forward contracts, futures contracts, options on securities, options on indices, options on currencies, and options on futures contracts to attempt to hedge against the overall level of investment and currency risk normally associated with each Fund's investments. The Funds may also invest in equity-linked derivative products designed to replicate the composition and performance of particular indices. These instruments are often referred to as "derivatives," which may be defined as financial instruments whose performance is derived, at least in part, from the performance of another asset (such as a security, currency or an index of securities).
EQUITY-LINKED DERIVATIVES. Equity-Linked Derivatives are interests in a securities portfolio designed to replicate the composition and performance of a particular securities index. Equity-Linked Derivatives are exchange traded. The performance results of Equity-Linked Derivatives will not replicate exactly the performance of the pertinent index due to transaction and other expenses, including fees to service providers, borne by the Equity-Linked Derivatives. Examples of such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark Series ("WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial Average Instruments ("DIAMONDS") and Optimised Portfolios As Listed Securities ("OPALS"). Investments in Equity-Linked Derivatives involve the same risks associated with a direct investment in the types of securities included in the indices such products are designed to track. There can be no assurance that the trading price of the Equity-Linked Derivatives will equal the underlying value of the basket of securities purchased to replicate a particular index or that such basket will replicate the index. Investments in Equity-Linked Derivatives may constitute investments in other investment companies, and therefore, a Fund may be subject to the same investment restrictions with Equity-Linked Derivatives as with other investment companies. See "Other Investment Companies."
PUT AND CALL OPTIONS. A call option gives the purchaser the right to buy the underlying security, futures contract or foreign currency at the stated exercise price at any time prior to the expiration of the option (or on a specified date if the option is a European style option), regardless of the market price or exchange rate of the security, contract or foreign currency, as the case may be at the time of exercise. If the purchaser exercises the call option, the writer of a call option is obligated to sell the underlying security, contract or foreign currency. A put option gives the purchaser the right to sell the underlying security, contract or foreign currency at the stated exercise price at any time prior to the expiration date of the option (or on a specified date if the option is a European style option), regardless of the market price or exchange rate of the security, contract or foreign currency, as the case may be at the time of exercise. If the purchaser exercises the put option, the writer of a put option is obligated to buy the underlying security, contract or foreign currency. The premium paid to the writer is consideration for undertaking the obligations under the option contract. Until an option expires or is offset, the option is said to be "open." When an option expires or is offset, the option is said to be "closed."
A Fund will not write (sell) options if, immediately after such sale, the aggregate value of securities or obligations underlying the outstanding options exceeds 20% of the Fund's total assets. A Fund will not purchase options if, at any time of the investment, the aggregate premiums paid for the options will exceed 5% of the Fund's total assets.
Pursuant to federal securities rules and regulations, a Fund's use of options may require that Fund to set aside assets to reduce the risks associated with using those options. This process is described in more detail below in the section "Cover."
Writing Options. A Fund may write put and call options in an attempt to realize, through the receipt of premiums, a greater current return than would be realized on the underlying security, futures contract, or foreign currency alone. In return for the premium received for writing a call option, the Fund foregoes the opportunity for profit from a price increase in the underlying security, contract, or foreign currency above the exercise price so long as the option remains open, but retains the risk of loss should the price of the underling security, contract, or foreign currency decline. In return for the premium received for writing a put option, the Fund assumes the risk that the price of the underlying security, contract, or foreign currency will decline below the exercise price, in which case the put would be exercised and the Fund would be required to buy the security at a higher cost than it could buy such security in the open market.
If a call option that a Fund has written expires, it will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the market value of the underlying security, contract or currency during the option period. If the call option is exercised, a Fund will realize a gain or loss from the sale of the underlying security, contract or currency, which will be increased or offset to the extent of the premium received. A Fund would write a put option at an exercise price that, reduced by the premium received on the option, reflects the lowest price it is willing to receive for the underlying security, contract or currency. The obligation imposed upon the writer of an option is terminated upon the expiration of the option, or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option (put or call as the case may be) identical to that previously sold.
Writing call options can serve as a limited hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. Closing transactions may be effected in order to realize a profit on an outstanding call option, to prevent an underlying security, contract or currency from being called or to permit the sale of the underlying security, contract or currency. Furthermore, effecting a closing transaction will permit a Fund to write another call option on the underlying security, contract or currency with either a different exercise price or expiration date, or both.
Purchasing Options. A Fund may purchase a call option for the purpose of acquiring the underlying security, contract or currency for its portfolio. Utilized in this fashion, the purchase of call options would enable a Fund to acquire the security, contract or currency at the exercise price of the call
option plus the premium paid. So long as it holds such a call option, rather than the underlying security or currency itself, the Fund is partially protected from any unexpected decline in the market price of the underlying security, contract or currency. If the market price does not exceed the exercise price, the Fund could purchase the security on the open market and could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option. Each of the Funds may also purchase call options on underlying securities, contracts or currencies against which it has written other call options. For example, where a Fund has written a call option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a call option with a different exercise strike and/or expiration date that would eliminate some or all of the risk associated with the written call. Used in combinations, these strategies are commonly referred to as "call spreads."
A Fund may purchase a put option on an underlying security, contract or currency ("protective put") owned by the Fund in order to protect against an anticipated decline in the value of the security, contract or currency. Such hedge protection is provided only during the life of the put option. The premium paid for the put option and any transaction costs would reduce any profit realized when the security, contract or currency is delivered upon the exercise of the put option. Conversely, if the underlying security, contract or currency does not decline in value, the option may expire worthless and the premium paid for the protective put would be lost. A Fund may also purchase put options on underlying securities, contracts or currencies against which it has written other put options. For example, where a Fund has written a put option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a put option with a different exercise price and/or expiration date that would eliminate some or all of the risk associated with the written put. Used in combinations, these strategies are commonly referred to as "put spreads." Likewise, a Fund may write call options on underlying securities, contracts or currencies against which it has purchased protective put options. This strategy is commonly referred to as a "collar."
Over-The-Counter Options. Options may be either listed on an exchange or traded in over-the-counter ("OTC") markets. Listed options are third-party contracts (i.e., performance of the obligations of the purchaser and seller is guaranteed by the exchange or clearing corporation) and have standardized strike prices and expiration dates. OTC options are two-party contracts with negotiated strike prices and expiration dates. A Fund will not purchase an OTC option unless it believes that daily valuations for such options are readily obtainable. OTC options differ from exchange-traded options in that OTC options are transacted with dealers directly and not through a clearing corporation (which guarantees performance). Consequently, there is a risk of non-performance by the dealer. Since no exchange is involved, OTC options are valued on the basis of an average of the last bid prices obtained from dealers, unless a quotation from only one dealer is available, in which case only that dealer's price will be used. In the case of OTC options, there can be no assurance that a liquid secondary market will exist for any particular option at any specific time. Because purchased OTC options in certain cases may be difficult to dispose of in a timely manner, the Fund may be required to treat some or all of these options (i.e., the market value) as illiquid securities. Although a Fund will enter into OTC options only with dealers that are expected to be capable of entering into closing transactions with it, there is no assurance that the Fund will in fact be able to close out an OTC option position at a favorable price prior to expiration. In the event of insolvency of the dealer, a Fund might be unable to close out an OTC option position at any time prior to its expiration.
Index Options. Index options (or options on securities indices) are similar in many respects to options on securities, except that an index option gives the holder the right to receive, upon exercise, cash instead of securities, if the closing level of the securities index upon which the option is based is greater than, in the case of a call, or less than, in the case of a put, the exercise price of the option. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call or put times a specified multiple (the "multiplier"), which determines the total dollar value for each point of such difference.
The risks of investment in index options may be greater than options on securities. Because index options are settled in cash, when a Fund writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying securities. A Fund can offset
some of the risk of writing a call index option position by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, the Fund cannot, as a practical matter, acquire and hold a portfolio containing exactly the same securities as underlie the index and, as a result, bears a risk that the value of the securities held will not be perfectly correlated with the value of the index.
STRADDLES. A Fund, for hedging purposes, may write straddles (combinations of put and call options on the same underlying security) to adjust the risk and return characteristics of the Fund's overall position. A possible combined position would involve writing a covered call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written covered call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out.
WARRANTS. Warrants are, in effect, longer-term call options. They give the holder the right to purchase a given number of shares of a particular company at specified prices within certain periods of time. The purchaser of a warrant expects that the market price of the security will exceed the purchase price of the warrant plus the exercise price of the warrant, thus giving him a profit. Since the market price may never exceed the exercise price before the expiration date of the warrant, the purchaser of the warrant risks the loss of the entire purchase price of the warrant. Warrants generally trade in the open market and may be sold rather than exercised. Warrants are sometimes sold in unit form with other securities of an issuer. Units of warrants and common stock may be employed in financing young, unseasoned companies. The purchase price of a warrant varies with the exercise price of the warrant, the current market value of the underlying security, the life of the warrant and various other investment factors.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A Futures Contract is a two party agreement to buy or sell a specified amount of a specified security or currency (or delivery of a cash settlement price, in the case of an index future) for a specified price at a designated date, time and place (collectively, "Futures Contracts"). A stock index Futures Contract provides for the delivery, at a designated date, time and place, of an amount of cash equal to a specified dollar amount times the difference between the stock index value at the close of trading on the contract and the price agreed upon in the Futures Contract; no physical delivery of stocks comprising the index is made. Brokerage fees are incurred when a Futures Contract is bought or sold, and margin deposits must be maintained at all times when a Futures Contract is outstanding.
A Fund will enter into Futures Contracts for hedging purposes only; that is, Futures Contracts will be sold to protect against a decline in the price of securities or currencies that the Fund owns, or Futures Contracts will be purchased to protect the Fund against an increase in the price of securities or currencies it has committed to purchase or expects to purchase. A Fund's hedging may include sales of Futures Contracts as an offset against the effect of expected increases in interest rates, and decreases in currency exchange rates and stock prices, and purchases of Futures Contracts as an offset against the effect of expected declines in interest rates, and increases in currency exchange rates or stock prices.
The Funds will only enter into Futures Contracts that are traded (either domestically or internationally) on futures exchanges and are standardized as to maturity date and underlying financial instrument. Futures exchanges and trading thereon in the United States are regulated under the Commodity Exchange Act and by the Commodity Futures Trading Commission ("CFTC"). Foreign futures exchanges and trading thereon are not regulated by the CFTC and are not subject to the same regulatory controls. For a further discussion of the risks associated with investments in foreign securities, see "Foreign Investments" in this Statement of Additional Information.
Closing out an open Futures Contract is effected by entering into an offsetting Futures Contract for the same aggregate amount of the identical financial instrument or currency and the same delivery date. There can be no assurance, however, that a Fund will be able to enter into an offsetting transaction with respect to a particular Futures Contract at a particular time. If a Fund is not able to enter into an offsetting transaction, it will continue to be required to maintain the margin deposits on the Futures Contract.
"Margin" with respect to Futures Contracts is the amount of funds that must be deposited by a Fund in order to initiate Futures Contracts trading and maintain its open positions in Futures Contracts. A margin deposit made when the Futures Contract is entered ("initial margin") is intended to ensure the Fund's performance under the Futures Contract. The margin required for a particular Futures Contract is set by the exchange on which the Futures Contract is traded and may be significantly modified from time to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures commission merchant through which a Fund entered into the Futures Contract will be made on a daily basis as the price of the underlying security, currency or index fluctuates making the Futures Contract more or less valuable, a process known as marking-to-market.
If a Fund were unable to liquidate a Futures Contract or an option on a Futures Contract position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Fund would continue to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the Fund would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the Futures Contract or option or to maintain cash or securities in a segregated account.
Options on Futures Contracts. Options on Futures Contracts are similar to options on securities or currencies except that options on Futures Contracts give the purchaser the right, in return for the premium paid, to assume a position in a Futures Contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the period of the option. Upon exercise of the option, the delivery of the Futures Contract position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer's Futures Contract margin account.
Limitations on Futures Contracts and Options on Futures Contracts and on Certain Options on Currencies. To the extent that a Fund enters into Futures Contracts, options on Futures Contracts and options on foreign currencies traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish those positions (excluding the amount by which options are "in-the-money") will not exceed 5% of the total assets of the Fund, after taking into account unrealized profits and unrealized losses on any contracts it has entered into. This guideline may be modified by the Board, without a shareholder vote. This limitation does not limit the percentage of the Fund's assets at risk to 5%.
Pursuant to federal securities rules and regulations, a Fund's use of Futures Contracts and options on Futures Contracts may require that Fund to set aside assets to reduce the risks associated with using Futures Contracts and options on Futures Contracts. This process is described in more detail below in the section "Cover."
FORWARD CURRENCY CONTRACTS. A forward currency contract is an obligation, usually arranged with a commercial bank or other currency dealer, to purchase or sell a currency against another currency at a future date and price as agreed upon by the parties. A Fund either may accept or make delivery of the currency at the maturity of the forward currency contract. A Fund may also, if its contra party agrees prior to maturity, enter into a closing transaction involving the purchase or sale of an offsetting contract. Forward currency contracts are traded over-the-counter, and not on organized commodities or securities exchanges. As a result, it may be more difficult to value such contracts, and it may be difficult to enter into closing transactions.
A Fund may engage in forward currency transactions in anticipation of, or to protect itself against, fluctuations in exchange rates. A Fund may enter into forward currency contracts with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. When a Fund purchases a security denominated in a foreign currency for settlement in the near future, it may immediately purchase in the forward market the currency needed to pay for and settle the purchase. By
entering into a forward currency contract with respect to the specific purchase or sale of a security denominated in a foreign currency, the Fund can secure an exchange rate between the trade and settlement dates for that purchase or sale transaction. This practice is sometimes referred to as "transaction hedging." Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions denominated or quoted in a foreign currency.
The cost to a Fund of engaging in forward currency contracts varies with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward currency contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward currency contracts does not eliminate fluctuations in the prices of the underlying securities a Fund owns or intends to acquire, but it does establish a rate of exchange in advance. In addition, while forward currency contract sales limit the risk of loss due to a decline in the value of the hedged currencies, they also limit any potential gain that might result should the value of the currencies increase.
Pursuant to federal securities rules and regulations, a Fund's use of forward currency contracts may require that Fund to set aside assets to reduce the risks associated with using forward currency contracts. This process is described in more detail below in the section "Cover."
COVER. Transactions using forward contracts, futures contracts and options (other than options purchased by a Fund) expose a Fund to an obligation to another party. A Fund will not enter into any such transactions unless it owns either (1) an offsetting ("covered") position in securities, currencies, or other options, forward contracts or futures contracts or (2) cash, liquid assets and/or short-term debt securities with a value sufficient at all times to cover its potential obligations not covered as provided in (1) above. Each Fund will comply with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash or liquid securities. To the extent that a futures contract, forward contract or option is deemed to be illiquid, the assets used to "cover" the Fund's obligation will also be treated as illiquid for purposes of determining the Fund's maximum allowable investment in illiquid securities.
Even though options purchased by the Funds do not expose the Funds to an obligation to another party, but rather provide the Funds with a right to exercise, the Funds intend to "cover" the cost of any such exercise. To the extent that a purchased option is deemed illiquid, a Fund will treat the market value of the option (i.e., the amount at risk to the Fund) as illiquid, but will not treat the assets used as cover on such transactions as illiquid.
Assets used as cover cannot be sold while the position in the corresponding forward contract, futures contract or option is open, unless they are replaced with other appropriate assets. If a large portion of a Fund's assets is used for cover or otherwise set aside, it could affect portfolio management or the Fund's ability to meet redemption requests or other current obligations.
GENERAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES. The use by the Funds of options, futures contracts and forward currency contracts involves special considerations and risks, as described below. Risks pertaining to particular strategies are described in the sections that follow.
(1) Successful use of hedging transactions depends upon AIM's ability to correctly predict the direction of changes in the value of the applicable markets and securities, contracts and/or currencies. While AIM is experienced in the use of these instruments, there can be no assurance that any particular hedging strategy will succeed.
(2) There might be imperfect correlation, or even no correlation, between the price movements of an instrument (such as an option contract) and the price movements of the investments being hedged. For example, if a "protective put" is used to hedge a potential decline in a security and the security does decline in price, the put option's increased value may not completely offset the loss in the underlying security. Such a lack of correlation might occur due to factors unrelated to the value of the investments
being hedged, such as changing interest rates, market liquidity, and speculative or other pressures on the markets in which the hedging instrument is traded.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements in the investments being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price movements in the hedged investments.
(4) There is no assurance that a liquid secondary market will exist for any particular option, futures contract or option thereon or forward contract at any particular time.
(5) As described above, a Fund might be required to maintain assets as "cover," maintain segregated accounts or make margin payments when it takes positions in instruments involving obligations to third parties. If a Fund were unable to close out its positions in such instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expired or matured. The requirements might impair the Fund's ability to sell a portfolio security or make an investment at a time when it would otherwise be favorable to do so, or require that the Fund sell a portfolio security at a disadvantageous time.
(6) There is no assurance that a Fund will use hedging transactions. For example, if a Fund determines that the cost of hedging will exceed the potential benefit to the Fund, the Fund will not enter into such transaction.
DIVERSIFICATION REQUIREMENTS - AIM V.I. MONEY MARKET FUND. As a money market fund, AIM V.I. Money Market Fund is subject to the diversification requirements of Rule 2a-7 under the 1940 Act. This Rule sets forth two different diversification requirements: one applicable to the issuer of securities (provided that such securities are not subject to a demand feature or a guarantee), and one applicable to securities with demand features or guarantees.
The issuer diversification requirement provides that the Fund may not invest in the securities of any issuer if, as a result, more than 5% of its total assets would be invested in securities issued by such issuer. If the securities are subject to a demand feature or guarantee, however, they are not subject to this requirement. Moreover, for purposes of this requirement, the issuer of a security is not always the nominal issuer. Instead, in certain circumstances, the underlying obligor of a security is deemed to be the issuer of the security. Such circumstances arise for example when another political subdivision agrees to be ultimately responsible for payments of principal of an interest on a security or when the assets and revenues of a non-governmental user of the facility financed with the securities secures repayment of such securities.
The diversification requirement applicable to securities subject to a demand feature or guarantee provides that, with respect to 75% of its total assets, the Fund may not invest more than 10% of its total assets in securities issued by or subject to demand features or guarantees from the same entity. A demand feature permits the Fund to sell a security at approximately its amortized cost value plus accrued interest at specified intervals upon no more than 30 days' notice. A guarantee includes a letter of credit, bond insurance and an unconditional demand feature (provided the demand feature is not provided by the issuer of the security.)
FUNDAMENTAL RESTRICTIONS. Each Fund is subject to the following fundamental investment restrictions, except AIM V.I. Global Utilities Fund is not subject to restrictions (1) or (4). Fundamental restrictions may be changed only by a vote of the lesser of (i) 67% or more of the Fund's shares present at a meeting if the holders of more than 50% of the outstanding shares are present in person or represented by proxy, or (ii) more than 50% of the Fund's outstanding shares. Consistent with applicable law and unless otherwise provided, all percentage limitations apply at the time of purchase.
(1) The Fund is a "diversified company" as defined in the 1940 Act. The Fund will not purchase the securities of any issuer if, as a result, the Fund would fail to be a diversified company within the
meaning of the 1940 Act, and the rules and regulations promulgated thereunder, as such statute, rules and regulations are amended from time to time or are interpreted from time to time by the SEC staff (collectively, the "1940 Act Laws and Interpretations") or except to the extent that the Fund may be permitted to do so by exemptive order or similar relief (collectively, with the 1940 Act Laws and Interpretations, the "1940 Act Laws, Interpretations and Exemptions"). In complying with this restriction, however, the Fund may purchase securities of other investment companies to the extent permitted by the 1940 Act Laws, Interpretations and Exemptions;
(2) The Fund may not borrow money or issue senior securities, except as permitted by the 1940 Act Laws, Interpretations and Exemptions;
(3) The Fund may not underwrite the securities of other issuers. This restriction does not prevent the Fund from engaging in transactions involving the acquisition, disposition or resale of its portfolio securities, regardless of whether the Fund may be considered to be an underwriter under the Securities Act of 1933;
(4) The Fund will not make investments that will result in the concentration (as that term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) of its investments in the securities of issuers primarily engaged in the same industry. This restriction does not limit the Fund's investments in (i) obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, (ii) tax-exempt obligations issued by governments or political subdivisions of governments, or (iii) for AIM V.I. Money Market Fund, bank instruments. In complying with this restriction, the Fund will not consider a bank-issued guaranty or financial guaranty insurance as a separate security;
(5) The Fund may not purchase real estate or sell real estate unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from investing in issuers that invest, deal, or otherwise engage in transactions in real estate or interests therein, or in investing in securities that are secured by real estate or interests therein;
(6) The Fund may not purchase physical commodities or sell physical commodities unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from engaging in transactions involving futures contracts and options thereon or investing in securities that are secured by physical commodities;
(7) The Fund may not make personal loans or loans of its assets to persons who control or are under common control with the Fund, except to the extent permitted by 1940 Act Laws, Interpretations and Exemptions. This restriction does not prevent the Fund from, among other things, purchasing debt obligations, entering into repurchase agreements, loaning its assets to broker-dealers or institutional investors, or investing in loans, including assignments and participation interests; and
(8) The Fund may, notwithstanding any other fundamental investment policy or limitation, invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objectives, policies and limitations as that Fund.
AIM V.I. Global Utilities Fund is also subject to the following fundamental investment restriction:
The Fund will concentrate (as such term may be defined or interpreted by the 1940 Act Laws, Interpretations, and Exemptions) its investments in the securities of domestic and foreign public utility companies.
The investment restrictions set forth above provide the Funds with the ability to operate under new interpretations of the 1940 Act or pursuant to exemptive relief from the SEC without receiving prior shareholder approval of the change. Even though the Funds have this flexibility, the Board of Trustees has adopted non-fundamental restrictions for the Funds relating to certain of these restrictions which the
advisor must follow in managing the Funds. Any changes to these non-fundamental restrictions, which are set forth below, require the approval of the Board of Trustees.
NON-FUNDAMENTAL RESTRICTIONS. The following non-fundamental investment restrictions apply to all of the Funds, except AIM V.I. Global Utilities Fund is not subject to restrictions (1) or (3). They may be changed for any Fund without approval of that Fund's voting securities.
(1) In complying with the fundamental restriction regarding issuer diversification, the Fund will not, with respect to 75% of its total assets (and for AIM V.I. Money Market Fund, with respect to 100% of its total assets), purchase the securities of any issuer (other than securities issued or guaranteed by the U. S. Government or any of its agencies or instrumentalities), if, as a result, (i) more than 5% of the Fund's total assets would be invested in the securities of that issuer, except as permitted by Rule 2a-7 under the 1940 Act, or (ii) the Fund would hold more than 10% of the outstanding voting securities of that issuer. The Fund may (i) purchase securities of other investment companies as permitted by Section 12(d)(1) of the 1940 Act and (ii) invest its assets in securities of money market funds and lend money to other investment companies and their series portfolios that have AIM as an investment advisor, subject to the terms and conditions of any exemptive orders issued by the SEC.
(2) In complying with the fundamental restriction regarding borrowing money and issuing senior securities, the Fund may borrow money in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). The Fund may borrow from banks, broker/dealers or other investment companies or their series portfolios that have AIM or an affiliate of AIM as an investment advisor (an "Advised Fund"). The Fund may not borrow for leveraging, but may borrow for temporary or emergency purposes, in anticipation of or in response to adverse market conditions, or for cash management purposes. The Fund may not purchase additional securities when any borrowing from banks exceeds 5% of the Fund's total assets.
(3) In complying with the fundamental restriction regarding industry concentration, the Fund may invest up to 25% of its total assets in the securities of issuers whose principal business activities are in the same industry.
(4) In complying with the fundamental restriction with regard to making loans, the Fund may lend up to 33 1/3% of its total assets and may lend money to another Advised Fund, on such terms and conditions as the SEC may require in an exemptive order.
(5) Notwithstanding the fundamental restriction with regard to investing all assets in an open-end fund, the Fund may not invest all of its assets in the securities of a single open-end management investment company with the same fundamental investment objectives, policies and restrictions as the Fund.
For purposes of Global Utilities Fund's fundamental restriction regarding industry concentration, public utility companies shall consist of companies that produce or supply electricity, natural gas, water, sanitary services, and telephone, cable satellite, telegraph or other communication or information transmission services, as well as developing utility technology companies and holding companies which derive at least 40% of their revenues from utility-related activities.
TEMPORARY DEFENSIVE POSITIONS
In anticipation of or in response to adverse market or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, the Fund may temporarily hold all or a portion of its assets in cash or the following liquid assets: money market instruments, shares of affiliated money market funds or high-quality debt obligations.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The overall management of the business and affairs of the Funds and the Trust is vested in the Board of Trustees. The Board of Trustees approves all significant agreements between the Trust, on behalf of one or more of the Funds, and persons or companies furnishing services to the Funds. The day-to-day operations of each Fund are delegated to the officers of the Trust and to AIM, subject always to the objective(s), restrictions and policies of the applicable Fund and to the general supervision of the Board of Trustees. Certain trustees and officers of the Trust are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the parent corporation of AIM. All of the Trust's executive officers hold similar offices with some or all of the other AIM Funds.
MANAGEMENT INFORMATION
The trustees and officers of the Trust and their principal occupations during at least the last five years and certain other information concerning them is set forth in Appendix B.
The standing committees of the Board of Trustees are the Audit Committee, the Investments Committee, the Valuation Committee and the Committee on Directors/Trustees.
The members of the Audit Committee are Frank S. Bayley, Bruce L. Crockett, Albert R. Dowden (Vice Chair), Edward K. Dunn, Jr. (Chair), Jack M. Fields, Carl Frischling (on leave of absence), Lewis F. Pennock and Louis S. Sklar, Dr. Prema Mathai-Davis and Miss Ruth H. Quigley. The Audit Committee is responsible for: (i) considering management's recommendations of independent accountants for each Fund and evaluating such accountants' performance, costs and financial stability; (ii) with AIM, reviewing and coordinating audit plans prepared by the Funds' independent accountants and management's internal audit staff; and (iii) reviewing financial statements contained in periodic reports to shareholders with the Funds' independent accountants and management. During the fiscal year ended December 31, 2001, the Audit Committee held [ ] meetings.
The members of the Investments Committee are Messrs. Bayley, Crockett,
Dowden, Dunn, Fields, Frischling, Pennock and Sklar (Chair), Dr. Mathai-Davis
(Vice Chair) and Miss Quigley. The Investments Committee is responsible for: (i)
overseeing AIM's investment-related compliance systems and procedures to ensure
their continued adequacy; and (ii) considering and acting, on an interim basis
between meetings of the full Board, on investment-related matters requiring
Board consideration, including dividends and distributions, brokerage policies
and pricing matters. During the fiscal year ended December 31, 2001, the
Investments Committee held [ ] meetings.
The members of the Valuation Committee are Messrs. Dunn and Pennock and Miss Quigley. The Valuation Committee is responsible for: (i) periodically reviewing AIM's Procedures for Valuing Securities ("Procedures"), and making any recommendations to AIM with respect thereto; (ii) reviewing proposed changes to the Procedures recommended by AIM from time to time; (iii) periodically reviewing information provided by AIM regarding industry developments in connection with valuation; (iv) periodically reviewing information from AIM regarding fair value and liquidity determinations made pursuant to the Procedures, and making recommendations to the full Board in connection therewith (whether such information is provided only to the Committee or to the Committee and the full Board simultaneously); and (v) if requested by AIM, assisting AIM's internal valuation committee and/or the full Board in resolving particular valuation anomalies. During the fiscal year ended December 31, 2001, the Valuation Committee held [ ] meetings.
The members of the Committee on Directors/Trustees are Messrs. Bayley, Crockett (Chair), Dowden, Dunn, Fields (Vice Chair), Pennock and Sklar, Dr. Mathai-Davis and Miss Quigley. The Committee on Directors/Trustees is responsible for: (i) considering and nominating individuals to stand for election as independent trustees as long as the Trust maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act; (ii) reviewing from time to time the compensation payable to the independent trustees; and (iii) making recommendations to the Board regarding matters related to compensation, including deferred compensation plans and retirement plans for the independent trustees. During the fiscal year ended December 31, 2001, the Committee on Directors/Trustees held [ ] meetings.
The Committee on Directors/Trustees will consider nominees recommended
by a shareholder to serve as trustees, provided: (i) that such person is a
shareholder of record at the time he or she submits such names and is entitled
to vote at the meeting of shareholders at which trustees will be elected; and
(ii) that the Committee on Directors/Trustees or the Board, as applicable, shall
make the final determination of persons to be nominated.
OWNERSHIP OF FUND SHARES
The dollar range of equity securities beneficially owned by each trustee (i) in the Funds and (ii) on an aggregate basis, in all registered investment companies overseen by the trustees within the AIM Funds complex, is set forth in Appendix B-1
FACTORS CONSIDERED IN RENEWING INVESTMENT ADVISORY AGREEMENT
The advisory agreement with AIM was approved by the Trust's Board at a meeting held on May 8-9, 2001. In evaluating the fairness and reasonableness of the advisory agreement, the Board of Trustees considered a variety of factors, including: the requirements of the Funds for investment supervisory and administrative services; the quality of the AIM's services, including a review of the Funds' investment performance and AIM's investment personnel; the size of the fees in relationship to the extent and quality of the investment advisory services rendered; fees charged to AIM's other clients; fees charged by competitive investment advisors; the size of the fees in light of services provided other than investment advisory services; the expenses borne by the Funds as a percentage of their assets and relationship to contractual limitations; any fee waivers (or payments of Fund expenses) by AIM; AIM's profitability; the benefits received by AIM from its relationship to the Funds, including soft dollar arrangements, and the extent to which the Funds share in those benefits; the organizational capabilities and financial condition of AIM and conditions and trends prevailing in the economy, the securities markets and the mutual fund industry; and the historical relationship between the Funds and AIM.
In considering the above factors, the Board also took into account the fact that uninvested cash and cash collateral from securities lending arrangements (collectively, "cash balances") of the Funds may be invested in money market funds advised by AIM pursuant to the terms of an exemptive order. The Board found that the Funds may realize certain benefits upon investing cash balances in AIM advised money market funds, including a higher net return, increased liquidity, increased diversification or decreased transaction costs. The Board also found that the Funds will not receive reduced services if they invest their cash balances in such money market funds. The Board further determined that the proposed securities lending program and related procedures with respect to each of the lending Funds is in the best interests of each lending Fund its respective shareholders. The Board therefore concluded that the investment of cash collateral received in connection with the securities lending program in the money market funds according to the procedures is in the best interests of each lending Fund and its respective shareholders.
After consideration of these factors, the Board found that: (i) the services provided to the Funds and their shareholders were adequate; (ii) the agreements were fair and reasonable under the circumstances; and (iii) the fees payable under the agreements would have been obtained through arm's length negotiations. The Board therefore concluded that the Funds' advisory agreement was in the best interests of the Fund and their shareholders and [continued the agreement for an additional year/approved and adopted the agreement].
COMPENSATION
Each trustee who is not affiliated with AIM is compensated for his or her services according to a fee schedule which recognizes the fact that such trustee also serves as a director or trustee of other AIM Funds. Each such trustee receives a fee, allocated among the AIM Funds for which he or she serves as a director or trustee, which consists of an annual retainer component and a meeting fee component.
Information regarding compensation paid or accrued for each trustee of the Trust who is not affiliated with AIM during the year ended December 31, 2001 is found in Appendix C.
Retirement Plan For Trustees
The Trustees have adopted a retirement plan for the trustees of the Trust who are not affiliated with AIM. The retirement plan includes a retirement policy as well as retirement benefits for the non-AIM-affiliated trustees.
The retirement policy permits each non-AIM-affiliated trustee to serve until December 31 of the year in which the trustee turns 72. A majority of the trustees may extend from time to time the retirement date of a trustee.
Annual retirement benefits are available to each non-AIM-affiliated
trustee of the Trust and/or the other AIM Funds (each, a "Covered Fund") who has
at least five years of credited service as a trustee (including service to a
predecessor fund) for a Covered Fund. The retirement benefits will equal 75% of
the trustee's annual retainer paid or accrued by any Covered Fund to such
trustee during the twelve-month period prior to retirement, including the amount
of any retainer deferred under a separate deferred compensation agreement
between the Covered Fund and the trustee. The annual retirement benefits are
payable in quarterly installments for a number of years equal to the lesser of
(i) ten or (ii) the number of such trustee's credited years of service. A death
benefit is also available under the plan that provides a surviving spouse with a
quarterly installment of 50% of a deceased trustee's retirement benefits for the
same length of time that the trustee would have received based on his or her
service. A trustee must have attained the age of 65 (55 in the event of death or
disability) to receive any retirement benefit.
Deferred Compensation Agreements
Messrs. Daly, Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis (for purposes of this paragraph only, the "Deferring Trustees") have each executed a Deferred Compensation Agreement (collectively, the "Compensation Agreements"). Pursuant to the Compensation Agreements, the Deferring Trustees have the option to elect to defer receipt of up to 100% of their compensation payable by the Trust, and such amounts are placed into a deferral account. Currently, the Deferring Trustees have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested. Distributions from the Deferring Trustees' deferral accounts will be paid in cash, generally in equal quarterly installments over a period of up to ten (10) years (depending on the Compensation Agreement) beginning on the date selected under the Compensation Agreement. The Trust's Board of Trustees, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the Deferring Trustee's retirement benefits commence under the Plan. The Board, in its sole discretion, also may accelerate or extend the distribution of such deferral accounts after the Deferring Trustee's termination of service as a trustee of the Trust. If a Deferring Trustee dies prior to the distribution of amounts in his or her deferral account, the balance of the deferral account will be distributed to his or her designated beneficiary. The Compensation Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the Deferring Trustees have the status of unsecured creditors of the Trust and of each other AIM Fund from which they are deferring compensation.
CODES OF ETHICS
AIM, the Trust and A I M Distributors, Inc. ("AIM Distributors") have each adopted a Code of Ethics governing, as applicable, personal trading activities of all directors/trustees, officers of the Trust, persons who, in connection with their regular functions, play a role in the recommendation of any purchase or sale of a security by any of the Funds or obtain information pertaining to such purchase or sale, and certain other employees. The Codes of Ethics are intended to prohibit conflicts of interest with the Trust that may arise from personal trading. Personal trading, including personal trading involving securities that may be purchased or held by a Fund, is permitted by persons covered under the relevant Codes subject to certain restrictions; however those persons are generally required to pre-clear all security transactions with the Compliance Officer or his designee and to report all transactions on a regular basis.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Information about the ownership of each class of each Fund's shares by certain beneficial or record owners of such Fund and by trustees and officers as a group is found in Appendix D. A shareholder who owns beneficially 25% or more of the outstanding shares of a Fund is presumed to "control" that Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISOR
AIM, the Funds' investment advisor, was organized in 1976, and along with its subsidiaries, manages or advises over 150 investment portfolios encompassing a broad range of investment objectives. AIM is a direct, wholly owned subsidiary of AIM Management, a holding company that has been engaged in the financial services business since 1976. AIM Management is an indirect, wholly owned subsidiary of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent global investment management group. Certain of the directors and officers of AIM are also executive officers of the Trust and their affiliations are shown under "Management Information" herein.
As investment advisor, AIM supervises all aspects of the Funds' operations and provides investment advisory services to the Funds. AIM obtains and evaluates economic, statistical and financial information to formulate and implement investment programs for the Funds.
The Advisor is also responsible for furnishing to the Funds, at the Advisor's expense, the services of persons believes to be competent to perform all supervisory and administrative services required by the Funds, in the judgment of the Trustees, to conduct their respective businesses effectively, as well as the offices, equipment and other facilities necessary for their operations. Such functions include the maintenance of each Fund's accounts and records, and the preparation of all requisite corporate documents such as tax returns and reports to the SEC and shareholders.
The Master Advisory Agreement provides that the Fund will pay or cause to be paid all expenses of the Fund not assumed by AIM, including, without limitation: brokerage commissions, taxes, legal, auditing or governmental fees, the cost of preparing share certificates, custodian, transfer and shareholder service agent costs, expenses of issue, sale, redemption, and repurchase of shares, expenses of registering and qualifying shares for sale, expenses relating to trustees and shareholder meetings, the cost of preparing and distributing reports and notices to shareholders, the fees and other expenses incurred by the Trust on behalf of each Fund in connection with membership in investment company organizations, and the cost of printing copies of prospectuses and statements of additional information distributed to the Funds' shareholders.
AIM, at its own expense, furnishes to the Trust office space and facilities. AIM furnishes to the Trust all personnel for managing the affairs of the Trust and each of its series of shares.
Pursuant to its advisory agreement with the Trust, AIM receives a monthly fee from each Fund calculated at the following annual rates, based on the average daily net assets of each Fund during the year:
------------------------------------------------------------ ------------------------------------ --------------------
FUND NAME NET ASSETS ANNUAL RATE
------------------------------------------------------------ ------------------------------------ --------------------
AIM V.I. Aggressive Growth Fund First $150 million 0.80%
Amount over $150 million 0.625%
------------------------------------------------------------ ------------------------------------ --------------------
AIM V.I. Balanced Fund First $150 million 0.75%
Amount over $150 million 0.50%
------------------------------------------------------------ ------------------------------------ --------------------
AIM V.I. Basic Value Fund First $500 million 0.725%
AIM V.I. Mid Cap Core Equity Fund Next $500 million 0.700%
Next $500 million 0.625%
Amount over $1.5 billion 0.65%
------------------------------------------------------------ ------------------------------------ --------------------
AIM V.I. Blue Chip Fund First $350 million 0.75%
AIM V.I. Capital Development Fund Amount over $350 million 0.625%
------------------------------------------------------------ ------------------------------------ --------------------
AIM V.I. Capital Appreciation Fund First $250 million 0.65%
AIM V.I. Core Equity Fund Amount over $250 million 0.60%
AIM V.I. Global Utilities Fund
AIM V.I. Growth Fund
AIM V.I. Premier Equity Fund
------------------------------------------------------------ ------------------------------------ --------------------
AIM V.I. Dent Demographic Trends Fund First $2 billion 0.85%
Amount over $2 billion 0.80%
------------------------------------------------------------ ------------------------------------ --------------------
AIM V.I. Diversified Income Fund First $250 million 0.60%
Amount over $250 million 0.55%
------------------------------------------------------------ ------------------------------------ --------------------
AIM V.I. Government Securities Fund First $250 million 0.50%
Amount over $250 million 0.45%
------------------------------------------------------------ ------------------------------------ --------------------
AIM V.I. High Yield Fund First $200 million 0.625%
Next $300 million 0.55%
Next $500 million 0.50%
Amount over $1 billion
------------------------------------------------------------ ------------------------------------ --------------------
AIM V.I. International Growth Fund First $250 million 0.75%
Amount over $250 million 0.70%
------------------------------------------------------------ ------------------------------------ --------------------
AIM V.I. Money Market Fund First $250 million 0.45%
Amount over $250 million 0.35%
------------------------------------------------------------ ------------------------------------ --------------------
AIM V.I. New Technology Fund All 1.00%
------------------------------------------------------------ ------------------------------------ --------------------
|
AIM may from time to time waive or reduce its fee. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund.
AIM has voluntarily agreed, effective July 1, 2001, to waive a portion of advisory fees payable by each Fund. The amount of the waiver will equal 25% of the advisory fee AIM receives from the Affiliated Money Market Funds as a result of each Funds Investment of uninvested cash in an Affiliated Money Market Fund. See "Investment Strategies and Risks--Other Investments--Other Investment Companies."
AIM has contractually agreed, effective July 1, 2001, to waive fees and/or reimburse expenses (excluding interest, taxes, dividends on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) for Series I Shares of each of AIM V.I. Dent Demographic Trends Fund and AIM V.I. New Technology Fund to the extent necessary to limit the total operating expenses of each such series to 1.30%. Such contractual fee waivers or reductions may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund.
INVESTMENT SUB-ADVISOR. AIM has entered into a Sub-Advisory contract with H.S. Dent Advisors, Inc. ("Dent") (H.S. Dent Advisors, Inc. a "Sub-Advisor") to provide investment sub-advisory services to AIM V.I. Dent Demographic Trends Fund.
Dent is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). Dent's responsibilities include providing the Fund's with macroeconomic and sector research, along with investment and market capitalization recommendations analyzing global economic trends
For the services to be rendered by Dent under its Sub-Advisory Contract, the Advisor will pay to Dent, a fee which will be computed daily and paid as of the last day of each month on the basis of the Fund's daily net asset value, using for each daily calculation the most recently determined net asset value of the Fund. (See "Computation of Net Asset Value.") On an annual basis, the sub-advisory fee is equal to 0.13% of the first $1 billion of AIM V.I. Dent Demographic Trends Fund's average daily net assets, plus 0.10% of the Fund's average daily net assets in excess of $1 billion to and including $2 billion of the Fund's average daily net assets, plus 0.07% of the Fund's average daily net assets in excess of $2 billion.
The management fees payable by each Fund, the amounts waived by AIM and the net fees paid by each Fund for the last three fiscal years ended December 31 are found in Appendix E.
SECURITIES LENDING ARRANGEMENTS. If a Fund engages in securities lending, AIM will provide the Fund investment advisory services and related administrative services. The advisory agreement describes the administrative services to be rendered by AIM if a Fund engages in securities lending activities, as well as the compensation AIM may receive for such administrative services. Services to be provided include: (a) overseeing participation in the securities lending program to ensure compliance with all applicable regulatory and investment guidelines; (b) assisting the securities lending agent or principal (the agent) in determining which specific securities are available for loan; (c) monitoring the agent to ensure that securities loans are effected in accordance with AIM's instructions and with procedures adopted by the Board; (d) preparing appropriate periodic reports for, and seeking appropriate approvals from, the Board with respect to securities lending activities; (e) responding to agent inquiries; and (f) performing such other duties as may be necessary.
AIM's compensation for advisory services rendered in connection with securities lending is included in the advisory fee schedule. As compensation for the related administrative services AIM will provide, a lending Fund will pay AIM a fee equal to 25% of the net monthly interest or fee income retained or paid to the Fund from such activities. AIM currently intends to waive such fee, and has agreed to seek Board approval prior to its receipt of all or a portion of such fee.
SERVICE AGREEMENTS
ADMINISTRATIVE SERVICES AGREEMENT. AIM and the Trust have entered into a Master Administrative Services Agreement ("Administrative Services Agreement") pursuant to which AIM may perform or arrange for the provision of certain accounting and other administrative services to each Fund which are not required to be performed by AIM under the advisory agreement. The Administrative Services Agreement provides that it will remain in effect and continue from year to year only if such continuance is specifically approved at least annually by the Trust's Board of Trustees, including the independent trustees, by votes cast in person at a meeting called for such purpose. Under the Administrative Services Agreement, AIM is entitled to receive from the Funds reimbursement of its costs or such reasonable compensation as may be approved by the Board of Trustees. Currently, AIM is reimbursed for the services of the Trust's principal financial officer and her staff, and any expenses related to fund accounting services. In addition, AIM provides, or assures that Participating Insurance Companies will provide, certain services implementing the Trust's funding arrangements with Participating Insurance Companies. These services include: establishment of compliance procedures; negotiation of participation agreements; preparation of prospectuses, financial reports and proxy statements for existing Contractowners; maintenance of master accounts; facilitation of purchases and redemptions requested by Contractowners; distribution to existing Contractowners of copies of prospectuses, proxy materials, periodic Fund reports and other materials; maintenance of records; and Contractowner services and communication. Effective May 1, 1998, the Funds reimburse AIM for its costs in providing, or assuring that Participating Insurance Companies provide, these services, currently in an amount up to 0.25% of the average net asset value of each Fund. AIM has agreed to bear certain of these costs on the net assets of each Fund as of April 30, 1998.
Administrative services fees paid to AIM by each Fund for the last three fiscal years ended December 31 are found in Appendix F.
OTHER SERVICE PROVIDERS
TRANSFER AGENT. A I M Fund Services, Inc. ("AFS"), 11 Greenway Plaza, Suite 100, Houston, Texas 77046, a registered transfer agent and wholly owned subsidiary of AIM, acts as transfer and dividend disbursing agent for the Funds.
The Transfer Agency and Service Agreement between the Trust and AFS provides that AFS will perform certain shareholder services for the Funds. The Transfer Agency and Service Agreement provides that AFS will receive a per account fee plus out-of-pocket expenses to process orders for purchases, redemptions and exchanges of shares; prepare and transmit payments for dividends and distributions declared by the Funds; maintain shareholder accounts and provide shareholders with information regarding the Funds and their accounts. AFS may impose certain copying charges for requests for copies of shareholder account statements and other historical account information older than the current year and the immediately preceding year.
CUSTODIANS. State Street Bank and Trust Company (the "Custodian"), 225 Franklin Street, Boston, Massachusetts 02110, is custodian of all securities and cash of the Funds (except AIM V.I. Money Market Fund). The Bank of New York, 100 Church Street, New York, New York 10286, is custodian of all securities and cash of AIM V.I. Money Market Fund.
The Custodians are authorized to establish separate accounts in foreign countries and to cause foreign securities owned by the Funds to be held outside the United States in branches of U.S. banks and, to the extent permitted by applicable regulations, in certain foreign banks and securities depositories.
AIM is responsible for selecting eligible foreign securities depositories; the Custodian is responsible for monitoring eligible foreign securities depositories.
Under their contract with the Trust, the Custodians maintains the portfolio securities of the Funds, administers the purchases and sales of portfolio securities, collects interest and dividends and other distributions made on the securities held in the portfolios of the Funds and performs other ministerial duties. These services do not include any supervisory function over management or provide any protection against any possible depreciation of assets.
AUDITORS. The Funds' independent public accountants are responsible for auditing the financial statements of the Funds. The firm of Tait, Weller & Baker, Eight Penn Center Plaza, Philadelphia, PA, 19103, serves as the auditors of each Fund.
COUNSEL TO THE TRUST. Foley & Lardner, Washington, D.C., has advised the Trust on certain federal securities law matters.
BROKERAGE ALLOCATION AND OTHER PRACTICES
The sub-advisor has adopted compliance procedures that cover, among other items, brokerage allocation and other trading practices. Unless specifically noted, the Sub-Advisor's procedures do not materially differ from AIM's procedures as set forth below.
Since purchases and sales of portfolio securities by the AIM V.I. Money Market Fund are usually principal transactions, the Fund incurs little or no brokerage commissions.
BROKERAGE TRANSACTIONS
Subject to the policies established by the Board of Trustees, AIM makes decisions to buy and sell securities for each Fund, selects broker-dealers, effects the Funds' investment portfolio transactions, allocates brokerage fees in such transactions and, where applicable, negotiates commissions and spreads on transactions. AIM's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. While AIM seeks reasonably competitive commission rates, the Funds may not pay the lowest commission or spread available. See "Brokerage Selection" below.
Purchases and sales of portfolio securities for the AIM V.I. Diversified Income Fund, AIM V.I. Government Securities Fund and AIM V.I. Money Market Fund are generally transacted with the issuer or a primary market maker. In addition, some of the securities in which the Funds invest are traded in over-the-counter markets. Portfolio transactions placed in such markets may be effected at either net prices without commissions, but which include compensation to the broker-dealer in the form of a mark up or mark down, or on an agency basis, which involves the payment of negotiated brokerage commissions.
Traditionally, commission rates have not been negotiated on stock markets outside the United States. Although in recent years many overseas stock markets have adopted a system of negotiated rates, a number of markets maintain an established schedule of minimum commission rates.
COMMISSIONS
During the last three fiscal years ended December 31, 2001, none of the Funds paid brokerage commissions to brokers affiliated with the Funds, AIM, AIM Distributors, or any affiliates of such entities.
The Funds may engage in certain principal and agency transactions with banks and their affiliates that own 5% or more of the outstanding voting securities of an AIM Fund, provided the conditions of an exemptive order received by the AIM Funds from the SEC are met. In addition, a Fund may purchase or sell a security from or to another AIM Fund or account (and may invest in Affiliated Money Market Funds) provided the Funds follow procedures adopted by the Boards of Directors/Trustees of the various
AIM Funds, including the Trust. These inter-fund transactions do not generate brokerage commissions but may result in custodial fees or taxes or other related expenses.
BROKERAGE SELECTION
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under certain circumstances, lawfully may cause an account to pay a higher commission than the lowest available. Under Section 28(e), AIM must make a good faith determination that the commissions paid are "reasonable in relation to the value of the brokerage and research services provided ... viewed in terms of either that particular transaction or [AIM's] overall responsibilities with respect to the accounts as to which it exercises investment discretion." In addition, the services provided by a broker also must lawfully and appropriately assist AIM in the performance of its investment decision-making responsibilities. Accordingly, in any transaction, the Fund may pay a higher price than that available from another broker provided that the difference is justified by other aspects of the portfolio execution services provided.
The Funds are not under any obligation to deal with any broker or group of brokers in the execution of transactions in portfolio securities. Brokers who provide supplemental investment research to AIM may receive orders for transactions by a Fund. Information so received will be in addition to and not in lieu of the services required to be performed by AIM under its agreements with the Fund, and the expenses of AIM will not necessarily be reduced as a result of the receipt of such supplemental information. Certain research services furnished by broker-dealers may be useful to AIM in connection with its services to other advisory clients, including the other mutual funds advised by AIM (collectively with the Funds, the "AIM Funds"). Also, a Fund may pay a higher price for securities or higher commissions in recognition of research services furnished by broker-dealers.
Research services received from broker-dealers supplement AIM's own research (and the research of its affiliates), and may include the following types of information: statistical and background information on the U.S. and foreign economies, industry groups and individual companies; forecasts and interpretations with respect to the U.S. and foreign economies, securities, markets, specific industry groups and individual companies; information on federal, state, local and foreign political developments; portfolio management strategies; performance information on securities, indexes and investment accounts; information concerning prices of securities; and information supplied by specialized services to AIM and to the Trust's trustees with respect to the performance, investment activities, and fees and expenses of other mutual funds. Broker-dealers may communicate such information electronically, orally, in written form or on computer software. Research services may also include the providing of electronic communications of trade information, the providing of custody services, as well as the providing of equipment used to communicate research information and the providing of specialized consultations with AIM personnel with respect to computerized systems and data furnished to AIM as a component of other research services, the arranging of meetings with management of companies, and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the broker-dealers used by AIM tend to follow a broader universe of securities and other matters than AIM's staff can follow. In addition, the research provides AIM with a diverse perspective on financial markets. Research services provided to AIM by broker-dealers are available for the benefit of all accounts managed or advised by AIM or by subadvisers to accounts managed or advised by AIM. Some broker-dealers may indicate that the provision of research services is dependent upon the generation of certain specified levels of commissions and underwriting concessions by AIM's clients, including the Funds. However, the Funds are not under any obligation to deal with any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the broker-dealer providing them. In other cases, the research services may be obtainable from alternative sources in return for cash payments. AIM believes that the research services are beneficial in supplementing AIM's research and analysis and that they improve the quality of AIM's investment advice. The advisory fee paid by the Funds is not reduced because AIM receives such services. However, to the extent that AIM would have
purchased research services had they not been provided by broker-dealers, the expenses to AIM could be considered to have been reduced accordingly.
AIM may determine target levels of commission business with various brokers on behalf of its clients (including the Funds) over a certain time period. The target levels will be based upon the following factors, among others: (1) the execution services provided by the broker; (2) the research services provided by the broker; and (3) the broker's interest in mutual funds in general and in the Funds and other mutual funds advised by AIM particular, including sales of the Funds and of the other AIM Funds. In connection with (3) above, the Funds' trades may be executed directly by dealers that sell shares of the AIM Funds or by other broker-dealers with which such dealers have clearing arrangements, consistent with obtaining best execution. AIM will not use a specific formula in connection with any of these considerations to determine the target levels.
Foreign equity securities held by a Fund in the form of ADRs or EDRs may be listed on stock exchanges, or traded in OTC markets in the United States or Europe, as the case may be. ADRs, like other securities traded in the United States, will be subject to negotiated commission rates.
Brokerage commissions paid by each of the Funds during the last three fiscal years ended December 31 are found in Appendix G.
DIRECTED BROKERAGE (RESEARCH SERVICES)
Directed brokerage (research services) paid by each of the Funds during the last fiscal year ended December 31, 2001 are found in Appendix H.
REGULAR BROKERS OR DEALERS
Information concerning the Funds' acquisition of securities of their regular brokers or dealers during the last fiscal year ended December 31, 2001 is found in Appendix H.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous other investment accounts. Some of these accounts may have investment objectives similar to the Funds. Often times, identical securities will be appropriate for investment by one of the Funds and by another Fund or one or more of these investment accounts. However, the position of each account in the same securities and the length of time that each account may hold its investment in the same securities may vary. The timing and amount of purchase by each account will also be determined by its cash position. If the purchase or sale of securities is consistent with the investment policies of the Fund(s) and one or more of these accounts, and is considered at or about the same time, AIM will fairly allocate transactions in such securities among the Fund(s) and these accounts. AIM may combine such transactions, in accordance with applicable laws and regulations, to obtain the most favorable execution. Simultaneous transactions could, however, adversely affect a Fund's ability to obtain or dispose of the full amount of a security which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the various investment accounts advised by AIM results in transactions which could have an adverse effect on the price or amount of securities available to a Fund. In making such allocations, AIM considers the investment objectives and policies of its advisory clients, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment, the size of investment commitments generally held, and the judgments of the persons responsible for recommending the investment. This procedure would apply to transactions in both equity and fixed income securities.
ALLOCATION OF EQUITY OFFERING TRANSACTIONS
From time to time, certain of the AIM Funds or other accounts managed by AIM may become interested in participating in equity security distributions that are available in an equity "offering", which AIM defines as an IPO, a secondary (follow-on offering), a private placement, a direct placement or a PIPE (private investment in a public equity) and occasions may arise when purchases of such securities by one AIM Fund or account may also be considered for purchase by one or more other AIM Funds or accounts. In such cases, it shall be AIM's practice to specifically combine or otherwise bunch indications of interest for offerings for all AIM Funds and accounts participating in purchase transactions for that offering, and to allocate such transactions in accordance with the following procedures:
AIM will determine the eligibility of each AIM Fund and account that seeks to participate in a particular offering by reviewing a number of factors, including suitability of the investment with the AIM Fund's or account's investment objective, policies and strategies, the liquidity of the AIM Fund or account if such investment is purchased, and whether the portfolio manager intends to hold the security as a long-term investment. The allocation of limited supply securities issued in offerings will be made to eligible AIM Funds and accounts in a manner designed to be fair and equitable for the eligible AIM Funds and accounts, and so that there is equal allocation of offerings over the longer term. Where multiple funds or accounts are eligible, rotational participation may occur, based on the extent to which an AIM Fund or account has participated in previous offerings as well as the size of the AIM Fund or account. Each eligible AIM Fund and account with an asset level of less than $500 million will be placed in one of three tiers, depending upon each AIM Fund's or account's asset level. The AIM Funds and accounts in the tier containing funds and accounts with the smallest asset levels will participate first, each receiving a 40 basis point allocation (rounded to the nearest share round lot that approximates 40 basis points) (the "Allocation"), based on that AIM Fund's or account's net assets. This process continues until all of the AIM Funds and accounts in the three tiers receive their Allocations, or until the shares are all allocated. Should securities remain after this process, eligible AIM Funds and accounts will receive their Allocations on a straight pro rata basis. For the tier of AIM Funds and accounts not receiving a full Allocation, the Allocation may be made only to certain AIM Funds or accounts so that each may receive close to or exactly 40 basis points. In addition, Incubator Funds, as described in AIM's Incubator and New Fund Investment Policy, will each be limited to a 40 basis point allocation only.
When any AIM Funds and/or accounts with substantially identical investment objectives and policies participate in offerings, they will do so in amounts that are substantially proportionate to each other. In these cases, the net assets of the largest participating AIM Fund will be used to determine in which tier, as described in the paragraph above, such group of AIM Funds or accounts will be placed. If no AIM Fund is participating, then the net assets of the largest account will be used to determine tier placement. The price per share of securities purchased in such offering transactions will be the same for each AIM Fund and account.
PURCHASE AND REDEMPTION OF SHARES
The Trust offers the shares of the Funds, on a continuous basis, to both registered and unregistered separate accounts of affiliated and unaffiliated Participating Insurance Companies to fund variable annuity contracts (the "Contracts") and variable life insurance policies ("Policies"). Each separate account contains divisions, each of which corresponds to a Fund in the Trust. Net purchase payments under the Contracts are placed in one or more of the divisions of the relevant separate account and the assets of each division are invested in the shares of the Fund which corresponds to that division. Each separate account purchases and redeems shares of these Funds for its divisions at net asset value without sales or redemption charges. Currently several insurance company separate accounts invest in the Funds.
The Trust, in the future, may offer the shares of its Funds to certain pension and retirement plans ("Plans") qualified under the Internal Revenue Code. The relationships of Plans and Plan participants to the Fund would be subject, in part, to the provisions of the individual plans and applicable law.
Accordingly, such relationships could be different from those described in this Prospectus for separate accounts and owners of Contracts and Policies, in such areas, for example, as tax matters and voting privileges.
The Board of Trustees monitors for possible conflicts among separate accounts (and will do so for plans) buying shares of the Funds. Conflicts could develop for a variety of reasons. For example, violation of the federal tax laws by one separate account investing in a fund could cause the contractors or policies funded through another separate account to lose their tax-deferred status, unless remedial actions were taken. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, the Board of Trustees may require a separate account or Plan to withdraw its participation in a Fund. A Fund's net asset value could decrease if it had to sell investment securities to pay redemptions proceeds to a separate account (or plan) withdrawing because of a conflict.
Calculation of Net Asset Value
The net asset value per share (or share price) of each Series of each of the Funds will be determined as of the close of the customary trading session of the New York Stock Exchange ("NYSE") (generally 4:00 p.m. Eastern Time) on each "business day of the Fund." In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time) on a particular day, the net asset value of a Fund share is determined as of the close of the NYSE on such day. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of the customary trading session of the NYSE. A "business day of a Fund" is any day on which the NYSE is open for business. It is expected that the NYSE will be closed during the next twelve months on Saturdays and Sundays and on the observed holidays of New Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Net asset value per share is determined by dividing the value of a Fund's securities, cash and other assets (including interest accrued but not collected) attributable to a particular class, less all its liabilities (including accrued expenses and dividends payable) attributable to that class, by the total number of shares outstanding of that class. The determination of a Fund's net asset value per share is made in accordance with generally accepted accounting principles.
Valuation of Investments of All Funds Except the Money Market Fund
Among other items, a Fund's liabilities include accrued expenses and dividends payable, and its total assets include portfolio securities valued at their market value as well as income accrued but not received. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the Trust's officers and in accordance with methods which are specifically authorized by the Board of Trustees of the Trust. Short-term obligations with maturities of 60 days or less are valued at amortized cost as reflecting fair value.
Valuation of the Money Market Fund's Investments
The Money Market Fund uses the amortized cost method of valuing the securities held by the Fund and rounds the Fund's per share net asset value to the nearest whole cent; therefore, it is anticipated that the net asset value of the shares of the Fund will remain constant at $1.00 per share. However, the Trust can give no assurance that the Fund can maintain a $1.00 net asset value per share.
For the Money Market Fund: The net asset value per share of the Fund is determined daily as of the close of trading on the New York Stock Exchange ("NYSE") (generally 4:00 p.m. Eastern time) on each business day of the Fund. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time) on a particular day, the net asset value of a Fund share is determined as of the close of the NYSE on such day. Net asset value per share is determined by dividing the value of the Fund's securities, cash and other assets (including interest accrued but not collected), less all its liabilities (including accrued expenses and dividends payable), by the number of shares outstanding of the Fund and rounding the
resulting per share net asset value to the nearest one cent. Determination of the Fund's net asset value per share is made in accordance with generally accepted accounting principles.
The securities of the Fund are valued on the basis of amortized cost. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Fund would receive if the security were sold. During such periods, the daily yield on shares of the Fund computed as described under "Yield Information" may differ somewhat from an identical computation made by another investment company with identical investments utilizing available indications as to the market value of its portfolio securities.
The valuation of the portfolio instruments based upon their amortized cost and the concomitant maintenance of the net asset value per share of $1.00 for the Fund is permitted in accordance with applicable rules and regulations of the SEC which require the Fund to adhere to certain conditions. The Fund will invest only in "Eligible Securities," as defined in Rule 2a-7 of the 1940 Act, which the Fund's Board of Trustees has determined present minimal credit risk. Rule 2a-7 also requires, among other things, that the Fund maintain a dollar-weighted average portfolio maturity of 90 days or less and purchase only instruments having remaining maturities of 397 calendar days or less.
The Board of Trustees is required to establish procedures designed to stabilize, to the extent reasonably practicable, the Fund's price per share at $1.00 for the Fund as computed for the purpose of sales and redemptions. Such procedures include review of the Fund's holdings by the Board of Trustees at such intervals as they may deem appropriate, to determine whether the net asset value calculated by using available market quotations or other reputable sources for the Fund deviates from $1.00 per share and, if so, whether such deviation may result in material dilution or is otherwise unfair to existing holders of the Fund's shares. In the event the Board of Trustees determines that such a deviation exists for the Fund, it will take such corrective action as the Board of Trustees deems necessary and appropriate with respect to the Fund, including the sale of portfolio instruments prior to maturity to realize capital gains or losses or to shorten the average portfolio maturity; the withholding of dividends; redemption of shares in kind; or the establishment of a net asset value per share by using available market quotations.
The Fund intends to comply with any amendments made to Rule 2a-7 which may require corresponding changes in the Fund's procedures which are designed to stabilize the Fund's price per share at $1.00.
For All Other Funds: The net asset value per share of each Fund is normally determined daily as of the close of the customary trading session on the NYSE (generally 4:00 p.m. Eastern time) on each business day of the Trust. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time) on a particular day, the net asset value of a Fund share is determined as of the close of the NYSE on such day. For purposes of determining net asset value per share, futures and options contracts closing prices which are available 15 minutes after the close of trading of the NYSE will generally be used. Net asset value per share is determined by dividing the value of the Fund's securities, cash and other assets (including interest accrued but not collected), less all its liabilities (including accrued expenses and dividends payable), by the total number of shares outstanding. Determination of the Fund's net asset value per share is made in accordance with generally accepted accounting principles.
Each equity security (excluding convertible bonds) held by the Fund is valued at its last sales price on the exchange where the security is principally traded or, lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market System) is valued at the closing bid price based upon quotes furnished by independent pricing services or market makers for such securities. Each security reported on the NASDAQ National Market System is valued at the last sales price on the valuation date or absent a last sales price, at the closing bid price on that day; option contracts are valued at the mean between the closing bid and asked prices on the exchange where the
contracts are principally traded; futures contracts are valued at final settlement price quotations from the primary exchange on which they are traded. Debt securities (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to special securities, yield, quality, coupon rate, maturity, type of issue, individual trading characteristics and other market data. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the Trust's officers in a manner specifically authorized by the Board of Trustees of the Trust. Short-term obligations having 60 days or less to maturity are valued on the basis of amortized cost. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of the customary trading session of the NYSE.
Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the customary trading session of the NYSE. The values of such foreign securities used in computing the net asset value of each Fund's shares are determined at such times as trading is completed. Foreign currency exchange rates are also generally determined prior to the close of the customary trading session of the NYSE. Occasionally, events affecting the values of such foreign securities and such foreign securities exchange rates may occur after the time at which such values are determined and prior to the close of the NYSE that will not be reflected in the computation of a Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Trustees.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
It is the present policy of the Funds to declare and distribute dividends representing substantially all net investment income as follows:
DIVIDENDS DIVIDENDS
DECLARED PAID
--------- ---------
AIM V.I. Aggressive Growth Fund ................................ annually annually
AIM V.I. Balanced Fund ......................................... annually annually
AIM V.I. Basic Value Fund....................................... annually annually
AIM V.I. Blue Chip Fund ........................................ annually annually
AIM V.I. Capital Appreciation Fund ............................. annually annually
AIM V.I. Capital Development Fund .............................. annually annually
AIM V.I. Core Equity Fund ...................................... annually annually
AIM V.I. Dent Demographic Trends Fund........................... annually annually
AIM V.I. Diversified Income Fund ............................... annually annually
AIM V.I. Global Utilities Fund ................................. annually annually
AIM V.I. Government Securities Fund ............................ annually annually
AIM V.I. Growth Fund ........................................... annually annually
AIM V.I. High Yield Fund ....................................... annually annually
AIM V.I. International Growth Fund ............................. annually annually
AIM V.I. Mid Cap Core Equity Fund............................... annually annually
AIM V.I. Money Market Fund ..................................... daily daily
AIM V.I. New Technology Fund.................................... annually annually
AIM V.I. Premier Equity Fund ................................... annually annually
|
All such distributions will be automatically reinvested, at the election of Participating Insurance Companies, in shares of the Fund issuing the distribution at the net asset value determined on the reinvestment date.
It is the Fund's intention to distribute substantially all of its net investment income and realized net capital gains by the end of each taxable year. In determining the amount of capital gains, if any, available for distribution, capital gains will be offset against available net capital losses, if any, carried forward from previous fiscal periods.
It is the present policy of the Funds to declare and pay annually net investment income dividends and capital gain distributions except for Aim V.I. Money Market Fund. It is the Fund's intention to distribute substantially all of its net investment income and realized net capital gains by the end of each taxable year to separate accounts of participating life insurance companies. In determining the amount of capital gains, if any, available for distribution, capital gains will be offset against available net capital losses, if any carried forward from previous fiscal periods. At the election of participating life insurance companies, dividends and distributions will be reinvested at the net asset value per share determined on the ex-dividend date.
AIM V.I. Money Market Fund declares and pays daily net investment income dividends and declares and pays annually any capital gain distributions. The Fund does not expect to realize any long-term capital gains and losses. The Fund may distribute net realized short-term gains, if any, more frequently.
A dividend or distribution paid by a fund which does not declare dividends daily has the effect of reducing the net asset value per share on the ex-dividend date by the amount of the dividend or distribution. Therefore, a dividend or distribution declared shortly after a purchase of shares by an investor would represent, in substance, a return of capital to the shareholder with respect to such shares even though it would be subject to income taxes.
Should the Trust incur or anticipate any unusual expense, loss or depreciation, which would adversely affect the net asset value per share of the Money Market Fund or the net income per share of a class of the Fund for a particular period, the Board of Trustees would at that time consider whether to adhere to the present dividend policy described above or to revise it in light of then prevailing circumstances. For example, if the net asset value per share of the AIM Money Market Fund was reduced, or was anticipated to be reduced, below $1.00, the Board of Trustees might suspend further dividend payments on shares of the Fund until the net asset value returns to $1.00. Thus, such expense, loss or depreciation might result in a shareholder receiving no dividends for the period during which it held shares of the Fund and/or its receiving upon redemption a price per share lower than that which it paid.
TAX MATTERS
Each series of shares of the Trust is treated as a separate association taxable as a corporation. Each Fund intends to qualify under the Internal Revenue Code of 1986, as amended (the "Code"), as a regulated investment company ("RIC") for each taxable year. As a RIC, a Fund will not be subject to federal income tax to the extent it distributes to its shareholders its net investment income and net capital gains.
In order to qualify as a regulated investment company, each Fund must satisfy certain requirements concerning the nature of its income, diversification of its assets and distribution of its income to shareholders. In order to ensure that individuals holding the Contracts whose assets are invested in a Fund will not be subject to federal income tax on distributions made by the Fund prior to the receipt of payments under the Contracts, each Fund intends to comply with additional requirements of Section 817(h) of the Code relating to both diversification of its assets and eligibility of an investor to be its shareholder. Certain of these requirements in the aggregate may limit the ability of a Fund to engage in transactions involving options, futures contracts, forward contracts and foreign currency and related deposits.
The holding of the foreign currencies and investments by a Fund in certain "passive foreign investment companies" may be limited in order to avoid imposition of a tax on such Fund.
Each Fund investing in foreign securities may be subject to foreign withholding taxes on income from its investments. In any year in which more than 50% in value of a Fund's total assets at the close of the taxable year consists of securities of foreign corporations, the Fund may elect to treat any foreign taxes paid by it as if they had been paid by its shareholders. The insurance company segregated asset accounts holding Fund shares should consider the impact of this election.
Holders of Contracts under which assets are invested in the Funds should refer to the prospectus for the Contracts for information regarding the tax aspects of ownership of such Contracts.
Because each Fund intends to qualify under the Code as a RIC for each taxable year, each Fund must, among other things, meet the following requirements: A. Each Fund must generally derive at least 90% of its gross income from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities, foreign currencies, or other income derived with respect to its business of investing in such stock, securities or currencies. B. Each Fund must diversify its holdings so that, at the end of each fiscal quarter or within 30 days thereafter: (i) at least 50% of the market value of the Fund's assets is represented by cash, cash items (including receivables), U.S. Government securities, securities of other RICs, and other securities, with such other securities limited, with respect to any one issuer, to an amount not greater than 5% of the Fund's assets and not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of the Fund's assets is invested in the securities of any one issuer (other than U.S. Government securities or securities of other RICs).
The Code imposes a nondeductible 4% excise tax on a RIC that fails to distribute during each calendar year the sum of 98% of its ordinary income for the calendar year, plus 98% of its capital gain net income for the 12-month period ending on October 31 of the calendar year. The amount which must
be distributed is increased by undistributed income and gains from prior years and decreased by certain distributions in prior years. Each Fund intends to make sufficient distributions to avoid imposition of the excise tax. Some Funds meet an exception which results in their not being subject to excise tax.
As a RIC, each Fund will not be subject to federal income tax on its income and gains distributed to shareholders if it distributes at least (i) 90% of its investment company taxable income for the taxable year; and (ii) 90% of the excess of its tax-exempt interest income under Code Section 103(a) over its deductions disallowed under Code Sections 265 and 171(a)(2). Distributions by a Fund made during the taxable year or, under specified circumstances, within twelve months after the close of the taxable year, will be considered distributions of income and gain of the taxable year and can therefore satisfy the distribution requirement.
Each Fund intends to comply with the diversification requirements imposed by Section 817(h) of the Code and the regulations thereunder. These requirements, which are in addition to the diversification requirements imposed on each Fund by the 1940 Act and Subchapter M of the Code, place certain limitations on (i) the assets of the insurance company separate accounts that may be invested in securities of a single issuer and (ii) eligible investors. Because Section 817(h) and those regulations treat the assets of each Fund as assets of the corresponding division of the insurance company separate accounts, each Fund intends to comply with these diversification requirements. Specifically, the regulations provide that, except as permitted by the "safe harbor" described below, as of the end of each calendar quarter or within 30 days thereafter no more than 55% of a Fund's total assets may be represented by any one investment, no more than 70% by any two investments, no more than 80% by any three investments and no more than 90% by any four investments. For this purpose, all securities of the same issuer are considered a single investment, and while each U.S. Government agency and instrumentality is considered a separate issuer, a particular foreign government and its agencies, instrumentalities and political subdivisions all will be considered the same issuer. The regulations also provide that a Fund's shareholders are limited, generally, to life insurance company separate accounts, general accounts of the same life insurance company, an investment adviser or affiliate in connection with the creation or management of a Fund or the trustee of a qualified pension plan. Section 817(h) provides, as a safe harbor, that a separate account will be treated as being adequately diversified if the diversification requirements under Subchapter M are satisfied and no more than 55% of the value of the account's total assets are cash and cash items (including receivables), government securities and securities of other RICs. Failure of a Fund to satisfy the Section 817(h) requirements would result in taxation of and treatment of the Contract holders investing in a corresponding division other than as described in the applicable prospectuses of the various insurance company separate accounts.
DISTRIBUTION OF SECURITIES
DISTRIBUTION PLAN
The Trust has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act with respect to each Fund's Series II shares (the "Plan"). Each Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of average daily net assets of Series II shares.
The Plan compensates AIM Distributors for the purpose of financing any activity which is primarily intended to result in the sale of shares of the Funds. Such activities include, but are not limited to, the following: printing of prospectuses and statements of additional information and reports for other than existing shareholders; overhead; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements; and costs of administering the Plan.
Amounts payable by a Fund under the Plan need not be directly related to the expenses actually incurred by AIM Distributors on behalf of each Fund. The Plan does not obligate the Funds to reimburse AIM Distributors for the actual expenses AIM Distributors may incur in fulfilling its obligations under the
Plan. Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors at any given time, the Funds will not be obligated to pay more than that fee. If AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee.
AIM Distributors may from time to time waive or reduce any portion of its 12b-1 fee for Series II shares. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM Distributors will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM Distributors and the Fund.
The Funds may pay a service fee of 0.25% of the average daily net assets of the Series II shares to selected dealers and financial institutions, including AIM Distributors, acting as principal, who furnish continuing personal shareholder services to their customers who purchase and own the applicable class of shares of the Fund. Under the terms of a shareholder service agreement, such personal shareholder services include responding to customer inquiries and providing customers with information about their investments. Any amounts not paid as a service fee under the Plan would constitute an asset-based sales charge.
Under a Shareholder Service Agreement, a Fund agrees to pay periodically fees to selected dealers and other institutions who render the foregoing services to their customers. The fees payable under a Shareholder Service Agreement will be calculated at the end of each payment period for each business day of the Funds during such period at the annual rate specified in each agreement based on the average daily net asset value of the Funds' shares purchased or acquired through exchange. Fees shall be paid only to those selected dealers or other institutions who are dealers or institutions of record at the close of business on the last business day of the applicable payment period for the account in which such Fund's shares are held.
Selected dealers and other institutions entitled to receive compensation for selling Fund shares may receive different compensation for selling shares of one particular class over another. Under the Plan, certain financial institutions which have entered into service agreements and which sell shares of the Funds on an agency basis, may receive payments from the Funds pursuant to the Plan. AIM Distributors does not act as principal, but rather as agent for the Funds, in making dealer incentive and shareholder servicing payments to dealers and other financial institutions under the Plan. These payments are an obligation of the Funds and not of AIM Distributors.
Payments pursuant to the Plan are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. ("NASD").
See Appendix I for a list of the amounts paid by Series II shares to AIM Distributors pursuant to the Plan for the year, or period, ended December 31, 2001 and Appendix J for an estimate by category of the allocation of actual fees paid by Series II shares of each Fund pursuant to its respective distribution plan for the year or period ended December 31, 2001.
As required by Rule 12b-1, the Plan and related forms of Shareholder Service Agreements were approved by the Board of Trustees, including a majority of the trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan (the "Rule 12b-1 Trustees"). In approving the Plans in accordance with the requirements of Rule 12b-1, the trustees considered various factors and determined that there is a reasonable likelihood that the Plan would benefit each class of the Funds and its respective shareholders.
The anticipated benefits that may result from the Plan with respect to each Fund and/or the classes of each Fund and/or the classes of each Fund and its shareholders include but are not limited to the following: (1) rapid account access; (2) relatively predictable flow of cash; and (3) a well-developed, dependable network of shareholder service agents to help to curb sharp fluctuations in rates of
redemptions and sales, thereby reducing the chance that an unanticipated increase in net redemptions could adversely affect the performance of each Fund.
Unless terminated earlier in accordance with its terms, the Plan continues from year to year as long as such continuance is specifically approved, in person, at least annually by the Board of Trustees, including a majority of the Rule 12b-1 Trustees. A Plan may be terminated as to any Fund or class by the vote of a majority of the Rule 12b-1 Trustees or, with respect to a particular class, by the vote of a majority of the outstanding voting securities of that class.
Any change in the Plan that would increase materially the distribution expenses paid by the class requires shareholder approval; otherwise, the Plan may be amended by the trustees, including a majority of the Rule 12b-1 Trustees, by votes cast in person at a meeting called for the purpose of voting upon such amendment. As long as the Plan is in effect, the selection or nomination of the Independent Trustees is committed to the discretion of the Independent Trustees.
DISTRIBUTOR
The Trust has entered into a master distribution agreement relating to the Funds (the "Distribution Agreement") with AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of AIM, pursuant to which AIM Distributors acts as the distributor of shares of the Funds. The address of AIM Distributors is P.O. Box 4739, Houston, Texas 77210-4739. Certain trustees and officers of the Trust are affiliated with AIM Distributors. See "Management of the Trust."
The Distribution Agreement provides AIM Distributors with the exclusive right to distribute shares of the Funds on a continuous basis [directly and through institutions with whom AIM Distributors has entered into selected dealer agreements. AIM Distributors has not undertaken to sell any specified number of shares of any classes of the Funds.]
The Trust (on behalf of any class of any Fund) or AIM Distributors may terminate the Distribution Agreement on sixty (60) days' written notice without penalty. The Distribution Agreement will terminate automatically in the event of its assignment.
CALCULATION OF PERFORMANCE DATA
Although performance data may be useful to prospective investors when comparing a Fund's performance with other funds and other potential investments, investors should note that the methods of computing performance of other potential investments are not necessarily comparable to the methods employed by a Fund.
Average Annual Total Return Quotation
The standard formula for calculating average annual total return is as follows:
n P(1+T) =ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the
applicable maximum sales load is deducted at the
beginning of the 1, 5, or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the 1, 5, or 10 year periods
(or fractional portion of such period).
|
The cumulative total returns for each Fund, with respect to its Series I shares, for the one, five and ten year periods (or since inception if applicable) ended December 31 are found in Appendix L.
Yield Quotation
Income calculated for purposes of calculating a Fund's yield differs from income as determined for other accounting purposes. Because of the different accounting methods used, and because of the compounding assumed in yield calculations, the yield quoted for a Fund may differ from the rate of distributions from the Fund paid over the same period or the rate of income reported in the Fund's financial statements.
The standard formula for calculating yield for each Fund is as follows:
Where a = dividends and interest earned during a stated 30-day
period. For purposes of this calculation, dividends
are accrued rather than recorded on the ex-dividend
date. Interest earned under this formula must
generally be calculated based on the yield to
maturity of each obligation (or, if more appropriate,
based on yield to call date).
b = expenses accrued during period (net of
reimbursements).
c = the average daily number of shares outstanding during
the period.
d = the maximum offering price per share on the last day
of the period.
|
The standard formula for calculating annualized yield for AIM V.I. Money Market Fund is as follows:
Y = (V -- V ) x 365
1 0
---------- ---
V 7
0
Where Y = annualized yield.
V = the value of a hypothetical pre-existing
0 account in the Fund having a balance of one
share at the beginning of a stated seven-day
period.
V = the value of such an account at the end of
1 the stated period.
|
The standard formula for calculating effective annualized yield for the Fund is as follows:
365/7 EY = (Y + 1) - 1
Where EY = effective annualized yield.
Y = annualized yield, as determined above.
Performance Information
All advertisements of the Funds will disclose the maximum sales charge (including deferred sales charges) imposed on purchases of a Fund's shares. If any advertised performance data does not reflect the maximum sales charge (if any), such advertisement will disclose that the sales charge has not been deducted in computing the performance data, and that, if reflected, the maximum sales charge would reduce the performance quoted. Further information regarding each Fund's performance is contained in that Fund's annual report to shareholders, which is available upon request and without charge.
From time to time, AIM or its affiliates may waive all or a portion of their fees and/or assume certain expenses of any Fund. Fee waivers or reductions or commitments to reduce expenses will have the effect of increasing that Fund's yield and total return.
Certain Funds may participate in the initial public offering (IPO) market in some market cycles. Because of these Funds' small asset bases, any investment the Funds may make in IPOs may significantly increase these Funds' total returns. As the Funds' assets grow, the impact of IPO investments will decline, which may decrease the Funds' total returns.
The performance of each Fund will vary from time to time and past results are not necessarily indicative of future results.
Total return and yield figures for the Funds are neither fixed nor guaranteed. The Funds may provide performance information in reports, sales literature and advertisements. The Funds may also, from time to time, quote information about the Funds published or aired by publications or other media entities which contain articles or segments relating to investment results or other data about one or more of the Funds. The following is a list of such publications or media entities:
Advertising Age Forbes Nation's Business Barron's Fortune New York Times Best's Review Hartford Courant Pension World Broker World Inc. Pensions & Investments Business Week Institutional Investor Personal Investor Changing Times Insurance Forum Philadelphia Inquirer Christian Science Monitor Insurance Week USA Today Consumer Reports Investor's Daily U.S. News & World Report Economist Journal of the American Wall Street Journal FACS of the Week Society of CLU & ChFC Washington Post Financial Planning Kiplinger Letter CNN Financial Product News Money CNBC Financial Services Week Mutual Fund Forecaster PBS Financial World |
Each Fund may also compare its performance to performance data of similar mutual funds as published by the following services:
Bank Rate Monitor Stanger Donoghue's Weisenberger Mutual Fund Values (Morningstar) Lipper, Inc. |
Each Fund's performance may also be compared in advertising to the performance of comparative benchmarks such as the following:
Lipper Balanced Fund Index Russell 2000(R) Index Lipper European Fund Index Russell 3000(R) Index Lipper Global Fund Index Russell 3000 Growth Index Lipper Utilities Fund Index Lehman Aggregate Bond Index Lipper International Fund Index Dow Jones Global Utilities Index Lipper Multi Cap Core Fund Index MSCI All Country World Index Lipper Multi Cap Growth Fund Index MSCI EAFE Index Lipper Science & Technology Fund Index MSCI Europe Index Lipper Small Cap Core Fund Index PSE Tech 100 Index Lipper Small Cap Growth Fund Index Standard & Poor's 500 Stock Index Lipper Large Cap Core Fund Index Wilshire 5000 Index Russell 1000 Index NASDAQ Index Russell 1000 Value Index |
Each Fund may also compare its performance to rates on Certificates of Deposit and other fixed rate investments such as the following:
10 year Treasury Notes
90 day Treasury Bills
Advertising for the Funds may from time to time include discussions of general economic conditions and interest rates. Advertising for such Funds may also include references to the use of those Funds as part of an individual's overall retirement investment program. From time to time, sales literature and/or advertisements for any of the Funds may disclose: (i) the largest holdings in the Fund's portfolio; (ii) certain selling group members; (iii) certain institutional shareholders; (iv) measurements of risk, including standard deviation, Beta and Sharpe ratios; and/or (v) capitalization and sector analyses of holdings in the Funds' portfolios.
From time to time, the Funds' sales literature and/or advertisements may discuss generic topics pertaining to the mutual fund industry. This includes, but is not limited to, literature addressing general information about mutual funds, variable annuities, dollar-cost averaging, stocks, bonds, money markets, certificates of deposit, retirement, retirement plans, asset allocation, tax-free investing, college planning and inflation.
From time to time, AIM V.I. Dent Demographic Trends Fund's sales literature and/or advertisements may quote (i) Harry S. Dent, Jr.'s theories on why the coming decade may offer unprecedented opportunities for investors, including his opinions on the stock market outlook and where growth may be strongest; (ii) Harry S. Dent, Jr.'s opinions and theories from his books and publications, including, but not limited to, Job Shock, The Great Boom Ahead and The Roaring 2000s, including his beliefs that (a) people's spending patterns may help predict the stock market, (b) the stock market has tended to perform best when a generation has reached its peak spending years from ages 45-50, and (c) as more and more baby boomers reach their peak spending age, they could propel stock prices up for the next decade; and (iii) Harry S. Dent, Jr.'s S-curve analysis, a forecasting tool used to analyze products that show remarkable growth.
APPENDIX A
RATINGS OF DEBT SECURITIES
The following is a description of the factors underlying the debt ratings of Moody's, S&P and Fitch:
MOODY'S BOND RATINGS
Moody's describes its ratings for corporate bonds as follows:
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt-edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. These are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa in its corporate bond rating system. The modifier 1 indicates that the security ranks in
the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.
MOODY'S MUNICIPAL BOND RATINGS
Aaa: Bonds rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
B: Bonds rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa: Bonds rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.
Ca: Bonds rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
Note: Bonds in the Aa group which Moody's believes possess the strongest investment attributes are designated by the symbol Aa1.
Note: Also, Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa to B. The modifier indicates that the issue ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic category.
MOODY'S DUAL RATINGS
In the case of securities with a demand feature, two ratings are assigned: one representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the other representing an evaluation of the degree of risk associated with the demand feature.
MOODY'S SHORT-TERM LOAN RATINGS
Moody's ratings for state and municipal short-term obligations will be designated Moody's Investment Grade or (MIG). Such ratings recognize the differences between short-term credit risk and long-term risk. Factors affecting the liquidity of the borrower and short-term cyclical elements are critical in short-term ratings, while other factors of major importance in bond risk, long-term secular trends for example, may be less important over the short run.
A short-term rating may also be assigned on an issue having a demand feature variable rate demand obligation (VRDO). Such ratings will be designated as VMIG or, if the demand feature is not rated, as NR. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. Additionally, investors should be alert to the fact that the source of payment may be limited to the external liquidity with no or limited legal recourse to the issuer in the event the demand is not met.
A VMIG rating may also be assigned to commercial paper programs. Such programs are characterized as having variable short-term maturities but having neither a variable rate nor demand feature.
Moody's short-term ratings are designated Moody's Investment Grade as MIG 1 or VMIG 1 through MIG 4 or VMIG 4.
Gradations of investment quality are indicated by rating symbols, with each symbol representing a group in which the quality characteristics are broadly the same.
MIG 1/VMIG 1: This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2: This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group.
MIG 3/VMIG 3: This designation denotes favorable quality. All security elements are accounted for but there is lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.
MIG 4/VMIG 4: This designation denotes adequate quality. Protection commonly regarded as required of an investment security is present and although not distinctly or predominantly speculative, there is specific risk.
MOODY'S COMMERCIAL PAPER RATINGS
Moody's commercial paper ratings are opinions of the ability of issuers to repay punctually promissory obligations not having an original maturity in excess of nine months.
PRIME-1: Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return on
Funds employed; conservative capitalization structures with moderate reliance on
debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal
cash generation; and well-established access to a range of financial markets and assured sources of alternate liquidity.
PRIME-2: Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3: Issuers rated Prime-3 (or related supported institutions) have an acceptable capacity for repayment of short-term promissory obligations. The effects of industry characteristics and market composition may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and the requirement for relatively high financial leverage. Adequate alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.
Note: A Moody's commercial paper rating may also be assigned as an evaluation of the demand feature of a short-term or long-term security with a put option.
S&P BOND RATINGS
S&P describes its ratings for corporate bonds as follows:
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in a small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories.
BB-B-CCC-CC-C: Debt rated BB, B, CCC, CC and C is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. BB indicates the lowest degree of speculation and C the highest. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or large exposure to adverse conditions.
S&P MUNICIPAL BOND RATINGS
An S&P municipal bond rating is a current assessment of the creditworthiness of an obligor with respect to a specific obligation. This assessment may take into consideration obligors such as guarantors, insurers, or lessees.
The ratings are based, in varying degrees, on the following considerations: likelihood of default - capacity and willingness of the obligor as to the timely payment of interest and repayment of principal in accordance with the terms of the obligation; nature of and provisions of the obligation; and protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in a small degree.
Note: Ratings within the AA and A major rating categories may be modified by the addition of a plus (+) sign or minus (-) sign to show relative standing.
S&P DUAL RATINGS
S&P assigns "dual" ratings to all debt issues that have a put option or demand feature as part of their structure.
The first rating addresses the likelihood of repayment of principal and interest as due, and the second rating addresses only the demand feature. The long-term debt rating symbols are used for bonds to denote the long-term maturity and the commercial paper rating symbols for the put option (for example, AAA/A-1+). With short-term demand debt, the note rating symbols are used with the commercial paper rating symbols (for example, SP-1+/A-1+).
S&P MUNICIPAL NOTE RATINGS
An S&P note rating reflects the liquidity factors and market-access risks unique to notes. Notes maturing in three years or less will likely receive a note rating. Notes maturing beyond three years will most likely receive a long-term debt rating. The following criteria will be used in making that assessment: amortization schedule (the larger the final maturity relative to other maturities, the more likely the issue will be treated as a note); and source of payment (the more the issue depends on the market for its refinancing, the more likely it is to be treated as a note).
Note rating symbols and definitions are as follows:
SP-1: Strong capacity to pay principal and interest. Issues determined to possess very strong characteristics are given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
SP-3: Speculative capacity to pay principal and interest.
S&P COMMERCIAL PAPER RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days.
Rating categories are as follows:
A-1: This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation.
A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.
A-3: Issues carrying this designation have adequate capacity for timely payment. They are, however, more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations.
B: Issues with this rating are regarded as having only speculative capacity for timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.
D: Debt with this rating is in payment default. The D rating category is used when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless it is believed that such payments will be made during such grace period.
FITCH INVESTMENT GRADE BOND RATINGS
Fitch investment grade bond ratings provide a guide to investors in determining the credit risk associated with a particular security. The ratings represent Fitch's assessment of the issuer's ability to meet the obligations of a specific debt issue in a timely manner.
The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer, the current and prospective financial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be provided by insurance policies or financial guaranties unless otherwise indicated.
Bonds carrying the same rating are of similar but not necessarily identical credit quality since the rating categories do not fully reflect small differences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature of taxability of payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other obligors, underwriters, their experts, and other sources Fitch believes to be reliable. Fitch does not audit or verify the truth or accuracy of such information. Ratings may be changed, suspended, or withdrawn as a result of changes in, or the unavailability of, information or for other reasons.
AAA: Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality. The obligor's ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated "AAA." Because bonds rated in the "AAA" and "AA" categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issuers is generally rated "F-1+."
A: Bonds considered to be investment grade and of high credit quality. The obligor's ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse impact on these bonds and, therefore, impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the "AAA" category.
NR: Indicates that Fitch does not rate the specific issue.
CONDITIONAL: A conditional rating is premised on the successful completion of a project or the occurrence of a specific event.
SUSPENDED: A rating is suspended when Fitch deems the amount of information available from the issuer to be inadequate for rating purposes.
WITHDRAWN: A rating will be withdrawn when an issue matures or is called or refinanced, and, at Fitch's discretion, when an issuer fails to furnish proper and timely information.
FITCHALERT: Ratings are placed on FitchAlert to notify investors of an occurrence that is likely to result in a rating change and the likely direction of such change. These are designated as "Positive," indicating a potential upgrade, "Negative," for potential downgrade, or "Evolving," where ratings may be raised or lowered. FitchAlert is relatively short-term, and should be resolved within 12 months.
RATINGS OUTLOOK
An outlook is used to describe the most likely direction of any rating change over the intermediate term. It is described as "Positive" or "Negative." The absence of a designation indicates a stable outlook.
FITCH SPECULATIVE GRADE BOND RATINGS
Fitch speculative grade bond ratings provide a guide to investors in determining the credit risk associated with a particular security. The ratings ("BB" to "C") represent Fitch's assessment of the likelihood of timely payment of principal and interest in accordance with the terms of obligation for bond issues not in default. For defaulted bonds, the rating ("DDD" to "D") is an assessment of the ultimate recovery value through reorganization of liquidation.
The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer or possible recovery value in bankruptcy, the current and prospective financial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength.
Bonds that have the same rating are of similar but not necessarily identical credit quality since rating categories cannot fully reflect the differences in degrees of credit risk.
BB: Bonds are considered speculative. The obligor's ability to pay interest and repay principal may be affected over time by adverse economic changes. However, business and financial alternatives can be identified, which could assist the obligor in satisfying its debt service requirements.
B: Bonds are considered highly speculative. While bonds in this class are currently meeting debt service requirements, the probability of continued timely payment of principal and interest reflects the obligor's limited margin of safety and the need for reasonable business and economic activity throughout the life of the issue.
CCC: Bonds have certain identifiable characteristics that, if not remedied, may lead to default. The ability to meet obligations requires an advantageous business and economic environment.
CC: Bonds are minimally protected. Default in payment of interest and/or principal seems probable over time.
C: Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D: Bonds are in default on interest and/or principal payments. Such bonds are extremely speculative and should be valued on the basis of their ultimate recovery value in liquidation or reorganization of the obligor. "DDD" represents the highest potential for recovery on these bonds, and "D" represents the lowest potential for recovery.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the "DDD," "DD," or "D" categories.
FITCH SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on demand or have original maturities of generally up to three years, including commercial paper, certificates of deposit, medium-term notes, and municipal and investment notes.
The short-term rating places greater emphasis than a long-term rating on the existence of liquidity necessary to meet the issuer's obligations in a timely manner.
Fitch short-term ratings are as follows:
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated "F-1+."
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned "F-1+" and "F-1" ratings.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is adequate, however, near-term adverse changes could cause these securities to be rated below investment grade.
F-S: Weak Credit Quality. Issues assigned this rating have characteristics suggesting a minimal degree of assurance for timely payment and are vulnerable to near-term adverse changes in financial and economic conditions.
D: Default. Issues assigned this rating are in actual or imminent payment default.
LOC: The symbol LOC indicates that the rating is based on a letter of credit issued by a commercial bank.
APPENDIX B
The address of each trustee and officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 86 portfolios in the AIM Funds complex. Column two below includes length of time served with any predecessor entities.
-------------------------------------------------------------------------------------------------------------------------------
TRUSTEE
NAME, YEAR OF BIRTH AND AND/OR
POSITION(S) HELD WITH OFFICER OTHER DIRECTORSHIP(S)
THE TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS HELD BY TRUSTEE
-------------------------------------------------------------------------------------------------------------------------------
INTERESTED PERSON
Robert H. Graham* - 1946 1993 Chairman, President and Chief Executive Officer, A I M None
Trustee, Chairman and Management Group Inc. (financial services holding
President company); Chairman and President, A I M Advisors, Inc.
(registered investment advisor); Director and Senior Vice
President, A I M Capital Management, Inc. (registered
investment advisor); Chairman, A I M Distributors, Inc.
(registered broker dealer), A I M Fund Services, Inc.
(registered transfer agent) and Fund Management Company
(registered broker dealer); and Director and Vice
Chairman, AMVESCAP PLC (parent of AIM and a global
investment management firm)
INDEPENDENT TRUSTEES
Frank S. Bayley - 1939 2001 Of Counsel, law firm of Baker & McKenzie Badgley Funds, Inc. (registered
Trustee investment company)
Bruce L. Crockett - 1944 1993 Chairman, Crockett Technology Associates (technology ACE Limited (insurance
Trustee consulting company) company); and Captaris, Inc.
(unified messaging provider)
Albert R. Dowden - 1941 2000 Chairman, Cortland Trust, Inc. (registered investment None
Trustee company) and DHJ Media, Inc.; Director, Magellan
Insurance Company; Member of Advisor Board of Rotary
Power International (designer, manufacturer, and seller
of rotary power engines); formerly, Director,
President and CEO, Volvo Group North America, Inc. and
director of various affiliated Volvo companies
Edward K. Dunn, 1998 Formerly, Chairman, Mercantile Mortgage Corp.; Vice Baltimore Equitable Society for
Jr. - 1935 Chairman, President and Chief Operating Officer, Insuring Houses Against Fires
Trustee Mercantile-Safe Deposit & Trust Co.; and President, (mutual insurance company);
Mercantile Bankshares Corp. and Ward Machinery
Jack M. Fields - 1952 1997 Chief Executive Officer, Twenty First Century Group, Inc. Administaff
Trustee (government affairs company)
Carl Frischling** - 1937 1993 Partner, law firm of Kramer Levin Naftalis and Frankel Cortland Trust, Inc.
Trustee LLP (registered investment company)
Prema 1998 Formerly, Chief Executive Officer, YWCA of the USA None
Mathai-Davis - 1950
Trustee
Lewis F. Pennock - 1942 1993 Partner, law firm of Pennock & Cooper None
Trustee
Ruth H. Quigley - 1935 2001 Retired None
Trustee
Louis S. Sklar - 1939 1993 Executive Vice President, Development and Operations, None
Trustee Hines Interests Limited Partnership (real estate
development company)
|
* Mr. Graham is considered an interested person of the fund because he is an officer and a director of the advisor to and a director of the principal underwriter of, the Trust.
** The law firm in which Mr. Frischling is a partner is counsel to the independent directors/trustees of the AIM Funds and the AIM Funds pay such firm's fees. The AIM Funds believe that Mr. Frischling is not an interested person of the AIM Funds solely as a result of this relationship and are currently communicating with the SEC to confirm their view.
The address of each trustee and officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 86 portfolios in the AIM Funds complex. Column two below includes length of time served with any predecessor entities.
-------------------------------------------------------------------------------------------------------------------------------
TRUSTEE
NAME, YEAR OF BIRTH AND AND/OR
POSITION(S) HELD WITH OFFICER OTHER DIRECTORSHIP(S)
THE TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS HELD BY TRUSTEE
-------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
Gary T. Crum - 1947 1993 Director and President, A I M Capital Management, Inc. N/A
Senior Vice President (registered investment advisor); Director and Executive
Vice President, A I M Management Group Inc. (financial
services holding company); Director and Senior Vice
President, A I M Advisors, Inc. (registered investment
advisor); and Director, A I M Distributors, Inc.
(registered broker dealer) and AMVESCAP PLC (parent of
AIM and a global investment management firm)
Carol F. Relihan - 1954 1993 Director, Senior Vice President, General Counsel and N/A
Senior Vice President Secretary, A I M Advisors, Inc. and A I M Management
and Secretary Group Inc.; Director, Vice President and General Counsel,
Fund Management Company; and Vice President, A I M Fund
Services, Inc., A I M Capital Management, Inc. and A I M
Distributors, Inc.
Robert G. Alley - 1948 1993 Senior Vice President, A I M Capital Management, Inc.; N/A
Vice President and Vice President, A I M Advisors, Inc.
Stuart W. Coco - 1955 1993 Senior Vice President-Director of Fixed Income Research, N/A
Vice President A I M Capital Management, Inc.; and Vice President, A I M
Advisors, Inc.
Melville B. Cox - 1943 1993 Vice President and Chief Compliance Officer, A I M N/A
Vice President Advisors, Inc. and A I M Capital Management, Inc.; and
Vice President, A I M Fund Services, Inc.
Karen Dunn Kelley - 1960 1993 Senior Vice President-Director of Cash Management, A I M N/A
Vice President Capital Management, Inc.; Director and President, Fund
Management Company; and Vice President, A I M Advisors,
Inc.
Edgar M. Larsen - 1940 1999 Vice President, A I M Advisors, Inc. and A I M Capital N/A
Vice President Management, Inc.
Dana R. Sutton - 1959 1993 Vice President and Fund Treasurer, A I M Advisors, Inc. N/A
Vice President and
Treasurer
|
APPENDIX B-1
AS OF DECEMBER 31, 2001
Name of Trustee Dollar Range or Equity Securities In Aggregate Dollar Range of Equity
the Funds(1) Securities in The AIM Family of Funds
---------------------------------------- -------------------------------------- --------------------------------------
Robert H. Graham N/A Over $100,000
---------------------------------------- -------------------------------------- --------------------------------------
Frank S. Bayley N/A $10,000 - $50,000
---------------------------------------- -------------------------------------- --------------------------------------
Bruce L. Crockett N/A $1 - $10,000
---------------------------------------- -------------------------------------- --------------------------------------
Owen Daly II N/A Over $100,000(2)
---------------------------------------- -------------------------------------- --------------------------------------
Albert R. Dowden N/A Over $100,000
---------------------------------------- -------------------------------------- --------------------------------------
Edward K. Dunn, Jr. N/A Over $100,000(2)
---------------------------------------- -------------------------------------- --------------------------------------
Jack M. Fields N/A Over $100,000(2)
---------------------------------------- -------------------------------------- --------------------------------------
Carl Frishling N/A Over $100,000(2)
---------------------------------------- -------------------------------------- --------------------------------------
Prema Mathai-Davis N/A $50,000 - $100,000(2)
---------------------------------------- ------------------------------------- --------------------------------------
Lewis F. Pennock N/A $10,000 - $50,000
---------------------------------------- -------------------------------------- --------------------------------------
Ruth H. Quigley N/A $1 - $10,000
---------------------------------------- -------------------------------------- --------------------------------------
Louis S. Skylar N/A Over $100,000
---------------------------------------- -------------------------------------- --------------------------------------
|
(1) During the above period, no Trustee had any Dollar Range or Equity Securities in the Funds.
(2) Included the total amount of compensation deferred by the trustee at his or her election pursuant to a deferred compensation plan. Such deferred compensation is placed in a deferral account and deemed to be invested in one or more of the AIM Funds.
APPENDIX C
TRUSTEE COMPENSATION TABLE
Set forth below is information regarding compensation paid or accrued for each trustee of the Trust who is not affiliated with AIM during the year ended December 31, 2001:
RETIREMENT ESTIMATED
AGGREGATE BENEFITS ANNUAL TOTAL
COMPENSATION FROM ACCRUED BENEFITS COMPENSATION
THE BY ALL UPON FROM ALL AIM
DIRECTOR TRUST(1) AIM FUNDS(2) RETIREMENT(3) FUNDS(4) (5)
------------------------------------ ------------------- ---------------- ----------------- ---------------------
Frank S. Bayley(6) $ 2,213 $ - 0 - $ 75,000 $ 112,000
------------------------------------ ------------------- ---------------- ----------------- ---------------------
Bruce L. Crockett 28,969 36,312 75,000 126,500
------------------------------------ ------------------- ---------------- ----------------- ---------------------
Owen Daly II(7) 28,969 33,318 75,000 126,500
------------------------------------ ------------------- ---------------- ----------------- ---------------------
Albert R. Dowden 25,600 3,193 75,000 126,500
------------------------------------ ------------------- ---------------- ----------------- ---------------------
Edward K. Dunn, Jr. 28,969 8,174 75,000 126,500
------------------------------------ ------------------- ---------------- ----------------- ---------------------
Jack M. Fields 28,616 19,015 75,000 126,000
------------------------------------ ------------------- ---------------- ----------------- ---------------------
Carl Frischling(8) 28,873 54,394 75,000 126,000
------------------------------------ ------------------- ---------------- ----------------- ---------------------
Prema Mathai-Davis 28,969 21,056 75,000 126,500
------------------------------------ ------------------- ---------------- ----------------- ---------------------
Lewis F. Pennock 28,969 37,044 75,000 126,500
------------------------------------ ------------------- ---------------- ----------------- ---------------------
Ruth H. Quigley(6) 2,309 - 0 - 75,000 112,500
------------------------------------ ------------------- ---------------- ----------------- ---------------------
Louis S. Sklar 28,108 53,911 75,000 123,000
==================================== =================== ================ ================= =====================
|
(1) The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended December 31, 2001, including earnings, was $________.
(2) During the fiscal year ended December 31, 2001, the total amount of expenses allocated to the Trust in respect of such retirement benefits was $________.
(3) Amounts shown assume each trustee serves until his or her normal retirement date.
(4) All trustees currently serve as directors or trustees of sixteen registered investment companies advised by AIM.
(5) During the fiscal year ended December 31, 2001 the Trust received reimbursement for compensation paid to the trustees of $_________. During the year ended December 31, 2001, all AIM Funds received reimbursement of total compensation paid to Trustees of $31,500.
(6) Mr. Bayley and Miss Quigley were elected to serve as trustees on September 28, 2001.
(7) Mr. Daly retired as a trustee on December 31, 2001.
(8) During the fiscal year ended December 31, 2001, the Trust paid $___________ in legal fees to Kramer Levin Naftalis & Frankel LLP for services rendered by such firm as counsel to the independent trustees of the Trust. Mr. Frischling is a partner of such firm.
APPENDIX D
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Trust, the names and addresses of the record and beneficial holders of 5% or more of the outstanding shares of each class of the Trust's equity securities and the percentage of the outstanding shares held by such holders are set forth below. Unless otherwise indicated below, the Trust has no knowledge as to whether all or any portion of the shares owned of record are also owned beneficially.
A shareholder who owns beneficially 25% or more of the outstanding securities of a Fund is presumed to "control" that Fund as defined in the 1940 Act. Such control may affect the voting rights of other shareholders.
All information listed below is as of February 2, 2002.
AIM V.I. AGGRESSIVE GROWTH FUND
SERIES I SERIES II
SHARES SHARES
------------------------------------------- -------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------- -------------------------- -------------------------
ALLMERICA FINANCIAL LIFE INS & ANNUITY 50.23%* N/A
COMPANY
ATTN: LYNNE MCENTEGART SEP ACCOUNT
440 LINCOLN STREET
MAILSTOP S-310
WORCESTER MA 01653-0000
------------------------------------------- -------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 29.07%* N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------- -------------------------- -------------------------
SAFECO LIFE INSURANCE COMPANY 8.12% N/A
ATTN MICHAEL ZHANG
10865 WILLOWS RD NE
REDMOND WA 98052-0000
------------------------------------------- -------------------------- -------------------------
|
AIM V.I. BALANCED FUND
SERIES I SERIES II
SHARES SHARES
------------------------------------------- -------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------- -------------------------- -------------------------
GLENBROOK LIFE & ANNUITY 62.91%* N/A
CO
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------- -------------------------- -------------------------
UNION CENTRAL LIFE INSURANCE 12.86% N/A
FBO VARIABLE UNIVERSAL LIFE
ATTN ROBERTA UJVARY
PO BOX 40888
CINCINNATI OH 45240-0000
------------------------------------------- -------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 8.45% N/A
GLAC MULTI-MANAGER ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------- -------------------------- -------------------------
ALLSTATE LIFE INS CO OF NEW YORK 5.41% N/A
NY PROPRIETARY
3100 SANDERS ROAD
NORTHBROOK IL 60062-0000
------------------------------------------- -------------------------- -------------------------
TRANSAMERICA LIFE INSURANCE N/A 100.00%**
CO
ATTN FMD ACCTG MS 4410
4333 EDGEWOOD RD NE
CEDAR RAPIDES IOWA 52499
------------------------------------------- -------------------------- -------------------------
|
** Owned of record and beneficially (such as AIM advisors, Inc.)
AIM V.I. BASIC VALUE FUND
SERIES I SERIES II
SHARES SHARES
------------------------------------------ --------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------ --------------------------- -------------------------
HARTFORD LIFE AND ANNUITY 39.19%* N/A
SEPARATE ACCOUNT
ATTN DAVE TEN BROECK
PO BOX 2999
HARTFORD CT 06104-2999
------------------------------------------ --------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 23.45% N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
ALLSTATE LIFE INSURANCE CO 14.01% N/A
ATTN FINANCIAL CONTROL- CIGNA
300 N MILWAUKEE AVE
VERNON HILLS IL 60061-0000
------------------------------------------ --------------------------- -------------------------
HARTFORD LIFE SEPARATE ACCOUNT 8.89% N/A
ATTN DAVE TEN BROECK
PO BOX 2999
HARTFORD CT 06104-2999
------------------------------------------ --------------------------- -------------------------
N/A
GLENBROOK LIFE & ANNUITY CO 6.93%
VA 1 AND SPVL ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
A I M ADVISORS
INC N/A 100.00%**
ATTN: DAVID HESSE
11 GREENWAY PLAZA
SUITE 1919
HOUSTON TX 77046-0000
------------------------------------------ --------------------------- -------------------------
|
** Owned of record and beneficially (such as AIM advisors, Inc.)
AIM V.I. BLUE CHIP FUND
SERIES I SERIES II
SHARES SHARES
------------------------------------------ --------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------ --------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 44.11%* N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
ALLMERICA FINANCIAL LIFE INS & ANNUITY 30.16%* N/A
COMPANY
ATTN: LYNNE MCENTEGART SEP ACCOUNT
440 LINCOLN STREET
MAILSTOP S-310
WORCESTER MA 01653-0000
------------------------------------------ --------------------------- -------------------------
ALLSTATE LIFE INS CO OF NEW 10.58% N/A
YORK
NY PROPRIETARY
3100 SANDERS ROAD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
|
AIM V.I. CAPITAL APPRECIATION FUND
SERIES I SERIES II
SHARES SHARES
------------------------------------------ --------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------ --------------------------- -------------------------
ALLSTATE LIFE INSURANCE CO 14.04% N/A
ATTN FINANCIAL CONTROL- CIGNA
300 N MILWAUKEE AVE
VERNON HILLS IL 60061-0000
------------------------------------------ --------------------------- -------------------------
|
AIM V.I. BLUE CHIP FUND
SERIES I SERIES II
SHARES SHARES
------------------------------------------ --------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------ --------------------------- -------------------------
AETNA LIFE INSURANCE & ANNUITY COMPANY 12.34% N/A
ATTN JACKIE JOHNSON
CONVEYOR TN41
151 FARMINGTON AVE
HARTFORD CT 06156-0000
------------------------------------------ --------------------------- -------------------------
MERRILL LYNCH LIFE INSURANCE CO 11.31% N/A
ATTN KELLEY WOODS
4804 DEER LAKE DR E
BLDG 3 4TH FL
JACKSONVILLE FL 32246-0000
------------------------------------------ --------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 6.87% N/A
VA 1 AND SPVL ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 5.58% N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
IDS LIFE INSURANCE CO N/A 48.14%*
RAVA
ADVANTAGE VARIABLE ANNUITY 1AC
222 AXP FINANCIAL CENTER
MINNEAPOLIS MN 55474-0000
------------------------------------------ --------------------------- -------------------------
IDS LIFE INSURANCE N/A 47.49%*
CO
RAVA ADVANTAGE VARIABLE ANTY 2AC
222 AXP FINANCIAL CENTER
MINNEAPOLIS MN 55474-0000
------------------------------------------ --------------------------- -------------------------
|
AIM V.I. CAPITAL DEVELOPMENT FUND
SERIES I SERIES II
SHARES SHARES
------------------------------------------ --------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------ --------------------------- -------------------------
AMERICAN EXPRESS FINANCIAL ADVIS 34.07%* N/A
C/O IDS LIFE INSURANCE COMPANY 1CA
FLEX VARIABLE ANNUIT AC T11/1646
IDS TOWER 10T11/340
MINNEAPOLIS MN 55440-0000
------------------------------------------ --------------------------- -------------------------
AMERICAN EXPRESS FINANCIAL ADVIS 31.51%* N/A
C/O IDS LIFE INSURANCE COMPANY 2CA
FLEX VARIABLE ANNUIT AC T11/1646
IDS TOWER 10T11/340
MINNEAPOLIS MN 55440-0000
------------------------------------------ --------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 17.92% N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
IDS LIFE INSURANCE N/A 50.86%*
CO
RAVA ADVANTAGE VARIABLE ANTY 2AC
222 AXP FINANCIAL CENTER
MINNEAPOLIS MN 55474-0000
------------------------------------------ --------------------------- -------------------------
IDS LIFE INSURANCE CO N/A 44.30%*
RAVA
ADVANTAGE VARIABLE ANNUITY 1AC
222 AXP FINANCIAL CENTER
MINNEAPOLIS MN 55474-0000
------------------------------------------ --------------------------- -------------------------
|
AIM V.I. CORE EQUITY FUND
SERIES I SERIES II
SHARES SHARES
------------------------------------------ --------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------ --------------------------- -------------------------
IDS LIFE INSURANCE CORP 38.45%* N/A
VARIABLE UNIVERSAL LIFE III
340 AXP FINANCIAL CENTER
MINNEAPOLIS MN 55474-0000
------------------------------------------ --------------------------- -------------------------
AMERICAN EXPRESS FINANCIAL ADVIS 18.63% N/A
C/O IDS LIFE INSURANCE COMPANY 1CA
FLEX VARIABLE ANNUIT AC T11/1646
IDS TOWER 10T11/340
MINNEAPOLIS MN 55440-0000
------------------------------------------ --------------------------- -------------------------
AETNA LIFE INSURANCE & ANNUITY COMPANY 7.27% N/A
ATTN JACKIE JOHNSON
CONVEYOR TN41
151 FARMINGTON AVE
HARTFORD CT 06156-0000
------------------------------------------ --------------------------- -------------------------
PRUDENTIAL INSURANCE CO IF AMER 6.94% N/A
ATTN IGG FINL REP SEP ACCTS
NJ-02-07-01
213 WASHINGTON ST
7TH FL
NEWARK NJ 07102-2992
------------------------------------------ --------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 5.14% N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
SAGE LIFE ASSURANCE OF N/A 99.57%*
AMERICA
300 ATLANTIC ST
STE 302
STAMFORD CT 06901-0000
------------------------------------------ --------------------------- -------------------------
|
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
SERIES I SERIES II
SHARES SHARES
-------------------------------------------- --------------------------- ------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
-------------------------------------------- --------------------------- ------------------------
GLENBROOK LIFE & ANNUITY CO 39.48%* N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
-------------------------------------------- --------------------------- ------------------------
RELIASTAR LIFE INSURANCE CO 17.14 N/A
FBO NORTHERN LIFE VAR ANN SEP 1
RTE 5106
PO BOX 20
MINNEAPOLIS MN 5440-0000
-------------------------------------------- --------------------------- ------------------------
RELIASTAR LIFE INSURANCE CO 9.17% N/A
FBO SELECT LIFE 2/3
RTE 5106 PO BOX 20
MINNEAPOLIS MN 55440-0000
-------------------------------------------- --------------------------- ------------------------
GOLDEN AMERICAN LIFE INSURANCE COM N/A 99.91%*
1475 DUNWOODY DRIVE
WEST CHESTER, PA 19380
-------------------------------------------- --------------------------- ------------------------
|
AIM V.I. DIVERSIFIED INCOME FUND
SERIES I SERIES II
SHARES SHARES
------------------------------------------ --------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------ --------------------------- -------------------------
ALLSTATE LIFE INSURANCE CO 29.92%* N/A
ATTN FINANCIAL CONTROL- CIGNA
300 N MILWAUKEE AVE
VERNON HILLS IL 60061-0000
------------------------------------------ --------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 20.92% N/A
VA 1 AND SPVL ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
|
SERIES I SERIES II
SHARES SHARES
------------------------------------------ --------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------ --------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 20.34% N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
GENERAL AMERICAN LIFE 8.12% N/A
SEPARATE ACCOUNTS B1-08
ATTN MARVIN HABBAS
13045 TESSON FERRY RD
ST LOUIS MO 63128-0000
------------------------------------------ --------------------------- -------------------------
AMERICAN GENERAL ANNUITY 5.60% N/A
ATTN CHRIS BOUMAN
205 E 10TH ST
AMARILLO TX 79101-0000
------------------------------------------ --------------------------- -------------------------
|
AIM V.I. GLOBAL UTILITIES FUND
SERIES I SERIES II
SHARES SHARES
------------------------------------------ --------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------ --------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 32.21%* N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
ALLSTATE LIFE INSURANCE CO 23.03% N/A
ATTN FINANCIAL CONTROL- CIGNA
300 N MILWAUKEE AVE
VERNON HILLS IL 60061-0000
------------------------------------------ --------------------------- -------------------------
|
SERIES I SERIES II
SHARES SHARES
------------------------------------------ --------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------ --------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 19.68% N/A
VA 1 AND SPVL ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
GUARDIAN INSURANCE & ANNUITY CO 13.63% N/A
ATTN EQUITY ACCOUNTING DEPT 3-S-18
3900 BURGESS PL
BETHLEHEM PA 18017-000
------------------------------------------ --------------------------- -------------------------
|
AIM V.I. GOVERNMENT SECURITIES FUND
SERIES I SERIES II
SHARES SHARES
------------------------------------------ --------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------ --------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 20.32% N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
SECURITY LIFE OF DENVER 16.43% N/A
VARIABLE OPERATIONS
1290 BROADWAY
DENVER CO 80203-5699
------------------------------------------ --------------------------- -------------------------
ALLSTATE LIFE INSURANCE CO 11.81% N/A
ATTN FINANCIAL CONTROL- CIGNA
300 N MILWAUKEE AVE
VERNON HILLS IL 60061-0000
------------------------------------------ --------------------------- -------------------------
TRAVELERS LIFE & ANNUITY CO 10.79% N/A
ATTN SHAREHOLDER ACCOUNTING
FBO FIRST CITICORP LIFE INS CO
1 TOWER SQUARE 6MS
HARTFORD CT 06183-0000
------------------------------------------ --------------------------- -------------------------
|
SERIES I SERIES II
SHARES SHARES
------------------------------------------ --------------------------- -------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
------------------------------------------ --------------------------- -------------------------
GLENBROOK LIFE & ANNUITY CO 7.59% N/A
VA 1 AND SPVL ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
------------------------------------------ --------------------------- -------------------------
AETNA LIFE INSURANCE & ANNUITY 6.08% N/A
COMPANY ATTN JACKIE JOHNSON
CONVEYOR TN41
151 FARMINGTON AVE
HARTFORD CT 06156-0000
------------------------------------------ --------------------------- -------------------------
HARTFORD LIFE AND ANNUITY 5.05% N/A
SEPARATE ACCOUNT
ATTN DAVE TEN BROECK
PO BOX 2999
HARTFORD CT 06104-2999
------------------------------------------ --------------------------- -------------------------
SAGE LIFE ASSURANCE OF N/A 54.27%*
AMERICA
300 ATLANTIC ST
STE 302
STAMFORD CT 06901-0000
------------------------------------------ --------------------------- -------------------------
THE LINCOLN NATIONAL LIFE INS N/A 45.58%*
CO
ATTN SHIRLEY SMITH
1300 SOUTH CLINTON STREET
FORT WAYNE IN 46802-0000
------------------------------------------ --------------------------- -------------------------
|
AIM V.I. GROWTH FUND
SERIES I SERIES II
SHARES SHARES
----------------------------------------- --------------------------- --------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
----------------------------------------- --------------------------- --------------------------
AETNA LIFE INSURANCE & ANNUITY COMPANY 14.87% N/A
ATTN JACKIE JOHNSON
CONVEYOR TN41
151 FARMINGTON AVE
HARTFORD CT 06156-0000
----------------------------------------- --------------------------- --------------------------
ALLSTATE LIFE INSURANCE CO 13.87% N/A
ATTN FINANCIAL CONTROL- CIGNA
300 N MILWAUKEE AVE
VERNON HILLS IL 60061-0000
----------------------------------------- --------------------------- --------------------------
GLENBROOK LIFE & ANNUITY CO 11.78% N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
----------------------------------------- --------------------------- --------------------------
GLENBROOK LIFE & ANNUITY CO 7.71% N/A
VA 1 AND SPVL ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
----------------------------------------- --------------------------- --------------------------
JOHN HANCOCK VARIABLE ACCOUNT H 6.47% N/A
ATTN RAY F SKIBA
101 HUNTINGTON AVE 4TH FL
BOSTON MA 02199-0000
----------------------------------------- --------------------------- --------------------------
SUN LIFE FINANCIAL 6.21% N/A
RETIREMENT PRODUCTS & SERVICES
PO BOX 9134
WELLESLEY HILLS, MA 02481
----------------------------------------- --------------------------- --------------------------
GOLDEN AMERICAN LIFE INSURANCE N/A 67.97%*
COM
1475 DUNWOODY DRIVE
WEST CHESTER, PA 19380
----------------------------------------- --------------------------- --------------------------
|
SERIES I SERIES II
SHARES SHARES
----------------------------------------- --------------------------- --------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
----------------------------------------- --------------------------- --------------------------
LINCOLN LIFE VARIABLE N/A 20.23%
ANNUITY
ACCOUNT N
MUTUAL FUND ADMINIST AREA 6H-02
1300 CLINTON STREET
FORT WAYNE IN 46801-0000
----------------------------------------- --------------------------- --------------------------
THE LINCOLN NATIONAL LIFE INS N/A 10.98%
CO
ATTN SHIRLEY SMITH
1300 SOUTH CLINTON STREET
FORT WAYNE IN 46802-0000
----------------------------------------- --------------------------- --------------------------
|
AIM V.I. HIGH YIELD FUND
SERIES I SERIES II
SHARES SHARES
----------------------------------------- --------------------------- --------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
----------------------------------------- --------------------------- --------------------------
GLENBROOK LIFE & ANNUITY CO 46.57%* N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
----------------------------------------- --------------------------- --------------------------
HARTFORD LIFE INSURANCE CO 25.79%* N/A
SEPARATE ACCOUNT 2
ATTN DAVID TEN BROECK
PO BOX 2999
HARTFORD CT 06104-2999
----------------------------------------- --------------------------- --------------------------
ALLMERICA FINANCIAL LIFE INS 6.57% N/A
ATTN: LYNNE MCENTEGART 440 LINCOLN
STREET
MAILSTOP S-310
WORCESTER MA 01653-0000
----------------------------------------- --------------------------- --------------------------
|
SERIES I SERIES II
SHARES SHARES
----------------------------------------- --------------------------- --------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
----------------------------------------- --------------------------- --------------------------
GLENBROOK LIFE & ANNUITY CO 6.32% N/A
GLAC MULTI-MANAGER ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
----------------------------------------- --------------------------- --------------------------
GLENBROOK LIFE & ANNUITY CO 5.91% N/A
VA 1 AND SPVL ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
----------------------------------------- --------------------------- --------------------------
ALLSTATE LIFE INSURANCE CO ATTN
FINANCIAL CONTROL-CIGNA 5.48% N/A
300 N MILWAUKEE AVE
VERNON HILLS IL 60061-0000
----------------------------------------- --------------------------- --------------------------
|
AIM V.I. INTERNATIONAL GROWTH FUND
SERIES I SERIES II
SHARES SHARES
----------------------------------------- --------------------------- --------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
----------------------------------------- --------------------------- --------------------------
ALLSTATE LIFE INSURANCE CO 15.99% N/A
ATTN FINANCIAL CONTROL- CIGNA
300 N MILWAUKEE AVE
VERNON HILLS IL 60061-0000
----------------------------------------- --------------------------- --------------------------
SUN LIFE FINANCIAL 15.31% N/A
RETIREMENT PRODUCTS & SERVICES
PO BOX 9134
WELLESLEY HILLS, MA 02481
----------------------------------------- --------------------------- --------------------------
GLENBROOK LIFE & ANNUITY CO 8.51% N/A
VA 1 AND SPVL ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
----------------------------------------- --------------------------- --------------------------
LINCOLN LIFE VARIABLE ANNUITY 7.64% N/A
MUTUAL FUND ADMINIST AREA 6H-02
1300 CLINTON STREET
FORT WAYNE IN 46801-0000
----------------------------------------- --------------------------- --------------------------
GLENBROOK LIFE & ANNUITY CO 6.26% N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
----------------------------------------- --------------------------- --------------------------
MERRILL LYNCH LIFE INSURANCE CO 6.22% N/A
ATTN KELLEY WOODS
4804 DEER LAKE DR E
BLDG 3 4TH FL
JACKSONVILLE FL 32246-0000
----------------------------------------- --------------------------- --------------------------
|
SERIES I SERIES II
SHARES SHARES
----------------------------------------- --------------------------- --------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
----------------------------------------- --------------------------- --------------------------
KEYPORT LIFE INSURANCE COMPANY 5.86% N/A
125 HIGH STREET
BOSTON MA 02110-2712
----------------------------------------- --------------------------- --------------------------
SAGE LIFE ASSURANCE OF N/A 60.84%*
AMERICA
300 ATLANTIC ST
STE 302
STAMFORD CT 06901-0000
----------------------------------------- --------------------------- --------------------------
LINCOLN LIFE VARIABLE N/A 21.90%
ANNUITY
ACCOUNT N
MUTUAL FUND ADMINIST AREA 6H-02
1300 CLINTON STREET
FORT WAYNE IN 46801-0000
----------------------------------------- --------------------------- --------------------------
AMERICAN LIFE INSURANCE COMPANY OF NEW N/A 16.60%
YORK
ATTN TREASURY/ACCOUNTING
300 DISTILLERY COMMONS
STE 300
LOUISVILLE KY 40206-0000
----------------------------------------- --------------------------- --------------------------
|
AIM V.I. MID CAP CORE EQUITY FUND
SERIES I SERIES II
SHARES SHARES
----------------------------------------- --------------------------- --------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
----------------------------------------- --------------------------- --------------------------
HARTFORD LIFE AND ANNUITY 35.13%* N/A
SEPARATE ACCOUNT
ATTN DAVE TEN BROECK
PO BOX 2999
HARTFORD CT 06104-2999
----------------------------------------- --------------------------- --------------------------
GLENBROOK LIFE & ANNUITY CO 24.25% N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
----------------------------------------- --------------------------- --------------------------
ALLSTATE LIFE INSURANCE CO 16.70% N/A
ATTN FINANCIAL CONTROL- CIGNA
300 N MILWAUKEE AVE
VERNON HILLS IL 60061-0000
----------------------------------------- --------------------------- --------------------------
GLENBROOK LIFE & ANNUITY CO 8.49% N/A
VA 1 AND SPVL ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
----------------------------------------- --------------------------- --------------------------
HARTFORD LIFE SEPARATE ACCOUNT 8.43% N/A
ATTN DAVE TEN BROECK
PO BOX 2999
HARTFORD CT 06104-2999
----------------------------------------- --------------------------- --------------------------
A I M ADVISORS
INC N/A 100.00%**
ATTN: DAVID HESSE
11 GREENWAY PLAZA SUITE 1919
HOUSTON TX 77046-0000
----------------------------------------- --------------------------- --------------------------
|
** Owned of record and beneficially (such as AIM advisors, Inc.)
AIM V.I. MONEY MARKET FUND
SERIES I SERIES II
SHARES SHARES
----------------------------------------- --------------------------- --------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
----------------------------------------- --------------------------- --------------------------
GLENBROOK LIFE & ANNUITY CO 36.24%* N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
----------------------------------------- --------------------------- --------------------------
ALLSTATE LIFE INSURANCE CO 32.72%* N/A
ATTN FINANCIAL CONTROL- CIGNA
VERNON HILLS IL 60061-0000
----------------------------------------- --------------------------- --------------------------
GLENBROOK LIFE & ANNUITY CO 19.81% N/A
VA 1 AND SPVL ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
----------------------------------------- --------------------------- --------------------------
AMERICAN LIFE INSURANCE COMPANY OF NEW N/A 100.00%**
YORK
ATTN TREASURY/ACCOUNTING
300 DISTILLERY COMMONS STE 300
LOUISVILLE KY 40206-0000
----------------------------------------- --------------------------- --------------------------
|
** Owned of record and beneficially (such as AIM advisors, Inc.)
AIM V.I. NEW TECHNOLOGY FUND
SERIES I SERIES II
SHARES SHARES
----------------------------------------- --------------------------- --------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
----------------------------------------- --------------------------- --------------------------
GENERAL AMERICAN LIFE 54.84%* N/A
SEPARATE ACCOUNTS B1-08
ATTN MARVIN HABBAS
13045 TESSON FERRY RD
ST LOUIS MO 63128-0000
----------------------------------------- --------------------------- --------------------------
GLENBROOK LIFE & ANNUITY CO 30.67%* N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
----------------------------------------- --------------------------- --------------------------
|
AIM V.I. PREMIER EQUITY FUND
SERIES I SERIES II
SHARES SHARES
----------------------------------------- --------------------------- --------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
----------------------------------------- --------------------------- --------------------------
MERRILL LYNCH LIFE INSURANCE CO 14.44% N/A
ATTN KELLEY WOODS
4804 DEER LAKE DR E
BLDG 3 4TH FL
JACKSONVILLE FL 32246-0000
----------------------------------------- --------------------------- --------------------------
PRUDENTIAL INSURANCE CO IF AMER 12.57% N/A
ATTN IGG FINL REP SEP ACCTS
NJ-02-07-01
213 WASHINGTON ST
7TH FL
NEWARK NJ 07102-2992
----------------------------------------- --------------------------- --------------------------
ALLSTATE LIFE INSURANCE CO 8.76% N/A
ATTN FINANCIAL CONTROL- CIGNA
300 N MILWAUKEE AVE
VERNON HILLS IL 60061-0000
----------------------------------------- --------------------------- --------------------------
AETNA LIFE INSURANCE & ANNUITY 5.93% N/A
COMPANY ATTN JACKIE JOHNSON
CONVEYOR TN41
151 FARMINGTON AVE
HARTFORD CT 06156-0000
----------------------------------------- --------------------------- --------------------------
GLENBROOK LIFE & ANNUITY CO 5.56% N/A
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155
----------------------------------------- --------------------------- --------------------------
LINCOLN LIFE VARIABLE N/A 57.88%*
ANNUITY
ACCOUNT N
MUTUAL FUND ADMINIST AREA 6H-02
1300 CLINTON STREET
FORT WAYNE IN 46801-0000
----------------------------------------- --------------------------- --------------------------
|
SERIES I SERIES II
SHARES SHARES
----------------------------------------- --------------------------- --------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD
----------------------------------------- --------------------------- --------------------------
SAGE LIFE ASSURANCE OF N/A 24.49%
AMERICA
300 ATLANTIC ST
STE 302
STAMFORD CT 06901-0000
----------------------------------------- --------------------------- --------------------------
THE LINCOLN NATIONAL LIFE INS N/A 13.82%
CO
ATTN SHIRLEY SMITH
1300 SOUTH CLINTON STREET
FORT WAYNE IN 46802-0000
----------------------------------------- --------------------------- --------------------------
|
MANAGEMENT OWNERSHIP
As of February 2, 2002, the trustees and officers as a group owned less than 1% of the shares outstanding of each class of any Fund.
APPENDIX E
MANAGEMENT FEES
For the last three fiscal years ended December 31, the management fees payable by each Fund, the amounts waived by AIM and the net fees paid by each Fund were as follows:
2001 2000
----------------------------------------------------- -----------------------------------------------------
MANAGEMENT FEE MANAGEMENT FEE NET MANAGEMENT FEE MANAGEMENT FEE MANAGEMENT FEE NET MANAGEMENT FEE
FUND NAME PAYABLE WAIVERS PAID PAYABLE WAIVERS PAID
-------------------- ---------------- ---------------- -------------------- ---------------- ---------------- -------------------
AIM V.I. Aggressive
Growth Fund $ $ $ $ $ 50,479 $ 353,091
-------------------- ---------------- ---------------- -------------------- ---------------- ---------------- -------------------
-0- 520,878
AIM V.I. Balanced
Fund
-------------------- ---------------- ---------------- -------------------- ---------------- ---------------- -------------------
AIM V.I. Basic Value N/A N/A N/A
Fund*
-------------------- ---------------- ---------------- -------------------- ---------------- ---------------- -------------------
AIM V.I. Blue Chip 82,552 -0-
Fund**
-------------------- ---------------- ---------------- -------------------- ---------------- ---------------- -------------------
AIM V.I. Capital -0- 8,988,195
Appreciation Fund
-------------------- ---------------- ---------------- -------------------- ---------------- ---------------- -------------------
AIM V.I. Capital
Development Fund 76,606 221,721
-------------------- ---------------- ---------------- -------------------- ---------------- ---------------- -------------------
AIM V.I. Core Equity
Fund -0- 16,262,897
-------------------- ---------------- ---------------- -------------------- ---------------- ---------------- -------------------
AIM V.I. Dent 47,600 128,447
Demographic Trends
Fund**
-------------------- ---------------- ---------------- -------------------- ---------------- ---------------- -------------------
AIM V.I. Diversified
Income Fund -0- 546,264
-------------------- ---------------- ---------------- -------------------- ---------------- ---------------- -------------------
AIM V.I. Global -0- 307,312
Utilities Fund
-------------------- ---------------- ---------------- -------------------- ---------------- ---------------- -------------------
1999
---------------------------------------------------------
MANAGEMENT FEE MANAGEMENT NET MANAGEMENT FEE
FUND NAME PAYABLE FEE WAIVERS PAID
--------------------- ---------------- --------------- --------------------
AIM V.I. Aggressive
Growth Fund $ $ 66,764 -0-
--------------------- ---------------- --------------- --------------------
26,814 183,468
AIM V.I. Balanced
Fund
--------------------- ---------------- --------------- --------------------
AIM V.I. Basic Value N/A N/A N/A
Fund*
--------------------- ---------------- --------------- --------------------
AIM V.I. Blue Chip N/A N/A N/A
Fund**
--------------------- ---------------- --------------- --------------------
AIM V.I. Capital -0- 4,830,846
Appreciation Fund
--------------------- ---------------- --------------- --------------------
AIM V.I. Capital
Development Fund 35,726 -0-
--------------------- ---------------- --------------- --------------------
AIM V.I. Core Equity
Fund -0- 10,438,977
--------------------- ---------------- --------------- --------------------
AIM V.I. Dent N/A N/A N/A
Demographic Trends
Fund**
--------------------- ---------------- --------------- --------------------
AIM V.I. Diversified
Income Fund -0- 556,418
--------------------- ---------------- --------------- --------------------
AIM V.I. Global -0- 202,137
Utilities Fund
--------------------- ---------------- --------------- --------------------
|
* Commenced operations on September 10, 2001
** Commenced operations on December 29, 1999
---------------------------------------------------- --------------------------------------------------
2001 2000
---------------------------------------------------- --------------------------------------------------
MANAGEMENT FEE MANAGEMENT FEE NET MANAGEMENT FEE MANAGEMENT MANAGEMENT FEE NET MANAGEMENT FEE
FUND NAME PAYABLE WAIVERS PAID FEE PAYABLE WAIVERS PAID
------------------ -------------- -------------- ------------------ ------------ -------------- ------------------
AIM V.I.
Government $ $ $ $ -0- $ 358,276
Securities Fund
------------------ -------------- -------------- ------------------ ------------ -------------- ------------------
AIM V.I. Growth -0- 5,604,879x
Fund
------------------ -------------- -------------- ------------------ ------------ -------------- ------------------
AIM V.I. High 16,986 155,683
Yield Fund
------------------ -------------- -------------- ------------------ ------------ -------------- ------------------
AIM V.I. -0- 3,372,955
International
Growth Fund
------------------ -------------- -------------- ------------------ ------------ -------------- ------------------
AIM V.I. Money -0- 303,297
Market Fund
------------------ -------------- -------------- ------------------ ------------ -------------- ------------------
AIM V.I. Mid Cap N/A N/A N/A
Core Equity Fund*
------------------ -------------- -------------- ------------------ ------------ -------------- ------------------
AIM V.I. New -0- 1,024,453
Technology Fund
------------------ -------------- -------------- ------------------ ------------ -------------- ------------------
AIM V.I. Premier -0- 16,526,917
Equity Fund
------------------ -------------- -------------- ------------------ ------------ -------------- ------------------
----------------------------------------------------------------------
1999
----------------------------------------------------------------------
MANAGEMENT FEE MANAGEMENT MANAGEMENT FEE NET MANAGEMENT FEE
FUND NAME PAYABLE FEE PAYABLE WAIVERS PAID
-------------------- -------------- ------------ --------------- -------------------
AIM V.I.
Government $ -0- $ 315,598
Securities Fund
-------------------- -------------- ------------ --------------- -------------------
AIM V.I. Growth -0- 3,026,404
Fund
-------------------- -------------- ------------ --------------- -------------------
AIM V.I. High 45,18 58,392
Yield Fund
-------------------- -------------- ------------ --------------- -------------------
AIM V.I. -0- 2,066,153
International
Growth Fund
-------------------- -------------- ------------ --------------- -------------------
AIM V.I. Money -0- 317,031
Market Fund
-------------------- -------------- ------------ --------------- -------------------
AIM V.I. Mid Cap N/A N/A N/A
Core Equity Fund*
-------------------- -------------- ------------ --------------- -------------------
AIM V.I. New -0- 756,068
Technology Fund
-------------------- -------------- ------------ --------------- -------------------
AIM V.I. Premier -0- 10,380,472
Equity Fund
-------------------- -------------- ------------ --------------- -------------------
|
* Commenced operations on September 10, 2001
** Commenced operations on December 29, 1999
APPENDIX F
ADMINISTRATIVE SERVICES FEES
The Funds paid AIM the following amounts for administrative services for the last three fiscal years ended December 31:
--------------------------------- ------------------------------- ------------------------------ -------------------------------
FUND NAME 2001 2000 1999
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Aggressive Growth Fund $ 50,000 $43,901
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Balanced Fund 50,000 43,975
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Basic Value Fund* N/A N/A
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Blue Chip Fund** 50,000 N/A
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Capital Appreciation 130,011 78,369
Fund
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Capital Development 50,000 43,901
Fund
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Core Equity Fund 169,439 102,711
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Dent Demographic 50,000 N/A
Trends Fund**
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Diversified Income Fund 50,000 50,901
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Global Utilities Fund 50,000 51,234
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Government Securities 50,000 44,501
Fund
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Growth Fund 112,857 73,728
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. High Yield Fund 50,137 43,433
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. International Growth 92,799 64,730
Fund
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Mid Cap Core Equity N/A N/A
Fund*
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Money Market Fund 50,000 44,311
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. New Technology Fund 50,000 34,698
--------------------------------- ------------------------------- ------------------------------ -------------------------------
AIM V.I. Premier Equity Fund 167,010 107,813
--------------------------------- ------------------------------- ------------------------------ -------------------------------
|
* Commenced operations on September 10, 2001.
** Commenced operations on December 29, 1999.
APPENDIX G
BROKERAGE COMMISSIONS
Brokerage commissions paid by each of the Funds listed below during the last three fiscal years were as follows:
FUND 2001 2000 1999
---- ---- ---- ----
AIM V.I. Aggressive Growth Fund .............. $ $ 72,497 $ 12,853
AIM V.I. Balanced Fund ....................... $ 38,836 $ 18,419
AIM V.I. Basic Value Fund* ................... $ $
AIM V.I. Blue Chip Fund** .................... $ 17,310 N/A
AIM V.I. Capital Appreciation Fund*** ........ $ 2,337,094 $ 1,028,908
AIM V.I. Capital Development Fund ............ $ 116,941 $ 14,060
AIM V.I. Core Equity Fund*** ................. $ 3,238,465 $ 2,951,259
AIM V.I. Dent Demographic Trends Fund** ...... $ 39,329 N/A
AIM V.I. Diversified Income Fund ............. -0- $ 1,626
AIM V.I. Global Utilities Fund ............... $ 63,962 $ 21,661
AIM V.I. Government Securities Fund .......... -0- -0-
AIM V.I. Growth Fund ......................... $ 2,025,067 $ 940,142
AIM V.I. High Yield Fund ..................... -0- -0-
AIM V.I. International Growth Fund ........... $ 1,670,150 $ 1,061,593
AIM V.I. Mid Cap Core Equity Fund* ...........
AIM V.I. Money Market Fund ................... -0- -0-
AIM V.I. New Technology Fund ................. $ 85,374 $ 131,019
AIM V.I. Premier Equity Fund ................. $ 3,583,721 $ 1,978,681
|
* Commenced operations on September 10, 2001.
** Commenced operations on December 29, 1999.
*** The variation in brokerage commission paid for the fiscal year ended December 31, 2000, as compared to the prior fiscal year, was due to a significant increase in asset levels of the funds.
APPENDIX H
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF
SECURITIES OF REGULAR BROKERS OR DEALERS
During the last fiscal year ended December 31, 2001, each Fund allocated the following amount of transactions to broker-dealers that provided AIM with certain research, statistics and other information:
Related
Fund Transactions Brokerage Commissions
------------ ---------------------
AIM V.I. Aggressive Growth Fund .......... $ 3,876,829 $ 4,166
AIM V.I. Balanced Fund ................... $ 1,990,817 $ 2,406
AIM V.I. Blue Chip Fund .................. $ 401,674 $ 361
AIM V.I. Capital Appreciation Fund ....... $189,697,345 $ 172,713
AIM V.I. Capital Development Fund ........ $ 2,480,459 $ 4,384
AIM V.I. Core Equity Fund ................ $303,693,257 $ 293,251
AIM V.I. Dent Demographic Trends Fund .... $ 2,266,476 $ 2,029
AIM V.I. Global Utilities Fund ........... $ 3,608,247 $ 5,134
AIM V.I. Growth Fund ..................... $170,942,962 $ 150,950
AIM V.I. International Growth Fund ....... $ 11,084,247 $ 20,496
AIM V.I. New Technology Fund ............. $ 6,000,451 $ 3,836
AIM V.I. Premier Equity Fund ............. $303,984,163 $ 284,553
|
SECURITY
-----------------------------------------------------------------------------------------
FUNDS LEHMAN MORGAN SALOMON
BROTHERS MERRILL STANLEY SMITH
AMERICAN GOLDMAN HOLDINGS, LYNCH & DEAN WITTER BARNEY
EXPRESS SACHS INC. CO., INC. & CO. HOLDINGS, INC.
------------ ------------ ------------ ------------ ------------ --------------
AIM V.I. Balanced Fund $ 455,981 $ 620,238 $ 534,399 $ 571,927 $ 602,300 --
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
AIM V.I. Blue Chip Fund $ 483,450 -- -- $ 354,575 $ 570,600 --
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
AIM V.I. Capital Appreciation $ 21,975,000 $ 30,776,612 -- $ 12,601,500 $ 26,628,000 --
Fund
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
AIM V.I. Dent Demographic Trends $ 659,250 $ 855,500 -- $ 818,250 $ 1,347,250 --
Fund
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
AIM V.I. Diversified Income Fund -- -- $ 1,538,181 $ 187,532 -- --
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
AIM V.I. Growth Fund $ 25,798,650 -- -- $ 20,476,706 -- --
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
AIM V.I. Core Equity Fund $ 75,539,062 $ 32,509,000 -- $ 40,912,500 $ 97,081,250 --
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
AIM V.I. Money Market Fund -- -- -- $ 3,500,000 $ 3,400,000 $ 2,981,129
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
AIM V.I. Value Fund -- -- -- $ 21,820,000 $106,884,475 --
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
|
APPENDIX I
AMOUNTS PAID TO A I M DISTRIBUTORS, INC. PURSUANT TO DISTRIBUTION PLAN
LIST OF AMOUNTS PAID BY EACH CLASS OF SHARES TO AIM DISTRIBUTORS
PURSUANT TO THE PLAN FOR THE FISCAL YEAR OR PERIOD ENDED DECEMBER 31, 2001.
SERIES I SERIES II
FUND SHARES SHARES
---- -------- ---------
AIM V.I. Aggressive Growth Fund........................ $ $
AIM V.I. Balanced Fund ................................ $ $
AIM V.I. Basic Value Fund.............................. $ $
AIM V.I. Blue Chip Fund................................ $ $
AIM V.I. Capital Appreciation Fund..................... $ $
AIM V.I. Capital Development Fund...................... $ $
AIM V.I. Core Equity Fund.............................. $ $
AIM V.I. Dent Demographic Trends Fund.................. $ $
AIM V.I. Diversified Income Fund....................... $ $
AIM V.I. Global Utilities Fund......................... $ $
AIM V.I. Government Securities Fund.................... $ $
AIM V.I. Growth Fund................................... $ $
AIM V.I. High Yield Fund............................... $ $
AIM V.I. International Growth Fund..................... $ $
AIM V.I. Mid Cap Core Equity Fund...................... $ $
AIM V.I. Money Market Fund............................. $ $
AIM V.I. New Technology Fund........................... $ $
AIM V.I. Premier Equity Fund........................... $ $
|
APPENDIX J
ALLOCATION OF ACTUAL FEES PAID PURSUANT TO DISTRIBUTION PLAN
An estimate by category of the allocation of actual fees paid by Series II Shares of the Funds during the year ended December 31, 2001, follows:
PRINTING & UNDERWRITERS DEALERS
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION
----------- ----------- ------------ ---------------- --------------
AIM V.I. Aggressive Growth Fund $ $ $ $ $
AIM V.I. Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Premier Equity Fund
|
APPENDIX K
PERFORMANCE DATA
The average annual total returns for each Fund, with respect to its Series I shares, for the periods ended December 31, 2001, are as follows:
PERIODS ENDED
DECEMBER 31, 2001
-----------------------------------------------
SERIES I SHARES: 1 YEAR 5 YEARS INCEPTION DATE
--------------- ------ ----------------- --------------
AIM V.I. Aggressive Growth Fund % % 05/01/98
AIM V.I. Balanced Fund % % 05/01/98
AIM V.I. Basic Value Fund % % 09/10/01
AIM V.I. Blue Chip Fund % % 12/29/99
AIM V.I. Capital Appreciation Fund % % 05/05/93
AIM V.I. Capital Development Fund % % 05/01/98
AIM V.I. Core Equity Fund % % 05/02/94
AIM V.I. Dent Demographic Trends Fund % % 12/29/99
AIM V.I. Diversified Income Fund % % 05/05/93
AIM V.I. Global Utilities Fund % % 05/02/94
AIM V.I. Government Securities Fund % % 05/05/93
AIM V.I. Growth Fund % % 05/05/93
AIM V.I. High Yield Fund % % 05/01/98
AIM V.I. International Growth Fund % % 05/05/93
AIM V.I. Mid Cap Core Equity Fund % % 09/10/01
AIM V.I. New Technology Fund % % 10/18/93
AIM V.I. Premier Equity Fund % % 05/05/93
|
The average annual total returns for each Fund, with respect to its Series II shares, for the periods ended December 31, 2001, are as follows:
PERIODS ENDED
DECEMBER 31, 2001
-----------------------------------------------
SERIES II SHARES: 1 YEAR 5 YEARS INCEPTION DATE
--------------- ------ ----------------- --------------
IM V.I. Aggressive Growth Fund % % 05/01/98
AIM V.I. Balanced Fund % % 05/01/98
AIM V.I. Basic Value Fund % % 09/10/01
AIM V.I. Blue Chip Fund % % 12/29/99
AIM V.I. Capital Appreciation Fund % % 05/05/93
AIM V.I. Capital Development Fund % % 05/01/98
AIM V.I. Core Equity Fund % % 05/02/94
AIM V.I. Dent Demographic Trends Fund % % 12/29/99
AIM V.I. Diversified Income Fund % % 05/05/93
AIM V.I. Global Utilities Fund % % 05/02/94
AIM V.I. Government Securities Fund % % 05/05/93
AIM V.I. Growth Fund % % 05/05/93
AIM V.I. High Yield Fund % % 05/01/98
AIM V.I. International Growth Fund % % 05/05/93
AIM V.I. Mid Cap Core Equity Fund % % 09/10/01
AIM V.I. New Technology Fund % % 10/18/93
AIM V.I. Premier Equity Fund % % 05/05/93
|
The yield for the AIM V.I. Money Market Fund is as follows:
30 DAYS ENDED
DECEMBER 31, 2001
------------------
SERIES I SHARES SERIES II SHARES
--------------- ----------------
AIM V.I. Money Market Fund % %
|
FINANCIAL STATEMENTS
FS
PART C
OTHER INFORMATION
Item 23. Exhibits
Exhibit
Number Description
a (1) (a) - Agreement and Declaration of Trust of Registrant,
dated December 6, 1999.(13)
(b) - Amendment No. 1 to Agreement and Declaration of
Trust of Registrant, dated April 26, 2000.(14)
(c) - Amendment No. 2 to Agreement and Declaration of
Trust of Registrant, dated September 18, 2000.(14)
(d) - Amendment No. 3 to Agreement and Declaration of
Trust of Registrant, dated May 10, 2000.(14)
(e) - Amendment No. 4 to Agreement and Declaration of
Trust of Registrant, dated December 13, 2000.(14)
(f) - Amendment No. 5 to Agreement and Declaration of
Trust of Registrant, dated March 14, 2001.(15)
(g) - Amendment No. 6 to Agreement and Declaration of
Trust of Registrant, dated May 1, 2001.(15)
(h) - Amendment No. 7 to Agreement and Declaration of
Trust of Registrant dated July 13, 2001.(17)
(i) - Amendment No. 8 to Agreement and Declaration of
Trust of Registrant, dated July 13, 2001.(17)
(j) - Amendment No. 9 to Agreement and Declaration of
Trust of Registrant, dated January 14, 2002, is
hereby filed electronically.
(k) - Amendment No. 10 to Agreement and Declaration of
Trust of Registrant, dated January 24, 2002, is
hereby filed electronically.
b (1) (a) - By-Laws of Registrant, dated effective December 6,
1999.(13)
(b) - Amendment No. 1 to By-Laws of Registrant adopted
June 14, 2000.(14)
c - Instruments Defining Rights of Security Holders -
All rights of security holders are contained in the
Registrant's Agreement and Declaration of Trust.
d (1) - (a) Master Investment Advisory Agreement, dated May
1, 2000 between Registrant and A I M Advisors,
Inc.(14)
- (b) Amendment No. 1, dated May 1, 2001, to Master
Investment Advisory Agreement, dated May 1, 2000,
between Registrant and A I M Advisors, Inc.(15)
|
- (c) Amendment No. 2 to Master Investment Advisory Agreement of Registrant dated September 7, 2001, between Registrant and A I M Advisors, Inc., is hereby filed electronically.
(2) - Sub-Advisory Agreement, dated May 1, 2000 between
Registrant and H.S. Dent Advisors, Inc.(14)
(3) - (a) Foreign Country Selection and Mandatory
Securities Depository Responsibilities Delegation
Agreement, dated September 9, 1998, between
Registrant and A I M Advisors, Inc.(7)
- (b) Amendment No. 1, dated September 28, 1998, to
Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement
between Registrant and A I M Advisors, Inc.(8)
- (c) Amendment No. 2, dated December 14, 1998, to
Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement
between Registrant and A I M Advisors, Inc.(8)
e (1) - (a) Master Distribution Agreement, dated May 1,
2000, between Registrant and A I M Distributors,
Inc.(15)
- (b) Amendment No. 1, dated May 1, 2001, to Master
Distribution Agreement between Registrant and A I M
Distributors, Inc.(15)
- (c) First Amended and Restated Master Distribution
Agreement, dated July 16, 2001, between Registrant
and A I M Distributors, Inc..(17)
- (d) Amendment No. 1, dated September 7, 2001, to
First Amended and Restated Master Distribution
Agreement, between Registrant and A I M
Distributors, Inc., dated July 16, 2001, is hereby
filed electronically.
f (1) - Retirement Plan of Registrant's Non-Affiliated
Directors, effective March 8, 1994, as restated
September 18, 1995.(4)
(2) - Retirement Plan for Eligible Directors/Trustees
effective as of March 8, 1994, as Restated September
18, 1995 and as Restated March 7, 2000.(14)
(3) - Form of Director Deferred Compensation Agreement
effective as Amended March 7, 2000.(14)
g (1) - (a) Master Custodian Agreement, dated May 1, 2000,
between Registrant and State Street Bank and Trust
Company.(15)
- (b) Amendment, dated May 1, 2000, to Master
Custodian Agreement, dated May 1, 2000, between
Registrant and State Street Bank and Trust
Company.(15)
(2) - Custody Agreement, dated September 19, 2000, between
Registrant and The Bank of New York.(15)
h (1) - (a) Master Administrative Services Agreement, dated
May 1, 2000, between Registrant and A I M Advisors,
Inc.(14)
C-2
|
- (b) Amendment No. 1, dated May 1, 2001, to Master
Administrative Services Agreement, dated May 1,
2000, between Registrant and A I M Advisors,
Inc.(15)
- (c) Amendment No. 2 to Master Administrative
Services Agreement between Registrant and A I M
Advisors, Inc., dated September 7, 2001, is hereby
filed electronically.
(2) - Transfer Agency and Service Agreement, dated October
15, 2001, between Registrant and A I M Fund
Services, Inc., Is hereby filed electronically.(15)
(3) - Participation Agreement, dated February 25, 1993,
between Registrant, Connecticut General Life
Insurance Company and A I M Distributors, Inc.(4)
(4) - (a) Participation Agreement, dated February 10,
1995, between Registrant and Citicorp Life Insurance
Company.(4)
- (b) Amendment No. 1, dated February 3, 1997, to
Participation Agreement dated February 10, 1995,
between Registrant and Citicorp Life Insurance
Company.(6)
(5) - (a) Participation Agreement, dated February 10,
1995, between Registrant and First Citicorp Life
Insurance Company.(4)
- (b) Amendment No. 1, dated February 3, 1997, to
Participation Agreement, dated February 10, 1995,
between Registrant and First Citicorp Life Insurance
Company.(6)
(6) - (a) Participation Agreement, dated December 19,
1995, between Registrant and Glenbrook Life and
Annuity Company.(4)
- (a)(i) Side Letter Agreement, dated December 1,
1995, among Registrant and Glenbrook Life and
Annuity Company.(5)
- (b) Amendment No. 1, dated November 7, 1997, to
Participation Agreement, dated December 19, 1995,
between Registrant and Glenbrook Life and Annuity
Company.(7)
- (c) Amendment No. 2, dated September 2, 1997, to
Participation Agreement, dated December 19, 1995,
between Registrant and Glenbrook Life and Annuity
Company.(6)
- (d) Amendment No. 3, dated January 26, 1998, to
Participation Agreement, dated December 19, 1995,
between Registrant and Glenbrook Life and Annuity
Company.(7)
- (e) Amendment No. 4, dated May 1, 1998, to
Participation Agreement, dated December 19, 1995,
between Registrant and Glenbrook Life and Annuity
Company.(7)
- (f) Amendment No. 5, dated January 12, 1999, to the
Participation Agreement, dated December 19, 1995,
between Registrant and Glenbrook Life and Annuity
Insurance Company.(8)
(7) - Participation Agreement, dated March 4, 1996,
between Registrant and IDS Life Insurance
Company.(4)
C-3
|
(8) - (a) Participation Agreement, dated October 7, 1996,
between Registrant and IDS Life Insurance Company
(supersedes and replaces Participation Agreement
dated March 4, 1996).(5)
- (a)(i) Side Letter Agreement, dated September 27,
1996, between Registrant, IDS Life Insurance Company
and IDS Life Insurance Company of New York.(6)
- (b) Amendment No. 1, dated November 11, 1997, to the
Participation Agreement, dated October 7, 1996,
between registrant and IDS Life Insurance Company.(8)
(9) - (a) Participation Agreement, dated October 7, 1996,
between Registrant and IDS Life Insurance Company of
New York.(5)
- (b) Amendment No. 1, dated November 11, 1997, to the
Participation Agreement, dated October 7, 1996
between registrant and IDS Life Insurance Company of
New York.(8)
(10) - Participation Agreement, dated April 8, 1996,
between Registrant and Connecticut General Life
Insurance Company.(4)
(11) - (a) Participation Agreement, dated September 21,
1996, between Registrant and Pruco Life Insurance
Company.(5)
- (b) Amendment No. 1, dated July 1, 1997, to
Participation Agreement, dated September 21, 1996,
between Registrant and Pruco Life Insurance
Company.(6)
- (c) Amendment No. 2, dated August 1, 1998, to
Participation Agreement, dated September 21, 1996,
between Registrant and Pruco Life Insurance
Company.(7)
- (d) Amendment No. 3, dated November 8, 1999, to the
Participation Agreement dated September 21, 1996,
between Registrant and Pruco Life Insurance
Company.(14)
- (e) Amendment No. 4 dated April 10, 2000, to the
Participation Agreement dated September 21, 1996,
between Registrant and Pruco Life Insurance
Company.(14)
(12) - (a) Participation Agreement, dated October 1, 1996,
between Registrant and Allstate Life Insurance
Company of New York.(5)
- (a)(i) Side Letter Agreement, dated October 1, 1996,
between Registrant and Allstate Life Insurance
Company of New York.(7)
- (b) Amendment No. 1, dated November 7, 1997, to
Participation Agreement, dated October 1, 1996,
between Registrant and Allstate Life Insurance
Company of New York.(9)
(13) - (a) Participation Agreement, dated December 18,
1996, between Registrant and Merrill Lynch Life
Insurance Company.(5)
- (a)(i) Side Letter Agreement, dated December 18,
1996, between Registrant and Merrill, Lynch, Pierce,
Fenner & Smith, Incorporated.(5)
|
- (b) Amendment No. 1, dated May 1, 1997, to Participation Agreement, dated December 18, 1996, between Registrant and Merrill Lynch Life Insurance Company.(6)
- (c) Amendment No. 2, dated April 13, 2000, to Participation Agreement, dated December 18, 1996, between Registrant and Merrill Lynch Life Insurance Company.(14)
- (d) Amendment No. 3, dated February 16, 2001, to the Participation Agreement, dated December 18, 1996, between Registrant and Merrill Lynch Life Insurance Company, is hereby filed electronically.
- (e) Amendment No. 4, dated May 1, 2001, to the Participation Agreement, dated December 18, 1996, between Registrant and Merrill Lynch Life Insurance Company, is hereby filed electronically.
- (f) Amendment No. 5, dated October 5, 2001, to the Participation Agreement, dated December 18, 1996, between Registrant and Merrill Lynch Life Insurance Company, is hereby filed electronically.
(14) - (a) Participation Agreement, dated December 18,
1996, between Registrant and ML Life Insurance
Company of New York.(5)
- (b) Amendment No. 1, dated May 1, 1997, to
Participation Agreement, dated December 18, 1996,
between Registrant and ML Life Insurance Company of
New York.(6)
- (c) Amendment No. 2, dated April 3, 2000, to
Participation Agreement, dated December 18, 1996, by
and between Registrant and ML Life Insurance Company
of New York.(14)
- (d) Amendment No. 3 dated February 16, 2001, to the
Participation Agreement, dated December 18, 1996,
between Registrant and ML Life Insurance Company of
New York, is hereby filed electronically.
- (e) Amendment No. 4, dated May 1, 2001, to the
Participation Agreement, dated December 18, 1996,
between Registrant and ML Life Insurance Company of
New York, is hereby filed electronically.
- (f) Amendment No. 5, dated October 5, 2001, to the
Participation Agreement dated, December 18, 1996,
between Registrant and ML Life Insurance Company of
New York, is hereby filed electronically.
(15) - (a) Participation Agreement, dated February 14,
1997, between Registrant and Pruco Life Insurance
Company of New Jersey.(5)
- (b) Amendment No. 1, dated November 8, 1999, to the
Participation Agreement, dated February 14, 1997,
between Registrant and Pruco Life Insurance Company
of New Jersey.(14)
- (c) Amendment No. 2, dated April 10, 2000, to the
Participation Agreement, dated February 14, 1997,
between Registrant and Pruco Life Insurance Company
of New Jersey.(14)
|
(16) - Participation Agreement, dated April 30, 1997,
between Registrant and Prudential Insurance Company
of America.(6)
(17) - Participation Agreement, dated October 30, 1997,
between Registrant and American Centurion Life
Assurance Company.(6)
(18) - (a) Participation Agreement, dated October 30,
1997, between Registrant and American Enterprise Life
Insurance Company.(6)
- (a)(i) Letter Agreement, dated October 30, 1997,
between American Enterprise Life Insurance Company
and American Centurion Life Assurance Company.(6)
(19) - Participation Agreement, dated November 20, 1997,
between Registrant and AIG Life Insurance Company.(6)
(20) - Participation Agreement, dated November 20, 1997,
between Registrant and American International Life
Assurance Company of New York.(6)
(21) - (a) Participation Agreement, dated November 4,
1997, between Registrant and Nationwide Life
Insurance Company.(6)
- (b) Amendment No. 1, dated June 15, 1998, to
Participation Agreement, dated November 4, 1997,
between Registrant and Nationwide Life Insurance
Company.(7)
(22) - (a) Participation Agreement, dated December 3,
1997, between Registrant and Security Life of
Denver.(6)
- (b) Amendment No. 1, dated June 23, 1998, to
Participation Agreement, dated December 3, 1997,
between Registrant and Security Life of Denver.(7)
- (c) Amendment No. 2, dated May 20, 1999, to the
Participation Agreement, dated December 3, 1997,
between Registrant and Security Life of Denver
Insurance Company.(10)
- (d) Amendment No. 3, dated November 1, 1999, to the
Participation Agreement, dated December 3, 1997,
between Registrant and Security Life of Denver
Insurance Company.(12)
- (e) Amendment No. 4, dated March 2, 2000, to the
Participation Agreement, dated December 3, 1997,
between Registrant and Security Life of Denver
Insurance Company.(14)
- (f) Amendment No. 5, dated December 28, 2000, to the
Participation Agreement, dated December 3, 1997,
between Registrant and Security Life of Denver
Insurance Company.(14)
- (g) Amendment No. 6, dated September 5, 2001, to the
Participation Agreement, dated December 3, 1997,
between Registrant and Security Life of Denver
Insurance Company, is hereby filed electronically.
(23) - (a) Participation Agreement, dated December 31,
1997, between Registrant and Cova Financial Services
Life Insurance Company.(6)
|
- (b) Amendment No. 1, dated April 23, 1999, to the Participation Agreement, dated December 31, 1997, between Registrant and Cova Financial Services Life Insurance Company.(12)
- (c) Amendment No. 2, dated September 1, 2000, to the Participation Agreement, dated December 31, 1997, between Registrant and Cova Financial Services Life Insurance Company.(14)
- (d) Amendment No. 3, dated February 12, 2001, to the Participation Agreement, dated December 31, 1997, between Registrant and Met Life Investors Insurance Company (formerly Cova Financial Services Life Insurance Company), is hereby filed electronically.
(24) - (a) Participation Agreement, dated December 31,
1997, between Registrant and Cova Financial Life
Insurance Company.(6)
- (b) Amendment No. 1, dated April 23, 1999, to the
Participation Agreement, dated December 31, 1997,
between Registrant and Cova Financial Life Insurance
Company.(10)
- (c) Amendment No. 2, dated February 12, 2001, to the
Participation Agreement, dated April 23, 1999,
between Registrant and Met Life Investors Insurance
Company (formerly Cova Financial Life Insurance
Company) is hereby filed electronically.
(25) - (a) Participation Agreement, dated February 2,
1998, between Registrant and The Guardian Insurance &
Annuity Company, Inc.(7)
- (b) Amendment No. 1, dated July 1, 1999, to the
Participation Agreement, dated February 2, 1998,
between Registrant and The Guardian Life Insurance &
Annuity Company, Inc.(11)
- (c) Amendment No. 2, dated May 1, 2000, to the
Participation Agreement, dated February 2, 1998,
between Registrant and The Guardian Life Insurance &
Annuity Company, Inc.(14)
- (d) Amendment No. 3, dated August 1, 2000, to the
Participation Agreement, dated February 2, 1998,
between Registrant and The Guardian Life Insurance &
Annuity Company.(14)
- (e) Amendment No. 4, dated December 1, 2000, to the
Participation Agreement, dated February 2, 1998,
between Registrant and The Guardian Life Insurance
and Annuity Company, Inc., is hereby filed
electronically.
(26) - (a) Participation Agreement, dated February 17,
1998, between Registrant and Sun Life Assurance
Company of Canada (U.S.).(7)
- (b) Amendment No. 1, dated December 11, 1998, to the
Participation Agreement, dated February 17, 1998,
between Registrant and Sun Life Assurance Company of
Canada (U.S.).(8)
- (c) Amendment No. 2, dated March 15, 1999, to the
Participation Agreement, dated February 17, 1998,
between Registrant and Sun Life Assurance Company of
Canada (U.S.).(14)
|
- (d) Amendment No. 3, dated April 17, 2000, to the Participation Agreement, dated February 17, 1998, between Registrant and Sun Life Assurance Company of Canada (U.S.).(14)
- (e) Amendment No. 4, dated May 1, 2000, to the Participation Agreement, dated February 17, 1998, between Registrant and Sun Life Assurance Company of Canada (U.S), is hereby filed electronically.
- (f) Amendment No. 5, dated May 1, 2001, to the Participation Agreement, dated February 17, 1998, between Registrant and Sun Life Assurance Company of Canada (U.S.), is hereby filed electronically.
- (g) Amendment No. 6, dated September 1, 2001, to the Participation Agreement dated February 17, 1998, between Registrant and Sun Life Assurance Company of Canada (U.S.), is hereby filed electronically.
(27) - Participation Agreement, dated April 1, 1998,
between Registrant and United Life & Annuity
Insurance Company.(7)
(28) - (a) Participation Agreement, dated April 21, 1998,
between Registrant and Keyport Life Insurance
Company.(7)
- (b) Amendment No. 1, dated December 28, 1998, to the
Participation Agreement, dated April 21, 1998,
between Registrant and Keyport Life Insurance
Company.(8)
- (c) Amendment No. 2, dated March 12, 2001, to the
Participation Agreement, dated April 21, 1998,
between Registrant and Keyport Life Insurance
Company, is hereby filed electronically.
(29) - (a) Participation Agreement, dated May 1, 1998,
between Registrant and PFL Life Insurance Company.(7)
- (b) Amendment No. 1, dated June 30, 1998, to
Participation Agreement, dated May 1, 1998, between
Registrant and PFL Life Insurance Company.(7)
- (c) Amendment No. 2, dated November 27, 1998, to the
Participation Agreement, dated May 1, 1998, between
Registrant and PFL Life Insurance Company.(8)
- (d) Amendment No. 3, dated August 1, 1999, to the
Participation Agreement, dated May 1, 1998, between
Registrant and PFL Life Insurance Company, is hereby
filed electronically.
- (e) Amendment No. 4, dated February 28, 2001, to the
Participation Agreement, dated May 1, 1998, between
Registrant and PFL Life Insurance Company, is hereby
filed electronically.
- (f) Amendment No. 5, dated July 1, 2001, to the
Participation Agreement, dated May 1, 1998, between
Registrant and Transamerica Life Insurance Company
(formerly PFL Life Insurance Company), is hereby
filed electronically.
- (g) Amendment No. 6, dated August 15, 2001, to the
Participation Agreement dated May 1, 1998, between
Transamerica Life Insurance
|
Company (formerly PFL Life Insurance Company), is hereby filed electronically.
(30) - Participation Agreement, dated May 1, 1998, between
Registrant and Fortis Benefits Insurance Company.(7)
(31) - (a) Participation Agreement, dated June 1, 1998,
between Registrant and American General Life
Insurance Company.(7)
- (b) Amendment No. 1, dated January 1, 1999, to the
Participation Agreement, dated June 1, 1998, between
Registrant and American General Life Insurance
Company.(9)
- (c) Amendment No. 2, dated September 29, 1999, to the
Participation Agreement, dated June 1, 1998, between
Registrant and American General Life Insurance
Company.(14)
- (d) Amendment No. 3, dated February 1, 2000, to the
Participation Agreement, dated June 1, 1998, between
Registrant and American General Life Insurance
Company.(14)
- (e) Amendment No. 4, dated May 22, 2001, to the
Participation Agreement, dated February 4, 2000,
between Registrant and American General Life
Insurance Company, is hereby filed electronically.
(32) - (a) Participation Agreement, dated June 16, 1998,
between Registrant and Lincoln National Life
Insurance Company.(7)
- (b) Amendment No. 1, dated November 20, 1998, to the
Participation Agreement, dated June 16, 1998, between
Registrant and Lincoln National Life Insurance
Company.(8)
- (c) Amendment No. 2, dated May 1, 1999, to the
Participation Agreement, dated June 16, 1998, between
Registrant and Lincoln National Life Insurance
Company.(14)
- (d) Amendment No. 3, dated October 14, 1999, to the
Participation Agreement, dated June 16, 1998, between
Registrant and Lincoln National Life Insurance
Company.(14)
- (e) Amendment No. 4, dated May 1, 2000, to the
Participation Agreement, dated June 16, 1998, between
Registrant and Lincoln National Life Insurance
Company.(14)
- (f) Amendment No. 5, dated July 15, 2000, to the
Participation Agreement, dated June 16, 1998, between
Registrant and Lincoln National Life Insurance
Company, is hereby filed electronically.
- (g) Amendment No. 6, dated July 15, 2001, to the
Participation Agreement dated June 16, 1998, between
Registrant and Lincoln National Life Insurance
Company is hereby filed electronically.
(33) - (a) Participation Agreement, dated June 30, 1998,
between Registrant and Aetna Life Insurance and
Annuity Company.(7)
|
- (b) Amendment No. 1, dated October 1, 2000, to the Participation Agreement, dated June 20, 1998, between Registrant and AETNA Life Insurance and Annuity Company, is hereby filed electronically.
(34) - Participation Agreement, dated July 1, 1998,
between Registrant and The Union Central Life
Insurance Company.(8)
(35) - Participation Agreement, dated July 1, 1998,
between Registrant and United Investors Life
Insurance Company.(8)
(36) - Participation Agreement, dated July 2, 1998,
between Registrant and Hartford Life Insurance
Company.(7)
(37) - (a) Participation Agreement, dated July 13, 1998,
between Registrant and Keyport Benefit Life Insurance
Company.(7)
- (b) Amendment No. 1, dated December 28, 1998 to the
Participation Agreement, dated July 13, 1998, between
Registrant and Keyport Benefit Life Insurance
Company.(8)
(38) - (a) Participation Agreement, dated July 27, 1998,
between Registrant and Allmerica Financial Life
Insurance and Annuity Company.(7)
- (b) Amendment No. 1, dated February 11, 2000, to the
Participation Agreement dated July 27, 1998 between
Registrant and Allmerica Financial Life Insurance and
Annuity Company.(13)
- (c) Amendment No. 2, dated April 10, 2000, to the
Participation Agreement, dated July 27, 1998, between
Registrant and Allmerica Financial Life Insurance and
Annuity Company.(14)
- (d) Amendment No. 3, dated May 1, 2000, to the
Participation Agreement, dated July 27, 1998, between
Registrant and Allmerica Financial Life Insurance and
Annuity Company.(14)
- (e) Amendment No. 4, dated October 4, 2000, to the
Participation Agreement, dated July 27, 1998, between
Registrant and Allmerica Financial Life Insurance and
Annuity Company.(14)
- (f) Amendment No. 5, dated December 1, 2000, to the
Participation Agreement, dated July 27, 1998, between
Registrant and Allmerica Financial Life Insurance and
Annuity Company, is hereby filed electronically.
- (g) Amendment No. 6, dated May 1, 2001, to the
Participation Agreement dated July 27, 1998, between
Registrant and Allmerica Financial Life Insurance and
Annuity Company, is hereby filed electronically.
(39) - (a) Participation Agreement, dated July 27, 1998,
between Registrant and First Allmerica Financial Life
Insurance Company.(7)
- (b) Amendment No. 1, dated February 11, 2000, to the
Participation Agreement dated July 27, 1998 between
Registrant and First Allmerica Financial Life
Insurance Company.(13)
|
- (c) Amendment No. 2, dated April 10, 2000, to the Participation Agreement, dated July 27, 1998, between Registrant and First Allmerica Financial Life Insurance Company.(14)
- (d) Amendment No. 3, dated May 1, 2000, to the Participation Agreement, dated July 27, 1998, between Registrant and First Allmerica Financial Life Insurance Company.(14)
- (e) Amendment No. 4, dated October 4, 2000, to the Participation Agreement, dated July 27, 1998, between Registrant and First Allmerica Financial Life Insurance Company.(14)
- (f) Amendment No. 5, dated December 1, 2000, to the Participation Agreement, dated July 27, 1998, between Registrant and First Allmerica Financial Life Insurance Company, is hereby filed electronically.
- (g) Amendment No. 6, dated May 1, 2001, to the Participation Agreement, dated July 27, 1998, between Registrant and First Allmerica Financial Life Insurance Company, is hereby filed electronically.
(40) - Participation Agreement, dated October 15, 1998,
between Registrant and Lincoln Life & Annuity
Insurance Company of New York.(9)
(41) - (a) Participation Agreement, dated November 23,
1998, between Registrant and American General Annuity
Insurance Company.(8)
- (b) Amendment No. 1, dated July 1, 1999, to the
Participation Agreement dated November 23, 1998,
between Registrant and American General Annuity
Insurance Company.(11)
- (c) Amendment No. 2, dated August 1, 2000, to the
Participation Agreement, dated November 23, 1998,
between Registrant and American General Annuity
Insurance Company.(14)
(42) - Participation Agreement, dated December 1, 1998,
between Registrant and the Prudential Insurance
Company of America.(8)
(43) - (a) Participation Agreement, dated February 1,
1999, between Registrant and Sage Life Assurance of
America, Inc.(9)
- (b) Amendment No. 1, dated October 1, 2001, to the
Participation Agreement, dated February 1, 1999,
between Registrant and Sage Life Assurance of
America, Inc., is hereby filed electronically.
(44) - (a) Participation Agreement, dated April 1, 1999,
between Registrant and Liberty Life Assurance Company
of Boston.(9)
- (b) Amendment No. 1, dated May 1, 2001, to the
Participation Agreement, dated April 1, 1999, between
Registrant and Liberty Life Assurance Company of
Boston, is hereby filed electronically.
(45) - Participation Agreement, dated April 13, 1999,
between Registrant and Western-Southern Life
Insurance Company.(10)
(46) - Participation Agreement, dated May 1, 1999, between
Registrant and Columbus Life Insurance Company.(10)
|
(47) - Participation Agreement, dated April 26, 1999,
between Registrant and First Variable Life Insurance
Company.(10)
(48) - Participation Agreement, dated August 21, 1999,
between Registrant and Life Investors Insurance
Company of America.(11)
(49) - Participation Agreement, dated June 8, 1999,
between Registrant and The Principal Life Insurance
Company.(10)
(50) - Participation Agreement, dated June 8, 1999,
between Registrant and Principal Life Insurance
Company.(11)
(51) - Participation Agreement, dated June 14, 1999,
between Registrant and Security First Life Insurance
Company.(11)
(52) - (a) Participation Agreement, dated July 1, 1999,
between Registrant and Allstate Life Insurance
Company.(11)
- (b) Amendment No. 1, dated December 20, 2001, to the
Participation Agreement, dated July 1, 1999, between
Registrant and Allstate Life Insurance Company, is
hereby filed electronically.
(53) - Participation Agreement, dated July 27, 1999,
between Registrant and Allianz Life Insurance Company
of North America.(11)
(54) - Participation Agreement, dated July 27, 1999,
between Registrant and Preferred Life Insurance
Company of New York.(11)
(55) - Participation Agreement, dated August 31, 1999,
between Registrant and John Hancock Mutual Life
Insurance Company.(11)
(56) - Participation Agreement, dated August 31, 1999,
between Registrant and The United States Life
Insurance Company in the City of New York.(11)
(57) - (a) Participation Agreement, dated November 1,
1999, between Registrant and AETNA Insurance Company
of America.(12)
- (b) Amendment No. 1, dated November 17, 2000, to the
Participation Agreement dated November 1, 1999,
between Registrant and AETNA Insurance Company of
America, is hereby filed electronically.
(58) - Participation Agreement, dated January 28, 2000,
between Registrant and Northbrook Life Insurance
Company.(13)
(59) - Participation Agreement, dated March 2, 2000,
between Registrant and GE Life and Annuity Assurance
Company.(14)
(60) - Participation Agreement, dated March 27, 2000,
between Registrant and Reliastar Life Insurance
Company of New York.(14)
(61) - Participation Agreement, dated March 27, 2000,
between Registrant and Northern Life Insurance
Company.(14)
(62) - Participation Agreement, dated March 27, 2000,
between Registrant and Reliastar Life Insurance
Company.(14)
|
(63) - (a) Participation Agreement, dated April 10, 2000,
between Registrant and Allmerica Financial Life
Insurance and Annuity Company.(14)
- (b) Amendment No. 1, dated December 1, 2000, to the
Participation Agreement, dated April 10, 2000,
between Registrant and Allmerica Financial Life
Insurance and Annuity Company, is hereby filed
electronically.
(64) - Participation Agreement, dated April 14, 2000,
between Registrant and United Investors Life
Insurance Company.(14)
(65) - Participation Agreement, dated April 17, 2000,
between Registrant and Sun Life Insurance and Annuity
Company of New York.(14)
(66) - Participation Agreement, dated August 1, 2000,
between Registrant and Kansas City Life Insurance
Company.(14)
(67) - (a) Participation Agreement, dated September 25,
2000, between Registrant and Security Life of Denver
Insurance Company.(14)
- (b) Amendment No. 1, dated September 5, 2001, to the
Private Placement Participation Agreement, dated
September 25, 2000, between Registrant and Security
Life of Denver Insurance Company, is hereby filed
electronically.
(68) - (a) Participation Agreement, dated February 26,
1999, between Registrant and American General Life
Insurance Company, is hereby filed electronically.
- (b) Amendment No. 1, dated November 1, 2000, to the
Participation Agreement, dated February 26, 1999,
between Registrant and American General Life
Insurance Company, is hereby filed electronically.
(69) - (a) Participation Agreement, dated April 3, 2000,
between Registrant and First Cova Life Insurance
Company, is hereby filed electronically.
- (b) Amendment No. 1, dated February 12, 2001, to the
Participation Agreement dated December 31, 1997,
between Registrant and First Met Life Investors
Insurance Company (formerly, First Cova Life
Insurance Company), is hereby filed electronically.
(70) - Participation Agreement, dated February 1, 2001,
between Registrant and Peoples Benefit Life Insurance
Company, is hereby filed electronically.
(71) - Participation Agreement, dated March 28, 2001,
between Registrant and Security Benefit Life
Insurance Company, is hereby filed electronically.
(72) - Participation Agreement, dated March 29, 2001,
between Registrant and Phoenix Home Life Mutual
Insurance Company, is hereby filed electronically.
(73) - Participation Agreement, dated March 29, 2001,
between Registrant and Phoenix Life and Annuity
Company, is hereby filed electronically.
(74) - Participation Agreement, dated March 29, 2001,
between Registrant and PHL Variable Insurance
Company, is hereby filed electronically.
|
(75) - Participation Agreement, dated April 4, 2001,
between Registrant and Annuity Investors Life
Insurance Company, is hereby filed electronically.
(76) - Participation Agreement, dated April 17, 2001,
between Registrant and Sun Life Insurance and Annuity
Company of New York, is hereby filed electronically.
(77) - Participation Agreement, dated April 30, 2001,
between Registrant and Western Reserve Life Assurance
Co. of Ohio, is hereby filed electronically.
(78) - Participation Agreement, dated July 13, 2001,
between Registrant and Golden American Life Insurance
Company, is hereby filed electronically.
(79) - Participation Agreement, dated July 24, 2000,
between Registrant and Lincoln Benefit Life Company,
is hereby filed electronically.
(80) - Participation Agreement, dated September 1, 2001,
between Registrant and Sun Life Insurance and Annuity
Company of New York, is hereby filed electronically.
(81) - Participation Agreement, dated October 1, 2001,
between Registrant and The Travelers Life and Annuity
Company, is hereby filed electronically.
(82) - Participation Agreement, dated November 1, 2001,
between Registrant and The American Life Insurance
Company of New York, is hereby filed electronically.
(83) - Accounting Services Agreement, dated March 31,
1993, between the Registrant and State Street Bank
and Trust Company.(4)
(84) - Agreement and Plan of Reorganization, dated
December 7, 1999, between Registrant and AIM Variable
Insurance Funds.(12)
(85) - (a) Memorandum of Agreement between Registrant, on
behalf of AIM V.I. Basic Value Fund and AIM V.I. Mid
Cap Equity Fund, and A I M Advisors, Inc., dated July
1, 2001, is filed herewith electronically.
- (b) Memorandum of Agreement, between Registrant, on
behalf of AIM V.I. Basic Value Fund and AIM V.I. Mid
Cap Equity Fund, and A I M Advisors, Inc. regarding
securities lending, dated July 1, 2001, is filed
herewith electronically.
i (1) - (a) Opinion and Consent of Messrs. Freedman, Levy,
Kroll & Simonds regarding the AIM V.I. Capital
Appreciation Fund, the AIM V.I. Diversified Income
Fund, the AIM V.I. Government Securities Fund, the
AIM V.I. Growth Fund, the AIM V.I. International
Equity Fund, the AIM V.I. Money Market Fund and the
AIM V.I. Value Fund.(1)
- (b) Opinion and Consent of Messrs. Freedman, Levy,
Kroll & Simonds regarding the AIM V.I. Growth and
Income Fund and the AIM V.I. Utilities Fund
(presently the AIM V.I. Global Utilities Fund).(2)
- (c) Opinion and Consent of Messrs. Freedman, Levy,
Kroll & Simonds regarding the AIM V.I. Global
Utilities Fund name change.(3)
|
- (d) Opinion and Consent of Messrs. Freedman, Levy, Kroll & Simonds regarding AIM V.I. Aggressive Growth Fund, AIM V.I. Balanced Fund, AIM V.I. Capital Development Fund and AIM V.I. High Yield Fund.(6)
- (e) Opinion and Consent of Messrs. Freedman, Levy, Kroll & Simonds regarding AIM V.I. Global Growth and Income Fund and AIM V.I. Telecommunications Fund.(7)
- (f) Opinion and Consent of Messrs. Freedman, Levy, Kroll & Simonds regarding AIM V.I. Blue Chip Fund.(10)
- (g) Opinion and Consent of Messrs. Freedman, Levy, Kroll & Simonds regarding AIM V.I. Dent Demographic Trends Fund.(11)
- (h) Opinion and Consent of Messrs. Freedman, Levy, Kroll & Simonds regarding the redomestication of the Registrant.(13)
- (i) Opinion and Consent of Messrs. Foley & Lardner regarding the addition of a Series II share class.(16)
- (j) Opinion and Consent of Messrs. Foley & Lardner regarding the addition of AIM V.I. Basic Value Fund and AIM V.I. Mid Cap Equity Fund. (17)
- (k) Opinion and Consent of Messrs. Foley & Lardner is hereby filed electronically.
j - Other Opinions, Appraisals or Rulings and Consents
- None.
k - Financial Statements omitted from Item 22 - None.
l (1) - (a) Agreements Concerning Initial Capitalization of
the AIM V.I. Capital Appreciation Fund, the AIM V.I.
Diversified Income Fund, the AIM V.I. Government
Securities Fund, the AIM V.I. Growth Fund, the AIM
V.I. International Equity Fund, the AIM V.I. Money
Market Fund, and the AIM V.I. Value Fund.(4)
- (b) Agreements Concerning Initial Capitalization of
the AIM V.I. Growth and Income Fund and the AIM V.I.
Utilities Fund.(4)
- (c) Agreement Concerning Initial Capitalization of
the AIM V.I. Aggressive Growth Fund, the AIM V.I.
Balanced Fund, the AIM V.I. Capital Development Fund
and the AIM V.I. High Yield Fund.(7)
- (d) Agreement Concerning Initial Capitalization of
the AIM V.I. Blue Chip Fund.(11)
- (e) Agreement Concerning Initial Capitalization of
the AIM V.I. Dent Demographic Trends Fund.(11)
- (f) Agreement Concerning Initial Capitalization of
the AIM V.I. Basic Value Fund and the AIM V.I. Mid
Cap Equity Fund, dated September 7, 2001, is hereby
filed electronically.
m - (a) Registrant's Master Distribution Plan pursuant
to Rule 12b-1 for Series II shares is hereby filed
electronically.
|
- (b) Amendment No. 1 to the Registrant's Master Distribution Plan, dated September 7, 2001, is hereby filed electronically.
n - Registrant's Multiple Class Plan.(16)
o Reserved
p (1) - The AIM Management Group Code of Ethics adopted May
1, 1981 and as amended August 17, 1999 relating to A
I M Management Group Inc. and A I M Advisors,
Inc.(11)
(2) - Code of Ethics of Registrant effective as of
September 23, 2000.(14)
----------
|
(1) Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on April 19, 1993.
(2) Incorporated herein by reference to Post-Effective Amendment No. 4, filed on November 3, 1994.
(3) Incorporated herein by reference to Post-Effective Amendment No. 6, filed on April 26, 1995.
(4) Incorporated herein by reference to Post-Effective Amendment No. 7, filed electronically on April 29, 1996.
(5) Incorporated herein by reference to Post-Effective Amendment No. 8, filed electronically on April 23, 1997.
(6) Incorporated herein by reference to Post-Effective Amendment No. 9, filed electronically on February 13, 1998.
(7) Incorporated herein by reference to Post-Effective Amendment No. 10, filed electronically on October 2, 1998.
(8) Incorporated herein by reference to Post-Effective Amendment No. 11, filed electronically on February 18, 1999.
(9) Incorporated herein by reference to Post-Effective Amendment No. 12, filed electronically on April 29, 1999.
(10) Incorporated herein by reference to Post-Effective Amendment No. 13, filed electronically on July 13, 1999.
(11) Incorporated herein by reference to Post-Effective Amendment No. 14, filed electronically on September 28, 1999.
(12) Incorporated herein by reference to Post-Effective Amendment No. 15, filed electronically on February 16, 2000.
(13) Incorporated herein by reference to Post-Effective Amendment No. 16, filed electronically on February 17, 2000.
(14) Incorporated herein by reference to Post-Effective Amendment No. 18, filed electronically on February 16, 2001.
(15) Incorporated herein by reference to Post-Effective Amendment No. 19, filed electronically on April 12, 2001.
(16) Incorporated herein by reference to Post Effective Amendment No. 20, filed electronically on May 29, 2001.
(17) Incorporated herein by reference to Post Effective Amendment No. 21, filed electronically on July 18, 2001.
Item 24. Persons Controlled by or Under Common Control with Registrant
None.
Item 25. Indemnification
The Registrant's Agreement and Declaration of Trust, dated December 6, 1999, provides, among other things (i) that trustees and officers of the Registrant, when acting as such, shall not be personally liable for any act, omission or obligation of the Registrant or any trustee or officer (except for liabilities to the Registrant or its shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of duty); (ii) for the indemnification by the Registrant of the trustees, officers, employees and agents of the Registrant to the fullest extent permitted by the Delaware Business Trust Act and Bylaws and other applicable law; (iii) that shareholders of the Registrant shall not be personally liable for the debts, liabilities, obligations or expenses of the Registrant or any portfolio or class; and (iv) for the indemnification by the Registrant, out of the assets belonging to the applicable portfolio, of shareholders and former shareholders of the Registrant in case they are held personally liable solely by reason of being or having been shareholders of the Registrant or any portfolio or class and not because of their acts or omissions or for some other reason.
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in such Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person in connection with the securities being registered hereby, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in such Act and will be governed by the final adjudication of such issue. Insurance coverage is provided under a joint Mutual Fund & Investment Advisory Professional Directors & Officers Liability Policy, issued by ICI Mutual Insurance Company, with a $35,000,000 limit of liability.
Item 26. Business and Other Connections of Investment Advisor
The only employment of a substantial nature of the Advisor's directors and officers is with the Advisor and its affiliated companies. Reference is also made to the caption "Fund Management--The Advisor" of the Prospectus which comprises Part A of this Registration Statement, and to the discussion under the caption "Management" of the Statement of Additional Information which comprises Part B of this Registration Statement, and to Item 29(b) of this Part C of the Registration Statement.
Item 27. Principal Underwriters
(a) A I M Distributors, Inc. the Registrant's principal underwriter, also acts as a principal underwriter to the following investment companies:
AIM Advisor Funds
AIM Equity Funds
AIM Floating Rate Fund
AIM Funds Group
AIM Growth Series
AIM International Funds, Inc.
AIM Investment Funds
AIM Investment Securities Funds
AIM Series Trust
AIM Special Opportunities Funds
AIM Summit Fund
AIM Tax-Exempt Funds
(b)
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
------------------ -------------------------- --------------------
Michael J. Cemo President, Director & None
Chief Executive Officer
Gary T. Crum Director Senior Vice President
Robert H. Graham Director & Chairman Chairman, President &
Trustee
James L. Salners Executive Vice President None
James E. Stueve Senior Vice President None
Michael C. Vessels Senior Vice President None
Leslie A. Schmidt Senior Vice President None
|
Marilyn M. Miller Senior Vice President None
Gene L. Needles Senior Vice President None
Mark D. Santero Senior Vice President None
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
& Assistant Secretary
Kathleen J. Pflueger Secretary Assistant Secretary
James R. Anderson Vice President & Chief Compliance Officer None
Dawn M. Hawley Vice President & Treasurer None
Mary A. Corcoran Vice President None
Sidney Dilgren Vice President None
Tony D. Green Vice President None
Kim T. McAuliffe Vice President None
Carol F. Relihan Vice President Senior Vice President &
Secretary
Linda L. Warriner Vice President None
|
(c) Not Applicable
Item 28. Location of Accounts and Records
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, will maintain physical possession of each such account, book or other document of the Registrant at its principal executive offices, except for those maintained by the Registrant's Custodian and Transfer Agent State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110.
Item 29. Management Services
Not Applicable
Item 30. Undertakings
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Houston, Texas on the 12th day of February, 2002.
REGISTRANT: AIM VARIABLE INSURANCE FUNDS
By: /s/ ROBERT H. GRAHAM
------------------------------------
Robert H. Graham, President
|
Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
SIGNATURES TITLE DATE
---------- ----- ----
/s/ ROBERT H. GRAHAM Chairman, Trustee & President February 12, 2002
----------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ FRANK S. BAYLEY Trustee February 12, 2002
-----------------------------
(Frank S. Bayley)
/s/ BRUCE L. CROCKETT Trustee February 12, 2002
-----------------------------
(Bruce L. Crockett)
/s/ ALBERT R. DOWDEN Trustee February 12, 2002
-----------------------------
(Albert R. Dowden)
/s/ EDWARD K. DUNN, JR. Trustee February 12, 2002
-----------------------------
(Edward K. Dunn, Jr.)
/s/ JACK M. FIELDS Trustee February 12, 2002
-----------------------------
(Jack M. Fields)
/s/ CARL FRISCHLING Trustee February 12, 2002
-----------------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS Trustee February 12, 2002
-----------------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Trustee February 12, 2002
-----------------------------
(Lewis F. Pennock)
/s/ RUTH H. QUIGLEY Trustee February 12, 2002
-----------------------------
(Ruth H. Quigley)
/s/ LOUIS S. SKLAR Trustee February 12, 2002
-----------------------------
(Louis S. Sklar)
/s/ DANA R. SUTTON Vice President & Treasurer February 12, 2002
----------------------------- (Principal Financial and
(Dana R. Sutton) Accounting Officer)
|
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
a(1)(j) Amendment No. 9 to Agreement and Declaration of Trust of
Registrant, dated January 14, 2002, is hereby filed
electronically.
a(1)(k) Amendment No. 10 to Agreement and Declaration of Trust of
Registrant, dated January 24, 2002, is hereby filed
electronically.
d(1)(c) Amendment No. 2 to Master Investment Advisory Agreement of
Registrant dated September 7, 2001, between Registrant and
A I M Advisors, Inc., is hereby filed electronically.
e (1)(d) Amendment No. 1, dated September 7, 2001, to the First Amended
and Restated Master Distribution Agreement, between Registrant
and A I M Distributors, Inc., dated July 16, 2001, is hereby
filed electronically.
h (1)(c) Amendment No. 2 to Master Administrative Services Agreement
between Registrant and A I M Advisors, Inc., dated September
7, 2001, is hereby filed electronically.
h (2) Transfer Agency and Service Agreement, October 15, 2001,
between Registrant and A I M Fund Services, Inc. Is hereby
filed electronically.(15)
h (13)(d) Amendment No. 3, dated February 16, 2001, to the Participation
Agreement, dated December 18, 1996, between Registrant and
Merrill Lynch Life Insurance Company is hereby filed
electronically.
h (13)(e) Amendment No. 4, dated May 1, 2001, to the Participation
Agreement dated December 18, 1996, between Registrant and
Merrill Lynch Life Insurance Company, is hereby filed
electronically.
h (13)(f) Amendment No. 5, dated October 5, 2001, to the Participation
Agreement dated, December 18, 1996, between Registrant and
Merrill Lynch Life Insurance Company is hereby filed
electronically.
h (14)(d) Amendment No. 3, dated February 16, 2001, to the Participation
Agreement, dated December 18, 1996, between Registrant and ML
Life Insurance Company of New York, is hereby filed
electronically.
h (14)(e) Amendment No. 4, dated May 1, 2001, to the Participation
Agreement, dated December 18, 1996, between Registrant and ML
Life Insurance Company of New York, is hereby filed
electronically.
h (14)(f) Amendment No. 5, dated October 5, 2001, to the Participation
Agreement dated, December 18, 1996, between Registrant and ML
Life Insurance Company of New York, is hereby filed
electronically.
h (22)(g) Amendment No. 6, dated September 5, 2001, to the Participation
Agreement, dated December 3, 1997, between Registrant and
Security Life of Denver Insurance Company is hereby filed
electronically.
|
h (23)(d) Amendment No. 3, dated February 12, 2001, to the Participation
Agreement, dated December 31, 1997, between Registrant and Met
Life Investors Insurance Company (formerly Cova Financial
Services Life Insurance Company) is hereby filed
electronically.
h (24)(c) Amendment No. 2, dated February 12, 2001, to the Participation
Agreement, dated December 31, 1997, between Registrant and Met
Life Investors Insurance Company (formerly Cova Financial Life
Insurance Company) is hereby filed electronically.
h (25)(e) Amendment No. 4, dated December 1, 2000, to the Participation
Agreement, dated February 2, 1998, between Registrant and The
Guardian Life Insurance and Annuity Company, Inc., is hereby
filed electronically.
h (26)(e) Amendment No. 4, dated May 1, 2000, to the Participation
Agreement, dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S), is hereby filed
electronically.
h (26)(f) Amendment No. 5, dated May 1, 2001, to the Participation
Agreement, dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S.), is hereby filed
electronically.
h (26)(g) Amendment No. 6, dated September 1, 2001, to the Participation
Agreement dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S.), is hereby filed
electronically.
h (28)(c) Amendment No. 2, dated March 12, 2001 to the Participation
Agreement, dated April 21, 1998, between Registrant and
Keyport Life Insurance Company, is hereby filed
electronically.
h (29)(d) Amendment No. 3, dated August 1, 1999, to the Participation
Agreement, dated May 1, 1998, between Registrant and PFL Life
Insurance Company, is hereby filed electronically.
h (29)(e) Amendment No. 4, dated February 28, 2001, to the Participation
Agreement, dated May 1, 1998, between Registrant and PFL Life
Insurance Company, is hereby filed electronically.
h (29)(f) Amendment No. 5, dated July 1, 2001, to the Participation
Agreement dated May 1, 1998, between Registrant and
Transamerica Life Insurance Company (formerly PFL Life
Insurance Company), is hereby filed electronically.
h (29)(g) Amendment No. 6, dated August 15, 2001, to the Participation
Agreement dated May 1, 1998, between Transamerica Life
Insurance Company (formerly PFL Life Insurance Company), is
hereby filed electronically.
h (31)(e) Amendment No. 4, dated May 22, 2001, to the Participation
Agreement, dated February 4, 2000, between Registrant and
American General Life Insurance Company, is hereby filed
electronically.
h (32)(f) Amendment No. 5, dated July 15, 2000, to the Participation
Agreement dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company, is hereby filed
electronically.
|
h (32)(g) Amendment No. 6, dated July 15, 2001, to the Participation
Agreement dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company, is hereby filed
electronically.
h (33)(b) Amendment No. 1, dated October 1, 2000, to the Participation
Agreement, dated June 20, 1998 between Registrant and AETNA
Life Insurance and Annuity Company, is hereby filed
electronically.
h (38)(f) Amendment No. 5, dated December 1, 2000, to the Participation
Agreement dated July 27, 1998, between Registrant and
Allmerica Financial Life Insurance and Annuity Company is
hereby filed electronically.
h (38)(g) Amendment No. 6, dated May 1, 2001, to the Participation
Agreement dated July 27, 1998, between Registrant and
Allmerica Financial Life Insurance and Annuity Company, is
hereby filed electronically.
h (39)(f) Amendment No. 5, dated December 1, 2000, to the Participation
Agreement, dated July 27, 1998, between Registrant and First
Allmerica Financial Life Insurance Company is hereby filed
electronically.
h (39)(g) Amendment No. 6, dated May 1, 2001, to the Participation
Agreement dated July 27, 1998, between Registrant and First
Allmerica Financial Life Insurance Company, is hereby filed
electronically.
h (43)(b) Amendment No. 1, dated October 1, 2001, to the Participation
Agreement dated February 1, 1999, between Registrant and Sage
Life Assurance of America, Inc., is hereby filed
electronically.
h (44)(b) Amendment No. 1, dated May 1, 2001, to the Participation
Agreement, dated April 1, 1999, between Registrant and Liberty
Life Assurance Company of Boston, is hereby filed
electronically.
h (52)(b) Amendment No. 1, dated December 20, 2001, to the Participation
Agreement dated July 1, 1999, between Registrant and Allstate
Life Insurance Company, is hereby filed electronically.
h (57)(b) Amendment No. 1, dated November 17, 2000, to the Participation
Agreement dated November 1, 1999, between Registrant and AETNA
Insurance Company of America, is hereby filed electronically.
h (63)(b) Amendment No. 1, dated December 1, 2000, to the Participation
Agreement dated April 10, 2000, between Registrant and
Allmerica Financial Life Insurance and Annuity Company, is
hereby filed electronically.
h (67)(b) Amendment No. 1, dated September 5, 2001, to the Participation
Agreement, dated September 25, 2000, between Registrant and
Security Life of Denver Insurance Company, is hereby filed
electronically.
h (68)(a) Participation Agreement, dated November 26, 1999, between
Registrant and American General Life Insurance Company, is
hereby filed electronically.
h (68)(b) Amendment No. 1, dated November 1, 2000, to the Participation
Agreement, dated November 26, 1999, between Registrant and
American General Life Insurance Company, is hereby filed
electronically.
|
h (69)(a) Participation Agreement, dated April 3, 2000, between
Registrant and First Cova Life Insurance Company, is hereby
filed electronically.
h (69)(b) Amendment No. 1, dated February 12, 2001, to the Participation
Agreement dated December 31, 1997, between Registrant and
First Met Life Investors Insurance Company (formerly, First
Cova Life Insurance Company), is hereby filed electronically.
h (70) Participation Agreement, dated February 1, 2001, between
Registrant and Peoples Benefit Life Insurance Company, is
hereby filed electronically.
h (71) Participation Agreement, dated March 28, 2001, between
Registrant and Security Benefit Life Insurance Company, is
hereby filed electronically.
h (72) Participation Agreement, dated March 29, 2001, between
Registrant and Phoenix Home Life Mutual Insurance Company, is
hereby filed electronically.
h (73) Participation Agreement, dated March 29, 2001, between
Registrant and Phoenix Life and Annuity Company, is hereby
filed electronically.
h (74) Participation Agreement, dated March 29, 2001, between
Registrant and PHL Variable Insurance Company, is hereby filed
electronically.
h (75) Participation Agreement, dated April 4, 2001, between
Registrant and Annuity Investors Life Insurance Company, is
hereby filed electronically.
h (76) Participation Agreement, dated April 17, 2000, between
Registrant and Sun Life Insurance and Annuity Company of New
York, is hereby filed electronically.
h (77) Participation Agreement, dated April 30, 2001, between
Registrant and Western Reserve Life Assurance Co. of Ohio, is
hereby filed electronically.
h (78) Participation Agreement, dated July 13, 2001, between
Registrant and Golden American Life Insurance Company, is
hereby filed electronically.
h (79) Participation Agreement, dated July 24, 2001, between
Registrant and Lincoln Benefit Life Company, is hereby filed
electronically.
h (80) Participation Agreement, dated October 1, 2001, between
Registrant and The Travelers Life and Annuity Company, is
hereby filed electronically.
h (81) Participation Agreement, dated November 1, 2001, between
Registrant and The American Life Insurance Company of New
York, is hereby filed electronically.
h (84)(a) Memorandum of Agreement between Registrant, on behalf of AIM
V.I. Basic Value Fund and AIM V.I. Mid Cap Equity Fund, and
A I M Advisors, Inc., dated July 1, 2001, is filed herewith
electronically.
h (84)(b) Memorandum of Agreement, between Registrant, on behalf of AIM
V.I. Basic Value Fund and AIM V.I. Mid Cap Equity Fund, and
A I M Advisors, Inc. regarding securities lending, dated
July 1, 2001, is filed herewith electronically.
i (1)(k) Opinion and Consent of Messrs. Foley & Lardner is hereby filed
electronically.
|
l (1)(f) Agreement Concerning Initial Capitalization of the AIM V.I.
Basic Value Fund and the AIM V.I. Mid Cap Equity Fund, dated
September 7, 2001, is hereby filed electronically.
m (b) Amendment No. 1 to the Registrant's Master Distribution Plan
dated September 7, 2001, is hereby filed electronically.
|
EXHIBIT a(1)(j)
AMENDMENT NO. 9
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM VARIABLE INSURANCE FUNDS
This Amendment No. 9 to the Agreement and Declaration of Trust of AIM Variable Insurance Funds (this "Amendment") amends, effective as of May 1, 2002, the Agreement and Declaration of Trust of AIM Variable Insurance Funds dated as of December 6, 1999, as amended (the "Agreement").
Under Section 9.7 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
AIM VARIABLE INSURANCE FUNDS
PORTFOLIOS AND CLASSES THEREOF
SERIES I SHARES
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Growth Fund
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Premier Equity Fund
SERIES II SHARES
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Growth Fund
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Premier Equity Fund"
2. All references in the Agreement to "this Agreement" shall mean the Agreement as amended by this Amendment.
3. Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of January 14, 2002.
By: /s/ ROBERT H. GRAHAM
-------------------------------
Name: Robert H. Graham
Title: President
|
EXHIBIT a(1)(k)
AMENDMENT NO. 10
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM VARIABLE INSURANCE FUNDS
This Amendment No. 10 to the Agreement and Declaration of Trust of AIM Variable Insurance Funds (this "Amendment") amends, effective as of May 1, 2002, the Agreement and Declaration of Trust of AIM Variable Insurance Funds dated as of December 6, 1999, as amended (the "Agreement").
Under Section 9.7 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
AIM VARIABLE INSURANCE FUNDS
PORTFOLIOS AND CLASSES THEREOF
SERIES I SHARES
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Premier Equity Fund
SERIES II SHARES
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Premier Equity Fund"
2. All references in the Agreement to "this Agreement" shall mean the Agreement as amended by this Amendment.
3. Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of January 24, 2002.
By: /s/ ROBERT H. GRAHAM
-------------------------------
Name: Robert H. Graham
Title: President
|
EXHIBIT d(1)(c)
AMENDMENT NO. 2
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This amendment dated as of September 7, 2001, amends the Master Investment Advisory Agreement (the "Agreement"), dated May 1, 2000, between AIM Variable Insurance Funds, a Delaware business trust, and A I M Advisors, Inc., a Delaware corporation.
WITNESSETH:
WHEREAS, the parties desire to amend the Agreement to add AIM V.I. Basic Value Fund and AIM V.I. Mid Cap Equity Fund;
NOW, THEREFORE, the parties agree as follows:
1. Appendix A and Appendix B to the Agreement are hereby deleted in their entirety and replaced with the following:
"APPENDIX A
FUNDS AND EFFECTIVE DATES
NAME OF FUND EFFECTIVE DATE OF ADVISORY AGREEMENT ------------ ------------------------------------ AIM V.I. Aggressive Growth Fund May 1, 2000 AIM V.I. Balanced Fund May 1, 2000 AIM V.I. Basic Value Fund September 7, 2001 AIM V.I. Blue Chip Fund May 1, 2000 AIM V.I. Capital Appreciation Fund May 1, 2000 AIM V.I. Capital Development Fund May 1, 2000 AIM V.I. Dent Demographic Trends Fund May 1, 2000 AIM V.I. Diversified Income Fund May 1, 2000 AIM V.I. Global Utilities Fund May 1, 2000 AIM V.I. Government Securities Fund May 1, 2000 AIM V.I. Growth and Income Fund May 1, 2000 AIM V.I. Growth Fund May 1, 2000 AIM V.I. High Yield Fund May 1, 2000 AIM V.I. International Equity Fund May 1, 2000 AIM V.I. Mid Cap Equity Fund September 7, 2001 AIM V.I. Money Market Fund May 1, 2000 AIM V.I. New Technology Fund May 1, 2001 AIM V.I. Value Fund May 1, 2000 |
APPENDIX B
COMPENSATION TO THE ADVISOR
The Trust shall pay the Advisor, out of the assets of a Fund, as full compensation for all services rendered, an advisory fee for such Fund set forth below. Such fee shall be calculated by applying the following annual rates to the average daily net assets of such Fund for the calendar year computed in the manner used for the determination of the net asset value of shares of such Fund.
AIM V.I. CAPITAL APPRECIATION FUND
AIM V.I. GROWTH FUND
AIM V.I. GROWTH AND INCOME FUND
AIM V.I. GLOBAL UTILITIES FUND
AIM V.I. VALUE FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $250 million................................................. 0.65% Over $250 million.................................................. 0.60% |
AIM V.I. AGGRESSIVE GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $150 million................................................. 0.80% Over $150 million.................................................. 0.625% |
AIM V.I. BALANCED FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $150 million................................................. 0.75% Over $150 million.................................................. 0.50% |
AIM V.I. BASIC VALUE FUND
AIM V.I. MID CAP EQUITY FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $500 million................................................. 0.725% Next $500 million.................................................. 0.700% Next $500 million.................................................. 0.675% Excess over $1.5 billion........................................... 0.65% |
AIM V.I. BLUE CHIP FUND
AIM V.I. CAPITAL DEVELOPMENT FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $350 million................................................. 0.75% Over $350 million.................................................. 0.625% |
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $2 billion................................................... 0.85% Over $2 billion.................................................... 0.80% |
AIM V.I. DIVERSIFIED INCOME FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $250 million................................................. 0.60% Over $250 million.................................................. 0.55% |
AIM V.I. NEW TECHNOLOGY FUND
NET ASSETS ANNUAL RATE ---------- ----------- Average Daily Net Assets........................................... 1.00% |
AIM V.I. GOVERNMENT SECURITIES FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $250 million................................................. 0.50% Over $250 million.................................................. 0.45% |
AIM V.I. HIGH YIELD FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $200 million................................................. 0.625% Next $300 million.................................................. 0.55% Next $500 million.................................................. 0.50% Amount over $1 billion............................................. 0.45% |
AIM V.I. INTERNATIONAL EQUITY FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $250 million................................................. 0.75% Over $250 million.................................................. 0.70% |
AIM V.I. MONEY MARKET FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $250 million................................................. 0.40% Over $250 million.................................................. 0.35%" |
2. In all other respects, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective officers on the date first written above.
Date: September 7, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
------------------------ --------------------------------
Assistant Secretary President
|
(SEAL)
A I M ADVISORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
------------------------ --------------------------------
Assistant Secretary President
|
(SEAL)
EXHIBIT e(1)(d)
AMENDMENT NO. 1
TO
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
The First Amended and Restated Master Distribution Agreement (the "Agreement"), dated as of September 7, 2001, by and between AIM Variable Insurance Funds, a Delaware business trust and A I M Distributors, Inc., a Delaware corporation, is hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
TO
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
OF
AIM VARIABLE INSURANCE FUNDS
SERIES I SHARES
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth and Income Fund
AIM V.I. Growth Fund
AIM V.I. High Yield Fund
AIM V.I. International Equity Fund
AIM V.I. Mid Cap Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Value Fund
SERIES II SHARES
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth and Income Fund
AIM V.I. Growth Fund
AIM V.I. High Yield Fund
AIM V.I. International Equity Fund
AIM V.I. Mid Cap Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Value Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: September 7, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
------------------------ --------------------------------
Assistant Secretary President
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ MICHAEL J. CEMO
------------------------ --------------------------------
Assistant Secretary President
|
EXHIBIT h(1)(c)
AMENDMENT NO. 2
MASTER ADMINISTRATIVE SERVICES AGREEMENT
The Master Administrative Services Agreement (the "Agreement"), dated May 1, 2000, by and between A I M Advisors, Inc., a Delaware corporation, and AIM Variable Insurance Funds, a Delaware business trust, is hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
TO
MASTER ADMINISTRATIVE SERVICES AGREEMENT
OF
AIM VARIABLE INSURANCE FUNDS
PORTFOLIOS EFFECTIVE DATE OF AGREEMENT ---------- --------------------------- AIM V.I. Aggressive Growth Fund May 1, 2000 AIM V.I. Balanced Fund May 1, 2000 AIM V.I. Basic Value Fund September 10, 2001 AIM V.I. Blue Chip Fund May 1, 2000 AIM V.I. Capital Appreciation Fund May 1, 2000 AIM V.I. Capital Development Fund May 1, 2000 AIM V.I. Dent Demographic Trends Fund May 1, 2000 AIM V.I. Diversified Income Fund May 1, 2000 AIM V.I. Global Utilities Fund May 1, 2000 AIM V.I. Government Securities Fund May 1, 2000 AIM V.I. Growth and Income Fund May 1, 2000 AIM V.I. Growth Fund May 1, 2000 AIM V.I. High Yield Fund May 1, 2000 AIM V.I. International Equity Fund May 1, 2000 AIM V.I. Mid Cap Equity Fund September 10, 2001 AIM V.I. Money Market Fund May 1, 2000 AIM V.I. New Technology Fund May 1, 2001 AIM V.I. Value Fund May 1, 2000" |
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated September 7, 2001
A I M ADVISORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
----------------------- ----------------------------
Assistant Secretary Robert H. Graham
President
|
(SEAL)
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
----------------------- ----------------------------
Assistant Secretary Robert H. Graham
President
|
(SEAL)
EXHIBIT h(2)
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
AIM VARIABLE INSURANCE FUNDS
AND
A I M FUND SERVICES, INC.
TABLE OF CONTENTS
PAGE
ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT 1
ARTICLE 2 FEES AND EXPENSES 2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT 3
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND 3
ARTICLE 5 INDEMNIFICATION 4
ARTICLE 6 COVENANTS OF THE FUND AND THE TRANSFER AGENT 5
ARTICLE 7 TERMINATION OF AGREEMENT 6
ARTICLE 8 ADDITIONAL FUNDS 6
ARTICLE 9 ASSIGNMENT 6
ARTICLE 10 AMENDMENT 7
ARTICLE 11 TEXAS LAW TO APPLY 7
ARTICLE 12 MERGER OF AGREEMENT 7
ARTICLE 13 COUNTERPARTS 7
|
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 15th day of October, 2001, by and between AIM VARIABLE INSURANCE FUNDS, a Delaware business trust, having its principal office and place of business at 11 Greenway Plaza, Suite 100, Houston, Texas 77046 (the "Fund"), and A I M Fund Services, Inc., a Delaware corporation having its principal office and place of business at 11 Greenway Plaza, Suite 100, Houston, Texas 77046 (the "Transfer Agent").
WHEREAS, the Transfer Agent is registered as such with the Securities and Exchange Commission (the "SEC"); and
WHEREAS, the Fund is authorized to issue separate series and classes, with each such series representing interests in a separate portfolio of securities and other assets and each such class having different distribution arrangements; and
WHEREAS, the Fund on behalf of all its authorized and issued shares of beneficial interest representing interests of the Fund ("Shares") desires to appoint the Transfer Agent as its transfer agent, and agent in connection with certain other activities, with respect to the Shares, and the Transfer Agent desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE 1
TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT
1.01 Subject to the terms and conditions set forth in this Agreement, the Fund hereby employs and appoints the Transfer Agent to act as, and the Transfer Agent agrees to act as, its transfer agent for the Shares, dividend disbursing agent, and paying agent in connection with any accumulation or similar plans provided to shareholders of the Shares (the "Shareholders"), as provided in the currently effective prospectus and statement of additional information (the "Prospectus") of the Fund, on behalf of the Shares.
1.02 The Transfer Agent agrees that it will perform the following services:
(a) The Transfer Agent shall, in accordance with procedures established from time to time by agreement between the Fund on behalf of the Shares, and the Transfer Agent:
(i) receive for acceptance, orders for the purchase of Shares, and promptly deliver payment and appropriate documentation thereof to the Custodian of the Fund authorized pursuant to the Agreement and Declaration of Trust of the Fund (the "Custodian");
(ii) pursuant to purchase orders, issue the appropriate number of Shares and hold such Shares in the appropriate Shareholder account;
(iii) receive for acceptance redemption requests and redemption directions and deliver the appropriate documentation thereof to the Custodian;
(iv) at the appropriate time as and when it receives monies paid to it by the Custodian with respect to any redemption, pay over or cause to be paid over in the appropriate manner such monies as instructed by the Fund;
(v) effect transfers of Shares by the registered owners thereof upon receipt of appropriate instructions;
(vi) prepare and transmit payments for dividends and distributions declared by the Fund on behalf of the Shares;
(vii) maintain records of account for and advise the Fund and its Shareholders as to the foregoing; and
(viii) record the issuance of Shares of the Fund and maintain pursuant to SEC Rule 17Ad-10(e) a record of the total number of Shares which are authorized, based upon data provided to it by the Fund, and issued and outstanding.
The Transfer Agent shall also provide the Fund on a regular basis with the total number of Shares which are authorized and issued and outstanding and shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which function shall be the sole responsibility of the Fund.
(b) In addition to the services set forth in the above paragraph (a), the Transfer Agent shall: (i) perform the customary services of a transfer agent, including but not limited to: maintaining all Shareholder accounts, mailing Shareholder reports and prospectuses to current Shareholders, preparing and mailing confirmation forms and statements of accounts to Shareholders for all purchases and redemptions of Shares and other confirmable transactions in Shareholder accounts, preparing and mailing activity statements for Shareholders, and providing Shareholder account information.
(c) Procedures as to who shall provide certain of these services in Article 1 may be established from time to time by agreement between the Fund on behalf of the Shares and the Transfer Agent. The Transfer Agent may at times perform only a portion of these services and the Fund or its agent may perform these services on the Fund's behalf.
ARTICLE 2
FEES AND EXPENSES
2.01 For performance by the Transfer Agent pursuant to this Agreement, the Fund agrees on behalf of the Shares to pay the Transfer Agent fees as set out in the initial Schedule A attached hereto. Such fees and out-of-pocket expenses and advances identified under Section 2.02 below may be changed from time to time subject to mutual written agreement between the Fund and the Transfer Agent.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees to reimburse the Transfer Agent for out-of-pocket expenses or advances incurred by the Transfer Agent for the items set out in Schedule A attached hereto. In addition, any other expenses
incurred by the Transfer Agent at the request or with the consent of the Fund, will be reimbursed by the Fund on behalf of the applicable Shares.
2.03 The Fund agrees on behalf of the Shares to pay all fees and reimbursable expenses following the mailing of the respective billing notice. Postage for mailing of dividends, proxies, Fund reports and other mailings to all Shareholder accounts shall be advanced to the Transfer Agent by the Fund at least seven (7) days prior to the mailing date of such materials.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT
The Transfer Agent represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good standing under the laws of the state of Delaware.
3.02 It is duly qualified to carry on its business in Delaware and in Texas.
3.03 It is empowered under applicable laws and by its Certificate of Incorporation and By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement.
3.06 It is registered as a Transfer Agent as required by the federal securities laws.
3.07 This Agreement is a legal, valid and binding obligation to it.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Transfer Agent that:
4.01 It is a business trust duly organized and existing and in good standing under the laws of the state of Delaware.
4.02 It is empowered under applicable laws and by its Agreement and Declaration of Trust and Bylaws to enter into and perform this Agreement.
4.03 All proceedings required by said Agreement and Declaration of Trust and Bylaws have been taken to authorize it to enter into and perform this Agreement.
4.04 It is an open-end, diversified management investment company registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as amended on behalf of the Shares is currently effective and will remain effective, with respect to all Shares of the Fund being offered for sale.
ARTICLE 5
INDEMNIFICATION
5.01 The Transfer Agent shall not be responsible for, and the Fund shall on behalf of the Shares, indemnify and hold the Transfer Agent harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to:
(a) all actions of the Transfer Agent or its agents or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence or willful misconduct;
(b) the Fund's lack of good faith, negligence or willful misconduct which arise out of the breach of any representation or warranty of the Fund hereunder;
(c) the reliance on or use by the Transfer Agent or its agents or subcontractors of information, records and documents or services which (i) are received or relied upon by the Transfer Agent or its agents or subcontractors and/or furnished to it or performed by on behalf of the Fund, and (ii) have been prepared, maintained and/or performed by the Fund or any other person or firm on behalf of the Fund; provided such actions are taken in good faith and without negligence or willful misconduct;
(d) the reliance on, or the carrying out by the Transfer Agent or its agents or subcontractors of any instructions or requests of the Fund on behalf of the Shares; provided such actions are taken in good faith and without negligence or willful misconduct; or
(e) the offer or sale of Shares in violation of any requirement under the federal securities laws or regulations or the securities laws or regulations of any state that such Shares be registered in such state or in violation of any stop order or other determination or ruling by any federal agency or any state with respect to the offer or sale of such Shares in such state.
5.02 The Transfer Agent shall indemnify and hold the Fund harmless from and against any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to any action or failure or omission to act by the Transfer Agent as result of the Transfer Agent's lack of good faith, negligence or willful misconduct.
5.03 At any time the Transfer Agent may apply to any officer of the Fund for instructions, and may consult with legal counsel with respect to any matter arising in connection with the services to be performed by the Transfer Agent under this Agreement, and the Transfer Agent and its agents or subcontractors shall not be liable to and shall be indemnified by the Fund on behalf of the Shares for any action taken or omitted by it in reliance upon such instructions or upon the opinion of such counsel. The Transfer Agent shall be protected and indemnified in acting upon any paper or document furnished by or on behalf of the Fund, reasonably believed to be genuine and to have been signed by the proper person or persons,
or upon any instruction, information, data, records or documents provided to the Transfer Agent or its agents or subcontractors by machine readable input, telex, CRT data entry or other similar means authorized by the Fund, and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Fund.
5.04 In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes.
5.05 Neither party to this Agreement shall be liable to the other party for consequential damages under any provision of this Agreement or for any consequential damages arising out of any act or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this Article 5 shall apply, upon the assertion of a claim for which either party may be required to indemnify the other, the party seeking indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all developments concerning such claim. The party who may be required to indemnify shall have the option to participate with the party seeking indemnification in the defense of such claim. The party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other party may be required to indemnify it except with the other party's prior written consent.
ARTICLE 6
COVENANTS OF THE FUND AND THE TRANSFER AGENT
6.01 The Fund shall, upon request, on behalf of the Shares promptly furnish to the Transfer Agent the following:
(a) a certified copy of the resolution of the Board of Trustees of the Fund authorizing the appointment of the Transfer Agent and the execution and delivery of this Agreement; and
(b) a copy of the Agreement and Declaration of Trust and Bylaws of the Fund and all amendments thereto.
6.02 The Transfer Agent shall keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable. To the extent required by Section 31 of the Investment Company Act of 1940, as amended, and the Rules thereunder, the Transfer Agent agrees that all such records prepared or maintained by the Transfer Agent relating to the services to be performed by the Transfer Agent hereunder are the property of the Fund and will be preserved, maintained and made available in accordance with such Section and Rules, and will be surrendered promptly to the Fund on and in accordance with its request.
6.03 The Transfer Agent and the Fund agree that all books, records, information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law.
6.04 In case of any requests or demands for the inspection of the Shareholder records of the Fund, the Transfer Agent will endeavor to notify the Fund and to secure instructions from an authorized officer of the Fund as to such inspection. The Transfer Agent reserves the right, however, to exhibit the Shareholder records to any person whenever it is advised by its counsel that it may be held liable for the failure to exhibit the Shareholder records to such person.
ARTICLE 7
TERMINATION OF AGREEMENT
7.01 This Agreement may be terminated by either party upon sixty (60) days written notice to the other.
7.02 Should the Fund exercise its right to terminate this Agreement, all out-of-pocket expenses associated with the movement of records and material will be borne by the Fund on behalf of the Shares. Additionally, the Transfer Agent reserves the right to charge for any other reasonable expenses associated with such termination and/or a charge equivalent to the average of three (3) months' fees.
ARTICLE 8
ADDITIONAL FUNDS
8.01 In the event that the Fund establishes one or more series of shares in addition to the Shares with respect to which it desires to have the Transfer Agent render services as transfer agent under the terms hereof, it shall so notify the Transfer Agent in writing, and if the Transfer Agent agrees in writing to provide such services, such series of shares shall become a portfolio hereunder.
ARTICLE 9
ASSIGNMENT
9.01 Except as provided in Section 9.03 below, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the written consent of the other party.
9.02 This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns.
9.03 The Transfer Agent may, without further consent on the part of the Fund, subcontract for the performance hereof with any entity which is duly registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of 1934 as amended ("Section 17A(c)(1)"); provided, however, that the Transfer Agent shall be as fully responsible to the Fund for the acts and omissions of any subcontractor as it is for its own acts and omissions.
ARTICLE 10
AMENDMENT
10.01 This Agreement may be amended or modified by a written agreement executed by both parties and authorized or approved by a resolution of the Board of Trustees of the Fund.
ARTICLE 11
TEXAS LAW TO APPLY
11.01 This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of Texas.
ARTICLE 12
MERGER OF AGREEMENT
12.01 This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written.
ARTICLE 13
COUNTERPARTS
13.01 This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written.
AIM VARIABLE INSURANCE FUNDS A I M FUND SERVICES, INC.
By: /s/ CAROL F. RELIHAN By: /s/ TONY D. GREEN
-------------------------------- ------------------------------
Title: Senior Vice President Title: President
----------------------------- ---------------------------
ATTEST: ATTEST:
By: /s/ NANCY L. MARTIN By: /s/ CAROL F. RELIHAN
-------------------------------- ------------------------------
Title: Assitant Secretary Title: Vice President
----------------------------- ---------------------------
|
SCHEDULE A
1. Transaction Fees
For performance by the Transfer Agent pursuant to this Agreement, the Fund agrees on behalf of the Shares to pay the Transfer Agent a fee equal to:
$2.00 per trade, to be billed monthly in arrears.
2. Out-Of-Pocket Expenses
The Fund shall reimburse the Transfer Agent monthly for applicable out-of-pocket expenses, including, but not limited to the following items:
o Microfiche/microfilm production & equipment
o Magnetic media tapes and freight
o Printing costs, including, without limitation, certificates, envelopes, checks, stationery, confirmations and statements
o Postage (bulk, pre-sort, ZIP+4, bar coding, first class) direct pass through to the Fund
o Due diligence mailings
o Telephone and telecommunication costs, including all lease, maintenance and line costs
o Ad hoc reports
o Proxy solicitations, mailings and tabulations
o Daily & Distribution advice mailings
o Shipping, Certified and Overnight mail and insurance
o Year-end form production and mailings
o Terminals, communication lines, printers and other equipment and any expenses incurred in connection with such terminals and lines
o Duplicating services
o Courier services
o Banking charges
o Rendering fees as billed
o Federal Reserve charges for check clearance
o Record retention, retrieval and destruction costs, including, but not limited to exit fees charged by third party record keeping vendors
o Third party audit reviews
o All client specific Systems enhancements will be at the Funds' cost.
o Certificate Insurance
o Such other miscellaneous expenses reasonably incurred by the Transfer Agent in performing its duties and responsibilities under this Agreement
o Check writing fee of $.75 per check redemption
The Fund agrees that postage and mailing expenses will be paid on the day of or prior to mailing. In addition, the Fund will promptly reimburse the Transfer Agent for any other unscheduled expenses incurred by the Transfer Agent whenever the Fund and the Transfer Agent mutually agree that such expenses are not otherwise properly borne by the Transfer Agent as part of its duties and obligations under the Agreement.
EXHIBIT h(13)(d)
AMENDMENT NO. 3
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 18, 1996, as amended, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, and Merrill Lynch Life Insurance Company, an Arkansas life insurance company, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS SEPARATE ACCOUNTS UTILIZING THE FUNDS CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
----------------------------------- ------------------------------------- -----------------------------------------
AIM V.I. Capital Appreciation Fund Merrill Lynch Life Variable Annuity Merrill Lynch Retirement Plus
AIM V.I. International Equity Fund Separate Account A Merrill Lynch Investor Life
AIM V.I. Value Fund
Merrill Lynch Variable Life Separate Merrill Lynch Investor Life Plus
Account
Merrill Lynch Estate Investor I
Merrill Lynch Life Variable Life Merrill Lynch Estate Investor II
Separate Account II Prime Plan V, VI, 7
Prime Plan Investor
Merrill Lynch Retirement Power
Merrill Lynch Legacy Power
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: February 16, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
----------------------------- --------------------------------
Assistant Secretary President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ MICHAEL J. CEMO
----------------------------- --------------------------------
Assistant Secretary President
|
(SEAL)
MERRILL LYNCH LIFE INSURANCE COMPANY
Attest: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
----------------------------- --------------------------------
Assistant Secretary Sr., Vice President
|
(SEAL)
EXHIBIT h(13)(e)
AMENDMENT NO. 4
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 18, 1996, as amended, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, and Merrill Lynch Life Insurance Company, an Arkansas life insurance company, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
--------------------------------------------------------------------------------------------------------------------------------
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE
CONTRACTS UTILIZING THE FUNDS SEPARATE ACCOUNTS
--------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund Merrill Lynch Life Variable Annuity Merrill Lynch Retirement Plus
AIM V.I. International Equity Fund Separate Account A Merrill Lynch Investor Life
AIM V.I. Value Fund Merrill Lynch Investor Life Plus
Merrill Lynch Variable Life Separate Merrill Lynch Estate Investor I
Account Merrill Lynch Estate Investor II
Prime Plans I, II, III, IV, V, VI, 7
Merrill Lynch Life Variable Life Prime Plan Investor
Separate Account II Directed Life, Directed Life 2
Merrill Lynch Retirement Power
Merrill Lynch Legacy Power
--------------------------------------------------------------------------------------------------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective as of Date: May 1, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ CAROL F. RELIHAN
------------------------------ -------------------------------------
Assistant Secretary Senior Vice President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ MICHAEL J. CERO
------------------------------ -------------------------------------
Assistant Secretary President
(SEAL)
MERRILL LYNCH LIFE INSURANCE COMPANY
Attest: /s/ ILLEGIBLE By: /s/ ILLEGIBLE
------------------------------ -------------------------------------
Assistant Secretary President
(SEAL)
|
EXHIBIT h(13)(f)
AMENDMENT NO. 5
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 18, 1996, as amended, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, and Merrill Lynch Life Insurance Company, an Arkansas life insurance company, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS SEPARATE ACCOUNTS UTILIZING THE FUNDS CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
----------------------------------- ------------------------------------- -----------------------------------------
SERIES I SHARES OF: Merrill Lynch Life Variable Annuity Merrill Lynch Retirement Plus
Separate Account A Merrill Lynch Investor Life
AIM V.I. Capital Appreciation Fund Merrill Lynch Investor Life Plus
AIM V.I. International Equity Fund Merrill Lynch Variable Life Separate Merrill Lynch Estate Investor I
AIM V.I. Value Fund Account Merrill Lynch Estate Investor II
Prime Plans I, II, III, IV, V, VI, 7
Merrill Lynch Life Variable Life Prime Plan Investor
Separate Account II Directed Life, Directed Life 2
Merrill Lynch Retirement Power
Merrill Lynch Legacy Power
Merrill Lynch Retirement Optimizer
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective as of October 5, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ CAROL F. RELIHAN
------------------------------- --------------------------------
Assistant Secretary Senior Vice President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ MICHAEL J. CEMO
------------------------------- --------------------------------
Assistant Secretary President
(SEAL)
MERRILL LYNCH LIFE INSURANCE COMPANY
Attest: /s/ ILLEGIBLE By: /s/ [ILLEGIBLE]
------------------------------- --------------------------------
Assistant Secretary President
(SEAL)
|
EXHIBIT h(14)(d)
AMENDMENT NO. 3
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 18, 1996, as amended, by and among AIM Variable Insurance Funds, a Delaware trust corporation, A I M Distributors, Inc., a Delaware corporation, and ML Life Insurance Company of New York, a New York life insurance company, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS SEPARATE ACCOUNTS UTILIZING THE FUNDS CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
----------------------------------- ------------------------------------- -----------------------------------------
AIM V.I. Capital Appreciation Fund Merrill Lynch Life Variable Annuity Merrill Lynch Retirement Plus
AIM V.I. International Equity Fund Separate Account A Merrill Lynch Investor Life
AIM V.I. Value Fund
Merrill Lynch Variable Life Separate Merrill Lynch Investor Life Plus
Account
Merrill Lynch Estate Investor I
Merrill Lynch Life Variable Life Merrill Lynch Estate Investor II
Separate Account II Prime Plan V, VI, 7
Prime Plan Investor
Merrill Lynch Retirement Power
Merrill Lynch Legacy Power
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: February 16, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
------------------------------- ---------------------------------
Assistant Secretary President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ MICHAEL J. CEMO
------------------------------- ---------------------------------
Assistant Secretary President
|
(SEAL)
ML LIFE INSURANCE COMPANY OF NEW YORK
Attest: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
------------------------------- ---------------------------------
Assistant Secretary Sr., Vice President
|
(SEAL)
EXHIBIT h(14)(e)
AMENDMENT NO. 4
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 18, 1996, as amended, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, and ML Life Insurance Company of New York, a New York life insurance company, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
--------------------------------------------------------------------------------------------------------------------------------
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE
CONTRACTS UTILIZING THE FUNDS SEPARATE ACCOUNTS
--------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund ML of New York Variable Annuity Merrill Lynch Retirement Plus
AIM V.I. International Equity Fund Separate Account A Merrill Lynch Investor Life
AIM V.I. Value Fund Merrill Lynch Investor Life Plus
ML of New York Variable Life Separate Merrill Lynch Estate Investor I
Account II Merrill Lynch Estate Investor II
Prime Plans I, II, III, IV, V, VI, 7
ML of New York Variable Life Separate Prime Plan Investor
Account Directed Life, Directed Life 2
Merrill Lynch Retirement Power
Merrill Lynch Legacy Power
--------------------------------------------------------------------------------------------------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective as of Date: May 1, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ CAROL F. RELIHAN
---------------------------------- -------------------------------------
Assistant Secretary Senior Vice President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ MICHAEL J. CERO
---------------------------------- -------------------------------------
Assistant Secretary President
(SEAL)
ML LIFE INSURANCE COMPANY OF NEW YORK
Attest: /s/ ILLEGIBLE By: /s/ ILLEGIBLE
---------------------------------- -------------------------------------
Assistant Secretary President
(SEAL)
|
EXHIBIT h(14)(f)
AMENDMENT NO. 5
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 18, 1996, as amended, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, and ML Life Insurance Company of New York, a New York life insurance company, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
--------------------------------------------------------------------------------------------------------------------------------
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE
CONTRACTS UTILIZING THE FUNDS SEPARATE ACCOUNTS
--------------------------------------------------------------------------------------------------------------------------------
SERIES I SHARES OF: ML of New York Variable Annuity Merrill Lynch Retirement Plus
AIM V.I. Capital Appreciation Fund Separate Account A Merrill Lynch Investor Life
AIM V.I. International Equity Fund Merrill Lynch Investor Life Plus
AIM V.I. Value Fund ML of New York Variable Life Separate Merrill Lynch Estate Investor I
Account II Merrill Lynch Estate Investor II
Prime Plans I, II, III, IV, V, VI, 7
ML of New York Life Variable Life Prime Plan Investor
Separate Account Directed Life, Directed Life 2
Merrill Lynch Retirement Power
Merrill Lynch Legacy Power
Merrill Lynch Retirement Optimizer
--------------------------------------------------------------------------------------------------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective as of October 5, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ CAROL F. RELIHAN
---------------------------------- -----------------------------------------
Assistant Secretary Senior Vice President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ MICHAEL J. CERO
---------------------------------- -----------------------------------------
Assistant Secretary President
(SEAL)
ML LIFE INSURANCE COMPANY OF NEW YORK
Attest: /s/ NOT LEGIBLE By: /s/ NOT LEGIBLE
---------------------------------- -----------------------------------------
Assistant Secretary President
(SEAL)
|
EXHIBIT h(22)g
AMENDMENT NO. 6
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 3, 1997, by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.), a Delaware trust, Security Life of Denver Insurance Company, a Colorado life insurance company and ING America Equities, Inc., a Colorado corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE SEPARATE
POLICIES UTILIZING THE FUNDS ACCOUNTS
-------------------------------------------- ---------------------------- ----------------------------------------------------
AIM V.I. Government Securities Fund Separate Account A1 o THE EXCHEQUER VARIABLE ANNUITY
-------------------------------------------- ---------------------------- ----------------------------------------------------
AIM V.I. Capital Appreciation Fund Separate Account L1 o FIRST LINE VARIABLE UNIVERSAL LIFE
AIM V.I. Government Securities Fund o FIRST LINE II VARIABLE UNIVERSAL LIFE
o STRATEGIC ADVANTAGE VARIABLE
UNIVERSAL LIFE
o STRATEGIC ADVANTAGE II VARIABLE
UNIVERSAL LIFE
o VARIABLE SURVIVORSHIP UNIVERSAL LIFE
o CORPORATE BENEFITS VARIABLE UNIVERSAL LIFE
o ESTATE DESIGNER VARIABLE UNIVERSAL LIFE
o STRATEGIC BENEFIT VARIABLE UNIVERSAL LIFE
o ASSET PORTFOLIO MANAGER VARIABLE UNIVERSAL
LIFE
o STRATEGIC INVESTOR VARIABLE UNIVERSAL LIFE
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
--------------------------------- ------------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
SECURITY LIFE OF DENVER INSURANCE COMPANY
Attest: /s/ RITA J. KUMMER By: /s/ LAWRENCE D. TAYLOR
--------------------------- ------------------------------------
Name: Rita J. Kummer Name: Lawrence D. Taylor
-----------------------------
Title: Assistant Secretary Title: Senior Vice President
-------------------------
|
(SEAL)
ING AMERICA EQUITIES, INC.
Attest: /s/ RITA J. KUMMER By: /s/ PAMELA S. ANSON
---------------------------- ------------------------------------
Name: Rita J. Kummer Name: Pamela S. Anson
------------------------------
Title: Assistant Secretary Title: Vice President
--------------------------
|
(SEAL)
EXHIBIT h(23)(d)
AMENDMENT NO. 3
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 31, 1997, by and among AIM Variable Insurance Funds, a Delaware Trust, A I M Distributors, Inc., a Delaware corporation, MetLife Investors Insurance Company (formerly Cova Financial Services Life Insurance Company), a Missouri life insurance company and Cova Life Sales Company, Inc., is hereby amended as follows:
It is agreed that effective March 22, 2001, MetLife Investors Distribution Company will assume the duties and responsibilities as principal underwriter of the contracts and become a party to this agreement in place of Cova Life Sales Company.
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE
POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
------------------------- ------------------- -----------------------
AIM V.I. Capital Appreciation Fund MetLife Investors Variable Annuity o CONTRACT FORM #XL-407
AIM V.I. International Equity Fund Account One o CONTRACT FORM #XL-617
AIM V.I. Value Fund MetLife Investors Variable Life Account o CONTRACT FORM #CL-407
One o CONTRACT FORM #CL-617
o CONTRACT FORM #CL-1020
o CONTRACT FORM #CL-4155
o CONTRACT FORM #CLP001
o CONTRACT FORM #CLP002
o CONTRACT FORM #7010
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: February 12, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
------------------------------ ------------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ MICHAEL J. CEMO
------------------------------ ------------------------------
Name: P. Michelle Grace Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
(SEAL)
METLIFE INVESTORS INSURANCE COMPANY
Attest: /s/ CHERYL J. FINNEY By: /s/ RICHARD C. PEARSON
--------------------------------- -------------------------------
Name: Cheryl J. Finney Name: Richard C. Pearson
--------------------------------- -----------------------------
Title: Senior Vice President Title: Executive Vice President
--------------------------------- ----------------------------
|
(SEAL)
COVA LIFE SALES COMPANY, INC.
Attest: /s/ CHERYL J. FINNEY By: /s/ RICHARD C. PEARSON
--------------------------------- -------------------------------
Name: Cheryl J. Finney Name: Richard C. Pearson
--------------------------------- -----------------------------
Title: Senior Vice President Title: Executive Vice President
--------------------------------- ----------------------------
|
(SEAL)
METLIFE INVESTORS DISTRIBUTION
COMPANY
Attest: /s/ CHERYL J. FINNEY By: /s/ RICHARD C. PEARSON
--------------------------------- -------------------------------
Name: Cheryl J. Finney Name: Richard C. Pearson
--------------------------------- -----------------------------
Title: Senior Vice President Title: Executive Vice President
--------------------------------- ----------------------------
|
(SEAL)
EXHIBIT h(24)(c)
AMENDMENT NO. 2
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 31, 1997, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, MetLife Investors Insurance Company of California (formerly Cova Financial Life Insurance Company), a California life insurance company and Cova Life Sales Company, Inc., a California corporation, is hereby amended as follows:
It is agreed that effective March 22, 2001 MetLife Investors Distribution Company will assume the duties and responsibilities as principal underwriter of the contracts and become a party to this agreement in place of Cova Life Sales Company.
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE
POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
------------------------- ------------------- -----------------------
AIM V.I. Capital Appreciation Fund MetLife Investors Variable Annuity o CONTRACT FORM #XLCC-648
AIM V.I. International Equity Fund Account Five o CONTRACT FORM #XLCC-833
AIM V.I. Value Fund MetLife Investors Variable Life Account o CONTRACT FORM #CC-1075
Five o CONTRACT FORM #CC-4181
o CONTRACT FORM #CC-P00104
o CONTRACT FORM #CC-P00204
o CONTRACT FORM #9010
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: February 12, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
------------------------------ ------------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ MICHAEL J. CEMO
------------------------------ ------------------------------
Name: P. Michelle Grace Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
(SEAL)
METLIFE INVESTORS INSURANCE COMPANY
OF CALIFORNIA
Attest: /s/ CHERYL J. FINNEY By: /s/ RICHARD C. PEARSON
--------------------------------- -------------------------------
Name: Cheryl J. Finney Name: Richard C. Pearson
--------------------------------- -----------------------------
Title: Senior Vice President Title: Executive Vice President
--------------------------------- ----------------------------
|
(SEAL)
COVA LIFE SALES COMPANY, INC.
Attest: /s/ CHERYL J. FINNEY By: /s/ RICHARD C. PEARSON
--------------------------------- -------------------------------
Name: Cheryl J. Finney Name: Richard C. Pearson
--------------------------------- -----------------------------
Title: Senior Vice President Title: Executive Vice President
--------------------------------- ----------------------------
|
(SEAL)
METLIFE INVESTORS DISTRIBUTION
COMPANY
Attest: /s/ CHERYL J. FINNEY By: /s/ RICHARD C. PEARSON
--------------------------------- -------------------------------
Name: Cheryl J. Finney Name: Richard C. Pearson
--------------------------------- -----------------------------
Title: Senior Vice President Title: Executive Vice President
--------------------------------- ----------------------------
|
(SEAL)
EXHIBIT h(25)(e)
AMENDMENT NO. 4
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated February 2, 1998, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, The Guardian Insurance & Annuity Company, Inc., a Delaware life insurance company and Guardian Investor Services Corporation, a New York corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE
POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
AIM V.I. Aggressive Growth Fund Separate Account K - Park Avenue Life
AIM V.I. Capital Appreciation Fund - Park Avenue Life - Millennium
AIM V.I. Global Utilities Fund Series
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Value Fund Separate Account M - Park Avenue VUL
Separate Account E - The Guardian Investor Retirement
Asset Manager Variable Annuity
Contract
Separate Account N - Park Avenue VUL - Millennium
Series
- Park Avenue SVUL - Millennium
Series
Separate Account D - Value Guard II - Individual and
Group Variable Annuity Contract
Separate Account A - Guardian Investor Individual
Variable Annuity Contract
Separate Account F - Guardian Variable Annuity Contract
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: December 1, 2000
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
-------------------------- --------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest:/s/Nancy L. Martin By: /s/ Michael J. Cemo
----------------------- ---------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
(SEAL)
THE GUARDIAN INSURANCE & ANNUITY
COMPANY, INC.
Attest: /s/ Richard T. Potter Jr. By: /s/ Bruce C. Long
-------------------------- ---------------------------
Name: Richard T. Potter Jr. Name: Bruce C. Long
--------------------------- Title: Executive Vice President
Title: Vice President and Counsel Equity Products
---------------------------
|
(SEAL)
GUARDIAN INVESTOR SERVICES
CORPORATION
Attest: /s/ Richard T. Potter Jr. By: /s/ Bruce C. Long
--------------------------- ---------------------------
Name: Richard T. Potter Jr. Name: Bruce C. Long
--------------------------- Title: President
Title: Vice President and Counsel
---------------------------
|
(SEAL)
EXHIBIT h(26)(e)
[AIM LOGO APPEARS HERE]
--Registered Trademark--
P.O. Box 4333
Houston, TX 77210-4333
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
713-626-1919
A I M Distributors, Inc.
April 27, 2000
VIA FEDERAL EXPRESS
Ted Shea
Sun Life Assurance Company of Canada (U.S.),
Clarendon Insurance Agency, Inc.
One Copley Place, Suite 200
Boston, MA 02116
Re: Notice of Assignment and Consent
Dear Mr. Shea:
Sun Life Assurance Company of Canada (U.S.), Clarendon Insurance Agency, Inc. and AIM Variable Insurance Funds, Inc. are parties to a Participation Agreement dated February 17, 1998 (the "Agreement").
On May 1, 2000, AIM Variable Insurance Funds, Inc., a Maryland corporation, will be reorganized into AIM Variable Insurance Funds, a Delaware business trust. AIM Variable Insurance Funds will succeed to all the rights and obligations of AIM Variable Insurance Funds, Inc. This reorganization will result in a technical change of control of AIM Variable Insurance Funds, Inc. and thus an assignment of the Agreement.
Such assignment requires the consent of the parties. Accordingly, AIM Variable Insurance Funds, Inc. requests that you PROVIDE YOUR CONSENT TO THE ASSIGNMENT OF THE AGREEMENT AS DESCRIBED ABOVE BY SIGNING WHERE INDICATED BELOW AND RETURNING ONE MANUALLY-EXECUTED COPY OF THIS LETTER TO LAURIE HOLLIS NO LATER THAN MAY 8, 2000. THIS LETTER SHALL CONSTITUTE AN AMENDMENT TO THE AGREEMENT EFFECTIVE MAY 1, 2000.
[AIM FUNDS LOGO APPEARS HERE]
--Registered Trademark--
Thank you for your prompt attention and assistance in this matter. If you have any questions, please call Laurie Hollis at 713-214-1785.
Sincerely,
/s/ Carol F. Relihan --------------------- Carol F. Relihan Senior Vice President |
Sun Life Assurance Company of Canada(U.S.)
ACKNOWLEDGED AND AGREED:
By: /s/ Ted Shea By: /s/ Norton A. Goss II
--------------------- ---------------------
Name: Ted Shea Name: Norton A. Goss II
--------------------- ---------------------
Title: AVP & Senior Counsel Title: AVP Compliance
--------------------- ---------------------
Date: Date:
--------------------- ---------------------
|
Clarendon Insurance Agency, Inc.
ACKNOWLEDGED AND AGREED:
By: /s/ Norton A. Goss II By: /s/ [Illegible]
--------------------- ---------------------
Name: Norton A. Goss II Name: /s/ [Illegible]
--------------------- ---------------------
Title: AVP Compliance Title: AVP & Senior Counsel
--------------------- ---------------------
Date: Date:
--------------------- ---------------------
|
Member of the AMVESCAP Group
EXHIBIT h(26)(f)
AMENDMENT NO. 5
PARTICIPATION AGREEMENT
The Participation Agreement, made and entered into as of the 17th day of February, 1998, and amended on December 11, 1998, March 15, 1999, April 17, 2000 and May 1, 2000, (the "Agreement"), by and among AIM Variable Insurance Funds, a Delaware business trust, A I M Distributors, Inc., a Delaware corporation, Sun Life Assurance Company of Canada (U.S.), a Delaware life insurance company, and Clarendon Insurance Agency, Inc., a Massachusetts corporation, is hereby amended as follows:
1. Schedule A of the Agreement is deleted in its entirety and replaced with the following:
SCHEDULE A
SEPARATE
ACCOUNTS
FUNDS AVAILABLE UNDER UTILIZING THE CONTRACTS FUNDED BY THE
THE POLICIES FUNDS SEPARATE ACCOUNTS
--------------------- ------------- -----------------------
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) o FUTURITY VARIABLE AND FIXED ANNUITY
AIM V.I. Growth Fund Variable Account F CONTRACT
AIM V.I. Growth and Income Fund o FUTURITY II VARIABLE AND FIXED ANNUITY
AIM V.I. International Equity Fund CONTRACT
o FUTURITY III VARIABLE AND FIXED ANNUITY
CONTRACT
o FUTURITY FOCUS VARIABLE AND FIXED ANNUITY
CONTRACT
o FUTURITY FOCUS II VARIABLE AND FIXED
ANNUITY CONTRACT
o FUTURITY ACCOLADE VARIABLE AND FIXED
ANNUITY CONTRACT
o FUTURITY SELECT FOUR VARIABLE AND FIXED
ANNUITY CONTRACT
AIM V.I. Capital Appreciation Fund Sun Life of Canada U.S. o FUTURITY VARIABLE UNIVERSAL LIFE
AIM V.I. Growth Fund Variable Account I INSURANCE POLICIES
AIM V.I. Growth and Income Fund o FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL
AIM V.I. International Equity Fund LIFE INSURANCE POLICIES (1999 Version)
o FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL
LIFE INSURANCE POLICIES (2000 Version)
o FUTURITY PROTECTOR VARIABLE UNIVERSAL
LIFE INSURANCE POLICIES
o FUTURITY ACCUMULATOR VARIABLE UNIVERSAL
LIFE INSURANCE POLICIES
|
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) o SUN LIFE CORPORATE VARIABLE UNIVERSAL
AIM V.I. Value Fund Variable Account G LIFE INSURANCE POLICIES
AIM V.I. Value Fund Sun Life of Canada (U.S.) o FUTURITY II VARIABLE AND FIXED ANNUITY
Variable Account F CONTRACT
o FUTURITY III VARIABLE AND FIXED ANNUITY
CONTRACT
o FUTURITY FOCUS II VARIABLE AND FIXED
ANNUITY CONTRACT
o FUTURITY ACCOLADE VARIABLE AND FIXED
ANNUITY CONTRACT
o FUTURITY SELECT FOUR VARIABLE AND FIXED
ANNUITY CONTRACT
AIM V.I. Value Fund Sun Life of Canada (U.S.) o FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL
Variable Account I LIFE INSURANCE POLICIES (2000 Version)
o FUTURITY PROTECTOR VARIABLE UNIVERSAL
LIFE INSURANCE POLICIES
o FUTURITY ACCUMULATOR VARIABLE UNIVERSAL
LIFE INSURANCE POLICIES
|
2. Schedule B of the Agreement is deleted in its entirety and replaced with the following:
SCHEDULE B
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Fund
AIM V.I. Value Fund
[AIM FUNDS LOGO APPEARS HERE]
--Registered Trademark--
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: May 1, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
----------------------------- --------------------------------
Name: P. Michelle Grace Name: Robert H. Graham
-----------------------------
Title: Assistant Secretary Title: President
-----------------------------
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
----------------------------- --------------------------------
Name: P. Michelle Grace Name: Robert H. Graham
-----------------------------
Title: Assistant Secretary Title: Sr. Vice President
-----------------------------
|
(SEAL)
SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
Attest: /s/ MAURA MURPHY By: /s/ RONALD J. FERNANDES
----------------------------- --------------------------------
Name: Maura Murphy Name: Ronald J. Fernandes
-----------------------------
Title: Senior Counsel Title: Vice President, Retirement
----------------------------- Products & Services
(SEAL)
By: /s/ EDWARD M. SHEA
--------------------------------
Name: Edward M. Shea
Title: Assistant Vice President and
Senior Counsel
CLARENDON INSURANCE AGENCY, INC.
Attest: /s/ MAURA MURPHY By: /s/ NORTON A. GOSS, II
----------------------------- --------------------------------
Name: Maura Murphy Name: Norton A. Goss, II
-----------------------------
Title: Senior Counsel Title: Assistant Vice President
-----------------------------
(SEAL)
By: /s/ GEORGE E. MADEN
--------------------------------
Name: George E. Maden
Title: Secretary
|
EXHIBIT h(26)(g)
AMENDMENT NO. 6
PARTICIPATION AGREEMENT
The Participation Agreement, made and entered into as of the 17th day of February, 1998, and amended on December 11, 1998, March 15, 1999, April 17, 2000, May 1, 2000, and May 1, 2001 (the "Agreement"), by and among AIM Variable Insurance Funds, a Delaware business trust, A I M Distributors, Inc., a Delaware corporation, Sun Life Assurance Company of Canada (U.S.), a Delaware life insurance company, and Clarendon Insurance Agency, Inc., a Massachusetts corporation, is hereby amended as follows:
Schedule A of the Agreement is deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE SEPARATE
POLICIES UTILIZING THE FUNDS ACCOUNTS
------------------------- ------------------- --------------------------------
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) o FUTURITY VARIABLE AND FIXED ANNUITY
AIM V.I. Growth Fund Variable Account F CONTRACT
AIM V.I. Growth and Income Fund o FUTURITY II VARIABLE AND FIXED ANNUITY
AIM V.I. International Equity Fund CONTRACT
o FUTURITY III VARIABLE AND FIXED ANNUITY
CONTRACT
o FUTURITY FOCUS VARIABLE AND FIXED ANNUITY
CONTRACT
o FUTURITY FOCUS II VARIABLE AND FIXED
ANNUITY CONTRACT
o FUTURITY ACCOLADE VARIABLE AND FIXED
ANNUITY CONTRACT
o FUTURITY SELECT FOUR VARIABLE AND FIXED
ANNUITY CONTRACT
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada U.S. o FUTURITY VARIABLE UNIVERSAL LIFE
AIM V.I. Growth Fund Variable Account I INSURANCE POLICIES
AIM V.I. Growth and Income Fund o FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL
AIM V.I. International Equity Fund LIFE INSURANCE POLICIES
o FUTURITY SURVIVORSHIP II VARIABLE
UNIVERSAL LIFE INSURANCE POLICIES
o FUTURITY PROTECTOR VARIABLE UNIVERSAL
LIFE INSURANCE POLICIES
FUTURITY ACCUMULATOR VARIABLE UNIVERSAL LIFE
INSURANCE POLICIES
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) o SUN LIFE CORPORATE VARIABLE UNIVERSAL
AIM V.I. Value Fund Variable Account G LIFE INSURANCE POLICIES
|
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) o FUTURITY CORPORATE VARIABLE UNIVERSAL
AIM V.I. Growth Fund Variable Account G LIFE INSURANCE POLICIES
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
SERIES (I) SHARES
AIM V.I. Value Fund Sun Life of Canada (U.S.) o FUTURITY II VARIABLE AND FIXED ANNUITY
Variable Account F CONTRACT
o FUTURITY III VARIABLE AND FIXED ANNUITY
CONTRACT
o FUTURITY FOCUS II VARIABLE AND FIXED
ANNUITY CONTRACT
o FUTURITY ACCOLADE VARIABLE AND FIXED
ANNUITY CONTRACT
o FUTURITY SELECT FOUR VARIABLE AND FIXED
ANNUITY CONTRACT
SERIES (I) SHARES
AIM V.I. Value Fund Sun Life of Canada (U.S.) o FUTURITY SURVIVORSHIP II VARIABLE
Variable Account I UNIVERSAL LIFE INSURANCE POLICIES
o FUTURITY PROTECTOR VARIABLE UNIVERSAL
LIFE INSURANCE POLICIES
o FUTURITY ACCUMULATOR VARIABLE UNIVERSAL
LIFE INSURANCE POLICIES
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: September 1, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ CAROL F. RELIHAN
------------------------------ ------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ MICHAEL J. CEMO
------------------------------ ------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
2
|
SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
Attest: /s/ MAURA MURPHY By: /s/ RONALD J. FERNANDES
------------------------------ ---------------------------------
Name: Maura Murphy Name: Ronald J. Fernandes
------------------------------
Title: Senior Counsel Title: Vice President, Retirement
------------------------------ Products & Services
By: /s/ EDWARD M. SHEA
---------------------------------
Name: Edward M. Shea
Title: Assistant Vice President and
Senior Counsel
CLARENDON INSURANCE AGENCY, INC.
Attest: /s/ MAURA MURPHY By: /s/ NORTON A. GOSS, II
------------------------------ ---------------------------------
Name: Maura Murphy
------------------------------ Name: Norton A. Goss, II
Title: Senior Counsel
------------------------------ Title: Assistant Vice President
By: /s/ GEORGE E. MADEN
---------------------------------
Name: George E. Maden
Title: Secretary
|
EXHIBIT h(28)(c)
AMENDMENT NO. 2
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated April 21, 1998, by and among AIM Variable Insurance Funds, a Delaware trust, Keyport Life Insurance Company, a Rhode Island life insurance company and Keyport Financial Services Corp., is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE
POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
AIM V.I. Capital Appreciation Fund Variable Account A - BVA
AIM V.I. Growth Fund - DVA
AIM V.I. International Equity Fund
AIM V.I. Value Fund
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
-------------------------- -----------------------------
Name: Nancy L. Martin Name: Robert H. Graham
--------------------------- ----------------------------
Title: Assistant Secretary Title: President
--------------------------- --------------------------
(SEAL)
KEYPORT LIFE INSURANCE COMPANY
Attest: /s/ James J. Klopper By: /s/Brian P. Kane
-------------------------- -----------------------------
Name: James J. Klopper Name: Brian P. Kane
-------------------------- ---------------------------
Title: Secretary Title: Assistant Vice President
-------------------------- --------------------------
(SEAL)
KEYPORT FINANCIAL SERVICES CORP.
Attest: /s/ Donald A. Truman By: /s/ James J. Klopper
-------------------------- -----------------------------
Name: Donald A. Truman Name: James J. Klopper
-------------------------- ---------------------------
Title: Assistant Clerk Title: President
-------------------------- ---------------------------
|
(SEAL)
EXHIBIT h(29)(d)
AMENDMENT NO. 3
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated as of May 1, 1998, by and among AIM Variable Insurance Funds, Inc., a Maryland corporation, A I M Distributors, Inc., a Delaware corporation, PFL Life Insurance Company, an Iowa life insurance company, and AFSG Securities Corporation, a Pennsylvania corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS POLICIES FUNDED BY THE
POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
AIM V.I. Capital Appreciation Fund PFL Retirement Builder Variable PFL Life Insurance Company Policy Form No.
AIM V.I. Government Securities Fund Annuity Account AV288-101-95-796 (including successors
AIM V.I. Growth Fund forms, addenda and endorsements may vary by
AIM V.I. Growth & Income Fund Legacy Builder Variable Life state under marketing names: "Retirement
AIM V.I. International Equity Fund Separate Account Income Builder Variable Annuity", "Portfolio
AIM V.I. Value Fund Select Variable Annuity")
PFL Variable Life
Account A PFL Life Insurance Company Policy Form No.'s
VL20 & JL20 under the marketing name "Legacy
Builder II"
PFL Life Insurance Company Policy Form No.
WL851 136 58 699 under the marketing name
"Legacy Builder Plus"
PFL Life Insurance Company Policy Form No.
APUL0600 699 under the marketing name
"Variable Protector"
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: August 1, 1999
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
-------------------------------- ------------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
-------------------------------- ------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
PFL LIFE INSURANCE COMPANY
Attest: /s/ Frank A. Camp By: /s/ William L. Busler
-------------------------------- ------------------------------
Name: Frank A. Camp Name: William L. Busler
-------------------------------- ----------------------------
Title: Vice President Title: President
-------------------------------- ----------------------------
|
AFSG SECURITIES CORPORATION
Attest: /s/ Frank A. Camp By: /s/ Larry N. Norman
-------------------------------- ------------------------------
Name: Frank A. Camp Name: Larry N. Norman
-------------------------------- ------------------------------
Title: Secretary Title: President
-------------------------------- ------------------------------
|
EXHIBIT h(29)(e)
AMENDMENT NO. 4
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated May 1, 1998, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, PFL Life Insurance Company, an Iowa life insurance company and AFSG Securities Corporation, a Pennsylvania corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS POLICIES FUNDED BY THE
POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
AIM V.I. Capital Appreciation Fund PFL Retirement Builder Variable PFL Life Insurance Company Policy Form No.
AIM V.I. Dent Demographic Trends Fund Annuity Account AV288-101-95-796 (including successors
AIM V.I. Government Securities Fund forms, addenda and endorsements may vary
AIM V.I. Growth Fund Legacy Builder Variable Life by state under marketing names:
AIM V.I. Growth and Income Fund Separate Account "Retirement Income Builder Variable
AIM V.I. International Equity Fund Annuity," "Portfolio Select Variable
AIM V.I. Value Fund PFL Variable Life Annuity")
Account A
PFL Life Insurance Company Policy Form
PFL Corporate Account No.'s VL20 & JL20 under the marketing name
One (1940 Act Exclusion) "Legacy Builder II"
PFL Life Insurance Company Policy Form No.
WL851 136 58 699 under the marketing name
"Legacy Builder Plus"
PFL Life Insurance Company Policy Form No.
APUL0600 699 under the marketing name
"Variable Protector"
Advantage V, Variable Universal Life
Policy (1933 Act Exempt)
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/Robert H. Graham
----------------------------- -----------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ Robert H. Graham
----------------------------- -----------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: Sr. Vice President
|
(SEAL)
PFL LIFE INSURANCE COMPANY
Attest: /s/ Ronald L. Ziegler By: /s/ Larry N. Norman
----------------------------- -----------------------------
Name: Ronald L. Ziegler Name: Larry N. Norman
----------------------------- ---------------------------
Title: Vice President Title: President
----------------------------- ---------------------------
|
(SEAL)
AFSG SECURITIES CORPORATION
Attest: /s/ Frank A. Camp By: /s/ Larry N. Norman
----------------------------- -----------------------------
Name: Frank A. Camp Name: Larry N. Norman
----------------------------- ---------------------------
Title: Secretary Title: President
----------------------------- ---------------------------
|
(SEAL)
EXHIBIT h(29)(f)
AMENDMENT NO. 5
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated as of May 1, 1998, by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.), a Delaware trust; A I M Distributors, Inc., a Delaware corporation; Transamerica Life Insurance Company (formerly PFL Life Insurance Company), an Iowa life insurance company; and AFSG Securities Corporation, a Pennsylvania corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE SEPARATE ACCOUNTS POLICIES FUNDED
UNDER THE UTILIZING THE FUNDS BY THE
POLICIES SEPARATE ACCOUNTS
AIM V.I. Balanced Fund Retirement Builder Variable Annuity Transamerica Life Insurance Company
AIM V.I. Capital Appreciation Fund Account Policy Form No. AV288-101-95-796
AIM V.I. Dent Demographic Trends Fund (formerly PFL Retirement Builder (including successors forms, addenda and
AIM V.I. Government Securities Fund Variable Annuity Account) endorsements may vary by state under
AIM V.I. Growth Fund marketing names: "Retirement Income
AIM V.I. Growth and Income Fund Legacy Builder Variable Life Builder II Variable Annuity," "Portfolio
AIM V.I. International Equity Fund Separate Account Select Variable Annuity" and "Premier
AIM V.I. Value Fund Asset Builder Variable Annuity")
PFL Variable Life Account A
Transamerica Life Insurance Company
Separate Account VA A Policy Form No. WL851 136 58 699 under
(formerly PFL Life Variable Annuity the marketing name "Legacy Builder Plus"
Account A)
Transamerica Life Insurance Company
Separate Account VA F Policy Form No. APUL0600 699 under the
marketing name "Variable Protector"
Separate Account VA J
Transamerica Life Insurance Company
PFL Corporate Account One Policy Form No. AV337 101 100397 under
(1940 Act Exclusion) the marketing name "The Atlas Portfolio
Builder Variable Annuity"
Transamerica Life Insurance Company
Policy Form No. AVI 200 1 0100 under the
marketing name "Immediate Income Builder
II"
Advantage V, Variable Universal Life
Policy (1933 Act Exempt)
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective date: July 1, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
----------------------------- -----------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
----------------------------- -----------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
TRANSAMERICA LIFE INSURANCE COMPANY
Attest: /s/ Frank A. Camp By: /s/ Larry N. Norman
----------------------------- -----------------------------
Name: Frank A. Camp Name: Larry N. Norman
Title: Vice President & Division Title: President
General Counsel
AFSG SECURITIES CORPORATION
Attest: /s/ Frank A. Camp By: /s/ Larry N. Norman
----------------------------- -----------------------------
Name: Frank A. Camp Name: Larry N. Norman
Title: Secretary Title: President
|
EXHIBIT h(29)(g)
AMENDMENT NO. 6
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated as of May 1, 1998, by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.), a Delaware trust; A I M Distributors, Inc., a Delaware corporation; Transamerica Life Insurance Company (formerly PFL Life Insurance Company), an Iowa life insurance company; and AFSG Securities Corporation, a Pennsylvania corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
---------------------------------------------------------------------------------------------------------------------------------
FUNDS AVAILABLE SEPARATE ACCOUNTS POLICIES FUNDED
UNDER THE UTILIZING THE FUNDS BY THE
POLICIES SEPARATE ACCOUNTS
---------------------------------------------------------------------------------------------------------------------------------
SERIES I SHARES Retirement Builder Variable Annuity Transamerica Life Insurance Company
AIM V.I. Balanced Fund Account Policy Form No. AV288-101-95-796
AIM V.I. Capital Appreciation Fund (formerly PFL Retirement Builder (including successors forms, addenda and
AIM V.I. Dent Demographic Trends Fund Variable Annuity Account) endorsements may vary by state under
AIM V.I. Government Securities Fund marketing names: "Retirement Income
AIM V.I. Growth Fund Legacy Builder Variable Life Builder II Variable Annuity" and
AIM V.I. Growth and Income Fund Separate Account "Portfolio Select Variable Annuity")
AIM V.I. International Equity Fund
AIM V.I. Value Fund PFL Variable Life Account A Transamerica Life Insurance Company
Policy Form No. WL851 136 58 699 under
Separate Account VA A the marketing name "Legacy Builder Plus"
(formerly PFL Life Variable Annuity
Account A) Transamerica Life Insurance Company
Policy Form No. APUL0600 699 under the
PFL Corporate Account One marketing name "Variable Protector"
(1940 Act Exclusion)
Transamerica Life Insurance Company
Policy Form No. AV337 101 100397 under
the marketing name "The Atlas Portfolio
Builder Variable Annuity"
Advantage V, Variable Universal Life
Policy (1933 Act Exempt)
---------------------------------------------------------------------------------------------------------------------------------
SERIES II Transamerica Life Insurance Company
AIM V.I. Balanced Fund Separate Account V A F Policy Form No. AVI 200 1 0100 under the
AIM V.I. Blue Chip Fund marketing name "Immediate Income Builder
AIM V.I. Capital Appreciation Fund Separate Account V A J II"
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Government Securities Fund Separate Account V A I Transamerica Life Insurance Company
AIM V.I. Growth and Income Fund Policy Form No. AV288 101 95 796 under
AIM V.I. Value Fund the marketing name "Premier Asset
Builder Variable Annuity"
Transamerica Life Insurance Company
Policy Form No. AV288 101 95 796 under
the marketing name "Principal- Plus
Variable Annuity"
---------------------------------------------------------------------------------------------------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective date: August 15, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ CAROL F. RELIHAN
----------------------------------- --------------------------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ MICHAEL J. CEMO
------------------------------------ ------------------------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
TRANSAMERICA LIFE INSURANCE COMPANY
Attest: /s/ FRANK A. CAMP By: /s/ LARRY N. NORMAN
------------------------------------ ------------------------------------------------
Name: Frank A. Camp Name: Larry N. Norman
Title: Vice President & Division Title: President
General Counsel
AFSG SECURITIES CORPORATION
Attest: /s/ FRANK A. CAMP By: /s/ LARRY N. NORMAN
----------------------------------- ------------------------------------------------
Name: Frank A. Camp Name: Larry N. Norman
Title: Secretary Title: President
|
EXHIBIT h(31)(e)
AMENDMENT NO. 4
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated June 1, 1998, by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.), a Delaware Trust, A I M Distributors, Inc., a Delaware Corporation, American General Life Insurance Company ("Life Company"), a Texas Life Insurance Company and American General Securities Incorporated ("AGSI"), and collectively (the "Parties") is hereby amended as follows. All capitalized terms not otherwise defined in this Amendment, shall have the same meaning as described in the Agreement.
WHEREAS, the parties desire to amend Schedule A of the Agreement to add the contracts of the Life Company relating to the Life Company's Platinum Investor III Flexible Premium Variable Life Insurance Policy, Form No. 00600, and Platinum Investor Survivor II Flexible Premium Variable Life Insurance Policy, Form No. 01206;
WHEREAS, American General Distributors, Inc. ("AGDI") is a Delaware corporation and is registered as a broker-dealer under the 1934 Act and under any appropriate regulatory requirements of state law, and is a member in good standing of the NASD, and is an affiliate of AGSI and the Company;
WHEREAS, the Life Company and AGDI have entered into a Distribution Agreement, dated November 1, 2000, which sets forth AGDI's duties as distributor of the Contracts and replaces the Distribution Agreement between the Life Company and AGSI; and
WHEREAS, AGSI desires that AGDI replace AGSI as a party to the Agreement.
NOW, THEREFORE, in consideration of their mutual promises, the parties agree as follows:
1. Effective on the date of the Distribution Agreement between the Life Company and AGDI, indicated herein, AGDI will replace AGSI as a party to the Agreement. All the duties and responsibilities of AGSI shall become the duties and responsibilities of AGDI.
2. Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES/CONTRACTS FUNDED BY THE
THE POLICIES UTILIZING SOME OR SEPARATE ACCOUNTS
ALL OF THE FUNDS
AIM V.I. International Equity Fund American General Life Insurance - Platinum Investor I Flexible Premium
AIM V.I. Value Fund Company Separate Account VL-R Variable Life Insurance Policy
Established: May 1, 1997 - Policy Form No. 97600
- Platinum Investor II Flexible Premium
Variable Life Insurance Policy
- Policy Form No. 97610
- Corporate America - Variable Flexible
Premium Variable Life Insurance
- Policy Form No. 99301
- Platinum Investor Survivor Last
Survivor Flexible Premium Variable Life
Insurance Policy
- Policy Form No. 99206
- Platinum Investor Survivor II Last
Survivor Flexible Premium Variable Life
Insurance Policy
- Policy Form No. 01206
|
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES/CONTRACTS FUNDED BY THE
THE POLICIES UTILIZING SOME OR SEPARATE ACCOUNTS
ALL OF THE FUNDS
(CONT'D) (CONT'D) (CONT'D)
American General Life Insurance
AIM V.I. International Equity Fund Company Separate Account VL-R - Platinum Investor III Flexible Premium
AIM V.I. Value Fund Established: May 1, 1997 Variable Life Insurance Policy
- Policy Form No. 00600
AIM V.I. Value Fund - AG Legacy Plus Flexible Premium
Variable Life Insurance Policy
- Policy Form No. 98615
AIM V.I. Capital Appreciation Fund - The One VUL Solution Flexible Premium
AIM V.I. Government Securities Fund Variable Life Insurance Policy
AIM V.I. High Yield Fund - Policy Form No. 99615
AIM V.I. International Equity Fund
AIM V.I. International Equity Fund - AG Legacy Plus Flexible Premium
Variable Life Insurance Policy
- Policy Form No. 99616
AIM V.I. International Equity Fund American General Life Insurance - Platinum Investor Variable Annuity
AIM V.I. Value Fund Company Separate Account D - Policy Form No. 98020
Established: November 19, 1973
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
------------------------------- -------------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
------------------------------- -------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
(SEAL)
AMERICAN GENERAL LIFE INSURANCE
COMPANY
Attest: /s/ Lauren W. Jones By: /s/ Don M. Ward
------------------------------- -------------------------------
Name: Lauren W. Jones Name: Don M. Ward
------------------------------- -----------------------------
Title: Assistant Secretary Title: Executive Vice President
------------------------------- -----------------------------
|
(SEAL)
AMERICAN GENERAL DISTRIBUTORS, INC.
Attest: /s/ Cheryl J. Hemley By: /s/ ILLEGIBLE
------------------------------- -------------------------------
Name: Cheryl J. Hemley Name: Illegible
------------------------------- -----------------------------
Title: Assistant Secretary Title: Senior Vice President-
------------------------------- Compliance
-----------------------------
|
(SEAL)
EXHIBIT h(32)(f)
AMENDMENT NO. 5
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated June 16, 1998, by and among AIM Variable Insurance Funds, Inc., a Maryland corporation, A I M Distributors, Inc., a Delaware Corporation and The Lincoln National Life Insurance Company, an Indiana life insurance company and Lincoln Financial Advisors Corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES/CONTRACTS FUNDED BY THE
THE POLICIES UTILIZING SOME OR SEPARATE ACCOUNTS
ALL OF THE FUNDS
AIM V.I. Capital Appreciation Fund Lincoln Life Variable Annuity - The Lincoln National Life Insurance Company:
AIM V.I. Diversified Income Fund Account N Flexible Premium Variable Annuity Contracts
AIM V.I. Growth Fund AN425LL, 30295, 30296 and state variations
AIM V.I. International Equity Fund thereof
AIM V.I. Value Fund
- The Lincoln National Life Insurance Company:
Lincoln Life Flexible Premium Flexible Premium Variable Life Insurance Policy
Variable Life Account M LN605LL/LN615LL/LN617LL/LN660/LN680 and state
variations thereof
- The Lincoln National Life Insurance Company:
Flexible Premium Variable Life Insurance Policy
Lincoln Life Flexible Premium On the Lives of Two Insureds LN650LL/LN655 and
Variable Life Account R state variations thereof
|
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to Schedule A to be executed in its name and behalf of its duly authorized officer on the date specified below. All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: July 15, 2000
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Robert H. Graham
-------------------------------- ------------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ Michael J. Cemo
-------------------------------- ------------------------------
Name: P. Michelle Grace Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
(SEAL)
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
Attest: /s/ Denis G. Schwartz By: /s/ Steven M. Kluever
-------------------------------- ------------------------------
Name: Denis G. Schwartz Name: Steven M. Kluever
Title: 2nd Vice President Title: 2nd Vice President
|
(SEAL)
EXHIBIT h(32)(g)
AMENDMENT NO. 6
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated June 16, 1998, by and among AIM Variable Insurance Funds, Inc., a Maryland corporation, A I M Distributors, Inc., a Delaware Corporation and The Lincoln National Life Insurance Company, an Indiana life insurance company, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES/CONTRACTS FUNDED BY THE
THE POLICIES UTILIZING SOME OR SEPARATE ACCOUNTS
ALL OF THE FUNDS
(SERIES I SHARES) Lincoln Life Variable Annuity - The Lincoln National Life Insurance Company:
Account N Flexible Premium Variable Annuity Contracts
AIM V.I. Capital Appreciation Fund AN425LL, 30295, 30296 and state variations
AIM V.I. Diversified Income Fund thereof
AIM V.I. Growth Fund
AIM V.I. International Equity Fund Lincoln Life Flexible - The Lincoln National Life Insurance Company:
AIM V.I. Value Fund Premium Variable Life Flexible Premium Variable Life Insurance Policy
AIM V.I. Government Securities Account M LN605LL/LN615LL/LN617LL/LN660/LN680 and state
variations thereof
- The Lincoln National Life Insurance Company:
Lincoln Life Flexible Premium Flexible Premium Variable Life Insurance Policy
Variable Life Account R On the Lives of Two Insureds LN650LL/LN655 and
state variations thereof
Lincoln National Variable Annuity - The Lincoln National Life Insurance Company:
Account C MultiFund Individual Variable Annuity Contract
30070-B and state variations thereof
(SERIES II SHARES) Lincoln Life Variable Annuity - The Lincoln National Life Insurance Company:
Account N ChoicePlus II Variable Annuity Contracts 30070-
AIM V.I. Growth Fund B and state variations thereof
AIM V.I. International Equity Fund
AIM V.I. Value Fund Lincoln Life Variable Annuity - The Lincoln National Life Insurance Company:
AIM V.I. Government Securities Account W Wells Fargo New Directions Variable Annuity
Contract 30070-B and state variations thereof
Lincoln National Life Insurance - The Lincoln National Life Insurance Company
Separate Account 13 Director Product 19476 and state variations
thereof
Lincoln National Life Insurance - The Lincoln National Life Insurance Company
Separate Account 15 Director Product 19476 and state variations
thereof
Lincoln National Life Insurance - The Lincoln National Life Insurance Company
Separate Account 16 Director Product 19476 and state variations
thereof
|
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to Schedule A to be executed in its name and behalf of its duly authorized officer on the date specified below. All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
---------------------------- -----------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
---------------------------- -----------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
(SEAL)
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
Attest: /s/ Denis G. Schwartz By: /s/ Steven M. Kluever
---------------------------- -----------------------------
Name: Name: Steven M. Kluever
Title: Title: 2nd Vice President
|
(SEAL)
EXHIBIT h(33)(b)
AMENDMENT NO. 1
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated June 30, 1998, by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.) a Delaware trust, A I M Distributors, Inc., a Delaware corporation, Aetna Life Insurance and Annuity Company, a Connecticut life insurance company and Aetna Life Insurance and Annuity Company, is hereby amended as follows:
The following subsection is added to Section 1 of the Agreement:
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, it being understood by the Parties that AVIF may sell shares of any Fund to any person eligible to invest in that Fund in accordance with applicable provisions of Section 817(h) of the Code and the regulations thereunder, and that if such provisions are not applicable, then AVIF may sell shares of any Fund to any person, including members of the general public.
The following subsection is added to Section 2.3:
(c) Notwithstanding any provision of the Agreement to the contrary, the Parties agree that AVIF shall determine the applicable price for Share orders attributable to Contracts funded by unregistered Accounts in accordance with Section 2.3(a) hereof, provided that LIFE COMPANY represents and warrants that it is legally or contractually obligated to treat such orders in the same manner as orders attributable to Contracts funded by registered Accounts. Each Share order placed by LIFE COMPANY that is attributable, in whole or in part, to Contracts funded by an unregistered Account, shall be deemed to constitute such representation and warranty by LIFE COMPANY unless the order specifically states to the contrary. Otherwise, AVIF shall determine the applicable price for Share orders attributable to Contracts funded by unregistered Accounts in accordance with Section 2.3(b) hereof. As used herein, an Account is registered if it is registered under the 1940 Act.
Section 4.3(a)(vii) is hereby deleted in its entirety and replaced with the following:
(vii) each Account's prospectus, statement of additional information, offering material, disclosure booklet, and other documents pursuant to which Contracts are offered, and any amendments or supplements thereto (collectively, the "Account Prospectus"), will at all times comply in all material respects with all applicable requirements of the 1933 Act and the rules thereunder.
Section 4.3(b)(vi) is hereby deleted in its entirety and replaced with the following:
(vi) AVIF's prospectus, statement of additional information and any amendments or supplements thereto (collectively, the "AVIF Prospectus") will at all times comply in all material respects with all applicable requirements of the 1933 Act and the rules thereunder.
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS
THE POLICIES UTILIZING THE FUNDS
--------------------- -------------------
AIM V.I. Capital Appreciation Fund Variable Annuity Account B
AIM V.I. Government Securities Fund Variable Annuity Account C
AIM V.I. Growth Fund Variable Annuity Account D
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: October 1, 2000
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
------------------------------- -----------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ MICHAEL J. CEMO
------------------------------- -----------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
(SEAL)
AETNA LIFE INSURANCE AND ANNUITY
COMPANY
(As Insurer and Underwriter)
Attest: /s/ LENA A. RABBITT By: LAURIE TILLINGHAST
------------------------------- -----------------------------
Name: Lena A. Rabbitt Name: Laurie Tillinghast
------------------------------- -----------------------------
Title: Assistant Corporate Secretary Title: Vice President
------------------------------- -----------------------------
|
(SEAL)
EXHIBIT h(38)(f)
AMENDMENT NO. 5
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated July 27, 1998, by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.), a Delaware trust, A I M Distributors, Inc., a Delaware corporation, Allmerica Financial Life Insurance and Annuity Company, a Delaware life insurance company and Allmerica Investments, Inc., is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES FUNDED BY THE
THE POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
--------------------- ------------------- ----------------------
AIM V.I. Aggressive Growth Fund Fulcrum Account of Allmerica Financial 3025-96
AIM V.I. Blue Chip Fund Life Insurance and Annuity Company
AIM V.I. Capital Appreciation Fund
AIM V.I. Dent Demographic Trends Fund Fulcrum Variable Life Account of 1030-96
AIM V.I. Growth Fund Allmerica Financial Life Insurance and
AIM V.I. High Yield Fund Annuity Company
AIM V.I. International Equity Fund
AIM V.I. Value Fund FUVUL Separate Account of Allmerica 1036-99
Financial Life Insurance and Annuity
Company
Separate Account VA-P of Allmerica Pioneer Vision; Pioneer C-Vision; and
Financial Life Insurance and Annuity Pioneer XtraVision; A3030-99; Pioneer
Company No-Load
Separate Account VA-K(Delaware) of Delaware Medallion; Delaware Golden
Allmerica Financial Life Insurance and Medallion; A3030-99; Delaware No-Load
Annuity Company
Separate Account VA-K of Allmerica A3030-99; Agency Ultimate Advantage;
Financial Life Insurance and Annuity Advantage, ExecAnnuity; First Union
Company IVA; Fund Quest; Annuity Scout
Group VEL Account Executive Solutions
Allmerica Select Separate Account Select Reward, Secondary Acclaim,
Select Resource (I, II), Select
Charter
Allmerica Select Separate Account (Life) Select Life, Select Inheiritage,
Select Single Premium Life, Select
VUL 2001
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: December 1, 2000
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
---------------------------- ------------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
---------------------------- ------------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: Sr. Vice President
|
(SEAL)
ALLMERICA FINANCIAL LIFE INSURANCE
AND ANNUITY COMPANY
Attest: /s/ SARAH LATORRE By: /s/ MARK HUG
---------------------------- ------------------------------
Name: Sarah Latorre Name: Mark Hug
------------------------------ ----------------------------
Title: Admin. Title: CMO
----------------------------- ---------------------------
|
(SEAL)
ALLMERICA INVESTMENTS, INC.
Attest: /s/ KAREN WARRINGTON By: /s/ WILLIAM F. MONROE, JR.
---------------------------- ------------------------------
Name: Karen Warrington Name: William F. Monroe, Jr.
------------------------------ ----------------------------
Title: Admin. Asst. Title: President
----------------------------- ---------------------------
|
(SEAL)
EXHIBIT h(38)(g)
AMENDMENT NO. 6
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated July 27, 1998, by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.), a Delaware trust, A I M Distributors, Inc., a Delaware corporation, Allmerica Financial Life Insurance and Annuity Company, a Delaware life insurance company and Allmerica Investments, Inc., is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES FUNDED BY THE
THE POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
--------------------- ------------------- ----------------------
AIM V.I. Aggressive Growth Fund Fulcrum Variable Life Account of Fulcrum Fund Variable Annuity
AIM V.I. Blue Chip Fund Allmerica Financial Life Insurance and
AIM V.I. Capital Appreciation Fund Annuity Company
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Growth Fund FUVUL Separate Account of Allmerica ValuPlus Assurance (First Union)
AIM V.I. High Yield Fund Financial Life Insurance and Annuity
AIM V.I. International Equity Fund Company
AIM V.I. Value Fund
Separate Account VA-P of Allmerica Pioneer Vision; Pioneer C-Vision; and
Financial Life Insurance and Annuity Pioneer XtraVision; Pioneer No-Load
Company
Separate Account VA-K(Delaware) of Delaware Medallion; Delaware Golden
Allmerica Financial Life Insurance and Medallion
Annuity Company
Separate Account VA-K of Allmerica Agency Ultimate Advantage; Advantage,
Financial Life Insurance and Annuity ExecAnnuity; IVA; Fund Quest; Annuity
Company Scout
Group VEL Account Executive Solutions
Allmerica Select Separate Account Select Reward, Select Resource (I,
II), Select Charter; Select Acclaim;
Select Reward
Allmerica Select Separate Account II Select Life II
(Life)
Separate Account IMO Allmerica Select Life Plus, Allmerica
VUL 2001, VUL 2001 Survivorship
Allmerica Select Separate Account III Select III, VEL III
Inheiritage Account Select Inheiritage
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: May 1, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. MICHELLE GRACE By: /s/ Robert H. Graham
------------------------------- ----------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
------------------------------- ----------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: Sr. Vice President
|
(SEAL)
ALLMERICA FINANCIAL LIFE
INSURANCE AND ANNUITY COMPANY
Attest: /s/ SARAH LATORRE By: /s/ MARK HUG
------------------------------- ----------------------------
Name: Sarah Latorre Name: Mark Hug
------------------------------- --------------------------
Title: Admin. Title: CMO
------------------------------- -------------------------
|
(SEAL)
ALLMERICA INVESTMENTS, INC.
Attest: /s/ KAREN WARRINGTON By: /s/ WILLIAM F. MONROE JR.
------------------------------- ----------------------------
Name: Karen Warrinton Name: William F. Monroe Jr.
------------------------------- --------------------------
Title: Admin. Ass't. Title: President
------------------------------- -------------------------
|
(SEAL)
EXHIBIT h(39)(f)
AMENDMENT NO. 5
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated July 27, 1998, by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.), a Delaware trust, A I M Distributors, Inc., a Delaware corporation, First Allmerica Financial Life Insurance Company, a Delaware life insurance company and Allmerica Investments, Inc., is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES FUNDED BY THE
THE POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
--------------------- ----------------- ----------------------
AIM V.I. Aggressive Growth Fund Fulcrum Account of First Allmerica A3025-96GRC
AIM V.I. Blue Chip Fund Financial Life Insurance Company
AIM V.I. Capital Appreciation Fund
AIM V.I. Dent Demographic Trends Fund FUVUL Separate Account of First 1036.NY-99GRC
AIM V.I. Growth Fund Allmerica Financial Life Insurance
AIM V.I. High Yield Fund Company
AIM V.I. International Equity Fund
AIM V.I. Value Fund Separate Account VA-P of First Pioneer Vision; Pioneer C-Vision; and
Allmerica Financial Life Insurance Pioneer XtraVision; A3030-99; Pioneer
Company No-Load
Separate Account VA-K(Delaware) of Delaware Medallion; Delaware Golden
First Allmerica Financial Life Medallion; A3030-99; Delaware No-Load
Insurance Company
Separate Account VA-K of First A3030-99; Agency Ultimate Advantage;
Allmerica Financial Life Insurance Advantage; ExecAnnuity; First Union VIA;
Company Annuity Scout Fund Quest
Group VEL Account Executive Solutions
Select Separate Account Select Reward; Secondary Acclaim, Select
Resource, Select Charter
Select Separate Account (Life) Select Life, Select Inheiritage, Select
Single Premium Life, Select VUL 2001
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: December 1, 2000
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
------------------------------- ------------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
------------------------------- ------------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: Sr. Vice President
|
(SEAL)
FIRST ALLMERICA FINANCIAL LIFE
INSURANCE COMPANY
Attest: /s/ SARAH LATORRE By: /s/ MARK HUG
------------------------------- ----------------------------
Name: Sarah Latorre Name: Mark Hug
------------------------------- ----------------------------
Title: Admin Title: CMO
------------------------------- ---------------------------
|
(SEAL)
ALLMERICA INVESTMENTS, INC.
Attest: /s/ KAREN WARRINGTON By: /s/ WILLIAM F. MONROE JR.
------------------------------- ----------------------------
Name: Karen Warrington Name: William F. Monroe Jr.
------------------------------- ----------------------------
Title: Admin. Ass't. Title: President
------------------------------- ---------------------------
|
(SEAL)
EXHIBIT h(39)(g)
AMENDMENT NO. 6
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated July 27, 1998, by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.), a Delaware trust, A I M Distributors, Inc., a Delaware corporation, First Allmerica Financial Life Insurance Company, a Delaware life insurance company and Allmerica Investments, Inc., is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES FUNDED BY THE
THE POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
--------------------- ------------------- ----------------------
AIM V.I. Aggressive Growth Fund Separate Account FUVUL of First Allmerica ValuPlus Assurance (First Union)
AIM V.I. Blue Chip Fund Financial Life Insurance Company
AIM V.I. Capital Appreciation
Fund Separate Account VA-P of First Allmerica Pioneer Vision; Pioneer C-Vision; and
AIM V.I. Dent Demographic Trends Fund Financial Life Insurance Company Pioneer XtraVision; Pioneer No-Load
AIM V.I. Growth Fund
AIM V.I. High Yield Fund Separate Account VA-K(Delaware) of First Delaware Medallion; Delaware Golden
AIM V.I. International Equity Fund Allmerica Financial Life Insurance Company Medallion;
AIM V.I. Value Fund
Separate Account VA-K of First Allmerica Agency Ultimate Advantage; Advantage;
Financial Life Insurance Company ExecAnnuity; Annuity Scout; Fund Quest;
Allmerica Immediate Advantage ("IVA")
Group VEL Account ExecutiveSolutions
Allmerica Select Separate Account Select Reward; Secondary Acclaim, Select
Resource, Select Charter
Allmerica Select Separate Account II Select Life, Select Inheiritage, Select
(Life) Single Premium Life, Select VUL 2001
Separate Account SPVL Select III, VEL III
Separate Account IMO Allmerica Select Life Plus; Allmerica VUL
2001; VUL 2001 Survivorship
Inheiritage Account Select Inheiritage
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: May 1, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
------------------------------- ------------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
------------------------------- ------------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: Sr. Vice President
|
(SEAL)
FIRST ALLMERICA FINANCIAL LIFE
INSURANCE COMPANY
Attest: /s/ SARAH LATORRE By: /s/ MARK HUG
------------------------------- ----------------------------
Name: Sarah Latorre Name: Mark Hug
------------------------------- ----------------------------
Title: Admin Title: CMO
------------------------------- ---------------------------
|
(SEAL)
ALLMERICA INVESTMENTS, INC.
Attest: /s/ KAREN WARRINGTON By: /s/ WILLIAM F. MONROE JR.
------------------------------- ----------------------------
Name: Karen Warrington Name: William F. Monroe Jr.
------------------------------- ----------------------------
Title: Admin. Ass't. Title: President
------------------------------- ---------------------------
|
(SEAL)
EXHIBIT h(43)(b)
AMENDMENT NO. 1
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated February 1, 1999, by and among AIM Variable Insurance Funds, a Delaware Trust, A I M Distributors, Inc., a Delaware corporation, Sage Life Assurance of America, Inc., a Delaware life insurance company and Sage Distributors, Inc., is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY
POLICIES UTILIZING THE FUNDS THE SEPARATE ACCOUNTS
(SERIES I SHARES)
AIM V.I. Government Securities Fund The Sage Variable Annuity Account A - Asset 1
AIM V.I. Growth and Income Fund - Asset 2
AIM V.I. International Equity Fund
AIM V.I. Value Fund
(SERIES I SHARES)
AIM V.I. Government Securities Fund The Sage Variable Life Account A - Life Asset 1
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
(SERIES II SHARES)
AIM V.I. Government Securities Fund The Sage Variable Annuity Account A - SageChoice
AIM V.I. Growth and Income Fund - SageSelect
AIM V.I. International Equity Fund - SagePlus
AIM V.I. Value Fund - SageFreedom
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
----------------------------- -----------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title : Assistant Secretary Title: Senior Vice President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
----------------------------- -----------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
(SEAL)
SAGE LIFE ASSURANCE OF AMERICA, INC.
Attest: /s/ James F. Bronsdon By: /s/ Robin I. Marsden
----------------------------- -----------------------------
Name: James F. Bronsdon Name: Robin I. Marsden
|
Title: Vice President Legal and Compliance Title: President and Chief Executive Officer
(SEAL)
SAGE DISTRIBUTORS, INC.
Attest: /s/ James F. Renz By: /s/ James F. Bronsdon
----------------------------- -----------------------------
Name: James F. Renz Name: James F. Bronsdon
Title: Treasurer Title: Chief Legal Officer
|
(SEAL)
EXHIBIT h(44)(b)
AMENDMENT NO. 1
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated April 11, 1999, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, Liberty Life Assurance Company of Boston, a Massachusetts life insurance company and Liberty Life Distributors LLC, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE
POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
AIM V.I. Capital Appreciation Fund LLAC Variable Account - Modified Single Payment Variable
AIM V.I. Government Securities Fund Universal Life Insurance Policy
AIM V.I. International Equity Fund
AIM V.I. New Technology Fund - Flexible Premium Variable Life
Insurance Account
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
------------------------------- -------------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
------------------------------- -------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
(SEAL)
LIBERTY LIFE ASSURANCE COMPANY OF
BOSTON
Attest: /s/ John T. Treece By: /s/ John A. Tymochko
------------------------------- -------------------------------
Name: John T. Treece Name: John A. Tymochko
------------------------------- -----------------------------
Title: President, LLD Title: Senior Vice President
------------------------------- -----------------------------
|
(SEAL)
LIBERTY LIFE DISTRIBUTORS LLC
Attest: /s/ John A. Tymochko By: /s/ John T. Treece
------------------------------- -------------------------------
Name: John A. Tymochko Name: John T. Treece
------------------------------- -----------------------------
Title: Senior Vice President, LLAC Title: President
------------------------------- -----------------------------
|
(SEAL)
Exhibit h(52)(b)
AMENDMENT NO. 1
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated July 1, 1999, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, Allstate Life Insurance Company, an Illinois life insurance company and Allstate Life Financial Services, Inc., a Delaware corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS POLICIES FUNDED BY THE
CONTRACTS UTILIZING THE FUNDS SEPARATE ACCOUNTS
--------- ------------------- -----------------
SERIES I SHARES OF:
AIM V.I. Basic Value Fund Allstate Financial Advisors - LU4518 (and state variations)
AIM V.I. Capital Appreciation Fund Separate Account I - LU10133FL
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Mid Cap Equity Fund
AIM V.I. Value Fund
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
------------------------- -----------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
------------------------- ------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
(SEAL)
ALLSTATE LIFE INSURANCE COMPANY
Attest: /s/ Cynthia Corsini By: /s/ Timothy N. Vander Pas
------------------------- -----------------------------
Name: Cynthia Corsini Name: Timothy N. Vander Pas
------------------------- --------------------------
Title: Secretary Title: AVP
------------------------- --------------------------
ALLSTATE LIFE FINANCIAL SERVICES, INC.
Attest: /s/ Cynthia Corsini By: /s/ Timothy N. Vander Pas
------------------------- -----------------------------
Name: Cynthia Corsini Name: Timothy N. Vander Pas
------------------------- --------------------------
Title: Secretary Title: AVP
------------------------- --------------------------
|
(SEAL)
EXHIBIT h(57)(b)
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
Pursuant to the Participation Agreement made and entered into in November, 1999, by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.), A I M Distributors, Inc., Aetna Insurance Company of America and Aetna Life Insurance and Annuity Company, the parties do hereby agree to amend the last clause of the first paragraph as follows:
and Aetna Investment Services, Inc., a registered broker-dealer, the principal underwriter of the Contracts ("UNDERWRITER") (collectively, the "Parties").
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to the Participation Agreement to be executed in its name and on its behalf by its duly authorized representative. The Amendment shall take effect on November 17, 2000.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
------------------------------- -------------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title: Assistant Secretary Title: President
A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ MICHAEL J. CEMO
------------------------------- -------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
AETNA INSURANCE COMPANY OF AMERICA,
on behalf of itself and its
separate accounts
Attest: /s/ LENA A. RABBITT By: /s/ LAURIE M. TILLINGHAST
------------------------------- -------------------------------
Name: Lena A. Rabbitt Name: Laurie Tillinghast
Title: Asst. Corporate Secretary Title: Pursuant to delegation
dated 8/12/98
AETNA INVESTMENT SERVICES, INC, as
Principal Underwriter (now known as
AETNA INVESTMENT SERVICES, LLC)
Attest: /s/ JOHN F. TODD By: /s/ MAUREEN M. GILLIS
------------------------------- -------------------------------
Name: John F. Todd Name: Maureen Gillis
Title: Corporate Secretary Title: President
|
Exhibit h(63)(b)
AMENDMENT NO. 1
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated April 10, 2000 by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.), a Delaware trust, A I M Distributors, Inc., a Delaware corporation, Allmerica Financial Life Insurance and Annuity Company, a Delaware life insurance company and Allmerica Investments, Inc., is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
- AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital Appreciation Funds AIM V.I Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
FR1 Separate Account
FR2 Separate Account
FR3 Separate Account
FR4 Separate Account
FQ1 Separate Account
UR1 Separate Account
UR2 Separate Account
UR3 Separate Account
UR4 Separate Account
UQ1 Separate Account
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
PremierFocus - Life
PremierFocus - Annuity
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: December 1, 2000
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ P. Michelle Grace By: /s/ Robert H. Graham
------------------------- -----------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ Robert H. Graham
------------------------- -----------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: Sr. Vice President
|
(SEAL)
FIRST ALLMERICA FINANCIAL LIFE
INSURANCE COMPANY
Attest: /s/ Sarah Latorre By: /s/ Mark Hug
------------------------- -----------------------------
Name: Sarah Latorre Name: Mark Hug
------------------------- --------------------------
Title: Admin Title: CMO
------------------------- --------------------------
|
(SEAL)
ALLMERICA INVESTMENTS, INC.
Attest: /s/ Karen Warrington By: /s/ William F. Monroe, Jr.
------------------------- -----------------------------
Name: Karen Warrington Name: William F. Monroe, Jr.
------------------------- --------------------------
Title: Admin. Ass't. Title: President
------------------------- --------------------------
|
(SEAL)
Exhibit h(67)(b)
AMENDMENT NO. 1
PRIVATE PLACEMENT
PARTICIPATION AGREEMENT
The Private Placement Participation Agreement (the "Agreement"), dated September 25, 2000, by and among AIM Variable Insurance Funds, a Delaware trust, Security Life of Denver Insurance Company, a Colorado life insurance company and ING America Equities, Inc., a Colorado corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
--------------------------------------------------------------------------------------------------------------------------------
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
THE CONTRACTS UTILIZING THE FUNDS
(SERIES I SHARES)
--------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund Security Life Separate Account Magnastar Private Placement Variable Life
SLDM1
AIM V.I. Government Securities Fund
Security Life Separate Account
SLDM2
---------------------------------------------------------------------------------
ING PRIVATE MARKET ADVANTAGE VARIABLE
Security Life Separate Account UNIVERSAL LIFE
SLDP1
Security Life Separate Account
SLDP2
--------------------------------------------------------------------------------------------------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
------------------------- -----------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
|
(SEAL)
SECURITY LIFE OF DENVER INSURANCE COMPANY
Attest: /s/ Eric G. Banta By: /s/ Jim Livingston
------------------------- -----------------------------
Name: Eric G. Banta Name: Jim Livingston
Title: Assistant Secretary Title: Executive Vice President
(SEAL)
ING AMERICA EQUITIES, INC.
Attest: /s/ Eric G. Banta By: /s/ Pamela S. Anson
------------------------- -----------------------------
Name: Eric G. Banta Name: Pamela S. Anson
Title: Assistant Secretary Title: Vice President
|
(SEAL)
EXHIBIT h(68)(a)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.,
AMERICAN GENERAL LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
AMERICAN GENERAL SECURITIES INCORPORATED
TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
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..................................................................2
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......................................................................................5
Section 3. Costs and Expenses....................................................................................5
3.1 General.........................................................................................5
3.2 Parties To Cooperate............................................................................5
Section 4. Legal Compliance......................................................................................5
4.1 Tax Laws........................................................................................5
4.2 Insurance and Certain Other Laws................................................................8
4.3 Securities Laws.................................................................................8
4.4 Notice of Certain Proceedings and Other Circumstances...........................................9
4.5 LIFE COMPANY To Provide Documents; Information About AVIF......................................10
4.6 AVIF To Provide Documents; Information About LIFE COMPANY......................................11
Section 5. Mixed and Shared Funding.............................................................................12
5.1 General........................................................................................12
5.2 Disinterested Directors........................................................................12
5.3 Monitoring for Material Irreconcilable Conflicts...............................................13
5.4 Conflict Remedies..............................................................................13
5.5 Notice to LIFE COMPANY.........................................................................15
5.6 Information Requested by Board of Directors....................................................15
5.7 Compliance with SEC Rules......................................................................15
5.8 Other Requirements.............................................................................15
Section 6. Termination..........................................................................................15
6.1 Events of Termination..........................................................................15
6.2 Notice Requirement for Termination.............................................................17
6.3 Funds To Remain Available......................................................................17
|
DESCRIPTION PAGE
----------- ----
6.4 Survival of Warranties and Indemnifications....................................................17
6.5 Continuance of Agreement for Certain Purposes..................................................17
Section 7. Parties To Cooperate Respecting Termination..........................................................18
Section 8. Assignment...........................................................................................18
Section 9. Notices..............................................................................................18
Section 10. Voting Procedures...................................................................................18
Section 11. Foreign Tax Credits.................................................................................19
Section 12. Indemnification.....................................................................................19
12.1 Of AVIF and AIM by LIFE COMPANY and UNDERWRITER................................................19
12.2 Of LIFE COMPANY and UNDERWRITER by AVIF and AIM................................................21
12.3 Effect of Notice...............................................................................24
12.4 Successors.....................................................................................24
Section 13. Applicable Law......................................................................................24
Section 14. Execution in Counterparts...........................................................................24
Section 15. Severability........................................................................................24
Section 16. Rights Cumulative...................................................................................24
Section 17. Headings............................................................................................24
Section 18. Confidentiality.....................................................................................25
Section 19. Trademarks and Fund Names...........................................................................25
Section 20. Parties to Cooperate................................................................................26
Section 21. Amendments..........................................................................................27
|
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 26th day of February, 1999 ("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland corporation ("AVIF"); A I M Distributors, Inc. ("AIM"); American General Life Insurance Company, a Texas life insurance company ("LIFE COMPANY"), 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"); American General Securities Incorporated, an affiliate of LIFE COMPANY and the principal underwriter of the Contracts ("UNDERWRITER") (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 fifteen 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, LIFE COMPANY 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"), will not be registered under the 1933 Act; and
WHEREAS, LIFE COMPANY 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, LIFE COMPANY will serve as the depositor of the Accounts, each of which has not been, nor will be registered as a unit investment trust investment company under the 1940 Act, and the security interests deemed to be issued by the Accounts under the Contracts will not be registered as securities under the 1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER 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");
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");
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 LIFE COMPANY for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. 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, 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, it being understood by the Parties that AVIF may sell shares of any Fund to any person eligible to invest in that Fund in accordance with applicable provisions of Section 817(h) of the Code and the regulations thereunder, and that if such provisions are not applicable, then AVIF may sell shares of any Fund to any person, including members of 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 LIFE COMPANY 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) LIFE COMPANY is open for business.
(b) LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of redemption proceeds by AVIF, LIFE COMPANY 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), LIFE COMPANY shall be entitled to an adjustment to the number of Shares purchased or redeemed to reflect the correct net asset value per Share. Any material error in the calculation or reporting of net asset value per Share, dividend or capital gain information shall be reported promptly upon discovery to LIFE COMPANY.
2.2 TIMELY PAYMENTS.
LIFE COMPANY will wire payment for net purchases to a custodial account
designated by AVIF by 3:00 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 LIFE COMPANY by 3:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY 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 LIFE COMPANY 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), LIFE COMPANY 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 LIFE COMPANY 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.
(c) Notwithstanding any provision of the Agreement to the contrary, the
Parties agree that AVIF shall determine the applicable price for Share orders
attributable to Contracts funded by unregistered Accounts in accordance with
Section 2.3(a) hereof, provided that LIFE COMPANY represents and warrants that
it is legally or contractually obligated to treat such orders in the same manner
as orders attributable to Contracts funded by registered Accounts. Each Share
order placed by LIFE COMPANY that is attributable, in whole or in part, to
Contracts funded by an unregistered Account, shall be deemed to constitute such
representation and warranty by LIFE COMPANY unless the order specifically states
to the contrary. Otherwise, AVIF shall determine the applicable price for Share
orders attributable to Contracts funded by unregistered Accounts in accordance
with Section 2.3(b) hereof. As used herein, an Account is registered if it is
registered under the 1940 Act.
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 LIFE COMPANY of any income dividends or capital gain distributions payable on the Shares of any Fund. LIFE COMPANY 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 LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY. Shares ordered from AVIF will be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto and made a part hereof, each Party will bear all expenses incident to its performance under this Agreement.
3.2 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, private placement memorandums 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 LIFE COMPANY 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 LIFE COMPANY 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. The representations and warranties of this Section 4.1(b) shall not apply with respect to any Fund whose beneficial interests are held solely by owners of "pension plan contracts" within the meaning of Section 818(a) of the Code and other persons whose federal income tax treatment is not dependent on the Fund's compliance with the requirements of Section 817(h) of the Code.
(c) LIFE COMPANY agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of LIFE COMPANY or, to LIFE COMPANY's knowledge, of any Participant, that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or LIFE COMPANY otherwise becomes aware of any facts that could give rise to any claim against AVIF or its affiliates as a result of such a failure or alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF of such assertion or potential claim (subject to the Confidentiality provisions of Section 18 as to any Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) LIFE COMPANY shall use its best efforts to minimize
any liability of AVIF or its affiliates resulting
from such failure, including, without limitation,
demonstrating, pursuant to Treasury Regulations
Section 1.817-5(a)(2), to the Commissioner of the IRS
that such failure was inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal and accounting advisors to participate in any conferences, settlement discussions or other administrative or judicial proceeding or contests (including judicial appeals thereof) with the IRS, any 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 LIFE COMPANY will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY to any such person (except for its parent company, affiliates, accounting and legal representatives on a need to know basis), without the express written consent of AVIF which shall not be unreasonably withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their accounting and legal advisors with such cooperation as AVIF shall reasonably request (including, without limitation, by permitting AVIF and its accounting and
legal advisors to review the relevant books and records of LIFE COMPANY) in order to facilitate review by AVIF or its advisors of any written submissions provided to it pursuant to the preceding clause or its assessment of the validity or amount of any claim against its arising from such a failure or alleged failure;
(vii) LIFE COMPANY 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 LIFE COMPANY 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;
(viii) AVIF and its affiliates shall have no liability as a result of such failure or alleged failure if LIFE COMPANY fails to comply with any of the foregoing clauses (i) through (vii), and such failure could be shown to have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to any compromise or settlement of any claim or liability hereunder, LIFE COMPANY may, in its discretion, authorize AVIF or its affiliates to act in the name of LIFE COMPANY in, and to control the conduct of, such conferences, discussions, proceedings, contests or appeals and all administrative or judicial appeals thereof, and in that event AVIF or its affiliates shall bear the fees and expenses associated with the conduct of the proceedings that it is so authorized to control; provided, that in no event shall LIFE COMPANY 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) LIFE COMPANY 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; LIFE COMPANY 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) LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY, including, the furnishing of information not otherwise available to LIFE COMPANY which is required by state insurance law to enable LIFE COMPANY to obtain the authority needed to issue the Contracts in any applicable state.
(b) LIFE COMPANY 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 Texas 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 Article 3.75 of the Texas Insurance Code 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) LIFE COMPANY represents and warrants that (i) each Account is
exempt from the registration requirement of the 1940 Act under the provisions of
Section 3(c)(1) thereof, (ii) that each Account is exempt to the extent required
by Section 12(d)(1)(E) of the 1940 Act, (iii) that the Policies are exempt from
the registration requirement of the 1933 Act under the provisions of Section
4(2) thereof, (iv) each Account's private placement memoranda and other
documents pursuant to which Contracts are offered, will at all times comply in
all material respects with all applicable 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, statement of additional information and any amendments or supplements thereto (collectively, the "AVIF
Prospectus") will at all times comply in all material respects with all applicable 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 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 LIFE COMPANY 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 LIFE COMPANY. 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) LIFE COMPANY 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 relating to the Contracts or, (ii)
the initiation of any proceedings for that purpose or for any other purpose
relating to offering of each Account's interests pursuant to the Contracts, or
(iii) 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. LIFE COMPANY 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.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) LIFE COMPANY will provide to AVIF or its designated agent at least one (1) complete copy of all private placement memorandums, 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 used in connection with the offer and sale of the Policies, as applicable.
(b) LIFE COMPANY will provide to AVIF or its designated agent at least one (1) complete copy of each private placement memorandum or related materials 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 AIM as the entity to receive such material, until such time as AVIF appoints another designated agent by giving notice to LIFE COMPANY in the manner required by Section 9 hereof.
(c) The parties hereto recognize that due to the private placement
nature of the Policies covered hereby, the use of sales literature or other
promotional materials in connection with the offer or sale of the Policies is
severely limited and it could jeopardize the Policies' exemption from
registration status. Notwithstanding the foregoing, LIFE COMPANY will furnish,
or will cause to be furnished, to AVIF and AIM for review, any material in which
AVIF, or any Series thereof, or advisor is named, before such material is
submitted to any regulatory body for review, and in any event, at least fifteen
(15) Business Days prior to its use. No such material will be used if AVIF or
AIM objects to its use in writing within fifteen (15) Business Days after
receipt of such material.
(d) LIFE COMPANY and its affiliates and agents shall not give any information or make any representations on behalf of AVIF or concerning AVIF other than the information or representations contained in a Registration Statement or prospectus for AVIF, as such Registration Statement and prospectus may be amended or supplemented from time to time, or in reports of AVIF or reports prepared for distribution to owners of shares of AVIF or for owners of the Policies, or in material approved by AVIF or its designee, without the written permission of AVIF.
(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, private placement memorandums or related materials, 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.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY.
(a) AVIF will provide to LIFE COMPANY 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 LIFE COMPANY camera ready or computer diskette copies of all AVIF prospectuses and printed copies, in an amount specified by LIFE COMPANY, of AVIF statements of additional information, any 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 LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, 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 LIFE COMPANY or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which LIFE COMPANY, 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 LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY, any of its affiliates or related entities, each Account, or the Contracts other than (i) the information or representations contained in private placement memorandums and materials relating to the Contracts, as such private placement memorandums and materials 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 LIFE COMPANY for distribution; or (iii) in sales literature or other promotional material approved by LIFE COMPANY or its affiliates, except with the express written permission of LIFE COMPANY.
(e) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning LIFE COMPANY, 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 LIFE
COMPANY, 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 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 LIFE COMPANY, 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 LIFE COMPANY that, in the event that AVIF implements Mixed and Shared Funding, it may be appropriate to include in the private offering memorandums 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 ("Participating Plans"). LIFE COMPANY 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 any 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 any voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard any 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, LIFE COMPANY 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 LIFE COMPANY to disregard any 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, LIFE COMPANY 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 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 LIFE COMPANY's decision to disregard any Participant voting instructions and that decision represents a minority position or would preclude a majority vote, LIFE COMPANY 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 LIFE COMPANY that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY 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 LIFE COMPANY conflicts with the majority of other state regulators, then LIFE COMPANY will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Directors informs LIFE COMPANY that it has determined that such decision has created a material irreconcilable conflict, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in resolving any material irreconcilable conflict will be carried out at its expense and with a view only to the interests of 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. LIFE COMPANY 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 LIFE COMPANY.
AVIF will promptly make known in writing to LIFE COMPANY 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.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
LIFE COMPANY 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 LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding LIFE COMPANY'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 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 LIFE COMPANY 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, LIFE COMPANY 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 LIFE COMPANY, 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, where required, 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 LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANY if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if LIFE
COMPANY reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by LIFE COMPANY 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:
(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 LIFE COMPANY, 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 LIFE COMPANY 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).
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:
AMERICAN GENERAL LIFE INSURANCE COMPANY
AMERICAN GENERAL SECURITIES INCORPORATED
c/o American General Independent Producer Division
2727-A Allen Parkway
Houston, Texas 77019
Facsimile: (713) 831-3071
Attn: Steven Glover, Esquire
AIM VARIABLE INSURANCE FUNDS, INC.
AIM DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
Facsimile: (713) 993-9185 Attn: Nancy L. Martin, Esquire
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, LIFE COMPANY will vote Fund shares held by each Separate Account in the same proportion as the vote of all other holders of shares of the Fund, to the extent required by Section 12(d)(1)(E)(iii)(aa) of the 1940 Act,
and will refrain from substituting Fund shares unless the SEC shall have approved such substitution in the manner provided in Section 26 of the 1940 Act.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LIFE COMPANY 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 LIFE COMPANY AND UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless AVIF, AIM, and their respective affiliates, and each person, if any, who controls AVIF, AIM, and 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 12.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of LIFE COMPANY and UNDERWRITER) 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 the private placement memorandums and related materials, the Contracts or, to the extent prepared by LIFE COMPANY or UNDERWRITER, or agents thereof, materials relating to 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 LIFE COMPANY or UNDERWRITER by or on behalf of AVIF for use in the private placement memorandums and related materials, the Contracts (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 LIFE COMPANY, UNDERWRITER or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of LIFE COMPANY, UNDERWRITER 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 or on behalf of LIFE COMPANY, UNDERWRITER 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
(iv) arise as a result of any failure by LIFE COMPANY or UNDERWRITER 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 LIFE COMPANY or UNDERWRITER in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANY or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued by LIFE COMPANY 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 LIFE COMPANY nor UNDERWRITER 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 LIFE COMPANY nor UNDERWRITER shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
shall have notified LIFE COMPANY and UNDERWRITER 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 LIFE COMPANY and UNDERWRITER of any such action shall not relieve LIFE COMPANY and UNDERWRITER 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, LIFE COMPANY and UNDERWRITER 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 LIFE COMPANY or UNDERWRITER to such Indemnified Party of LIFE COMPANY's or UNDERWRITER's election to assume the defense thereof, the Indemnified Party will cooperate fully with LIFE COMPANY and UNDERWRITER and shall bear the fees and expenses of any additional counsel retained by it, and neither LIFE COMPANY nor UNDERWRITER 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 LIFE COMPANY AND UNDERWRITER 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 LIFE COMPANY,
UNDERWRITER, their respective affiliates, and each person, if any, who controls
LIFE COMPANY, UNDERWRITER 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, damages, liabilities (including amounts paid
in settlement with the written consent of AVIF and 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, AIM or their respective affiliates by or on behalf of LIFE COMPANY, UNDERWRITER 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 the private placement
memorandums or related materials, or any amendment or
supplement to any of the foregoing, not supplied for
use therein by or on behalf of AVIF and AIM or their
respective affiliates and on which such persons have
reasonably relied) or the negligent, illegal or
fraudulent conduct of AVIF and 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 I 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 the private placement memorandums or related materials 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 LIFE COMPANY, UNDERWRITER or their respective affiliates by or on behalf of AVIF or AIM for use in the private placement memorandums or related materials covering the Contracts, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any 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 or AIM in this Agreement or arise out of or result from any other material breach of this Agreement by AVIF or AIM.
(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 LIFE COMPANY 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 LIFE COMPANY of Shares of another investment company or portfolio for those of any adversely affected Fund as a funding medium for each Account that LIFE COMPANY 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 LIFE COMPANY, UNDERWRITER, 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 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 and AIM of any such action shall not relieve
AVIF and 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 AIM will be entitled to participate, at
its 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 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 and/or AIM's election to assume the
defense thereof, the Indemnified Party will cooperate fully with AVIF and/or AIM
and shall bear the fees and expenses of any additional counsel retained by it,
and neither AVIF nor AIM will not 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 AVIF be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, LIFE COMPANY, UNDERWRITER 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 LIFE COMPANY or UNDERWRITER hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by LIFE COMPANY 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; or (iii) the failure by LIFE COMPANY 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.
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 LIFE COMPANY
or any of its affiliates (collectively, the "LIFE COMPANY Protected Parties" for
purposes of this Section 18), information maintained regarding those customers,
and all computer programs and procedures or other information developed by or on
behalf of LIFE COMPANY, the LIFE COMPANY Protected Parties or any of their
employees or agents in connection with LIFE COMPANY's performance of its duties
under this Agreement are the valuable property of the LIFE COMPANY or LIFE
COMPANY Protected Parties, as the case may be. AVIF agrees that if it comes into
possession of any list or compilation of the identities of or other information
about the LIFE COMPANY Protected Parties' customers, or any other information or
property of LIFE COMPANY or the LIFE COMPANY Protected Parties, other than such
information as may be independently developed or compiled by AVIF from
information supplied to it by the LIFE COMPANY 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 LIFE COMPANY's prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY
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 Agreement are the valuable property of the
AVIF Protected Parties. LIFE COMPANY 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 LIFE COMPANY from information supplied to it by the AVIF
Protected Parties' customers who also maintain accounts directly with LIFE
COMPANY, LIFE COMPANY 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 mark "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 LIFE COMPANY (the "AIM licensed marks" or the "licensor's licensed marks") and is authorized to use and to license other persons to use such marks. LIFE COMPANY and its affiliates are hereby granted a non-exclusive license to use the AIM
licensed marks in connection with LIFE COMPANY'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 LIFE COMPANY 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 LIFE COMPANY 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, LIFE COMPANY 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 LIFE COMPANY 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 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.
SECTION 21. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner except by a written agreement executed by all parties hereto.
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: By:
-------------------------- ----------------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
A I M DISTRIBUTORS, INC.
Attest: By:
-------------------------- ----------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
AMERICAN GENERAL LIFE INSURANCE
COMPANY, on behalf of itself and its
separate accounts
Attest: By:
-------------------------- ----------------------------------
Name: Name:
-------------------------- ----------------------------------
Title: Title:
-------------------------- ----------------------------------
|
AMERICAN GENERAL SECURITIES INCORPORATED
Attest: By:
-------------------------- ----------------------------------
Name: Name:
-------------------------- ----------------------------------
Title: Title:
-------------------------- ----------------------------------
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
o AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. International Equity Fund AIM V.I. Value Fund
UNREGISTERED SEPARATE ACCOUNTS UTILIZING THE FUNDS
American General Life Insurance Company Separate Account VL-U-LIS Established: October 19, 1998
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
American General Signature II A - Private Placement Variable Insurance Policies - Policy Form Nos. 98070 and 98075
SCHEDULE B
o AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. International Equity Fund AIM V.I. Value Fund
o AIM and Design
[AIM LOGO]
--Registered Trademark--
SCHEDULE C
EXPENSE ALLOCATIONS
AMERICAN GENERAL LIFE AVIF / AIM
preparing and (when applicable) filing the private preparing and filing the Fund's registration statement
placement memorandums and related materials
text composition (when applicable) for Account private text composition for Fund prospectuses and supplements
placement memorandums and related materials
text alterations (when applicable) of private placement text alterations of prospectuses (Fund) and
memorandums and related materials supplements (Fund)
printing private placement memorandums and related a camera ready Fund prospectus (the prospectus shall
materials be limited to those Funds listed on Schedule A)
text composition and printing Fund SAIs
mailing and distributing Fund SAIs to policy owners
upon request by policy owners
mailing and distributing private placement memorandums
and related materials (Account) prospectuses (Fund) and
supplements (Fund) to policy owners of record and to
prospective purchasers
text composition and printing (Account), printing, text composition and printing of annual and
mailing, and distributing annual and semi-annual reports semi-annual reports (Fund)
for Account (Fund and Account as, applicable)
text composition, printing, mailing, distributing, and text composition, printing, mailing, distributing and
tabulation of any proxy statements and voting instruction tabulation of proxy statements and voting instruction
solicitation materials to policy owners with respect to solicitation materials to policy owners with respect
proxies related to the Account to proxies related to the Fund
-----------------------------------------------------------------------------------------------------------------
preparation, printing and distributing private placement
memorandums and related materials to the Funds, insofar
as such materials relate to the Contracts and filing
such materials with and obtaining approval from any
state insurance regulatory authority and any other
appropriate regulatory authority, to the extent required
|
EXHIBIT h(68)(b)
AMENDMENT NO. 1
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated February 26, 1999, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware Corporation, American General Life Insurance Company ("Life Company"), a Texas life insurance company and American General Securities Incorporated ("AGSI"), and collectively (the "Parties"), is hereby amended as follows. All capitalized terms not otherwise defined in this Amendment, shall have the same meaning as described in the agreement.
WHEREAS, American General Distributors, Inc. ("AGDI") is a Delaware corporation and is registered as a broker-dealer under the 1934 Act and under any appropriate regulatory requirements of state law, and is a member in good standing of the NASD, and is an affiliate of AGSI and the Company;
WHEREAS, the Life Company and AGDI have entered into a Distribution Agreement, dated November 1, 2000, which sets forth AGDI's duties as distributor of the Contracts and replace the Distribution Agreement between the Life Company and AGSI; and
WHEREAS, AGSI desires that AGDI replace AGSI as a party to the Agreement.
NOW THEREFORE, in consideration of their mutual promises, the parties agree as follows:
Effective on the date of the Distribution Agreement between the Life Company and AGDI, indicated herein, AGDI will replace AGSI as a party to the Agreement. All the duties and responsibilities of AGSI shall become the duties and responsibilities of AGDI.
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: November 1, 2000
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
-------------------- -----------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
AIM DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cerno
-------------------- -----------------------------
Name: Nancy L. Martin Name: Michael J. Cerno
Title: Assistant Secretary Title: President
|
(SEAL)
AMERICAN GENERAL LIFE INSURANCE
COMPANY
Attest: /s/ Lauren W. Jones By: /s/ Don M. Ward
-------------------------- ---------------------------------
Name: Lauren W. Jones Name: Don M. Ward
-------------------------- ---------------------------------
|
Title: Assistant Secretary Title:Executive Vice President
-------------------------- ---------------------------------
|
(SEAL)
AMERICAN GENERAL DISTRIBUTORS, INC.
Attest: /s/ Cheryl G. Hemley By: /s/ [Illeligible}
-------------------------- ---------------------------------
Name: Cheryl G. Hemley Name: [Illeligible}
-------------------------- ---------------------------------
|
Title: Assistant Secretary Title:Senior Vice President - Compliance
-------------------------- ---------------------------------
|
(SEAL)
EXHIBIT h(69)(a)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.,
FIRST COVA LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
AND
COVA LIFE SALES COMPANY
TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
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...................................2
Section 2. Processing Transactions................................................2
2.1 Timely Pricing and Orders........................................2
2.2 Timely Payments..................................................3
2.3 Applicable Price.................................................3
2.4 Dividends and Distributions......................................4
2.5 Book Entry.......................................................4
Section 3. Costs and Expenses.....................................................4
3.1 General..........................................................4
3.2 Registration.....................................................4
3.3 Other (Non-Sales-Related)........................................4
3.4 Other (Sales-Related)............................................5
3.5 Parties To Cooperate.............................................5
Section 4. Legal Compliance.......................................................5
4.1 Tax Laws.........................................................5
4.2 Insurance and Certain Other Laws.................................8
4.3 Securities Laws..................................................8
4.4 Notice of Certain Proceedings and Other Circumstances............9
4.5 Cova To Provide Documents; Information About AVIF...............10
4.6 AVIF To Provide Documents; Information About Cova...............11
Section 5. Mixed and Shared Funding..............................................12
5.1 General........................................................12
5.2 Disinterested Directors........................................12
5.3 Monitoring for Material Irreconcilable Conflicts...............13
5.4 Conflict Remedies..............................................13
5.5 Notice to Cova.................................................14
5.6 Information Requested by Board of Directors....................15
5.7 Compliance with SEC Rules......................................15
5.8 Other Requirements.............................................15
Section 6. Termination...........................................................15
6.1 Events of Termination..........................................15
6.2 Notice Requirement for Termination.............................16
|
6.3 Funds To Remain Available....................................17
6.4 Survival of Warranties and Indemnifications..................17
6.5 Continuance of Agreement for Certain Purposes................17
Section 7. Parties To Cooperate Respecting Termination.........................17
Section 8. Assignment..........................................................18
Section 9. Notices.............................................................18
Section 10. Voting Procedures..................................................19
Section 11. Foreign Tax Credits................................................19
Section 12. Indemnification....................................................19
12.1 Of AVIF and AIM by Cova and Cova Sales........................19
12.2 Of Cova and Cova Sales by AVIF and AIM........................21
12.3 Effect of Notice..............................................24
12.4 Successors....................................................24
Section 13. Applicable Law.....................................................24
Section 14. Execution in Counterparts..........................................24
Section 15. Severability.......................................................24
Section 16. Rights Cumulative..................................................25
Section 17. Headings...........................................................25
Section 18. Confidentiality....................................................25
Section 19. Parties to Cooperate...............................................26
Section 20. Amendments.........................................................26
Section 21. Assignment.........................................................26
SCHEDULE A......................................................................28
|
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 3rd day of April, 2000 ("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland corporation ("AVIF"); A I M Distributors, Inc., a Delaware corporation ("AIM"), First Cova Life Insurance Company, a New York life insurance company ("Cova"), 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 Cova Life Sales Company, an affiliate of Cova and the principal underwriter of the Contracts ("Cova Sales") (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 seventeen 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, Cova 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, Cova 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, Cova 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
WHEREAS, to the extent permitted by applicable insurance laws and regulations, Cova intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, Cova Sales 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");
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 Cova for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. 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, 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 agrees that all shares of the Funds will be sold only to
Participating Insurance Companies and other entities, all in accordance with
Section 817 (h)(4) of the Internal Revenue Code of 1986, as amended (the "Code")
and Treasury Regulation Section 1.817-5. Shares of the Funds will not 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
Cova 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) Cova is open for business.
(b) Cova 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. Cova 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 Cova 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 Cova.
(c) With respect to payment of the purchase price by Cova and of redemption proceeds by AVIF, Cova 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), Cova 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 Cova.
2.2 TIMELY PAYMENTS.
Cova 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 Cova by 1:00 p.m. Central Time on the same day as the Order is placed, to the extent practicable, but in any event within five (5) calendar days after the date the order is placed in order to enable Cova 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 Cova 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), Cova 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 Cova 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 Cova of any income dividends or capital gain distributions payable on the Shares of any Fund. Cova 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 Cova 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. Cova 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 Cova. Shares ordered from AVIF will be recorded in an appropriate title for Cova, on behalf of its Account.
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) Cova 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) Cova 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) Cova will print in quantity and deliver to existing Participants the documents described in Section 3.3(b) above and the prospectus provided by AVIF in camera ready form. AVIF will print the AVIF statement of additional information, proxy materials relating to AVIF and periodic reports of AVIF.
3.4 OTHER (SALES-RELATED).
Cova 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 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 Code, and represents that it will qualify and to maintain qualification of each Fund as a RIC. AVIF will notify Cova 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 Cova 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) Notwithstanding Section 12.2 hereunder, Cova agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of Cova or, to Cova's knowledge, of any Participant, that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or Cova 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) Cova shall promptly notify AVIF of such assertion or potential claim (subject to the Confidentiality provisions of Section 18 as to any Participant);
(ii) Cova shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) Cova 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) Cova 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 Cova will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by Cova 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 Cova 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 Cova to any such person without the express written consent of AVIF which shall not be unreasonably withheld;
(vi) Cova 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 Cova) 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) Cova 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 Cova shall not be required, after exhausting all administrative remedies, 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 provided further that the costs of any such appeal shall be borne equally by the Parties hereto except that Cova shall not be liable for such costs if the failure to comply with Section 817 (h) arises from a failure to meet the requirements of Treasury Regulation Section 1.817-5(b)(1) or (2) or Treasury Regulation Section 1.817-5(f) through no fault of Cova; and
(viii) AVIF and its affiliates shall have no liability as a result of such failure or alleged failure if Cova 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, Cova may, in its discretion, authorize AVIF or its affiliates to act in the name of Cova 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 Cova 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) Cova 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 maintain such treatment; Cova 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) Cova 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. Cova will 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 comply with any applicable state insurance laws or regulations, to the extent specifically requested in writing by Cova, including, the furnishing of information not otherwise available to Cova which is required by state insurance law to enable Cova to obtain the authority needed to issue the Contracts in any applicable state.
(b) Cova 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 New York 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 New York Insurance Law 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) Cova 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 New York 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) Cova 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 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 Cova 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 Cova. 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) Cova 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. Cova 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.
4.5 COVA TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) Cova 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) Cova 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 Cova in the manner required by Section 9 hereof.
(c) Neither Cova 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) Cova 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.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT COVA.
(a) AVIF will provide to Cova 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 Cova camera ready or computer diskette copies of all AVIF prospectuses and printed copies, in an amount specified by Cova, 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 Cova in a timely manner so as to enable Cova, 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 Cova or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which Cova, 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 Cova 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. Cova 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 Cova, 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 Cova for distribution; or (iii) in sales literature or other promotional material approved by Cova or its affiliates, except with the express written permission of Cova.
(e) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning Cova, 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 Cova, 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 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 Cova, 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 Cova that 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 ("Participating Plans"). Cova 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, Cova 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 Cova 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, Cova 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 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 Cova's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, Cova 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 Cova that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by Cova 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 Cova conflicts with the majority of other state regulators, then Cova will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Directors informs Cova 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 Cova for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) Cova 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. Cova 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 COVA .
AVIF will promptly make known in writing to Cova 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.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
Cova 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 Cova or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding Cova'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 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 Cova 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, Cova 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 Cova, 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 Cova; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of Cova if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if Cova reasonably believes that the Fund may fail to so qualify; or
(g) at the option of Cova if the Fund fails to comply with Section 817(h) of the Code or with successor or similar provisions, or if Cova reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by Cova 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:
(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 sixty (60) 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 Cova, 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") nine (9) months following the Initial Termination Date, except that Cova may, by written notice shorten said nine (9) 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).
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.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
FIRST COVA LIFE INSURANCE COMPANY
Facsimile:
Attn: General Counsel
COVA LIFE SALES COMPANY
One Tower Lane
Suite 3000
Oakbrook Terrace, IL 60181
Facsimile:
Attn: General Counsel
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, Cova 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. Cova will vote Shares in accordance with timely instructions received from Participants. Cova 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 Cova 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. Cova reserves the right to vote shares held in any Account in its own right, to the extent permitted by law. Cova 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 Cova 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 Cova 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 COVA AND COVA SALES.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, Cova and Cova Sales 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 Cova and Cova Sales) 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 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 Cova or Cova Sales by or on behalf of AVIF 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 Cova, Cova Sales or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of Cova, Cova Sales 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 or on behalf of Cova, Cova Sales 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
(iv) arise as a result of any failure by Cova or Cova Sales 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 Cova or Cova Sales in this Agreement or arise out of or result from any other material breach of this Agreement by Cova or Cova Sales; or
(v) arise as a result of failure by the Contracts issued by Cova 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 Cova nor Cova Sales 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 Cova nor Cova Sales shall be liable under this Section 12.1 with respect to any action against an Indemnified Party unless AVIF shall have notified Cova and Cova Sales 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 Cova and Cova Sales of any such action shall not relieve Cova and Cova Sales 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, Cova and Cova Sales 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 Cova or Cova Sales to such Indemnified Party of Cova's or Cova Sales's election to assume the defense thereof, the Indemnified Party will cooperate fully with Cova and Cova Sales and shall bear the fees and expenses of any additional counsel retained by it, and neither Cova nor Cova Sales 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 COVA AND COVA SALES BY AVIF AND AIM.
(a) Except to the extent provided in Sections 4.1(c),12.2(c), 12.2(d) and 12.2(e), below, AVIF and AIM agree to indemnify and hold harmless Cova, Cova Sales, their respective affiliates, and each person, if any, who controls Cova, Cova Sales 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, 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, insofar as such losses, claims, damages, liabilities or actions are related to the sale or acquisition of AVIF's shares and:
(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 Cova, Cova Sales 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 their control
(including, without limitation, their employees and
"Associated Persons" as that Term is defined in
Section (q) 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 Cova, Cova Sales or their respective affiliates by or on behalf of AVIF or AIM for use 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
(iv) arise as a result of any 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 Cova 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 Cova of Shares of another investment company or portfolio for those of any adversely affected Fund as a funding medium for each Account that Cova 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 Cova, Cova Sales, 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 its 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 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 and/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 AVIF or AIM be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, Cova, Cova Sales 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 Cova or Cova Sales hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by Cova 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 Cova 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.
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 Cova or any
of its affiliates (collectively, the "Cova 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 Cova
Protected Parties or any of their employees or agents in connection with Cova's
performance of its duties under this Agreement are the valuable property of the
Cova Protected Parties. AVIF agrees that if it comes into possession of any list
or compilation of the identities of or other information about the Cova
Protected Parties' customers, or any other information or property of the Cova
Protected Parties, other than such information as may be independently developed
or compiled by AVIF from information supplied to it by the Cova 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 Cova's
prior written consent; or (b) as required by law or judicial process. Cova
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 Agreement are the valuable property of the
AVIF Protected Parties. Cova 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 Cova from information supplied to it by the AVIF Protected
Parties' customers who also maintain accounts directly with Cova, Cova 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. 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.
SECTION 20. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner except by a written agreement executed by all parties hereto.
SECTION 21. ASSIGNMENT
This Agreement may not be assigned without the prior written consent of all parties hereto.
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/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
------------------------- ------------------------------------
Nancy L. Martin Name: Robert H. Graham
Assistant Secretary Title: President
A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ MICHAEL J. CEMO
------------------------- ------------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
FIRST COVA LIFE INSURANCE COMPANY, on
behalf of itself and its separate
accounts
Attest: By: /s/ NORMA J. NASELLI
------------------------ --------------------------------
Name: Name: Norma J. Naselli
------------------------ --------------------------------
Title: Title: Vice President
------------------------ --------------------------------
COVA LIFE SALES COMPANY
Attest: By: /s/ PATRICIA E. GUBBE
------------------------ --------------------------------
Name: Name: Patricia E. Gubbe
------------------------ --------------------------------
Title: Title: President
------------------------ --------------------------------
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. International Equity Fund AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
First Cova Variable Annuity Account One
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
CNY-672
EXHIBIT h(69)(b)
AMENDMENT NO. 1
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 31, 1997, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, First MetLife Investors Insurance Company (formerly First Cova Life Insurance Company), a New York life insurance company and Cova Life Sales Company, Inc., a California corporation, is hereby amended as follows:
It is agreed that Effective March 22, 2001, MetLife Investors Distribution Company will assume the duties and responsibilities as principal underwriter of the contracts and become a party to this agreement in place of Cova Life Sales Company.
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE
POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
AIM V.I. Capital Appreciation Fund First MetLife Investors Variable - CONTRACT FORM #CNY-672
AIM V.I. International Equity Fund Annuity Account One
AIM V.I. Value Fund
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: February 12, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Michelle Grace By: /s/ Robert H. Graham
------------------------ ----------------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Michelle Grace By: /s/ Michael J. Cemo
------------------------ ----------------------------------
Name: P. Michelle Grace Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
(SEAL)
FIRST METLIFE INVESTORS INSURANCE
COMPANY
Attest: /s/ CHERYL J. FINNEY By: /s/ RICHARD C. PEARSON
--------------------------- -----------------------------
Name: Cheryl J. Finney Name: Richard C. Pearson
--------------------------- -----------------------------
Title: Senior Vice President Title: Executive Vice President
--------------------------- -----------------------------
|
(SEAL)
COVA LIFE SALES COMPANY, INC.
Attest: /s/ CHERYL J. FINNEY By: /s/ RICHARD C. PEARSON
--------------------------- -----------------------------
Name: Cheryl J. Finney Name: Richard C. Pearson
--------------------------- -----------------------------
Title: Senior Vice President Title: Executive Vice President
--------------------------- -----------------------------
|
(SEAL)
METLIFE INVESTORS DISTRIBUTION
COMPANY
Attest: /s/ CHERYL J. FINNEY By: /s/ RICHARD C. PEARSON
--------------------------- -----------------------------
Name: Cheryl J. Finney Name: Richard C. Pearson
--------------------------- -----------------------------
Title: Senior Vice President Title: Executive Vice President
--------------------------- -----------------------------
|
(SEAL)
EXHIBIT h(70)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS,
A I M DISTRIBUTORS, INC.,
PEOPLES BENEFIT LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
AFSG SECURITIES CORPORATION, AS UNDERWRITER
OF VARIABLE CONTRACTS AND POLICIES
TABLE OF CONTENTS
DESCRIPTION PAGE
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........................................................... 2
Section 2. Processing Transactions........................................................................ 2
2.1 Timely Pricing and Orders................................................................ 2
2.2 Timely Payments.......................................................................... 3
2.3 Applicable Price......................................................................... 3
2.4 Dividends and Distributions.............................................................. 4
2.5 Book Entry............................................................................... 4
Section 3. Costs and Expenses............................................................................. 4
3.1 General.................................................................................. 4
3.2 Parties To Cooperate..................................................................... 4
Section 4. Legal Compliance............................................................................... 4
4.1 Tax Laws................................................................................. 4
4.2 Insurance and Certain Other Laws......................................................... 7
4.3 Securities Laws.......................................................................... 7
4.4 Notice of Certain Proceedings and Other Circumstances.................................... 8
4.5 LIFE COMPANY To Provide Documents; Information About AVIF................................ 9
4.6 AVIF To Provide Documents; Information About LIFE COMPANY................................ 10
Section 5. Mixed and Shared Funding....................................................................... 12
5.1 General.................................................................................. 12
5.2 Disinterested Trustees................................................................... 12
5.3 Monitoring for Material Irreconcilable Conflicts......................................... 12
5.4 Conflict Remedies........................................................................ 13
5.5 Notice to LIFE COMPANY................................................................... 14
5.6 Information Requested by Board of Trustees............................................... 14
5.7 Compliance with SEC Rules................................................................ 15
5.8 Other Requirements....................................................................... 15
Section 6. Termination.................................................................................... 15
6.1 Events of Termination.................................................................... 15
6.2 Notice Requirement for Termination....................................................... 16
6.3 Funds To Remain Available................................................................ 17
|
6.4 Survival of Warranties and Indemnifications.............................................. 17
6.5 Continuance of Agreement for Certain Purposes............................................ 17
Section 7. Parties To Cooperate Respecting Termination.................................................... 17
Section 8. Assignment..................................................................................... 17
Section 9. Notices........................................................................................ 18
Section 10. Voting Procedures............................................................................. 18
Section 11. Foreign Tax Credits........................................................................... 19
Section 12. Indemnification............................................................................... 19
12.1 Of AVIF and AIM by LIFE COMPANY and UNDERWRITER.......................................... 19
12.2 Of LIFE COMPANY and UNDERWRITER by AVIF and AIM.......................................... 21
12.3 Effect of Notice......................................................................... 24
12.4 Successors............................................................................... 24
Section 13. Applicable Law................................................................................ 24
Section 14. Execution in Counterparts..................................................................... 24
Section 15. Severability.................................................................................. 24
Section 16. Rights Cumulative............................................................................. 24
Section 17. Headings...................................................................................... 25
Section 18. Confidentiality............................................................................... 25
Section 19. Trademarks and Fund Names..................................................................... 25
Section 20. Parties to Cooperate.......................................................................... 26
|
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of February, 2001 ("Agreement"), by and among AIM Variable Insurance Funds, a Delaware trust ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"), Peoples Benefit Life Insurance Company, an Iowa life insurance company ("LIFE COMPANY"), 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 AFSG Securities Corporation, an affiliate of LIFE COMPANY and the principal underwriter of the Contracts ("UNDERWRITER") (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 seventeen 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, LIFE COMPANY 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, LIFE COMPANY 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, LIFE COMPANY 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
WHEREAS, to the extent permitted by applicable insurance laws and regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER 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");
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 LIFE COMPANY for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. The Board of Trustees 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 Trustees 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, 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 LIFE COMPANY with the net asset value per Share for each Fund by 6:00 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) LIFE COMPANY is open for business.
(b) LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY in the event that AVIF is unable to meet the 6:00 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 LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of redemption proceeds by AVIF, LIFE COMPANY 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), LIFE COMPANY shall be entitled to an adjustment to the number of Shares purchased or redeemed to reflect the correct net asset value per Share. Any material error in the calculation or reporting of net asset value per Share, dividend or capital gain information shall be reported promptly upon discovery to LIFE COMPANY.
2.2 TIMELY PAYMENTS.
LIFE COMPANY 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 LIFE COMPANY by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY 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 LIFE COMPANY 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), LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY of any income dividends or capital gain distributions payable on the Shares of any Fund. LIFE COMPANY 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 LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY. Shares ordered from AVIF will be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule B, attached hereto and made a part hereof, each Party will bear all expenses incident to its performance under this Agreement.
3.2 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 LIFE COMPANY 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 LIFE COMPANY 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) LIFE COMPANY agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of LIFE COMPANY or, to LIFE COMPANY"s knowledge, of any Participant, that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or LIFE COMPANY otherwise becomes aware of any facts that could give rise to any claim against AVIF or its affiliates as a result of such a failure or alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF of such assertion or
potential claim (subject to the Confidentiality provisions of
Section 18 as to any Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) LIFE COMPANY shall use its best efforts to minimize any liability of AVIF or its affiliates resulting from such failure, including, without limitation, demonstrating, pursuant to Treasury Regulations Section 1.817-5(a)(2), to the Commissioner of the IRS that such failure was inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal and accounting advisors to participate in any conferences, settlement discussions or other administrative or judicial proceeding or contests (including judicial appeals thereof) with the IRS, any 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 LIFE COMPANY will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by LIFE COMPANY 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 LIFE COMPANY 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 LIFE
COMPANY to any such person without the express written consent
of AVIF which shall not be unreasonably withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their accounting and legal advisors with such cooperation as AVIF shall reasonably request (including, without limitation, by permitting AVIF and its accounting and legal advisors to review the relevant books and records of LIFE COMPANY) in order to facilitate review by AVIF or its advisors of any written submissions provided to it pursuant to the preceding clause or its assessment of the validity or amount of any claim against its arising from such a failure or alleged failure;
(vii) LIFE COMPANY 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 LIFE COMPANY 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 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 LIFE COMPANY fails to comply with any of the foregoing clauses (i) through (vii), and such failure could be shown to have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to any compromise or settlement of any claim or liability hereunder, LIFE COMPANY may, in its discretion, authorize AVIF or its affiliates to act in the name of LIFE COMPANY in, and to control the conduct of, such conferences, discussions, proceedings, contests or appeals and all administrative or judicial appeals thereof, and in that event AVIF or its affiliates shall bear the fees and expenses associated with the conduct of the proceedings that it is so authorized to control; provided, that in no event shall LIFE
COMPANY 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) LIFE COMPANY 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; LIFE COMPANY 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) LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY, including, the furnishing of information not otherwise available to LIFE COMPANY which is required by state insurance law to enable LIFE COMPANY to obtain the authority needed to issue the Contracts in any applicable state.
(b) LIFE COMPANY 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 Iowa 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 the Iowa Insurance Code 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 trust duly organized, validly existing, and in good standing under the laws of the State of Delaware 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) LIFE COMPANY 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 Iowa 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) LIFE COMPANY 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 Delaware 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 pursuant to Rule 12b-1, AVIF undertakes to have its Board of Trustees, 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 LIFE COMPANY 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 LIFE COMPANY. 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) LIFE COMPANY 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. LIFE COMPANY 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.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) LIFE COMPANY 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) LIFE COMPANY 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 AIM as the entity to receive such sales literature, until such time as AVIF appoints another designated agent by giving notice to LIFE COMPANY in the manner required by Section 9 hereof.
(c) Neither LIFE COMPANY 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) LIFE COMPANY 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.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY.
(a) AVIF will provide to LIFE COMPANY 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 LIFE COMPANY camera ready or computer diskette copies of all AVIF prospectuses and printed copies, in an amount specified by LIFE COMPANY, 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 LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, 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 LIFE COMPANY or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which LIFE COMPANY, 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 LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY, 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 LIFE COMPANY for distribution; or (iii) in sales literature or other promotional material approved by LIFE COMPANY or its affiliates, except with the express written permission of LIFE COMPANY.
(e) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning LIFE COMPANY, 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 LIFE COMPANY, 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 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 LIFE COMPANY, and trustees of qualified pension and retirement plans (collectively, "Mixed and Shared Funding"). AVIF will provide a complete copy of such order to LIFE COMPANY upon execution of this Agreement. 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 LIFE COMPANY that, in the event that AVIF implements Mixed and Shared Funding, it may be appropriate to include in the prospectus pursuant to which a Contract is offered disclosure regarding the potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED TRUSTEES.
AVIF agrees that its Board of Trustees shall at all times consist of trustees a majority of whom (the "Disinterested Trustees") 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 trustee, 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 Trustees 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 ("Participating Plans"). LIFE COMPANY agrees to inform the Board of Trustees 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, LIFE COMPANY will assist the Board of Trustees in carrying out its responsibilities by providing the Board of Trustees with all information reasonably necessary for the Board of Trustees to consider any issue raised, including information as to a decision by LIFE COMPANY 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 Trustees or a majority of the Disinterested Trustees that a material irreconcilable conflict exists, LIFE COMPANY 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 Trustees), 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 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 LIFE COMPANY's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, LIFE COMPANY 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 LIFE COMPANY that this provision is being
implemented, and until such withdrawal AVIF shall continue to accept and
implement orders by LIFE COMPANY 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 LIFE COMPANY conflicts with the majority of other state regulators, then LIFE COMPANY will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Trustees informs LIFE COMPANY that it has determined that such decision has created a material irreconcilable conflict, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in resolving any material irreconcilable conflict will be carried out at its expense and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Trustees 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. LIFE COMPANY 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 LIFE COMPANY.
AVIF will promptly make known in writing to LIFE COMPANY the Board of Trustees' 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.
5.6 INFORMATION REQUESTED BY BOARD OF TRUSTEES.
LIFE COMPANY and AVIF (or its investment adviser) will at least annually submit to the Board of Trustees of AVIF such reports, materials or data as the Board of Trustees may reasonably request in writing so that the Board of Trustees 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 Trustees. All reports received by the Board of Trustees of potential or existing conflicts, and all Board of Trustees 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 Trustees 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 LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding LIFE COMPANY'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 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 LIFE COMPANY 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, LIFE COMPANY 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 LIFE COMPANY, 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 LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANY if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if LIFE
COMPANY reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by LIFE COMPANY 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 breach of any material 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:
(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 LIFE COMPANY, 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 LIFE COMPANY 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).
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
AIM DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
PEOPLES BENEFIT LIFE INSURANCE COMPANY
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499
Facsimile: (319) 398-2372
Attn: Karen J. Epp, Esq.
Division Counsel
AFSG SECURITIES CORPORATION
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499
Facsimile: (319) 297-8290
Attn: Frank A. Camp, Esq.
Financial Markets Division General Counsel
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, LIFE COMPANY 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. LIFE COMPANY will vote Shares in accordance with timely instructions received from Participants. LIFE COMPANY 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 LIFE COMPANY 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. LIFE COMPANY reserves the right to vote shares held in any Account in its own right, to the extent permitted by law. LIFE COMPANY 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 LIFE COMPANY 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 trustees and with whatever rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LIFE COMPANY 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 LIFE COMPANY AND UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless AVIF, its affiliates, 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 trustees 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 LIFE COMPANY and UNDERWRITER) 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 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 LIFE COMPANY or UNDERWRITER 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 LIFE COMPANY, UNDERWRITER or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of LIFE COMPANY, UNDERWRITER 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 or on behalf of LIFE COMPANY, UNDERWRITER 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
(iv) arise as a result of any failure by LIFE COMPANY or UNDERWRITER 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 LIFE COMPANY or UNDERWRITER in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANY or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued by LIFE COMPANY 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 LIFE COMPANY nor UNDERWRITER 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 LIFE COMPANY nor UNDERWRITER shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
or AIM shall have notified LIFE COMPANY and UNDERWRITER 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 LIFE COMPANY and
UNDERWRITER of any such action shall not relieve LIFE COMPANY and UNDERWRITER
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, LIFE COMPANY and UNDERWRITER 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 LIFE COMPANY or UNDERWRITER to such Indemnified
Party of LIFE COMPANY's or UNDERWRITER's election to assume the defense thereof,
the Indemnified Party will cooperate fully with LIFE COMPANY and UNDERWRITER and
shall bear the fees and expenses of any additional counsel retained by it, and
neither LIFE COMPANY nor UNDERWRITER 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 LIFE COMPANY AND UNDERWRITER 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 LIFE COMPANY,
UNDERWRITER, their respective affiliates, and each person, if any, who controls
LIFE COMPANY, UNDERWRITER or their respective affiliates within the meaning of
Section 15 of the 1933 Act and each of their respective trustees and officers,
(collectively, the "Indemnified Parties" for purposes of this Section 12.2)
against any and all losses, claims, 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 LIFE COMPANY, UNDERWRITER 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, AIM, or its affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF, AIM, or its affiliates or persons under its control (including, without limitation, their employees and "Associated Persons" as that term is defined in Section (m) of Article I 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 LIFE COMPANY, UNDERWRITER or their respective affiliates by or on behalf of AVIF or AIM for use 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
(iv) arise as a result of any 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 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 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 LIFE COMPANY 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 LIFE COMPANY of Shares of another investment company or portfolio for those of any adversely affected Fund as a funding medium for each Account that LIFE COMPANY 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 LIFE COMPANY, UNDERWRITER, 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 its 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 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 AVIF
will not 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, LIFE COMPANY, UNDERWRITER 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 LIFE COMPANY or UNDERWRITER hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by LIFE
COMPANY 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 LIFE COMPANY 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 Delaware law, without regard for that state's principles of conflict of laws.
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 LIFE COMPANY
or any of its affiliates (collectively, the "LIFE COMPANY 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
LIFE COMPANY Protected Parties or any of their employees or agents in connection
with LIFE COMPANY's performance of its duties under this Agreement are the
valuable property of the LIFE COMPANY Protected Parties. AVIF agrees that if it
comes into possession of any list or compilation of the identities of or other
information about the LIFE COMPANY Protected Parties' customers, or any other
information or property of the LIFE COMPANY Protected Parties, other than such
information as may be independently developed or compiled by AVIF from
information supplied to it by the LIFE COMPANY 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 LIFE COMPANY's prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY
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 Agreement are the valuable property of the
AVIF Protected Parties. LIFE COMPANY 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 LIFE COMPANY from information supplied to it by the AVIF
Protected Parties' customers who also maintain accounts directly with LIFE
COMPANY, LIFE COMPANY 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) Except as may otherwise be provided in a License Agreement among A I M Management Group Inc., LIFE COMPANY and UNDERWRITER, neither LIFE COMPANY nor UNDERWRITER or any of their respective affiliates, shall use any trademark, trade name, service mark or logo of AVIF, AIM or any of their respective affiliates, or any variation of any such trademark, trade name, service mark or logo, without AVIF's or AIM's prior written consent, the granting of which shall be at AVIF's or AIM's sole option.
(b) Except as otherwise expressly provided in this Agreement, neither AVIF, its investment adviser, its principal underwriter, or any affiliates thereof shall use any trademark, trade name, service mark or logo of LIFE COMPANY, UNDERWRITER or any of their affiliates, or any variation of any such trademark, trade name, service mark or logo, without LIFE COMPANY's or UNDERWRITER's prior written consent, the granting of which shall be at LIFE COMPANY's or UNDERWRITER's sole option.
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.
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
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
----------------------- ------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cerno
----------------------- ------------------------
Name: Nancy L. Martin Name: Michael J. Cerno
Title: Assistant Secretary Title: President
|
PEOPLES BENEFIT LIFE INSURANCE
COMPANY, on behalf of
itself and its separate
accounts
Attest: /s/ John D. Cleavenger By: /s/Paul Reaburn
----------------------- ------------------------
Name: John D. Cleavenger Name: Paul Reaburn
Title: V.P. Title: V.P.
|
AFSG SECURITIES CORPORATION
Attest: /s/ Darin D. Smith By: /s/ Lisa Wachendorf
----------------------- ------------------------
Name: Darin D. Smith Name: Lisa Wachendorf
Title: AOP and AS Title: VP and Chief Compliance
Officer
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
- AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital Appreciation Fund AIM V.I. Government Securities Fund AIM V.I. Growth and Income Fund AIM V.I. International Equity Fund AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Peoples Benefit Variable Life Account A
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Peoples Benefit Life Insurance Company - Variable Protector Policy Form number AVUL 0709 00 1200
SCHEDULE B
EXPENSE ALLOCATIONS
LIFE COMPANY AVIF / AIM
preparing and filing the Account"s registration preparing and filing the Fund"s registration statement
statement
text composition for Account prospectuses and text composition for Fund prospectuses and supplements
supplements
text alterations of prospectuses (Account) and text alterations of prospectuses (Fund) and
supplements (Account) supplements (Fund)
printing Account and Fund prospectuses and a camera ready Fund prospectus;
supplements printing costs of Fund prospectus to existing policy
owners with amounts allocated to the Fund
text composition and printing Account SAIs text composition and printing Fund SAIs
mailing and distributing Account SAIs to mailing and distributing Fund SAIs to policy owners
policy owners upon request by policy owners upon request by policy owners
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of record
as required by Federal Securities
Laws and to prospective purchasers
text composition (Account), printing, mailing, and text composition of annual and semi-annual reports
distributing annual and semi-annual reports for (Fund)
Account (Fund and Account as, applicable)
text composition, printing, mailing, distributing, text composition, printing, mailing, distributing and tabulation
tabulation and instruction solicitation of proxy of proxy statements and voting instruction solicitation materials to
statements and voting materials to policy policy owners with respect proxies related to the Fund
owners with respect to proxies related to the
Account
preparation, printing and distributing sales
material and advertising relating
to the Funds, insofar as such materials
relate to the Contracts and 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
|
Exhibit h(71)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS,
A I M DISTRIBUTORS, INC.,
SECURITY BENEFIT LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
SECURITY DISTRIBUTORS, INC.
TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
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............................. 2
Section 2. Processing Transactions...................................... 3
2.1 Timely Pricing and Orders.................................. 3
2.2 Timely Payments............................................ 3
2.3 Applicable Price........................................... 3
2.4 Dividends and Distributions................................ 4
2.5 Book Entry................................................. 4
Section 3. Costs and Expenses........................................... 4
3.1 General.................................................... 4
3.2 Parties To Cooperate....................................... 4
Section 4. Legal Compliance............................................. 5
4.1 Tax Laws................................................... 5
4.2 Insurance and Certain Other Laws........................... 7
4.3 Securities Laws............................................ 7
4.4 Notice of Certain Proceedings and Other Circumstances...... 9
4.5 LIFE COMPANY To Provide Documents; Information About AVIF.. 9
4.6 AVIF To Provide Documents; Information About LIFE COMPANY.. 10
Section 5. Mixed and Shared Funding..................................... 12
5.1 General.................................................... 12
5.2 Disinterested Trustees..................................... 12
5.3 Monitoring for Material Irreconcilable Conflicts........... 12
5.4 Conflict Remedies.......................................... 13
5.5 Notice to LIFE COMPANY..................................... 14
5.6 Information Requested by Board of Trustees................. 14
5.7 Compliance with SEC Rules.................................. 15
5.8 Other Requirements......................................... 15
Section 6. Termination.................................................. 15
6.1 Events of Termination...................................... 15
6.2 Notice Requirement for Termination......................... 16
6.3 Funds To Remain Available.................................. 16
6.4 Survival of Warranties and Indemnifications................ 17
6.5 Continuance of Agreement for Certain Purposes.............. 17
|
Section 7. Parties To Cooperate Respecting Termination.................. 17
Section 8. Assignment................................................... 17
Section 9. Notices...................................................... 17
Section 10. Voting Procedures............................................ 18
Section 11. Foreign Tax Credits.......................................... 19
Section 12. Indemnification.............................................. 19
12.1 Of AVIF and AIM by LIFE COMPANY and UNDERWRITER............ 19
12.2 Of LIFE COMPANY and UNDERWRITER by AVIF and AIM............ 21
12.3 Effect of Notice........................................... 24
12.4 Successors................................................. 24
Section 13. Applicable Law............................................... 24
Section 14. Execution in Counterparts.................................... 24
Section 15. Severability................................................. 24
Section 16. Rights Cumulative............................................ 24
Section 17. Headings..................................................... 24
Section 18. Confidentiality.............................................. 25
Section 19. Trademarks and Fund Names.................................... 25
Section 20. Parties to Cooperate......................................... 26
Section 21. Amendments................................................... 26
|
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 28th day of March, 2001 ("Agreement"), by and among AIM Variable Insurance Funds, a Delaware Trust ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"), Security Benefit Life Insurance Company, a Kansas life insurance company ("LIFE COMPANY"), 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 Security Distributors, Inc., an affiliate of LIFE COMPANY and the principal underwriter of the Contracts ("UNDERWRITER") (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 sixteen separate series ("Series"), shares ("Shares") 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, LIFE COMPANY 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, LIFE COMPANY 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, LIFE COMPANY 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
WHEREAS, to the extent permitted by applicable insurance laws and regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER 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");
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");
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 LIFE COMPANY for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. The Board of Trustees 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 Trustees 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, 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 LIFE COMPANY with the net asset value per Share for each Fund by 6:00 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) LIFE COMPANY is open for business.
(b) LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY in the event that AVIF is unable to meet the 6:00 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 LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of redemption proceeds by AVIF, LIFE COMPANY 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), LIFE COMPANY shall be entitled to an adjustment to the number of Shares purchased or redeemed to reflect the correct net asset value per Share. Any material error in the calculation or reporting of net asset value per Share, dividend or capital gain information shall be reported promptly upon discovery to LIFE COMPANY. Materiality and reprocessing cost reimbursement shall be determined in accordance with standards established by the Parties as provided in Schedule B, attached hereto and incorporated herein.
2.2 TIMELY PAYMENTS.
LIFE COMPANY 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 LIFE COMPANY by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY 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 LIFE COMPANY 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), LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY of any income dividends or capital gain distributions payable on the Shares of any Fund. AVIF or its designated agent will use its best effort to provide such notice to LIFE COMPANY no later than 5:30 p.m. Central time on the payment date. LIFE COMPANY 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 LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY. Shares ordered from AVIF will be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto and made a part hereof, each Party will bear, or arrange for others to bear, all expenses incident to its performance under this Agreement.
3.2 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 each Fund will maintain such qualification as a RIC under Subchapter M (or any successor provision) of the Code. AVIF will notify LIFE COMPANY 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 and warrants that each Fund will comply and will maintain each Fund's compliance with the diversification requirements set forth in Section 817(h) of the Code and Section 1.817-5(b) (or any successor provision) of the regulations under the Code. AVIF will notify LIFE COMPANY 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) Notwithstanding any other provision of this Agreement, LIFE COMPANY agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of LIFE COMPANY or, to LIFE COMPANY"s knowledge, of any Contract owners, annuitants, insureds or participants (as appropriate) under the Contracts (collectively, "Participants"), that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or LIFE COMPANY otherwise becomes aware of any facts that could give rise to any claim against AVIF or its affiliates as a result of such a failure or alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF of such assertion or
potential claim (subject to the Confidentiality provisions of
Section 18 as to any Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) LIFE COMPANY shall use its best efforts to minimize any liability of AVIF or its affiliates resulting from such failure, including, without limitation, demonstrating, pursuant to Treasury Regulations Section 1.817-5(a)(2), to the Commissioner of the IRS that such failure was inadvertent, it being understood that AVIF and its affiliates will cooperate with LIFE COMPANY in this regard;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal and accounting advisors to participate in any conferences, settlement discussions or other administrative or judicial proceeding or contests (including judicial appeals thereof) with the IRS, any 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 LIFE COMPANY will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by LIFE COMPANY 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 LIFE COMPANY 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 LIFE
COMPANY to any such person without the express written consent
of AVIF which shall not be unreasonably withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their accounting and legal advisors with such cooperation as AVIF shall reasonably request (including, without limitation, by permitting AVIF and its accounting and legal advisors to review the relevant books and records of LIFE COMPANY) in order to facilitate review by AVIF or its advisors of any written submissions provided to it pursuant to the preceding clause or its assessment of the validity or amount of any claim against its arising from such a failure or alleged failure;
(vii) LIFE COMPANY 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 LIFE COMPANY shall not be required, after exhausting all administrative remedies, to appeal any adverse judicial decision unless AVIF or its affiliates shall have provided an opinion of independent counsel, which counsel shall be reasonably satisfactory to LIFE COMPANY, to the effect that a reasonable basis exists for taking such appeal; and 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 LIFE COMPANY fails to comply with any of the foregoing clauses (i) through (vii), and such failure could be shown to have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to
any compromise or settlement of any claim or liability hereunder, LIFE COMPANY
may, in its discretion, authorize AVIF or its affiliates to act in the name of
LIFE COMPANY in, and to control the conduct of, such conferences, discussions,
proceedings, contests or appeals and all administrative or judicial appeals
thereof, and in that event AVIF or its affiliates shall bear the fees and
expenses associated with the conduct of the proceedings that it is so authorized
to control; provided, that in no event shall LIFE COMPANY 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) LIFE COMPANY 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; LIFE COMPANY 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) LIFE COMPANY 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 (or any successor provision) and the regulations thereunder. LIFE COMPANY will 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 LIFE COMPANY, including, the furnishing of information not otherwise available to LIFE COMPANY which is required by state insurance law to enable LIFE COMPANY to obtain the authority needed to issue the Contracts in any applicable state.
(b) LIFE COMPANY 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 Kansas 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 40-436 of the Kansas Insurance Law 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 lawfully organized, validly existing, and in good standing under the laws of the State of Delaware 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) LIFE COMPANY 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 the law(s) of LIFE COMPANY"s state(s) of organization and domicile, (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) LIFE COMPANY 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 Delaware 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 all applicable federal securities laws, including, but not limited to 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 necessary in order to perform its obligations under this Agreement.
(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 pursuant to Rule 12b-1, AVIF undertakes to have its Board of Trustees, 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.
(f) AIM represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. AIM further represents that it will sell and distribute AVIF's shares in accordance with the laws of the State of Kansas and any applicable federal securities laws.
(g) Underwriter represents and warrants that it is a member in good standing of the NASD and is a registered broker-dealer registered with the SEC and will sell its Contracts in accordance with any applicable law.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF or AIM will immediately notify LIFE COMPANY 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 LIFE COMPANY. AVIF and AIM 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) LIFE COMPANY or UNDERWRITER 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. LIFE COMPANY and UNDERWRITER 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.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) LIFE COMPANY 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) LIFE COMPANY 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 AIM as the entity to receive such sales literature, until such time as AVIF appoints another designated agent by giving notice to LIFE COMPANY in the manner required by Section 9 hereof.
(c) Neither LIFE COMPANY 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) LIFE COMPANY 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.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY.
(a) AVIF will provide to LIFE COMPANY 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 LIFE COMPANY a camera ready copy of all AVIF prospectuses and printed copies, in an amount specified by LIFE COMPANY, 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 LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, 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 LIFE COMPANY or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which LIFE COMPANY, 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 LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY, 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 LIFE COMPANY for distribution; or (iii) in sales literature or other promotional material approved by LIFE COMPANY or its affiliates, except with the express written permission of LIFE COMPANY.
(e) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning LIFE COMPANY, 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 LIFE COMPANY, 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 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 LIFE COMPANY, 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 LIFE COMPANY that, in the event that AVIF implements Mixed and Shared Funding, it may be appropriate to include in the prospectus pursuant to which a Contract is offered disclosure regarding the potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED TRUSTEES.
AVIF agrees that its Board of Trustees shall at all times consist of trustees a majority of whom (the "Disinterested Trustees") 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 Trustees 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 ("Participating Plans"). LIFE COMPANY agrees to inform the Board of Trustees 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, LIFE COMPANY will assist the Board of Trustees in carrying out its responsibilities by providing the Board of Trustees with all information reasonably necessary for
the Board of Trustees to consider any issue raised, including information as to a decision by LIFE COMPANY to disregard voting instructions of Participants. LIFE COMPANY's responsibilities in connection with the foregoing shall be carried out with a view only to the interests 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 Trustees or a majority of the Disinterested Trustees that a material irreconcilable conflict exists, LIFE COMPANY 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 Trustees), 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 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 LIFE COMPANY's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, LIFE COMPANY 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 LIFE COMPANY that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY 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 LIFE COMPANY conflicts with the majority of other state regulators, then LIFE COMPANY will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Trustees informs LIFE COMPANY that it has determined that such decision has created a material irreconcilable conflict, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in resolving any material irreconcilable conflict will be carried out at its expense and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Trustees 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. LIFE COMPANY 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 LIFE COMPANY.
AVIF will promptly make known in writing to LIFE COMPANY the Board of Trustees' 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.
5.6 INFORMATION REQUESTED BY BOARD OF TRUSTEES.
LIFE COMPANY and AVIF (or its investment adviser) will at least annually submit to the Board of Trustees of AVIF such reports, materials or data as the Board of Trustees may reasonably request so that the Board of Trustees 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 Trustees. All reports received by the Board of Trustees of potential or existing conflicts, and all Board of Trustees 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 Trustees 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 6.5 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 LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding LIFE COMPANY'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 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 LIFE COMPANY 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, LIFE COMPANY 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 LIFE COMPANY; 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 LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of AVIF if the Contracts issued by LIFE COMPANY 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
(g) upon another Party's material breach of any provision of this Agreement.
6.2 Subject to Section 6.5 below, this Agreement will terminate as to AVIF:
(a) at the option of LIFE COMPANY, if any Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if LIFE COMPANY reasonably believes that any Fund may fail to so qualify; or
(b) at the option of LIFE COMPANY, if any Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if LIFE
COMPANY, reasonably believes that any Fund may fail to so comply.
6.3 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:
(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.
6.4 FUNDS TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, AVIF will, at the option of LIFE COMPANY, 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.
6.5 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications will survive the termination of this Agreement.
6.6 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), 6.2(a) or 6.2(b) 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 LIFE COMPANY 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), 6.2(a) or 6.2(b).
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 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
A I M DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
SECURITY BENEFIT LIFE INSURANCE COMPANY
SECURITY DISTRIBUTORS, INC.
700 SW Harrison
Topeka, Kansas 66636
Facsimile: (785) 431-3080
Attn: General Counsel
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof,
LIFE COMPANY 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. LIFE COMPANY will vote
Shares in accordance with timely instructions received from Participants. LIFE
COMPANY 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
LIFE COMPANY 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. LIFE COMPANY reserves the right to vote
shares held in any Account in its own right, to the extent permitted by law.
LIFE COMPANY 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 LIFE COMPANY
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 trustees and
with whatever rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LIFE COMPANY 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 LIFE COMPANY AND UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless AVIF, AIM, their affiliates, and each person, if any, who controls AVIF, AIM, or their affiliates within the meaning of Section 15 of the 1933 Act and each of their respective trustees 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 LIFE COMPANY and UNDERWRITER) 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 or owned 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 LIFE COMPANY or UNDERWRITER 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 LIFE COMPANY, UNDERWRITER or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of LIFE COMPANY, UNDERWRITER or their respective affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member," as that term is defined in paragraph (q) 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, AIM or their affiliates by or on behalf of LIFE COMPANY, UNDERWRITER 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
(iv) arise as a result of any failure by LIFE COMPANY or UNDERWRITER 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 LIFE COMPANY or UNDERWRITER in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANY or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued by LIFE COMPANY 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 any successor provision) or Section 817(h) of the Code (or any successor provision).
(b) Neither LIFE COMPANY nor UNDERWRITER 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 or AIM.
(c) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
or AIM shall have notified LIFE COMPANY and UNDERWRITER 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 LIFE COMPANY and
UNDERWRITER of any such action shall not relieve LIFE COMPANY and UNDERWRITER
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, LIFE COMPANY and UNDERWRITER 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 LIFE COMPANY or UNDERWRITER to such
Indemnified Party of LIFE COMPANY's or UNDERWRITER's election to assume the defense thereof, the Indemnified Party will cooperate fully with LIFE COMPANY and UNDERWRITER and shall bear the fees and expenses of any additional counsel retained by it, and neither LIFE COMPANY nor UNDERWRITER 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 LIFE COMPANY AND UNDERWRITER 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 LIFE COMPANY,
UNDERWRITER, their respective affiliates, and each person, if any, who controls
LIFE COMPANY, UNDERWRITER or their respective affiliates within the meaning of
Section 15 of the 1933 Act and each of their respective trustees and officers,
(collectively, the "Indemnified Parties" for purposes of this Section 12.2)
against any and all losses, claims, 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 or owned 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 LIFE COMPANY, UNDERWRITER 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, AIM or their affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF, AIM or their affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member" as that term is defined in Section (q) of Article I
of the NASD By-Laws), in connection with the sale or distribution of the Contract or 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 LIFE COMPANY, UNDERWRITER or their respective affiliates by or on behalf of AVIF or AIM for use 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
(iv) arise as a result of any failure by AVIF or AIM 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 or AIM in this Agreement or arise out of or result from any other material breach of this Agreement by AVIF or AIM.
(b) The parties agree that the foregoing indemnification by AVIF shall not apply to any acts or omissions of AIM. 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 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 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 any successor provision), or (ii) Section 817(h) of the Code and regulations thereunder (or any successor provision), including, without limitation, any income taxes and related penalties, rescission charges, liability under state law to Participants asserting liability against LIFE COMPANY 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 LIFE COMPANY of Shares of another investment company or portfolio for those of any adversely affected Fund as a funding medium for each Account that LIFE COMPANY 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 LIFE COMPANY, UNDERWRITER, 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 its 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 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 AVIF
and AIM will not 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 AVIF or AIM be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, LIFE COMPANY, UNDERWRITER 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 LIFE COMPANY or UNDERWRITER hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by LIFE COMPANY 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 LIFE COMPANY 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 Delaware law, without regard for that state's principles of conflict of laws.
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 LIFE COMPANY or any of its affiliates (collectively, the "LIFE COMPANY 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 LIFE COMPANY Protected Parties or any of their employees or agents in connection with LIFE COMPANY's performance of its duties under this Agreement are the valuable property of the LIFE COMPANY Protected Parties. AVIF agrees that if it comes into
possession of any list or compilation of the identities of or other information
about the LIFE COMPANY Protected Parties' customers, or any other information or
property of the LIFE COMPANY Protected Parties, other than such information as
may be independently developed or compiled by AVIF from information supplied to
it by the LIFE COMPANY 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 LIFE COMPANY's prior written consent; or (b) as
required by law or judicial process. LIFE COMPANY 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 Agreement are the valuable property of the AVIF Protected Parties. LIFE
COMPANY 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
LIFE COMPANY from information supplied to it by the AVIF Protected Parties'
customers who also maintain accounts directly with LIFE COMPANY, LIFE COMPANY
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) Except as may otherwise be provided in a License Agreement among A I M Management Group Inc., LIFE COMPANY and UNDERWRITER, neither LIFE COMPANY nor UNDERWRITER or any of their respective affiliates, shall use any trademark, trade name, service mark or logo of AVIF, AIM or any of their respective affiliates, or any variation of any such trademark, trade name, service mark or logo, without AVIF's or AIM's prior written consent, the granting of which shall be at AVIF's or AIM's sole option.
(b) Except as otherwise expressly provided in this Agreement, neither AVIF, its investment adviser, its principal underwriter, or any affiliates thereof shall use any trademark, trade name, service mark or logo of LIFE COMPANY, UNDERWRITER or any of their affiliates, or any variation of any such trademark, trade name, service mark or logo, without LIFE COMPANY's or UNDERWRITER's prior written consent, the granting of which shall be at LIFE COMPANY's or UNDERWRITER's sole option.
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.
SECTION 21. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner except by a written agreement executed by all parties hereto.
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
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
----------------------------- ---------------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title Assistant Secretary Title: President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
----------------------------- ---------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
SECURITY BENEFIT LIFE INSURANCE
COMPANY, on behalf of itself and
its separate accounts
Attest: /s/ Chris Swickerd By: /s/ Elliot Shifman
----------------------------- ---------------------------------
Name: Chris Swickerd Name: Elliot Shifman
------------------------------- -------------------------------
Title: 2nd VP and Assistant Counsel Title: Vice President
------------------------------ ------------------------------
|
SECURITY DISTRIBUTORS, INC
Attest: /s/ Chris Swickerd By: /s/ Amy J. Lee
----------------------------- ---------------------------------
Name: Chris Swickerd Name: Amy J. Lee
------------------------------- -------------------------------
Title: Registered Principal Title: Secretary
------------------------------ ------------------------------
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
- AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital Appreciation Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
SBL Variable Annuity Account XIV
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
V6029
SCHEDULE B
AIM'S PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following thresholds are applied:
a. If the amount of the difference in the erroneous net asset value and the correct net asset value is less than .5% of the correct net asset value, AIM will reimburse the affected Fund to the extent of any loss resulting from the error. No other adjustments shall be made.
b. If the amount of the difference in the erroneous net asset value and the correct net asset value is .5% of the correct net asset value or greater, then AIM will determine the impact of the error to the affected Fund and shall reimburse such Fund (and/or LIFE COMPANY, as appropriate, such as in the event that the error was not discovered until after LIFE COMPANY processed transactions using the erroneous net asset value) to the extent of any loss resulting from the error. To the extent that an overstatement of net asset value per share is detected quickly and LIFE COMPANY has not mailed redemption checks to Participants, LIFE COMPANY and AIM agree to examine the extent of the error to determine the feasibility of reprocessing such redemption transaction (for purposes of reimbursing the Fund to the extent of any such overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to paragraph (b), above, AIM shall reimburse LIFE COMPANY for LIFE COMPANY's reprocessing costs in an amount not to exceed $1.00 per contract affected by $10 or more.
The Pricing Policies described herein may be modified by AVIF as approved by its Board of Trustees. AIM agrees to use its best efforts to notify LIFE COMPANY at least five (5) days prior to any such meeting of the Board of Trustees of AVIF to consider such proposed changes.
SCHEDULE C
EXPENSE ALLOCATIONS
LIFE COMPANY AVIF / AIM
preparing and filing the Account's Preparing and filing the Fund's
registration statement registration statement
text composition for Account text composition for Fund prospectuses
prospectuses and supplements and supplements
text alterations of prospectuses text alterations of prospectuses (Fund)
(Account) and supplements (Account) and supplements (Fund)
printing Account and Fund prospectuses a camera ready Fund prospectus
and supplements
text composition and printing Account text composition and printing Fund SAIs
SAIs
mailing and distributing Account SAIs mailing and distributing Fund SAIs to
to policy owners upon request by policy owners upon request by policy
policy owners owners
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by Federal
Securities Laws and to prospective
purchasers
Text composition (Account), printing, text composition of annual and
mailing, and distributing annual and semi-annual reports (Fund)
semi-annual reports for Account (Fund
and Account as, applicable)
Text composition, printing, mailing, text composition, printing, mailing,
distributing, and tabulation of proxy distributing and tabulation of proxy
statements and voting instruction statements and voting instruction
solicitation materials to policy solicitation materials to policy owners
owners with respect to proxies related with respect to proxies related to the
to the Account Fund
Preparation, printing and distributing
sales material and advertising
relating to the Funds, insofar as such
materials relate to the Contracts and
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
|
Exhibit h(72)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS
AND
A I M DISTRIBUTORS, INC.
AND
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
AND
PHOENIX EQUITY PLANNING CORPORATION
TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
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............................. 2
Section 2. Processing Transactions...................................... 3
2.1 Timely Pricing and Orders.................................. 3
2.2 Timely Payments............................................ 3
2.3 Applicable Price........................................... 3
2.4 Dividends and Distributions................................ 4
2.5 Book Entry................................................. 4
Section 3. Costs and Expenses........................................... 4
3.1 General.................................................... 4
3.2 Parties To Cooperate....................................... 4
Section 4. Legal Compliance............................................. 5
4.1 Tax Laws................................................... 5
4.2 Insurance and Certain Other Laws........................... 7
4.3 Securities Laws............................................ 7
4.4 Notice of Certain Proceedings and Other Circumstances...... 9
4.5 Phoenix To Provide Documents; Information About AVIF....... 9
4.6 AVIF To Provide Documents; Information About Phoenix....... 10
4.7 General.................................................... 12
Section 5. Mixed and Shared Funding..................................... 12
5.1 General.................................................... 12
5.2 Disinterested Trustees..................................... 12
5.3 Monitoring for Material Irreconcilable Conflicts........... 13
5.4 Conflict Remedies.......................................... 13
5.5 Notice to Phoenix.......................................... 15
5.6 Information Requested by Board of Trustees................. 15
5.7 Compliance with SEC Rules.................................. 15
5.8 Other Requirements......................................... 15
Section 6. Termination.................................................. 15
6.1 Events of Termination...................................... 15
6.2 Notice Requirement for Termination......................... 17
6.3 Funds To Remain Available.................................. 17
|
6.4 Survival of Warranties and Indemnifications................ 18
6.5 Continuance of Agreement for Certain Purposes.............. 18
Section 7. Parties To Cooperate Respecting Termination.................. 18
Section 8. Assignment................................................... 18
Section 9. Notices...................................................... 18
Section 10. Voting Procedures............................................ 19
Section 11. Foreign Tax Credits.......................................... 20
Section 12. Indemnification.............................................. 20
12.1 Of AVIF and AIM by Phoenix and UNDERWRITER................. 20
12.2 Of Phoenix and UNDERWRITER by AIM and Advisor.............. 22
12.3 Effect of Notice........................................... 25
12.4 Successors................................................. 25
Section 13. Applicable Law............................................... 25
Section 14. Execution in Counterparts.................................... 25
Section 15. Severability................................................. 25
Section 16. Rights Cumulative............................................ 25
Section 17. Headings..................................................... 25
Section 18. Confidentiality.............................................. 26
Section 19. Trademarks and Fund Names.................................... 26
Section 20. Parties to Cooperate......................................... 27
|
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 29th day of March, 2001 ("Agreement"), by and among AIM Variable Insurance Funds, a Delaware Trust ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"), Phoenix Home Life Mutual Insurance Company, a New York life insurance company ("Phoenix"), 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"), Phoenix Equity Planning Corporation ("PEPCO"), an affiliate of Phoenix 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 sixteen separate series ("Series"), shares ("Shares") each of which is registered under the Securities Act of 1933, as amended (the "1933 Act") and is 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, Phoenix 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, Phoenix 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, Phoenix 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
WHEREAS, to the extent permitted by applicable insurance laws and regulations, Phoenix intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, PEPCO 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
WHEREAS, AIM is a broker-dealer registered with the SEC under the 1934 Act and a member in good standing of the NASD;
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 Phoenix for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. The Board of Trustees 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 Trustees 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, 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 Phoenix 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) Phoenix is open for business.
(b) Phoenix 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. Phoenix 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 Phoenix 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 Phoenix.
(c) With respect to payment of the purchase price by Phoenix and of redemption proceeds by AVIF, Phoenix 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), Phoenix 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 Phoenix. Materiality and reprocessing cost reimbursement shall be determined in accordance with standards established by the Parties as provided in Schedule B, attached hereto and incorporated herein.
2.2 TIMELY PAYMENTS.
Phoenix 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 Phoenix by 1:00 p.m. Central Time on the same day as the order is placed, to the extent practicable, but in any event within five (5) calendar days after the date the order is placed in order to enable Phoenix to pay redemption proceeds within the time specified in Section 22(e) of the 1940 Act and any rules thereunder.
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 Phoenix 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), Phoenix 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 Phoenix not involving Contract transactions 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 Phoenix of any income dividends or capital gain distributions payable on the Shares of any Fund. Phoenix 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 Phoenix 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. Phoenix 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 Phoenix. Shares ordered from AVIF will be recorded in an appropriate title for Phoenix, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto and made a part hereof, or as otherwise agreed to in writing by and among some or all of the Parties, each Party will bear, or arrange for others to bear, all expenses incident to its performance under this Agreement.
3.2 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 make every effort to qualify and to maintain qualification of each Fund as a RIC. AVIF will notify Phoenix 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 and warrants that each Fund currently complies 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 ("diversification
requirements") and that it will make every effort to maintain each Fund's
compliance with the diversification requirements. AVIF will notify Phoenix
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) Notwithstanding any other provision of this Agreement, Phoenix agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of Phoenix or, to Phoenix's knowledge, of any Contract owners, annuitants, insureds or participants (as appropriate) under the Contracts (collectively, "Participants"), that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or Phoenix 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) Phoenix shall promptly notify AVIF of such assertion or
potential claim (subject to the Confidentiality provisions of
Section 18 as to any Participant);
(ii) Phoenix shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure.
(iii) Phoenix 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) Phoenix 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 Phoenix will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by Phoenix 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 Phoenix 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 Phoenix to any such person without the express written consent of AVIF which shall not be unreasonably withheld;
(vi) Phoenix 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 Phoenix) 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) Phoenix 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 Phoenix shall not be required, after exhausting all administrative remedies, 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 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 Phoenix 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, Phoenix may, in its discretion, authorize AVIF or its affiliates to act in the name of Phoenix 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 Phoenix 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) Phoenix 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 make every effort to maintain such treatment; Phoenix 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) Phoenix 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. Phoenix will make every effort 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 Phoenix, including, the furnishing of information not otherwise available to Phoenix which is required by state insurance law to enable Phoenix to obtain the authority needed to issue the Contracts in any applicable state.
(b) Phoenix 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 New York 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 such law 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 lawfully organized, validly existing, and in good standing under the laws of the State of Delaware 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) Phoenix 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 the law(s) of Phoenix's state(s) of organization and domicile, (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) Phoenix 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 Delaware 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 pursuant to Rule 12b-1, AVIF undertakes to have its Board of Trustees, 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.
(f) AVIF agrees that AVIF and the Funds shall be managed consistent with the investment objectives, policies, and restrictions as described in AVIF's and the Funds' prospectuses and registration statements, as amended or modified from time to time.
(g) AVIF and AIM shall sell and distribute the Shares of the Funds in accordance with the applicable provisions of federal law, including the 1933 Act, 1934 Act, and 1940 Act; the NASD Conduct Rules; and state law.
(h) PEPCO shall sell and distribute the Contracts in accordance with the applicable provisions of federal law, including the 1933 Act, 1934 Act, and 1940 Act; the NASD Conduct Rules; and state law.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF or AIM will immediately notify Phoenix 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 Phoenix. AVIF and AIM 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) Phoenix or PEPCO 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. Phoenix or PEPCO 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.
4.5 PHOENIX AND PEPCO TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) Phoenix 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) Phoenix or PEPCO 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 AIM as the entity to receive such sales literature, until such time as AVIF appoints another designated agent by giving notice to Phoenix in the manner required by Section 9 hereof.
(c) Neither Phoenix, PEPCO, nor any of their respective 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) Phoenix 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.
4.6 AVIF AND AIM TO PROVIDE DOCUMENTS; INFORMATION ABOUT PHOENIX.
(a) AVIF will provide to Phoenix 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 Phoenix a camera ready copy of all AVIF Prospectuses and printed copies, in an amount specified by Phoenix, 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 Phoenix in a timely manner so as to enable Phoenix, as the case may be, to print and distribute such materials within the time required by law to be furnished to Participants.
(c) AVIF or AIM will provide to Phoenix or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which Phoenix, 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 Phoenix 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. Phoenix 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, AIM, nor any of their respective affiliates will give any information or make any representations or statements on behalf of or concerning Phoenix, 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 Phoenix for distribution; or (iii) in sales literature or other promotional material approved by Phoenix or its affiliates, except with the express written permission of Phoenix.
(e) AIM shall adopt and implement procedures reasonably designed to ensure that information concerning Phoenix 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 Phoenix, 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 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.
4.7 GENERAL.
Each of the Parties represent and warrant that they shall perform their obligations hereunder in compliance with any applicable state and federal laws.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
(a) 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 Phoenix, 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.
(b) AVIF hereby notifies Phoenix 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.
(c) To the extent applicable, AVIF shall disclose in its Prospectus, in
substance, that: (i) Shares of the Funds are offered to affiliated and
unaffiliated insurance company separate accounts that fund both annuity and life
insurance contracts and are offered to qualified pension and retirement plans;
(ii) Mixed and Shared Funding may present certain conflicts of interest; (iii)
due to differences in tax treatment or other considerations, the interests of
various variable contract owners investing in separate accounts investing in
AVIF or a Fund and the interests of qualified pension and retirement plan
participants might at some time be in irreconcilable conflict; and (iv) the
Board of Trustees of AVIF will monitor for any material irreconcilable conflicts
and determine what action, if any, should be taken.
5.2 DISINTERESTED TRUSTEES.
AVIF agrees that its Board of Trustees shall at all times consist of
trustees a majority of whom are not interested persons of AVIF (the
"Disinterested Trustees") 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 Trustees 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 ("Participating Plans"). Phoenix agrees to inform the Board of Trustees 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, Phoenix will assist the Board of Trustees in carrying out its responsibilities by providing the Board of Trustees with all information reasonably necessary for the Board of Trustees to consider any issue raised, including information as to a decision by Phoenix to disregard voting instructions of Participants. Phoenix's responsibilities in connection with the foregoing shall be carried out with a view only to the interests 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 Trustees or a majority of the Disinterested Trustees that a material irreconcilable conflict exists, Phoenix 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 Trustees), 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 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 Phoenix's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, Phoenix 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 Phoenix that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by Phoenix 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 Phoenix conflicts with the majority of other state regulators, then Phoenix will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Trustees informs Phoenix 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 Phoenix for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) Phoenix 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 Trustees 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. Phoenix 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 PHOENIX.
AVIF will promptly make known in writing to Phoenix the Board of Trustees' 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.
5.6 INFORMATION REQUESTED BY BOARD OF TRUSTEES.
Phoenix and AVIF (or its investment adviser) will at least annually submit to the Board of Trustees of AVIF such reports, materials or data as the Board of Trustees may reasonably request so that the Board of Trustees 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 Trustees. All reports received by the Board of Trustees of potential or existing conflicts, and all Board of Trustees 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 Trustees 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), 4.1(e), 4.3(a), 4.4(b), 4.5(a), 5, 10 and 12.2(e) of this Agreement, but with respect to Section 12.2(e), only as to agreements with Participating Insurance Companies and Plans that are entered into after the execution of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.3 below, this Agreement will terminate as to a Fund:
(a) at the option of any Party, upon 90 days advance written notice to the other Parties, unless a shorter time is agreed to by the Parties; or
(b) at the option of Phoenix if Shares of the Funds are not reasonably available to meet the requirements of the Contracts issued by Phoenix, as determined by Phoenix, and upon written notice by Phoenix to the other Parties; or
(c) at the option of AVIF upon institution of formal proceedings against Phoenix or PEPCO by the NASD, the SEC, or any state securities or insurance department or any other regulatory body if AVIF shall determine, in its sole judgment exercised in good faith, that Phoenix or PEPCO 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
(d) at the option of Phoenix or PEPCO upon institution of formal proceedings against AVIF, its principal underwriter, or its investment adviser by the NASD, the SEC, or any state securities or insurance department or any other regulatory body if Phoenix or PEPCO shall determine, in its sole judgment exercised in good faith, that AVIF, its principal underwriter, or its investment 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
(e) 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 Phoenix; or
(f) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(g) at the option of Phoenix if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if Phoenix reasonably believes that the Fund may fail to so qualify; or
(h) at the option of Phoenix if the Fund fails to comply with Section 817(h) of the Code or with successor or similar provisions, or if Phoenix reasonably believes that the Fund may fail to so comply; or
(i) at the option of AVIF if the Contracts issued by Phoenix 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
(j) at the option of Phoenix upon any substitution of the shares of another investment company or series thereof for Shares of AVIF or a Fund in accordance with the terms of the Contracts, provided that Phoenix has given at least 30 days prior written notice to AVIF or AIM of the date of the substitution; or
(k) upon another Party's material breach of any provision of this Agreement.
6.2 RIGHT TO SUBSTITUTE.
Under the terms of the Contracts, Phoenix reserves the right, subject to compliance with the law as then in effect, to make substitutions for the securities that are held by an Account under certain circumstances. The Parties acknowledge that Phoenix has the right to substitute other securities for the Shares of AVIF or a Fund already purchased or to be purchased in the future. Phoenix will provide 30 days written notice to AVIF or to AIM prior to effecting any such substitution.
6.3 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:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) 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;
(b) in the event that any termination is based upon the provisions of Sections 6.1(c) or 6.1(d) 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;
(c) in the event that any termination is based upon the provisions of 6.1(j) hereof, such prior written notice shall be given at least thirty (30) days in advance of the effective date of the substitution unless a shorter time is agreed to by the Parties hereto;
(d) in the event that any termination is based upon the provisions of Sections 6.1(b), 6.1(e), 6.1(f), 6.1(g), 6.1(h), 6.1(i), or 6.1(k) 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.
6.4 FUNDS TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, AVIF will, at the option of Phoenix, 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 6.5 will not apply to any terminations under Section 5 and the effect of such terminations will be governed by Section 5 of this Agreement.
6.5 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications and Section 6.2 will survive the termination of this Agreement.
6.6 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any Fund pursuant
to Sections 6.1(a), 6.1(b), 6.1(c), 6.1(d), 6.1(e), 6.1(g), 6.1(h), 6.1(i),
6.1(j), or 6.1(k) 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 or such longer time as is necessary for Phoenix to
obtain a substitution order from the SEC, the application for which Phoenix will
diligently pursue, except that Phoenix may, by written notice, shorten said six
(6) month period.
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; provided that the contemplated demutualization of Phoenix Home Life Mutual Insurance Company will not be considered an assignment within the meaning of this Section 8.
SECTION 9. NOTICES
Notices and communications required or permitted 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
A I M DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
One American Row
Hartford, Connecticut 06115
Facsimile: (860) 403-5182
Attn: Richard J. Wirth
PHOENIX EQUITY PLANNING CORPORATION
38 Prospect Street
Hartford, Connecticut 06103
Facsimile: (860) 403-7696
Attn: Nancy Engberg
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, Phoenix 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. Phoenix will vote Shares in accordance with timely instructions received from Participants. Phoenix 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 Phoenix 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. Phoenix reserves the right to vote shares held in any Account in its own right, to the extent permitted by law. Phoenix 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 Phoenix 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 trustees and with whatever
rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with Phoenix 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 PHOENIX AND PEPCO.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, Phoenix and PEPCO agree to indemnify and hold harmless AVIF, AIM, their affiliates, and each person, if any, who controls AVIF, AIM, or their affiliates within the meaning of Section 15 of the 1933 Act and each of their respective trustees 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 Phoenix and PEPCO) 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, 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 Phoenix or PEPCO by or on behalf of AVIF or AIM for use in any Account's 1933 Act registration statements, any Account Prospectuses, 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 statements, AVIF's Prospectuses, 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 Phoenix, PEPCO, or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of Phoenix, PEPCO, or their respective affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member," as that term is defined in paragraph (q) 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 statements, AVIF Prospectuses, 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, AIM or their affiliates by or on behalf of Phoenix, PEPCO, or their respective affiliates for use in AVIF's 1933 Act registration statements, AVIF's Prospectuses, sales literature or advertising of AVIF, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by Phoenix or PEPCO 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 Phoenix or PEPCO in this Agreement or arise out of or result from any other material breach of this Agreement by Phoenix or PEPCO; or
(v) arise as a result of failure by the Contracts issued by Phoenix 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 Phoenix nor PEPCO 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 or AIM.
(c) Neither Phoenix nor PEPCO shall be liable under this Section 12.1 with respect to any action against an Indemnified Party unless AVIF or AIM shall have notified Phoenix and PEPCO 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 Phoenix and PEPCO of any such action shall not relieve Phoenix and PEPCO 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, Phoenix and PEPCO 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 Phoenix or PEPCO to such Indemnified Party of Phoenix's or PEPCO's election to assume the defense thereof, the Indemnified Party will cooperate fully with Phoenix and PEPCO and shall bear the fees and expenses of any additional counsel retained by it, and neither Phoenix nor PEPCO 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 PHOENIX AND PEPCO 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 Phoenix, PEPCO, and their respective affiliates, the Accounts and each person, if any, who controls Phoenix, PEPCO, their respective affiliates, or the Accounts within the meaning of Section 15 of the 1933 Act and each of their respective trustees and officers, (collectively, the "Indemnified Parties" for purposes of this Section 12.2) against any and all losses, claims, 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, 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 statements, AVIF's Prospectuses 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 Phoenix, PEPCO, or their respective affiliates for use in AVIF's 1933 Act registration statements, AVIF Prospectuses, 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 statements, any Account Prospectuses, 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, AIM, or their affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF, AIM, or their affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member" as that term is defined in Section (q) of Article I 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 statements, any Account Prospectuses, 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 Phoenix, PEPCO, or their respective affiliates by or on behalf of AVIF or AIM for use in any Account's 1933 Act registration statements, any Account Prospectuses, sales literature or advertising covering the Contracts, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF or AIM 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 or AIM in this Agreement or arise out of or result from any other material breach of this Agreement by AVIF or AIM.
(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 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 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 Phoenix 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 Phoenix of Shares of another investment company or portfolio for those of any adversely affected Fund as a
funding medium for each Account that Phoenix 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 Phoenix, PEPCO, 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 its 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 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 shall 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 AVIF or AIM be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, Phoenix, PEPCO 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 Phoenix or PEPCO hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by Phoenix 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 Phoenix 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 Delaware law, without regard for that state's principles of conflict of laws.
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 and AIM acknowledge that the identities of the customers of Phoenix or any of its affiliates (collectively, the "Phoenix 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 Phoenix Protected Parties or any of their employees or agents in connection with Phoenix's performance of its duties under this Agreement are the valuable property of the Phoenix Protected Parties. AVIF and AIM agree that if they come into possession of any list or compilation of the identities of or other information about the Phoenix Protected Parties' customers, or any other information or property of the Phoenix Protected Parties, other than such information as may be independently developed or compiled by AVIF or AIM from information supplied to it by the Phoenix Protected Parties' customers who also maintain accounts directly with AVIF, AVIF and AIM 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 Phoenix's prior written consent; or (b) as required by law or judicial process. Phoenix 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 Agreement are the valuable property of the AVIF Protected Parties. Phoenix 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 Phoenix from information supplied to it by the AVIF Protected Parties' customers who also maintain accounts directly with Phoenix, Phoenix 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) Except as may otherwise be provided in a License Agreement among A I M Management Group Inc., Phoenix and PEPCO, neither Phoenix nor PEPCO or any of their respective affiliates shall not use any trademark, trade name, service mark or logo of AVIF, AIM or any of their respective affiliates, or any variation of any such trademark, trade name, service mark or logo, without AVIF's or AIM's prior written consent, the granting of which shall be at AVIF's or AIM's sole option.
(b) Except as otherwise expressly provided in this Agreement, neither AVIF, its investment adviser, its principal underwriter, or any affiliates thereof shall use any trademark, trade name, service mark or logo of Phoenix, PEPCO, or any of their affiliates, or any variation of any such trademark, trade name, service mark or logo, without Phoenix's or PEPCO's prior written consent, the granting of which shall be at Phoenix's or PEPCO's sole option.
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.
SECTION 21. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner except by a written agreement executed by all parties hereto.
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
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
----------------------------- ---------------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
----------------------------- ---------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
PHOENIX HOME LIFE MUTUAL INSURANCE
COMPANY, on behalf of itself and its
separate accounts
Attest: /s/ John H. Beers By: /s/ Paul Fischer
----------------------------- ---------------------------------
Name: John H. Beers Name: Paul Fischer
------------------------------ -------------------------------
Title: Secretary Title: Vice President
------------------------------ ------------------------------
|
PHOENIX EQUITY PLANNING CORPORATION
Attest: /s/ Nancy J. Engberg By: /s/ William R. Moyer
----------------------------- ---------------------------------
Name: Nancy J. Engberg Name: William R. Moyer
------------------------------ -------------------------------
Title: Secretary Title: EVP, CFO, Treasurer
------------------------------ ------------------------------
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital Appreciation Fund AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Phoenix Home Life Variable Accumulation Account
Phoenix Home Life Variable Universal Life Account
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
The Big Edge Plus - Form 2646
The Group Strategic Edge - Form GD603
Retirement Planners Edge for New York - Form D603NY
Phoenix Edge - VA for New York - Form D602 NY
Flex Edge Success - Form V603
Joint Edge - Form V601
Phoenix Individual Edge - Form V603
Estate Edge - Form V604
Phoenix Corporate Edge - Form V609
Phoenix Edge - SPVL - Form V610
SCHEDULE B
AIM'S PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following thresholds are applied:
a. If the amount of the difference in the erroneous net asset value and the correct net asset value is less than .5% of the correct net asset value, AIM will reimburse the affected Fund to the extent of any loss resulting from the error. No other adjustments shall be made.
b. If the amount of the difference in the erroneous net asset value and the correct net asset value is .5% of the correct net asset value or greater, then AIM will determine the impact of the error to the affected Fund and shall reimburse such Fund (and/or Phoenix, as appropriate, such as in the event that the error was not discovered until after Phoenix processed transactions using the erroneous net asset value) to the extent of any loss resulting from the error. To the extent that an overstatement of net asset value per share is detected quickly and Phoenix has not mailed redemption checks to Participants, Phoenix and AIM agree to examine the extent of the error to determine the feasibility of reprocessing such redemption transaction (for purposes of AIM reimbursing the Fund to the extent of any such overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to paragraph (b), above, AIM shall reimburse Phoenix for Phoenix's reprocessing costs in an amount not to exceed $1.00 per contract affected by $10 or more.
The Pricing Policies described herein may be modified by AVIF as approved by its Board of Trustees. AIM agrees to use its best efforts to notify Phoenix at least five (5) days prior to any such meeting of the Board of Trustees of AVIF to consider such proposed changes.
SCHEDULE C
EXPENSE ALLOCATIONS
PHOENIX AVIF / AIM
preparing and filing the Account's Preparing and filing the Fund's
registration statement registration statement
text composition for Account text composition for Fund prospectuses
prospectuses and supplements and supplements
text alterations of prospectuses text alterations of prospectuses (Fund)
(Account) and supplements (Account) and supplements (Fund)
printing Account and Fund prospectuses a camera ready Fund prospectus
and supplements
text composition and printing Account text composition and printing Fund SAIs
SAIs
mailing and distributing Account SAIs mailing and distributing Fund SAIs to
to policy owners upon request by policy owners upon request by policy
policy owners owners
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by Federal
Securities Laws and to prospective
purchasers
text composition (Account), printing, text composition of annual and
mailing, and distributing annual and semi-annual reports (Fund)
semi-annual reports for Account (Fund
and Account as, applicable)
text composition, printing, mailing, text composition, printing, mailing,
distributing, and tabulation of proxy distributing and tabulation of proxy
statements and voting instruction statements and voting instruction
solicitation materials to policy solicitation materials to policy
owners with respect to proxies related owners with respect to proxies related
to the Account to the Fund
preparation, printing and distributing
sales material and advertising
relating to the Funds, insofar as such
materials relate to the Contracts and
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
|
Exhibit h(73)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS
AND
A I M DISTRIBUTORS, INC.
AND
PHOENIX LIFE AND ANNUITY COMPANY
AND
PHOENIX EQUITY PLANNING CORPORATION
TABLE OF CONTENTS
DESCRIPTION PAGE
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................................ 2
Section 2. Processing Transactions....................................... 3
2.1 Timely Pricing and Orders..................................... 3
2.2 Timely Payments............................................... 3
2.3 Applicable Price.............................................. 3
2.4 Dividends and Distributions................................... 4
2.5 Book Entry.................................................... 4
Section 3. Costs and Expenses............................................ 4
3.1 General....................................................... 4
3.2 Parties To Cooperate.......................................... 4
Section 4. Legal Compliance.............................................. 5
4.1 Tax Laws...................................................... 5
4.2 Insurance and Certain Other Laws.............................. 7
4.3 Securities Laws............................................... 7
4.4 Notice of Certain Proceedings and Other Circumstances......... 9
4.5 Phoenix To Provide Documents; Information About AVIF.......... 9
4.6 AVIF To Provide Documents; Information About Phoenix.......... 10
4.7 General....................................................... 12
Section 5. Mixed and Shared Funding...................................... 12
5.1 General....................................................... 12
5.2 Disinterested Trustees........................................ 12
5.3 Monitoring for Material Irreconcilable Conflicts.............. 13
5.4 Conflict Remedies............................................. 13
5.5 Notice to Phoenix............................................. 15
5.6 Information Requested by Board of Trustees.................... 15
5.7 Compliance with SEC Rules..................................... 15
5.8 Other Requirements............................................ 15
Section 6. Termination................................................... 15
6.1 Events of Termination......................................... 15
6.2 Notice Requirement for Termination............................ 17
6.3 Funds To Remain Available..................................... 17
6.4 Survival of Warranties and Indemnifications................... 18
|
6.5 Continuance of Agreement for Certain Purposes................. 18
Section 7. Parties To Cooperate Respecting Termination................... 18
Section 8. Assignment.................................................... 18
Section 9. Notices....................................................... 18
Section 10. Voting Procedures............................................ 19
Section 11. Foreign Tax Credits.......................................... 20
Section 12. Indemnification.............................................. 20
12.1 Of AVIF and AIM by Phoenix and UNDERWRITER.................... 20
12.2 Of Phoenix and UNDERWRITER by AIM and Advisor................. 22
12.3 Effect of Notice.............................................. 25
12.4 Successors.................................................... 25
Section 13. Applicable Law............................................... 25
Section 14. Execution in Counterparts.................................... 25
Section 15. Severability................................................. 25
Section 16. Rights Cumulative............................................ 25
Section 17. Headings..................................................... 25
Section 18. Confidentiality.............................................. 26
Section 19. Trademarks and Fund Names.................................... 26
Section 20. Parties to Cooperate......................................... 27
|
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 29th day of March, 2001 ("Agreement"), by and among AIM Variable Insurance Funds, a Delaware Trust ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"), Phoenix Life and Annuity Company, a Connecticut life insurance company ("Phoenix"), 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"), Phoenix Equity Planning Corporation ("PEPCO"), an affiliate of Phoenix 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 sixteen separate series ("Series"), shares ("Shares") each of which is registered under the Securities Act of 1933, as amended (the "1933 Act") and is 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, Phoenix 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, Phoenix 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, Phoenix 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
WHEREAS, to the extent permitted by applicable insurance laws and regulations, Phoenix intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, PEPCO 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
WHEREAS, AIM is a broker-dealer registered with the SEC under the 1934 Act and a member in good standing of the NASD;
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.1.1 AVAILABILITY.
AVIF will make Shares of each Fund available to Phoenix for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. The Board of Trustees 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 Trustees 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, 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 Phoenix 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) Phoenix is open for business.
(b) Phoenix 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. Phoenix 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 Phoenix 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 Phoenix.
(c) With respect to payment of the purchase price by Phoenix and of redemption proceeds by AVIF, Phoenix 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), Phoenix 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 Phoenix. Materiality and reprocessing cost reimbursement shall be determined in accordance with standards established by the Parties as provided in Schedule B, attached hereto and incorporated herein.
2.2 TIMELY PAYMENTS
Phoenix 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 Phoenix by 1:00 p.m. Central Time on the same day as the order is placed, to the extent practicable, but in any event within five (5) calendar days after the date the order is placed in order to enable Phoenix to pay redemption proceeds within the time specified in Section 22(e) of the 1940 Act and any rules thereunder.
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 Phoenix 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), Phoenix 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 Phoenix not involving Contract transactions 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 Phoenix of any income dividends or capital gain distributions payable on the Shares of any Fund. Phoenix 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 Phoenix 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. Phoenix 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 Phoenix. Shares ordered from AVIF will be recorded in an appropriate title for Phoenix, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL
Except as otherwise specifically provided in Schedule C, attached hereto and made a part hereof, or as otherwise agreed to in writing by and among some or all of the Parties, each Party will bear, or arrange for others to bear, all expenses incident to its performance under this Agreement.
3.2 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 make every effort to qualify and to maintain qualification of each Fund as a RIC. AVIF will notify Phoenix 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 and warrants that each Fund currently complies 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 ("diversification
requirements") and that it will make every effort to maintain each Fund's
compliance with the diversification requirements. AVIF will notify Phoenix
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) Notwithstanding any other provision of this Agreement, Phoenix agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of Phoenix or, to Phoenix's knowledge, of any Contract owners, annuitants, insureds or participants (as appropriate) under the Contracts (collectively, "Participants"), that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or Phoenix 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) Phoenix shall promptly notify AVIF of such assertion or potential claim (subject to the Confidentiality provisions of Section 18 as to any Participant);
(ii) Phoenix shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure.
(iii) Phoenix 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) Phoenix 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 Phoenix will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by Phoenix 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 Phoenix 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 Phoenix to any such person without the express written consent of AVIF which shall not be unreasonably withheld;
(vi) Phoenix 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 Phoenix) 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) Phoenix 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 Phoenix shall not be required, after exhausting all administrative remedies, 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 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 Phoenix 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, Phoenix may, in its discretion, authorize AVIF or its affiliates to act in the name of Phoenix 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 Phoenix 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) Phoenix 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 make every effort to maintain such treatment; Phoenix 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) Phoenix 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. Phoenix will make every effort 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 Phoenix, including, the furnishing of information not otherwise available to Phoenix which is required by state insurance law to enable Phoenix to obtain the authority needed to issue the Contracts in any applicable state.
(b) Phoenix 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 Connecticut 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 such law 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 lawfully organized, validly existing, and in good standing under the laws of the State of Delaware 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) Phoenix 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 the law(s) of Phoenix's state(s) of organization and domicile, (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) Phoenix 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 Delaware 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 pursuant to Rule 12b-1, AVIF undertakes to have its Board of Trustees, 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.
(f) AVIF agrees that AVIF and the Funds shall be managed consistent with the investment objectives, policies, and restrictions as described in AVIF's and the Funds' prospectuses and registration statements, as amended or modified from time to time.
(g) AVIF and AIM shall sell and distribute the Shares of the Funds in accordance with the applicable provisions of federal law, including the 1933 Act, 1934 Act, and 1940 Act; the NASD Conduct Rules; and state law.
(h) PEPCO shall sell and distribute the Contracts in accordance with the applicable provisions of federal law, including the 1933 Act, 1934 Act, and 1940 Act; the NASD Conduct Rules; and state law.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES
(a) AVIF or AIM will immediately notify Phoenix 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 Phoenix. AVIF and AIM 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) Phoenix or PEPCO 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. Phoenix or PEPCO 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.
4.5 PHOENIX AND PEPCO TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF
(a) Phoenix 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) Phoenix or PEPCO 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 AIM as the entity to receive such sales literature, until such time as AVIF appoints another designated agent by giving notice to Phoenix in the manner required by Section 9 hereof.
(c) Neither Phoenix, PEPCO, nor any of their respective 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) Phoenix 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.
4.6 AVIF AND AIM TO PROVIDE DOCUMENTS; INFORMATION ABOUT PHOENIX
(a) AVIF will provide to Phoenix 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 Phoenix a camera ready copy of all AVIF Prospectuses and printed copies, in an amount specified by Phoenix, 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 Phoenix in a timely manner so as to enable Phoenix, as the case may be, to print and distribute such materials within the time required by law to be furnished to Participants.
(c) AVIF or AIM will provide to Phoenix or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which Phoenix, 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 Phoenix 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. Phoenix 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, AIM, nor any of their respective affiliates will give any information or make any representations or statements on behalf of or concerning Phoenix, 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 Phoenix for distribution; or (iii) in sales literature or other promotional material approved by Phoenix or its affiliates, except with the express written permission of Phoenix.
(e) AIM shall adopt and implement procedures reasonably designed to ensure that information concerning Phoenix 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 Phoenix, 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 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.
4.7 GENERAL
Each of the Parties represent and warrant that they shall perform their obligations hereunder in compliance with any applicable state and federal laws.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL
(a) 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 Phoenix, 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.
(b) AVIF hereby notifies Phoenix 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.
(c) To the extent applicable, AVIF shall disclose in its Prospectus, in
substance, that: (i) Shares of the Funds are offered to affiliated and
unaffiliated insurance company separate accounts that fund both annuity and life
insurance contracts and are offered to qualified pension and retirement plans;
(ii) Mixed and Shared Funding may present certain conflicts of interest; (iii)
due to differences in tax treatment or other considerations, the interests of
various variable contract owners investing in separate accounts investing in
AVIF or a Fund and the interests of qualified pension and retirement plan
participants might at some time be in irreconcilable conflict; and (iv) the
Board of Trustees of AVIF will monitor for any material irreconcilable conflicts
and determine what action, if any, should be taken.
5.2 DISINTERESTED TRUSTEES
AVIF agrees that its Board of Trustees shall at all times consist of
trustees a majority of whom are not interested persons of AVIF (the
"Disinterested Trustees") 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 Trustees 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 ("Participating Plans"). Phoenix agrees to inform the Board of Trustees 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, Phoenix will assist the Board of Trustees in carrying out its responsibilities by providing the Board of Trustees with all information reasonably necessary for the Board of Trustees to consider any issue raised, including information as to a decision by Phoenix to disregard voting instructions of Participants. Phoenix's responsibilities in connection with the foregoing shall be carried out with a view only to the interests 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 Trustees or a majority of the Disinterested Trustees that a material irreconcilable conflict exists, Phoenix 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 Trustees), 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 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 Phoenix's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, Phoenix 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 Phoenix that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by Phoenix 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 Phoenix conflicts with the majority of other state regulators, then Phoenix will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Trustees informs Phoenix 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 Phoenix for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) Phoenix 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 Trustees 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. Phoenix 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 PHOENIX
AVIF will promptly make known in writing to Phoenix the Board of Trustees' 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.
5.6 INFORMATION REQUESTED BY BOARD OF TRUSTEES
Phoenix and AVIF (or its investment adviser) will at least annually submit to the Board of Trustees of AVIF such reports, materials or data as the Board of Trustees may reasonably request so that the Board of Trustees 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 Trustees. All reports received by the Board of Trustees of potential or existing conflicts, and all Board of Trustees 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 Trustees 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), 4.1(e), 4.3(a), 4.4(b), 4.5(a), 5, 10 and 12.2(e) of this Agreement, but with respect to Section 12.2(e), only as to agreements with Participating Insurance Companies and Plans that are entered into after the execution of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION
Subject to Section 6.3 below, this Agreement will terminate as to a Fund:
(a) at the option of any Party, upon 90 days advance written notice to the other Parties, unless a shorter time is agreed to by the Parties; or
(b) at the option of Phoenix if Shares of the Funds are not reasonably available to meet the requirements of the Contracts issued by Phoenix, as determined by Phoenix, and upon written notice by Phoenix to the other Parties; or
(c) at the option of AVIF upon institution of formal proceedings against Phoenix or PEPCO by the NASD, the SEC, or any state securities or insurance department or any other regulatory body if AVIF shall determine, in its sole judgment exercised in good faith, that Phoenix or PEPCO 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
(d) at the option of Phoenix or PEPCO upon institution of formal proceedings against AVIF, its principal underwriter, or its investment adviser by the NASD, the SEC, or any state securities or insurance department or any other regulatory body if Phoenix or PEPCO shall determine, in its sole judgment exercised in good faith, that AVIF, its principal underwriter, or its investment 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
(e) 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 Phoenix; or
(f) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(g) at the option of Phoenix if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if Phoenix reasonably believes that the Fund may fail to so qualify; or
(h) at the option of Phoenix if the Fund fails to comply with Section 817(h) of the Code or with successor or similar provisions, or if Phoenix reasonably believes that the Fund may fail to so comply; or
(i) at the option of AVIF if the Contracts issued by Phoenix 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
(j) at the option of Phoenix upon any substitution of the shares of another investment company or series thereof for Shares of AVIF or a Fund in accordance with the terms of the Contracts, provided that Phoenix has given at least 30 days prior written notice to AVIF or AIM of the date of the substitution; or
(k) upon another Party's material breach of any provision of this Agreement.
6.2 RIGHT TO SUBSTITUTE.
Under the terms of the Contracts, Phoenix reserves the right, subject to compliance with the law as then in effect, to make substitutions for the securities that are held by an Account under certain circumstances. The Parties acknowledge that Phoenix has the right to substitute other securities for the Shares of AVIF or a Fund already purchased or to be purchased in the future. Phoenix will provide 30 days written notice to AVIF or to AIM prior to effecting any such substitution.
6.3 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:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) 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;
(b) in the event that any termination is based upon the provisions of Sections 6.1(c) or 6.1(d) 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;
(c) in the event that any termination is based upon the provisions of 6.1(j) hereof, such prior written notice shall be given at least thirty (30) days in advance of the effective date of the substitution unless a shorter time is agreed to by the Parties hereto;
(d) in the event that any termination is based upon the provisions of Sections 6.1(b), 6.1(e), 6.1(f), 6.1(g), 6.1(h), 6.1(i), or 6.1(k) 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.
6.4 FUNDS TO REMAIN AVAILABLE
Notwithstanding any termination of this Agreement, AVIF will, at the option of Phoenix, 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 6.5 will not apply to any terminations under Section 5 and the effect of such terminations will be governed by Section 5 of this Agreement.
6.5 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS
All warranties and indemnifications and Section 6.2 will survive the termination of this Agreement.
6.6 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES
If any Party terminates this Agreement with respect to any Fund pursuant
to Sections 6.1(a), 6.1(b), 6.1(c), 6.1(d), 6.1(e), 6.1(g), 6.1(h), 6.1(i),
6.1(j), or 6.1(k) 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 or such longer time as is necessary for Phoenix to
obtain a substitution order from the SEC, the application for which Phoenix will
diligently pursue, except that Phoenix may, by written notice, shorten said six
(6) month period.
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; provided that the contemplated demutualization of Phoenix Home Life Mutual Insurance Company will not be considered an assignment within the meaning of this Section 8.
SECTION 9. NOTICES
Notices and communications required or permitted 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
A I M DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
PHOENIX LIFE AND ANNUITY COMPANY
One American Row
Hartford, Connecticut 06115
Facsimile: (860) 403-5182
Attn: Richard J. Wirth
PHOENIX EQUITY PLANNING CORPORATION
38 Prospect Street
Hartford, Connecticut 06103
Facsimile: (860) 403-7696
Attn: Nancy Engberg
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, Phoenix 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. Phoenix will vote Shares in accordance with timely instructions received from Participants. Phoenix 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 Phoenix 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. Phoenix reserves the right to vote shares held in any Account in its own right, to the extent permitted by law. Phoenix 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 Phoenix 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 trustees and with whatever
rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with Phoenix 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 PHOENIX AND PEPCO
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, Phoenix and PEPCO agree to indemnify and hold harmless AVIF, AIM, their affiliates, and each person, if any, who controls AVIF, AIM, or their affiliates within the meaning of Section 15 of the 1933 Act and each of their respective trustees 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 Phoenix and PEPCO) 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, 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 Phoenix or PEPCO by or on behalf of AVIF or AIM for use in any Account's 1933 Act registration statements, any Account Prospectuses, 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 statements, AVIF's Prospectuses, 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 Phoenix, PEPCO, or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of Phoenix, PEPCO, or their respective affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member," as that term is defined in paragraph (q) 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 statements, AVIF Prospectuses, 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, AIM or their affiliates by or on behalf of Phoenix, PEPCO, or their respective affiliates for use in AVIF's 1933 Act registration statements, AVIF's Prospectuses, sales literature or advertising of AVIF, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by Phoenix or PEPCO 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 Phoenix or PEPCO in this Agreement or arise out of or result from any other material breach of this Agreement by Phoenix or PEPCO; or
(v) arise as a result of failure by the Contracts issued by Phoenix 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 Phoenix nor PEPCO 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 or AIM.
(c) Neither Phoenix nor PEPCO shall be liable under this Section 12.1 with respect to any action against an Indemnified Party unless AVIF or AIM shall have notified Phoenix and PEPCO 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 Phoenix and PEPCO of any such action shall not relieve Phoenix and PEPCO 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, Phoenix and PEPCO 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 Phoenix or PEPCO to such Indemnified Party of Phoenix's or PEPCO's election to assume the defense thereof, the Indemnified Party will cooperate fully with Phoenix and PEPCO and shall bear the fees and expenses of any additional counsel retained by it, and neither Phoenix nor PEPCO 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 PHOENIX AND PEPCO 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 Phoenix, PEPCO, and their respective affiliates, the Accounts and each person, if any, who controls Phoenix, PEPCO, their respective affiliates, or the Accounts within the meaning of Section 15 of the 1933 Act and each of their respective trustees and officers, (collectively, the "Indemnified Parties" for purposes of this Section 12.2) against any and all losses, claims, 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, 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 statements, AVIF's Prospectuses 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 Phoenix, PEPCO, or their respective affiliates for use in AVIF's 1933 Act registration statements, AVIF Prospectuses, 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 statements, any Account Prospectuses, 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, AIM, or their affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF, AIM, or their affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member" as that term is defined in Section (q) of Article I 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 statements, any Account Prospectuses, 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 Phoenix, PEPCO, or their respective affiliates by or on behalf of AVIF or AIM for use in any Account's 1933 Act registration statements, any Account Prospectuses, sales literature or advertising covering the Contracts, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF or AIM 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 or AIM in this Agreement or arise out of or result from any other material breach of this Agreement by AVIF or AIM.
(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 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 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 Phoenix 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 Phoenix of Shares of another investment company or portfolio for those of any adversely affected Fund as a
funding medium for each Account that Phoenix 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 Phoenix, PEPCO, 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 its 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 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 shall 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 AVIF or AIM be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, Phoenix, PEPCO 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 Phoenix or PEPCO hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by Phoenix 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 Phoenix 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 Delaware law, without regard for that state's principles of conflict of laws.
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 and AIM acknowledge that the identities of the customers of Phoenix or any of its affiliates (collectively, the "Phoenix 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 Phoenix Protected Parties or any of their employees or agents in connection with Phoenix's performance of its duties under this Agreement are the valuable property of the Phoenix Protected Parties. AVIF and AIM agree that if they come into possession of any list or compilation of the identities of or other information about the Phoenix Protected Parties' customers, or any other information or property of the Phoenix Protected Parties, other than such information as may be independently developed or compiled by AVIF or AIM from information supplied to it by the Phoenix Protected Parties' customers who also maintain accounts directly with AVIF, AVIF and AIM 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 Phoenix's prior written consent; or (b) as required by law or judicial process. Phoenix 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 Agreement are the valuable property of the AVIF Protected Parties. Phoenix 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 Phoenix from information supplied to it by the AVIF Protected Parties' customers who also maintain accounts directly with Phoenix, Phoenix 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) Except as may otherwise be provided in a License Agreement among A I M Management Group Inc., Phoenix and PEPCO, neither Phoenix nor PEPCO or any of their respective affiliates shall not use any trademark, trade name, service mark or logo of AVIF, AIM or any of their respective affiliates, or any variation of any such trademark, trade name, service mark or logo, without AVIF's or AIM's prior written consent, the granting of which shall be at AVIF's or AIM's sole option.
(b) Except as otherwise expressly provided in this Agreement, neither AVIF, its investment adviser, its principal underwriter, or any affiliates thereof shall use any trademark, trade name, service mark or logo of Phoenix, PEPCO, or any of their affiliates, or any variation of any such trademark, trade name, service mark or logo, without Phoenix's or PEPCO's prior written consent, the granting of which shall be at Phoenix's or PEPCO's sole option.
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.
SECTION 21. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner except by a written agreement executed by all parties hereto.
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
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
---------------------------- -----------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title Assistant Secretary Title: President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
---------------------------- -----------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
PHOENIX LIFE AND ANNUITY COMPANY, on
behalf of itself and its separate
accounts
Attest: /s/ John H. Beers By: /s/ Paul Fischer
---------------------------- -----------------------------
Name: John H. Beers Name: Paul Fischer
---------------------------- -----------------------------
Title: Secretary Title: Vice President
---------------------------- -----------------------------
|
PHOENIX EQUITY PLANNING CORPORATION
Attest: /s/ Nancy J. Engberg By: William R. Moyer
---------------------------- -----------------------------
Name: Nancy J. Engberg Name: William R. Moyer
---------------------------- -----------------------------
Title: Secretary Title: EVP, CFO, Treasurer
---------------------------- -----------------------------
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital Appreciation Fund AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Phoenix Life and Annuity Variable Universal Life Account
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Corporate Edge - LO133
Executive Benefit - LO134
SCHEDULE B
AIM'S PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following thresholds are applied:
a. If the amount of the difference in the erroneous net asset value and the correct net asset value is less than .5% of the correct net asset value, AIM will reimburse the affected Fund to the extent of any loss resulting from the error. No other adjustments shall be made.
b. If the amount of the difference in the erroneous net asset value and the correct net asset value is .5% of the correct net asset value or greater, then AIM will determine the impact of the error to the affected Fund and shall reimburse such Fund (and/or Phoenix, as appropriate, such as in the event that the error was not discovered until after Phoenix processed transactions using the erroneous net asset value) to the extent of any loss resulting from the error. To the extent that an overstatement of net asset value per share is detected quickly and Phoenix has not mailed redemption checks to Participants, Phoenix and AIM agree to examine the extent of the error to determine the feasibility of reprocessing such redemption transaction (for purposes of AIM reimbursing the Fund to the extent of any such overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to paragraph (b), above, AIM shall reimburse Phoenix for Phoenix's reprocessing costs in an amount not to exceed $1.00 per contract affected by $10 or more.
The Pricing Policies described herein may be modified by AVIF as approved by its Board of Trustees. AIM agrees to use its best efforts to notify Phoenix at least five (5) days prior to any such meeting of the Board of Trustees of AVIF to consider such proposed changes.
SCHEDULE C
EXPENSE ALLOCATIONS
=======================================================================================
PHOENIX AVIF / AIM
---------------------------------------------------------------------------------------
preparing and filing the Account's Preparing and filing the Fund's
registration statement registration statement
---------------------------------------------------------------------------------------
text composition for Account prospectuses text composition for Fund prospectuses
and supplements and supplements
---------------------------------------------------------------------------------------
text alterations of prospectuses text alterations of prospectuses (Fund)
(Account) and supplements (Account) and supplements (Fund)
---------------------------------------------------------------------------------------
printing Account and Fund prospectuses a camera ready Fund prospectus
and supplements
---------------------------------------------------------------------------------------
text composition and printing Account SAIs text composition and printing Fund SAIs
---------------------------------------------------------------------------------------
mailing and distributing Account SAIs to mailing and distributing Fund SAIs to
policy owners upon request by policy policy owners upon request by policy
owners owners
---------------------------------------------------------------------------------------
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by Federal Securities
Laws and to prospective purchasers
---------------------------------------------------------------------------------------
text composition (Account), printing, text composition of annual and
mailing, and distributing annual and semi-annual reports (Fund)
semi-annual reports for Account (Fund
and Account as, applicable)
---------------------------------------------------------------------------------------
text composition, printing, mailing, text composition, printing, mailing,
distributing, and tabulation of proxy distributing and tabulation of proxy
statements and voting instruction statements and voting instruction
solicitation materials to policy owners solicitation materials to policy owners
with respect to proxies related to the with respect to proxies related to the
Account Fund
---------------------------------------------------------------------------------------
preparation, printing and distributing
sales material and advertising relating
to the Funds, insofar as such materials
relate to the Contracts and 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
=======================================================================================
|
Exhibit h(74)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS
AND
A I M DISTRIBUTORS, INC.
AND
PHL VARIABLE INSURANCE COMPANY
AND
PHOENIX EQUITY PLANNING CORPORATION
TABLE OF CONTENTS
DESCRIPTION PAGE
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................................ 2
Section 2. Processing Transactions....................................... 3
2.1 Timely Pricing and Orders..................................... 3
2.2 Timely Payments............................................... 3
2.3 Applicable Price.............................................. 3
2.4 Dividends and Distributions................................... 4
2.5 Book Entry.................................................... 4
Section 3. Costs and Expenses............................................ 4
3.1 General....................................................... 4
3.2 Parties To Cooperate.......................................... 4
Section 4. Legal Compliance.............................................. 5
4.1 Tax Laws...................................................... 5
4.2 Insurance and Certain Other Laws.............................. 7
4.3 Securities Laws............................................... 7
4.4 Notice of Certain Proceedings and Other Circumstances......... 9
4.5 Phoenix To Provide Documents; Information About AVIF.......... 9
4.6 AVIF To Provide Documents; Information About Phoenix.......... 10
4.7 General....................................................... 12
Section 5. Mixed and Shared Funding...................................... 12
5.1 General....................................................... 12
5.2 Disinterested Trustees........................................ 12
5.3 Monitoring for Material Irreconcilable Conflicts.............. 13
5.4 Conflict Remedies............................................. 13
5.5 Notice to Phoenix............................................. 15
5.6 Information Requested by Board of Trustees.................... 15
5.7 Compliance with SEC Rules..................................... 15
5.8 Other Requirements............................................ 15
Section 6. Termination................................................... 15
6.1 Events of Termination......................................... 15
6.2 Notice Requirement for Termination............................ 17
6.3 Funds To Remain Available..................................... 17
|
6.4 Survival of Warranties and Indemnifications................... 18
6.5 Continuance of Agreement for Certain Purposes................. 18
Section 7. Parties To Cooperate Respecting Termination................... 18
Section 8. Assignment.................................................... 18
Section 9. Notices....................................................... 18
Section 10. Voting Procedures............................................ 19
Section 11. Foreign Tax Credits.......................................... 20
Section 12. Indemnification.............................................. 20
12.1 Of AVIF and AIM by Phoenix and UNDERWRITER.................... 20
12.2 Of Phoenix and UNDERWRITER by AIM and Advisor................. 22
12.3 Effect of Notice.............................................. 25
12.4 Successors.................................................... 25
Section 13. Applicable Law............................................... 25
Section 14. Execution in Counterparts.................................... 25
Section 15. Severability................................................. 25
Section 16. Rights Cumulative............................................ 25
Section 17. Headings..................................................... 25
Section 18. Confidentiality.............................................. 26
Section 19. Trademarks and Fund Names.................................... 26
Section 20. Parties to Cooperate......................................... 27
|
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 29th day of March, 2001 ("Agreement"), by and among AIM Variable Insurance Funds, a Delaware Trust ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"), PHL Variable Insurance Company, a Connecticut life insurance company ("Phoenix"), 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"), Phoenix Equity Planning Corporation ("PEPCO"), an affiliate of Phoenix 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 sixteen separate series ("Series"), shares ("Shares") each of which is registered under the Securities Act of 1933, as amended (the "1933 Act") and is 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, Phoenix 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, Phoenix 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, Phoenix 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
WHEREAS, to the extent permitted by applicable insurance laws and regulations, Phoenix intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, PEPCO 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
WHEREAS, AIM is a broker-dealer registered with the SEC under the 1934 Act and a member in good standing of the NASD;
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 Phoenix for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. The Board of Trustees 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 Trustees 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, 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 Phoenix 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) Phoenix is open for business.
(b) Phoenix 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. Phoenix 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 Phoenix 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 Phoenix.
(c) With respect to payment of the purchase price by Phoenix and of redemption proceeds by AVIF, Phoenix 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), Phoenix 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 Phoenix. Materiality and reprocessing cost reimbursement shall be determined in accordance with standards established by the Parties as provided in Schedule B, attached hereto and incorporated herein.
2.2 TIMELY PAYMENTS
Phoenix 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 Phoenix by 1:00 p.m. Central Time on the same day as the order is placed, to the extent practicable, but in any event within five (5) calendar days after the date the order is placed in order to enable Phoenix to pay redemption proceeds within the time specified in Section 22(e) of the 1940 Act and any rules thereunder.
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 Phoenix 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), Phoenix 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 Phoenix not involving Contract transactions 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 Phoenix of any income dividends or capital gain distributions payable on the Shares of any Fund. Phoenix 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 Phoenix 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. Phoenix 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 Phoenix. Shares ordered from AVIF will be recorded in an appropriate title for Phoenix, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto and made a part hereof, or as otherwise agreed to in writing by and among some or all of the Parties, each Party will bear, or arrange for others to bear, all expenses incident to its performance under this Agreement.
3.2 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 make every effort to qualify and to maintain qualification of each Fund as a RIC. AVIF will notify Phoenix 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 and warrants that each Fund currently complies 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 ("diversification
requirements") and that it will make every effort to maintain each Fund's
compliance with the diversification requirements. AVIF will notify Phoenix
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) Notwithstanding any other provision of this Agreement, Phoenix agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of Phoenix or, to Phoenix's knowledge, of any Contract owners, annuitants, insureds or participants (as appropriate) under the Contracts (collectively, "Participants"), that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or Phoenix 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) Phoenix shall promptly notify AVIF of such assertion or potential claim (subject to the Confidentiality provisions of Section 18 as to any Participant);
(ii) Phoenix shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure.
(iii) Phoenix 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) Phoenix 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 Phoenix will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by Phoenix 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 Phoenix 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 Phoenix to any such person without the express written consent of AVIF which shall not be unreasonably withheld;
(vi) Phoenix 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 Phoenix) 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) Phoenix 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 Phoenix shall not be required, after exhausting all administrative remedies, 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 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 Phoenix 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, Phoenix may, in its discretion, authorize AVIF or its affiliates to act in the name of Phoenix 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 Phoenix 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) Phoenix 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 make every effort to maintain such treatment; Phoenix 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) Phoenix 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. Phoenix will make every effort 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 Phoenix, including, the furnishing of information not otherwise available to Phoenix which is required by state insurance law to enable Phoenix to obtain the authority needed to issue the Contracts in any applicable state.
(b) Phoenix 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 Connecticut 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 such law 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 lawfully organized, validly existing, and in good standing under the laws of the State of Delaware 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) Phoenix 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 the law(s) of Phoenix's state(s) of organization and domicile, (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) Phoenix 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 Delaware 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 pursuant to Rule 12b-1, AVIF undertakes to have its Board of Trustees, 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.
(f) AVIF agrees that AVIF and the Funds shall be managed consistent with the investment objectives, policies, and restrictions as described in AVIF's and the Funds' prospectuses and registration statements, as amended or modified from time to time.
(g) AVIF and AIM shall sell and distribute the Shares of the Funds in accordance with the applicable provisions of federal law, including the 1933 Act, 1934 Act, and 1940 Act; the NASD Conduct Rules; and state law.
(h) PEPCO shall sell and distribute the Contracts in accordance with the applicable provisions of federal law, including the 1933 Act, 1934 Act, and 1940 Act; the NASD Conduct Rules; and state law.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF or AIM will immediately notify Phoenix 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 Phoenix. AVIF and AIM 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) Phoenix or PEPCO 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. Phoenix or PEPCO 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.
4.5 PHOENIX AND PEPCO TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) Phoenix 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) Phoenix or PEPCO 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 AIM as the entity to receive such sales literature, until such time as AVIF appoints another designated agent by giving notice to Phoenix in the manner required by Section 9 hereof.
(c) Neither Phoenix, PEPCO, nor any of their respective 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) Phoenix 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.
4.6 AVIF AND AIM TO PROVIDE DOCUMENTS; INFORMATION ABOUT PHOENIX.
(a) AVIF will provide to Phoenix 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 Phoenix a camera ready copy of all AVIF Prospectuses and printed copies, in an amount specified by Phoenix, 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 Phoenix in a timely manner so as to enable Phoenix, as the case may be, to print and distribute such materials within the time required by law to be furnished to Participants.
(c) AVIF or AIM will provide to Phoenix or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which Phoenix, 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 Phoenix 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. Phoenix 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, AIM, nor any of their respective affiliates will give any information or make any representations or statements on behalf of or concerning Phoenix, 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 Phoenix for distribution; or (iii) in sales literature or other promotional material approved by Phoenix or its affiliates, except with the express written permission of Phoenix.
(e) AIM shall adopt and implement procedures reasonably designed to ensure that information concerning Phoenix 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 Phoenix, 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 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.
4.7 GENERAL.
Each of the Parties represent and warrant that they shall perform their obligations hereunder in compliance with any applicable state and federal laws.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
(a) 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 Phoenix, 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.
(b) AVIF hereby notifies Phoenix 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.
(c) To the extent applicable, AVIF shall disclose in its Prospectus, in
substance, that: (i) Shares of the Funds are offered to affiliated and
unaffiliated insurance company separate accounts that fund both annuity and life
insurance contracts and are offered to qualified pension and retirement plans;
(ii) Mixed and Shared Funding may present certain conflicts of interest; (iii)
due to differences in tax treatment or other considerations, the interests of
various variable contract owners investing in separate accounts investing in
AVIF or a Fund and the interests of qualified pension and retirement plan
participants might at some time be in irreconcilable conflict; and (iv) the
Board of Trustees of AVIF will monitor for any material irreconcilable conflicts
and determine what action, if any, should be taken.
5.2 DISINTERESTED TRUSTEES.
AVIF agrees that its Board of Trustees shall at all times consist of
trustees a majority of whom are not interested persons of AVIF (the
"Disinterested Trustees") 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 Trustees 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 ("Participating Plans"). Phoenix agrees to inform the Board of Trustees 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, Phoenix will assist the Board of Trustees in carrying out its responsibilities by providing the Board of Trustees with all information reasonably necessary for the Board of Trustees to consider any issue raised, including information as to a decision by Phoenix to disregard voting instructions of Participants. Phoenix's responsibilities in connection with the foregoing shall be carried out with a view only to the interests 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 Trustees or a majority of the Disinterested Trustees that a material irreconcilable conflict exists, Phoenix 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 Trustees), 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 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 Phoenix's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, Phoenix 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 Phoenix that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by Phoenix 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 Phoenix conflicts with the majority of other state regulators, then Phoenix will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Trustees informs Phoenix 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 Phoenix for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) Phoenix 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 Trustees 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. Phoenix 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 PHOENIX.
AVIF will promptly make known in writing to Phoenix the Board of Trustees' 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.
5.6 INFORMATION REQUESTED BY BOARD OF TRUSTEES.
Phoenix and AVIF (or its investment adviser) will at least annually submit to the Board of Trustees of AVIF such reports, materials or data as the Board of Trustees may reasonably request so that the Board of Trustees 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 Trustees. All reports received by the Board of Trustees of potential or existing conflicts, and all Board of Trustees 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 Trustees 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), 4.1(e), 4.3(a), 4.4(b), 4.5(a), 5, 10 and 12.2(e) of this Agreement, but with respect to Section 12.2(e), only as to agreements with Participating Insurance Companies and Plans that are entered into after the execution of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.3 below, this Agreement will terminate as to a Fund:
(a) at the option of any Party, upon 90 days advance written notice to the other Parties, unless a shorter time is agreed to by the Parties; or
(b) at the option of Phoenix if Shares of the Funds are not reasonably available to meet the requirements of the Contracts issued by Phoenix, as determined by Phoenix, and upon written notice by Phoenix to the other Parties; or
(c) at the option of AVIF upon institution of formal proceedings against Phoenix or PEPCO by the NASD, the SEC, or any state securities or insurance department or any other regulatory body if AVIF shall determine, in its sole judgment exercised in good faith, that Phoenix or PEPCO 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
(d) at the option of Phoenix or PEPCO upon institution of formal proceedings against AVIF, its principal underwriter, or its investment adviser by the NASD, the SEC, or any state securities or insurance department or any other regulatory body if Phoenix or PEPCO shall determine, in its sole judgment exercised in good faith, that AVIF, its principal underwriter, or its investment 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
(e) 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 Phoenix; or
(f) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(g) at the option of Phoenix if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if Phoenix reasonably believes that the Fund may fail to so qualify; or
(h) at the option of Phoenix if the Fund fails to comply with Section 817(h) of the Code or with successor or similar provisions, or if Phoenix reasonably believes that the Fund may fail to so comply; or
(i) at the option of AVIF if the Contracts issued by Phoenix 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
(j) at the option of Phoenix upon any substitution of the shares of another investment company or series thereof for Shares of AVIF or a Fund in accordance with the terms of the Contracts, provided that Phoenix has given at least 30 days prior written notice to AVIF or AIM of the date of the substitution; or
(k) upon another Party's material breach of any provision of this Agreement.
6.2 RIGHT TO SUBSTITUTE.
Under the terms of the Contracts, Phoenix reserves the right, subject to compliance with the law as then in effect, to make substitutions for the securities that are held by an Account under certain circumstances. The Parties acknowledge that Phoenix has the right to substitute other securities for the Shares of AVIF or a Fund already purchased or to be purchased in the future. Phoenix will provide 30 days written notice to AVIF or to AIM prior to effecting any such substitution.
6.3 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:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) 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;
(b) in the event that any termination is based upon the provisions of Sections 6.1(c) or 6.1(d) 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;
(c) in the event that any termination is based upon the provisions of 6.1(j) hereof, such prior written notice shall be given at least thirty (30) days in advance of the effective date of the substitution unless a shorter time is agreed to by the Parties hereto;
(d) in the event that any termination is based upon the provisions of Sections 6.1(b), 6.1(e), 6.1(f), 6.1(g), 6.1(h), 6.1(i), or 6.1(k) 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.
6.4 FUNDS TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, AVIF will, at the option of Phoenix, 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 6.5 will not apply to any terminations under Section 5 and the effect of such terminations will be governed by Section 5 of this Agreement.
6.5 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications and Section 6.2 will survive the termination of this Agreement.
6.6 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any Fund pursuant
to Sections 6.1(a), 6.1(b), 6.1(c), 6.1(d), 6.1(e), 6.1(g), 6.1(h), 6.1(i),
6.1(j), or 6.1(k) 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 or such longer time as is necessary for Phoenix to
obtain a substitution order from the SEC, the application for which Phoenix will
diligently pursue, except that Phoenix may, by written notice, shorten said six
(6) month period.
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; provided that the contemplated demutualization of Phoenix Home Life Mutual Insurance Company will not be considered an assignment within the meaning of this Section 8.
SECTION 9. NOTICES
Notices and communications required or permitted 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
A I M DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
PHL VARIABLE INSURANCE COMPANY
One American Row
Hartford, Connecticut 06115
Facsimile: (860) 403-5182
Attn: Richard J. Wirth
PHOENIX EQUITY PLANNING CORPORATION
38 Prospect Street
Hartford, Connecticut 06103
Facsimile: (860) 403-7696
Attn: Nancy Engberg
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, Phoenix 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. Phoenix will vote Shares in accordance with timely instructions received from Participants. Phoenix 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 Phoenix 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. Phoenix reserves the right to vote shares held in any Account in its own right, to the extent permitted by law. Phoenix 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 Phoenix 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 trustees and with whatever
rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with Phoenix 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 PHOENIX AND PEPCO.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, Phoenix and PEPCO agree to indemnify and hold harmless AVIF, AIM, their affiliates, and each person, if any, who controls AVIF, AIM, or their affiliates within the meaning of Section 15 of the 1933 Act and each of their respective trustees 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 Phoenix and PEPCO) 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, 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 Phoenix or PEPCO by or on behalf of AVIF or AIM for use in any Account's 1933 Act registration statements, any Account Prospectuses, 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 statements, AVIF's Prospectuses, 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 Phoenix, PEPCO, or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of Phoenix, PEPCO, or their respective affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member," as that term is defined in paragraph (q) 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 statements, AVIF Prospectuses, 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, AIM or their affiliates by or on behalf of Phoenix, PEPCO, or their respective affiliates for use in AVIF's 1933 Act registration statements, AVIF's Prospectuses, sales literature or advertising of AVIF, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by Phoenix or PEPCO 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 Phoenix or PEPCO in this Agreement or arise out of or result from any other material breach of this Agreement by Phoenix or PEPCO; or
(v) arise as a result of failure by the Contracts issued by Phoenix 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 Phoenix nor PEPCO 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 or AIM.
(c) Neither Phoenix nor PEPCO shall be liable under this Section 12.1 with respect to any action against an Indemnified Party unless AVIF or AIM shall have notified Phoenix and PEPCO 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 Phoenix and PEPCO of any such action shall not relieve Phoenix and PEPCO 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, Phoenix and PEPCO 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 Phoenix or PEPCO to such Indemnified Party of Phoenix's or PEPCO's election to assume the defense thereof, the Indemnified Party will cooperate fully with Phoenix and PEPCO and shall bear the fees and expenses of any additional counsel retained by it, and neither Phoenix nor PEPCO 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 PHOENIX AND PEPCO 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 Phoenix, PEPCO, and their respective affiliates, the Accounts and each person, if any, who controls Phoenix, PEPCO, their respective affiliates, or the Accounts within the meaning of Section 15 of the 1933 Act and each of their respective trustees and officers, (collectively, the "Indemnified Parties" for purposes of this Section 12.2) against any and all losses, claims, 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, 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 statements, AVIF's Prospectuses 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 Phoenix, PEPCO, or their respective affiliates for use in AVIF's 1933 Act registration statements, AVIF Prospectuses, 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 statements, any Account Prospectuses, 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, AIM, or their affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF, AIM, or their affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member" as that term is defined in Section (q) of Article I 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 statements, any Account Prospectuses, 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 Phoenix, PEPCO, or their respective affiliates by or on behalf of AVIF or AIM for use in any Account's 1933 Act registration statements, any Account Prospectuses, sales literature or advertising covering the Contracts, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF or AIM 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 or AIM in this Agreement or arise out of or result from any other material breach of this Agreement by AVIF or AIM.
(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 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 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 Phoenix 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 Phoenix of Shares of another investment company or portfolio for those of any adversely affected Fund as a
funding medium for each Account that Phoenix 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 Phoenix, PEPCO, 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 its 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 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 shall 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 AVIF or AIM be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, Phoenix, PEPCO 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 Phoenix or PEPCO hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by Phoenix 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 Phoenix 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 Delaware law, without regard for that state's principles of conflict of laws.
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 and AIM acknowledge that the identities of the customers of Phoenix or any of its affiliates (collectively, the "Phoenix 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 Phoenix Protected Parties or any of their employees or agents in connection with Phoenix's performance of its duties under this Agreement are the valuable property of the Phoenix Protected Parties. AVIF and AIM agree that if they come into possession of any list or compilation of the identities of or other information about the Phoenix Protected Parties' customers, or any other information or property of the Phoenix Protected Parties, other than such information as may be independently developed or compiled by AVIF or AIM from information supplied to it by the Phoenix Protected Parties' customers who also maintain accounts directly with AVIF, AVIF and AIM 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 Phoenix's prior written consent; or (b) as required by law or judicial process. Phoenix 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 Agreement are the valuable property of the AVIF Protected Parties. Phoenix 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 Phoenix from information supplied to it by the AVIF Protected Parties' customers who also maintain accounts directly with Phoenix, Phoenix 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) Except as may otherwise be provided in a License Agreement among A I M Management Group Inc., Phoenix and PEPCO, neither Phoenix nor PEPCO or any of their respective affiliates shall not use any trademark, trade name, service mark or logo of AVIF, AIM or any of their respective affiliates, or any variation of any such trademark, trade name, service mark or logo, without AVIF's or AIM's prior written consent, the granting of which shall be at AVIF's or AIM's sole option.
(b) Except as otherwise expressly provided in this Agreement, neither AVIF, its investment adviser, its principal underwriter, or any affiliates thereof shall use any trademark, trade name, service mark or logo of Phoenix, PEPCO, or any of their affiliates, or any variation of any such trademark, trade name, service mark or logo, without Phoenix's or PEPCO's prior written consent, the granting of which shall be at Phoenix's or PEPCO's sole option.
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.
SECTION 21. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner except by a written agreement executed by all parties hereto.
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
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
---------------------------- -----------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title Assistant Secretary Title: President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
---------------------------- -----------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
PHL VARIABLE INSURANCE COMPANY, on
behalf of itself and its separate
accounts
Attest: /s/ John H. Beers By: /s/ Michael J. Giloth
---------------------------- -----------------------------
Name: John H. Beers Name: Michael J. Giloth
---------------------------- -----------------------------
Title: Secretary Title: Executive VP
---------------------------- -----------------------------
|
PHOENIX EQUITY PLANNING CORPORATION
Attest: /s/ Nancy J. Engberg By: /s/ William R. Moyer
---------------------------- -----------------------------
Name: Nancy J. Engberg Name: William R. Moyer
---------------------------- -----------------------------
Title: Secretary Title: EVP, CFO, Treasurer
---------------------------- -----------------------------
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital Appreciation Fund AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
PHL Variable Accumulation Account
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
The Big Edge Choice - Form D601
Retirement Planners' Edge - Form D603
The Phoenix Edge - VA - Form D602
The Premium Edge - Form D604
SCHEDULE B
AIM'S PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following thresholds are applied:
a. If the amount of the difference in the erroneous net asset value and the correct net asset value is less than .5% of the correct net asset value, AIM will reimburse the affected Fund to the extent of any loss resulting from the error. No other adjustments shall be made.
b. If the amount of the difference in the erroneous net asset value and the correct net asset value is .5% of the correct net asset value or greater, then AIM will determine the impact of the error to the affected Fund and shall reimburse such Fund (and/or Phoenix, as appropriate, such as in the event that the error was not discovered until after Phoenix processed transactions using the erroneous net asset value) to the extent of any loss resulting from the error. To the extent that an overstatement of net asset value per share is detected quickly and Phoenix has not mailed redemption checks to Participants, Phoenix and AIM agree to examine the extent of the error to determine the feasibility of reprocessing such redemption transaction (for purposes of AIM reimbursing the Fund to the extent of any such overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to paragraph (b), above, AIM shall reimburse Phoenix for Phoenix's reprocessing costs in an amount not to exceed $1.00 per contract affected by $10 or more.
The Pricing Policies described herein may be modified by AVIF as approved by its Board of Trustees. AIM agrees to use its best efforts to notify Phoenix at least five (5) days prior to any such meeting of the Board of Trustees of AVIF to consider such proposed changes.
SCHEDULE C
EXPENSE ALLOCATIONS
=======================================================================================
PHOENIX AVIF / AIM
---------------------------------------------------------------------------------------
preparing and filing the Account's Preparing and filing the Fund's
registration statement registration statement
---------------------------------------------------------------------------------------
text composition for Account prospectuses text composition for Fund prospectuses
and supplements and supplements
---------------------------------------------------------------------------------------
text alterations of prospectuses text alterations of prospectuses (Fund)
(Account) and supplements (Account) and supplements (Fund)
---------------------------------------------------------------------------------------
printing Account and Fund prospectuses a camera ready Fund prospectus
and supplements
---------------------------------------------------------------------------------------
text composition and printing Account SAIs text composition and printing Fund SAIs
---------------------------------------------------------------------------------------
mailing and distributing Account SAIs to mailing and distributing Fund SAIs to
policy owners upon request by policy policy owners upon request by policy
owners owners
---------------------------------------------------------------------------------------
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by Federal Securities
Laws and to prospective purchasers
---------------------------------------------------------------------------------------
text composition (Account), printing, text composition of annual and
mailing, and distributing annual and semi-annual reports (Fund)
semi-annual reports for Account (Fund
and Account as, applicable)
---------------------------------------------------------------------------------------
text composition, printing, mailing, text composition, printing, mailing,
distributing, and tabulation of proxy distributing and tabulation of proxy
statements and voting instruction statements and voting instruction
solicitation materials to policy owners solicitation materials to policy
with respect to proxies related to the owners with respect to proxies related
Account to the Fund
---------------------------------------------------------------------------------------
preparation, printing and distributing
sales material and advertising relating
to the Funds, insofar as such materials
relate to the Contracts and 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
=======================================================================================
|
EXHIBIT h(75)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS,
A I M DISTRIBUTORS, INC.,
ANNUITY INVESTORS LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
GREAT AMERICAN ADVISORS, INC.
TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
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................................... 2
Section 2. Processing Transactions.......................................... 2
2.1 Timely Pricing and Orders........................................ 2
2.2 Timely Payments.................................................. 3
2.3 Applicable Price................................................. 3
2.4 Dividends and Distributions...................................... 4
2.5 Book Entry....................................................... 4
Section 3. Costs and Expenses............................................... 4
3.1 General.......................................................... 4
3.2 Parties To Cooperate............................................. 5
Section 4. Legal Compliance................................................. 5
4.1 Tax Laws......................................................... 5
4.2 Insurance and Certain Other Laws................................. 7
4.3 Securities Laws.................................................. 8
4.4 Notice of Certain Proceedings and Other Circumstances............ 9
4.5 LIFE COMPANY To Provide Documents; Information About AVIF........ 9
4.6 AVIF To Provide Documents; Information About LIFE COMPANY....... 10
Section 5. Mixed and Shared Funding........................................ 12
5.1 General......................................................... 12
5.2 Disinterested Trustees.......................................... 12
5.3 Monitoring for Material Irreconcilable Conflicts................ 12
5.4 Conflict Remedies............................................... 13
5.5 Notice to LIFE COMPANY.......................................... 14
5.6 Information Requested by Board of Trustees...................... 14
5.7 Compliance with SEC Rules....................................... 15
5.8 Other Requirements.............................................. 15
Section 6. Termination..................................................... 15
6.1 Events of Termination........................................... 15
6.2 Notice Requirement for Termination.............................. 16
6.3 Funds To Remain Available....................................... 17
6.4 Survival of Warranties and Indemnifications..................... 17
6.5 Continuance of Agreement for Certain Purposes................... 17
|
DESCRIPTION PAGE
----------- ----
Section 7. Parties To Cooperate Respecting Termination..................... 17
Section 8. Assignment...................................................... 18
Section 9. Notices......................................................... 18
Section 10. Voting Procedures.............................................. 19
Section 11. Foreign Tax Credits............................................ 19
Section 12. Indemnification................................................ 19
12.1 Of AVIF and AIM by LIFE COMPANY and UNDERWRITER................. 19
12.2 Of LIFE COMPANY and UNDERWRITER by AVIF and AIM................. 21
12.3 Effect of Notice................................................ 24
12.4 Successors...................................................... 24
Section 13. Applicable Law................................................. 24
Section 14. Execution in Counterparts...................................... 24
Section 15. Severability................................................... 25
Section 16. Rights Cumulative.............................................. 25
Section 17. Headings....................................................... 25
Section 18. Confidentiality................................................ 25
Section 19. Trademarks and Fund Names...................................... 26
Section 20. Parties to Cooperate........................................... 26
|
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 4th day of April, 2001 ("Agreement"), by and among AIM Variable Insurance Funds, a Delaware Trust ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM") Annuity Investors Life Insurance Company, an Ohio life insurance company ("LIFE COMPANY"), 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 Great American Advisors, Inc., an affiliate of LIFE COMPANY and the principal underwriter of the Contracts ("UNDERWRITER") (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 sixteen separate series ("Series"), shares ("Shares") 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, LIFE COMPANY 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, LIFE COMPANY 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, LIFE COMPANY 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
WHEREAS, to the extent permitted by applicable insurance laws and regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER 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");
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");
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 LIFE COMPANY for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. The Board of Trustees 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 Trustees 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, 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 LIFE COMPANY with the net asset value per Share for each Fund by 6:00 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) LIFE COMPANY is open for business.
(b) LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY in the event that AVIF is unable to meet the 6:00 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 LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of redemption proceeds by AVIF, LIFE COMPANY 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), LIFE COMPANY shall be entitled to an adjustment to the number of Shares purchased or redeemed to reflect the correct net asset value per Share. Any material error in the calculation or reporting of net asset value per Share, dividend or capital gain information shall be reported promptly upon discovery to LIFE COMPANY. Materiality and reprocessing cost reimbursement shall be determined in accordance with standards established by the Parties as provided in Schedule B, attached hereto and incorporated herein.
2.2 TIMELY PAYMENTS.
LIFE COMPANY 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 LIFE COMPANY by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY 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 LIFE COMPANY 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), LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY of any income dividends or capital gain distributions payable on the Shares of any Fund. LIFE COMPANY 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 LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY. Shares ordered from AVIF will be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL
Except as otherwise specifically provided in Schedule C, attached hereto and made a part hereof, each Party will bear, or arrange for others to bear, all expenses incident to its performance under this Agreement.
3.2 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 LIFE COMPANY 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 LIFE COMPANY 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) Notwithstanding any other provision of this Agreement, LIFE COMPANY agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of LIFE COMPANY or, to LIFE COMPANY's knowledge, of any Contract owners, annuitants, insureds or participants (as appropriate) under the Contracts (collectively, "Participants"), that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or LIFE COMPANY otherwise becomes aware of any facts that could give rise to any claim against AVIF or its affiliates as a result of such a failure or alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF of such assertion or
potential claim (subject to the Confidentiality provisions of
Section 18 as to any Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) LIFE COMPANY shall use its best efforts to minimize any liability of AVIF or its affiliates resulting from such failure, including, without limitation, demonstrating, pursuant to Treasury Regulations Section 1.817-5(a)(2), to the Commissioner of the IRS that such failure was inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal and accounting advisors to participate in any conferences, settlement discussions or other administrative or judicial proceeding or contests (including judicial appeals thereof) with the IRS, any 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 LIFE COMPANY will retain control of the conduct of such conferences, discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by LIFE COMPANY 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 LIFE
COMPANY 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 LIFE COMPANY to any such person without the express written consent of AVIF which shall not be unreasonably withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their accounting and legal advisors with such cooperation as AVIF shall reasonably request (including, without limitation, by permitting AVIF and its accounting and legal advisors to review the relevant books and records of LIFE COMPANY) in order to facilitate review by AVIF or its advisors of any written submissions provided to it pursuant to the preceding clause or its assessment of the validity or amount of any claim against its arising from such a failure or alleged failure;
(vii) LIFE COMPANY 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 LIFE COMPANY shall not be required, after exhausting all administrative remedies, 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 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 LIFE COMPANY fails to comply with any of the foregoing clauses (i) through (vii), and such failure could be shown to have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to
any compromise or settlement of any claim or liability hereunder, LIFE COMPANY
may, in its discretion, authorize AVIF or its affiliates to act in the name of
LIFE COMPANY in, and to control the conduct of, such conferences, discussions,
proceedings, contests or appeals and all administrative or judicial appeals
thereof, and in that event AVIF or its affiliates shall bear the fees and
expenses associated with the conduct of the proceedings that it is so authorized
to control; provided, that in no event shall LIFE COMPANY 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) LIFE COMPANY 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; LIFE COMPANY 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) LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY, including, the furnishing of information not otherwise available to LIFE COMPANY which is required by state insurance law to enable LIFE COMPANY to obtain the authority needed to issue the Contracts in any applicable state.
(b) LIFE COMPANY 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 Ohio 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 3907.15 of the Ohio Revised Code 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 lawfully organized, validly existing, and in good standing under the laws of the State of Delaware 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) LIFE COMPANY 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 the law(s) of LIFE COMPANY's state(s) of organization and domicile, (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) LIFE COMPANY 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 Delaware 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 pursuant to Rule 12b-1, AVIF undertakes to have its Board of Trustees, 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 or AIM will immediately notify LIFE COMPANY 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 LIFE COMPANY. AVIF and AIM 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) LIFE COMPANY or UNDERWRITER 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. LIFE COMPANY and UNDERWRITER 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.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) LIFE COMPANY 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) LIFE COMPANY 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 AIM as the entity to receive such sales
literature, until such time as AVIF appoints another designated agent by giving
notice to LIFE COMPANY in the manner required by Section 9 hereof.
(c) Neither LIFE COMPANY 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) LIFE COMPANY 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.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY.
(a) AVIF will provide to LIFE COMPANY 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 LIFE COMPANY a camera ready copy and/or a file in PDF format of all AVIF prospectuses and printed copies, in an amount specified by LIFE COMPANY, 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 LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, 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 LIFE COMPANY or its designated agent at least one
(1) complete copy of each piece of sales literature or other promotional
material in which LIFE COMPANY, 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 LIFE COMPANY 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. LIFE
COMPANY 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 LIFE COMPANY, 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 LIFE COMPANY for distribution; or (iii) in sales literature or other promotional material approved by LIFE COMPANY or its affiliates, except with the express written permission of LIFE COMPANY.
(e) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning LIFE COMPANY, 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 LIFE COMPANY, 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 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 LIFE COMPANY, 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 LIFE COMPANY that, in the event that AVIF implements Mixed and Shared Funding, it may be appropriate to include in the prospectus pursuant to which a Contract is offered disclosure regarding the potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED TRUSTEES.
AVIF agrees that its Board of Trustees shall at all times consist of trustees a majority of whom (the "Disinterested Trustees") 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 Trustees 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 ("Participating Plans"). LIFE COMPANY agrees to inform the Board of Trustees 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, LIFE COMPANY will assist the Board of Trustees in carrying out its responsibilities by providing the Board of Trustees with all information reasonably necessary for the Board of Trustees to consider any issue raised, including information as to a decision by LIFE COMPANY to disregard voting instructions of Participants. LIFE COMPANY'S responsibilities in connection with the foregoing shall be carried out with a view only to the interests 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 Trustees or a majority of the Disinterested Trustees that a material irreconcilable conflict exists, LIFE COMPANY 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 Trustees), 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 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 LIFE COMPANY's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, LIFE COMPANY 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 LIFE COMPANY that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY 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 LIFE COMPANY conflicts with the majority of other state regulators, then LIFE COMPANY will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Trustees informs LIFE COMPANY that it has determined that such decision has created a material irreconcilable conflict, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in resolving any material irreconcilable conflict will be carried out at its expense and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Trustees 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. LIFE COMPANY 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 LIFE COMPANY.
AVIF will promptly make known in writing to LIFE COMPANY the Board of Trustees' 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.
5.6 INFORMATION REQUESTED BY BOARD OF TRUSTEES.
LIFE COMPANY and AVIF (or its investment adviser) will at least annually submit to the Board of Trustees of AVIF such reports, materials or data as the Board of Trustees may reasonably request so that the Board of Trustees 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 Trustees. All reports received by the Board of Trustees of potential or existing conflicts, and all Board of Trustees 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 Trustees 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 sixty (60) days 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 LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding LIFE COMPANY'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 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 LIFE COMPANY 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, LIFE COMPANY 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 LIFE COMPANY, 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 LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANY if the Fund fails to comply with Section 817(h) of the Code or with successor or similar provisions, or if LIFE COMPANY reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by LIFE COMPANY 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:
(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 LIFE COMPANY, 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 LIFE COMPANY 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).
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 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
A I M DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
ANNUITY INVESTORS LIFE INSURANCE COMPANY
GREAT AMERICAN ADVISORS, INC.
525 Vine Street
Cincinnati, Ohio 45202
Facsimile: (513) 412-1611
Attn: James L. Henderson, Vice President
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof,
LIFE COMPANY 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. LIFE COMPANY will vote
Shares in accordance with timely instructions received from Participants. LIFE
COMPANY 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
LIFE COMPANY 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. LIFE COMPANY reserves the right to vote
shares held in any Account in its own right, to the extent permitted by law.
LIFE COMPANY 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 LIFE COMPANY
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 trustees and
with whatever rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LIFE COMPANY 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 LIFE COMPANY AND UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless AVIF, AIM, their affiliates, and each person, if any, who controls AVIF, AIM, or their affiliates within the meaning of Section 15 of the 1933 Act and each of their respective trustees 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 LIFE COMPANY and UNDERWRITER) 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 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 LIFE COMPANY or UNDERWRITER 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 LIFE COMPANY, UNDERWRITER or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of LIFE COMPANY, UNDERWRITER or their respective affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member," as that term is defined in paragraph (q) 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, AIM or their affiliates by or on behalf of LIFE COMPANY, UNDERWRITER 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
(iv) arise as a result of any failure by LIFE COMPANY or UNDERWRITER 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 LIFE COMPANY or UNDERWRITER in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANY or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued by LIFE COMPANY 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 LIFE COMPANY nor UNDERWRITER 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 or AIM.
(c) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
or AIM shall have notified LIFE COMPANY and UNDERWRITER 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 LIFE COMPANY and
UNDERWRITER of any such action shall not relieve LIFE COMPANY and UNDERWRITER
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, LIFE COMPANY and UNDERWRITER 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 LIFE COMPANY or UNDERWRITER to such Indemnified
Party of LIFE COMPANY's or UNDERWRITER's election to assume the defense thereof,
the Indemnified Party will cooperate fully with LIFE COMPANY and UNDERWRITER and
shall bear the fees and expenses of any additional counsel retained by it, and
neither LIFE COMPANY nor UNDERWRITER 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 LIFE COMPANY AND UNDERWRITER 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 LIFE COMPANY, UNDERWRITER, their respective affiliates, and each person, if any, who controls LIFE COMPANY, UNDERWRITER or
their respective affiliates within the meaning of Section 15 of the 1933 Act and each of their respective trustees and officers, (collectively, the "Indemnified Parties" for purposes of this Section 12.2) against any and all losses, claims, 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 LIFE COMPANY, UNDERWRITER 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, AIM or their affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF, AIM or their affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member" as that term is defined in Section (q) of Article I 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 LIFE COMPANY, UNDERWRITER or their respective affiliates by or on behalf of AVIF or AIM for use 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
(iv) arise as a result of any 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 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 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 LIFE COMPANY 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 LIFE COMPANY of Shares of another investment company or portfolio for those of any adversely affected Fund as a funding medium for each Account that LIFE COMPANY 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 LIFE COMPANY, UNDERWRITER, 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 its 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 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 AVIF and AIM will not 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 AVIF or AIM be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, LIFE COMPANY, UNDERWRITER 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 LIFE COMPANY or UNDERWRITER hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by LIFE COMPANY 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 LIFE COMPANY 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 Delaware law, without regard for that state's principles of conflict of laws.
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 LIFE COMPANY or
any of its affiliates (collectively, the "LIFE COMPANY 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
LIFE COMPANY Protected Parties or any of their employees or agents in connection
with LIFE COMPANY's performance of its duties under this Agreement are the
valuable property of the LIFE COMPANY Protected Parties. AVIF agrees that if it
comes into possession of any list or compilation of the identities of or other
information about the LIFE COMPANY Protected Parties' customers, or any other
information or property of the LIFE COMPANY Protected Parties, other than such
information as may be independently developed or compiled by AVIF from
information supplied to it by the LIFE COMPANY 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 LIFE COMPANY's prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY
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 Agreement are the valuable property of the
AVIF Protected Parties. LIFE COMPANY 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 LIFE COMPANY from information supplied to it by the
AVIF Protected Parties' customers who also maintain accounts directly with LIFE COMPANY, LIFE COMPANY 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) Except as may otherwise be provided in a License Agreement among A I M Management Group Inc., LIFE COMPANY and UNDERWRITER, neither LIFE COMPANY nor UNDERWRITER or any of their respective affiliates, shall use any trademark, trade name, service mark or logo of AVIF, AIM or any of their respective affiliates, or any variation of any such trademark, trade name, service mark or logo, without AVIF's or AIM's prior written consent, the granting of which shall be at AVIF's or AIM's sole option.
(b) Except as otherwise expressly provided in this Agreement, neither AVIF, its investment adviser, its principal underwriter, or any affiliates thereof shall use any trademark, trade name, service mark or logo of LIFE COMPANY, UNDERWRITER or any of their affiliates, or any variation of any such trademark, trade name, service mark or logo, without LIFE COMPANY's or UNDERWRITER's prior written consent, the granting of which shall be at LIFE COMPANY"s or UNDERWRITER"s sole option.
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.
SECTION 21. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner except by a written agreement executed by all parties hereto.
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
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
------------------------- -----------------------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title Assistant Secretary Title: President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
------------------------- -----------------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
ANNUITY INVESTORS LIFE INSURANCE COMPANY,
on behalf of itself and its separate
accounts
Attest: /s/ John P. Gruber By: /s/ James L. Henderson
------------------------- -----------------------------------------
Name: John P. Gruber Name: James L. Henderson
Title: Vice President Title: Vice President
GREAT AMERICAN ADVISORS, INC.
Attest: /s/ John P. Gruber By: /s/ James L. Henderson
------------------------- -----------------------------------------
Name: John P. Gruber Name: James L. Henderson
Title: Vice President Title: President
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Value Fund
AIM V.I. Capital Development Fund
AIM V.I. Government Securities Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Annuity Investors Separate Account A
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
The Commodore Nauticus(SM)
Group Flexible Premium Deferred Variable Annuity
The Commodore Americus(SM)
Individual Flexible Premium Deferred Variable Annuity
SCHEDULE B
AIM'S PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following thresholds are applied:
a. If the amount of the difference in the erroneous net asset value and the correct net asset value is less than .5% of the correct net asset value, AIM will reimburse the affected Fund to the extent of any loss resulting from the error. No other adjustments shall be made.
b. If the amount of the difference in the erroneous net asset value and the correct net asset value is .5% of the correct net asset value or greater, then AIM will determine the impact of the error to the affected Fund and shall reimburse such Fund (and/or LIFE COMPANY, as appropriate, such as in the event that the error was not discovered until after LIFE COMPANY processed transactions using the erroneous net asset value) to the extent of any loss resulting from the error. To the extent that an overstatement of net asset value per share is detected quickly and LIFE COMPANY has not mailed redemption checks to Participants, LIFE COMPANY and AIM agree to examine the extent of the error to determine the feasibility of reprocessing such redemption transaction (for purposes of reimbursing the Fund to the extent of any such overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to paragraph (b), above, AIM shall reimburse LIFE COMPANY for LIFE COMPANY's reprocessing costs in an amount not to exceed $1.00 per contract affected by $10 or more.
The Pricing Policies described herein may be modified by AVIF as approved by its Board of Trustees. AIM agrees to use its best efforts to notify LIFE COMPANY at least five (5) days prior to any such meeting of the Board of Trustees of AVIF to consider such proposed changes.
SCHEDULE C
EXPENSE ALLOCATIONS
LIFE COMPANY AVIF / AIM
------------ ----------
preparing and filing the Account's Preparing and filing the Fund's
registration statement registration statement
text composition for Account prospectuses text composition for Fund prospectuses
and supplements and supplements
text alterations of prospectuses text alterations of prospectuses (Fund)
(Account) and supplements (Account) and supplements (Fund)
printing Account and Fund prospectuses a camera ready Fund prospectus; or a
and supplements prospectus file in PDF format
text composition and printing Account SAIs text composition and printing Fund SAIs
mailing and distributing Account SAIs to mailing and distributing Fund SAIs to
policy owners upon request by policy policy owners upon request by policy
owners owners
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by Federal Securities
Laws and to prospective purchasers
text composition (Account), printing, text composition of annual and
mailing, and distributing annual and semi-annual reports (Fund); and/or Fund
semi-annual reports for Account (Fund and annual and semi-annual reports in a PDF
Account as, applicable) format
text composition, printing, mailing, text composition, printing, mailing,
distributing, and tabulation of proxy distributing and tabulation of proxy
statements and voting instruction statements and voting instruction
solicitation materials to policy owners solicitation materials to policy owners
with respect to proxies related to the with respect to proxies related to the
Account Fund
preparation, printing and distributing
sales material and advertising relating
to the Funds, insofar as such materials
relate to the Contracts and 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
|
Exhibit h(76)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.,
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
CLARENDON INSURANCE AGENCY, INC.
TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
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.................................. 2
Section 2. Processing Transactions......................................... 2
2.1 Timely Pricing and Orders....................................... 2
2.2 Timely Payments................................................. 3
2.3 Applicable Price................................................ 3
2.4 Dividends and Distributions..................................... 4
2.5 Book Entry...................................................... 4
Section 3. Costs and Expenses.............................................. 4
3.1 General......................................................... 4
3.2 Parties To Cooperate............................................ 4
Section 4. Legal Compliance................................................ 4
4.1 Tax Laws........................................................ 4
4.2 Insurance and Certain Other Laws................................ 7
4.3 Securities Laws................................................. 8
4.4 Notice of Certain Proceedings and Other Circumstances........... 9
4.5 INSURER To Provide Documents; Information About AVIF............ 9
4.6 AVIF To Provide Documents; Information About INSURER............ 10
Section 5. Mixed and Shared Funding........................................ 11
5.1 General......................................................... 11
5.2 Disinterested Directors......................................... 12
5.3 Monitoring for Material Irreconcilable Conflicts................ 12
5.4 Conflict Remedies............................................... 13
5.5 Notice to INSURER .............................................. 14
5.6 Information Requested by Board of Directors..................... 14
5.7 Compliance with SEC Rules....................................... 14
5.8 Other Requirements.............................................. 14
Section 6. Termination..................................................... 15
6.1 Events of Termination........................................... 15
6.2 Notice Requirement for Termination.............................. 16
6.3 Funds To Remain Available....................................... 17
6.4 Survival of Warranties and Indemnifications..................... 17
6.5 Continuance of Agreement for Certain Purposes................... 17
Section 7. Parties To Cooperate Respecting Termination..................... 17
|
DESCRIPTION PAGE
----------- ----
Section 8. Assignment...................................................... 17
Section 9. Notices......................................................... 18
Section 10. Voting Procedures............................................... 18
Section 11. Foreign Tax Credits............................................. 19
Section 12. Indemnification................................................. 19
12.1 Of AVIF and AIM by INSURER and Clarendon........................ 19
12.2 Of INSURER and Clarendon by AVIF and AIM........................ 21
12.3 Effect of Notice................................................ 24
12.4 Successors...................................................... 24
Section 13. Applicable Law.................................................. 24
Section 14. Execution in Counterparts....................................... 24
Section 15. Severability.................................................... 24
Section 16. Rights Cumulative............................................... 24
Section 17. Headings........................................................ 24
Section 18. Confidentiality................................................. 25
Section 19. Trademarks and Fund Names....................................... 25
Section 20. Parties to Cooperate............................................ 26
Section 21. Access to Information by INSURER................................ 27
|
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 17th day of April, 2000 ("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland corporation ("AVIF"); A I M Distributors, Inc., a Maryland corporation ("AIM"); Sun Life Insurance and Annuity Company of New York, a New York life insurance company ("INSURER"), 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 Clarendon Insurance Agency, Inc. ("CLARENDON"), a Massachusetts corporation, a subsidiary of INSURER 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 eighteen 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, INSURER 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, INSURER 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, INSURER 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
WHEREAS, to the extent permitted by applicable insurance laws and regulations, INSURER intends to purchase Shares of one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, CLARENDON 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");
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 INSURER for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. 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, 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 INSURER 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) INSURER is open for business.
(b) INSURER 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. INSURER 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 INSURER in the event that AVIF is unable to meet the 5:30 p.m. Central 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 INSURER.
(c) With respect to payment of the purchase price by INSURER and of redemption proceeds by AVIF, INSURER 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), INSURER 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 INSURER.
2.2 TIMELY PAYMENTS.
INSURER 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 INSURER by 1:00 p.m. Central Time on the same day as the Order is placed, to the extent practicable, but in any event within five (5) calendar days after the date the order is placed in order to enable INSURER 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 INSURER 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), INSURER 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. AVIF will acknowledge and verify receipt of such orders by 12:00
p.m. Central Time on each business day on which orders are received.
(b) All other Share purchases and redemptions by INSURER 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 INSURER of any income dividends or capital gain distributions payable on the Shares of any Fund. INSURER 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 INSURER 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. INSURER 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 INSURER. Shares ordered from AVIF will be recorded in an appropriate title for INSURER, on behalf of its Account, as directed by INSURER.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto and made a part hereof, each Party will bear all expenses incident to its performance under this Agreement.
3.2 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. Except as otherwise specifically provided herein, each Party will bear all expenses incident to its performance under this Agreement.
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 qualify and maintain qualification of each Fund as a RIC. AVIF will notify INSURER 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 comply and 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 INSURER 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) Notwithstanding Section 12.2 of this Agreement, INSURER agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of INSURER or, to INSURER's knowledge, of any Participant, that any Fund has failed to comply with the diversification requirements of Subchapter M or Section 817(h) of the Code or INSURER 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) INSURER shall promptly notify AVIF of such assertion or
potential claim (subject to the confidentiality provisions of
Section 18 as to any Participant);
(ii) INSURER shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) INSURER shall, in good faith and to the extent not
inconsistent with its fiduciary duties to its Contract owners,
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) INSURER shall permit AVIF, its affiliates and their legal and accounting advisors to participate, at their sole expense, 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 INSURER will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by INSURER 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 INSURER 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 INSURER to any such person without the express written consent of AVIF which shall not be unreasonably withheld; provided, that in any event, each Party shall use its best efforts to make, as promptly as possible, the submissions to the Commissioner of the IRS contemplated by paragraph (c)(iii) above;
(vi) INSURER 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 INSURER) 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) INSURER 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 after exhausting all administrative remedies, in the event of an adverse judicial decision, INSURER shall either (a) appeal such decision, provided, that to the extent requested by INSURER, AVIF or its affiliates provides an opinion of independent counsel to the effect that a reasonable basis exists for taking such appeal, in which case the costs of such appeal shall be borne equally by the Parties hereto, or (b) permit AVIF and its affiliates to act in the name of INSURER and to control the conduct of such appeal pursuant to the last paragraph of this Section 4.1(c), in which case the costs of such appeal shall be borne by AVIF or its affiliates pursuant to that paragraph; and
(viii) AVIF and its affiliates shall have no liability as a result of such failure or alleged failure if INSURER 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, INSURER may,
in its discretion, authorize AVIF or its affiliates to act in the name of
INSURER 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 INSURER have any liability
resulting from AVIF's refusal to accept the proposed settlement or compromise
with respect to any failure to comply with the requirements of Subchapter M or
Section 817(h) of the Code 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) AVIF agrees to cooperate with INSURER with respect to the matters described in paragraphs (c)(i) through (vii) above. AVIF further agrees that it shall provide or cause to be provided to INSURER, on a quarterly basis, written confirmation of each Fund's compliance with the diversification requirements of Subchapter M and Section 817(h) of the Code.
(e) INSURER 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 maintain such treatment; INSURER 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.
(f) INSURER 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. INSURER will 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 by INSURER, including, the furnishing of information not otherwise available to INSURER which is required by state insurance law to enable INSURER to obtain the authority needed to issue the Contracts in any applicable state.
(b) INSURER 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 New York 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 New York law 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) INSURER 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 New York 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) INSURER 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 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 directors, 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 INSURER 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 INSURER. 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) INSURER 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. INSURER 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.
4.5 INSURER TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) INSURER 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) INSURER 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 ten (10) 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 ten (10) 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 AIM as the entity to receive such sales literature, until such time as AVIF appoints another designated agent by giving notice to INSURER in the manner required by Section 9 hereof.
(c) Neither INSURER 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) INSURER 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.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT INSURER.
(a) AVIF will provide to INSURER at least one (1) complete copy of all SEC registration statements, AVIF Prospectuses, statements of additional information reports, any preliminary and final proxy material, applications for exemptions, exemptive orders, 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 INSURER or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which INSURER, or any of its respective affiliates is named, or that refers to the Contracts, at least ten (10) 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 INSURER or its designated agent objects to such use within ten (10) Business Days after receipt of such material or such shorter period as the Parties hereto may, from time to time, agree upon. INSURER 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.
(c) Neither AVIF nor any of its affiliates will give any information or make any representations or statements on behalf of or concerning INSURER, 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 INSURER for distribution; or (iii) in sales literature or other promotional material approved by INSURER or its affiliates, except with the express written permission of INSURER.
(d) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning INSURER, 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 INSURER, 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.
(e) 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 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 INSURER, and directors 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 INSURER that 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 TRUSTEES") 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 ("Participating Plans"). INSURER 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, INSURER 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
INSURER to disregard voting instructions of Participants. INSURER's responsibilities in connection with the foregoing shall be carried out with a view only to the interests 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, INSURER 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 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 INSURER's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, INSURER 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 INSURER that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by INSURER 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 INSURER conflicts with the majority of other state regulators, then INSURER will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Directors informs INSURER 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 INSURER for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) INSURER 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. INSURER 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 INSURER.
AVIF will promptly make known in writing to INSURER 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.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
INSURER 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 one (1) year's 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 INSURER or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding INSURER'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 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 INSURER 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, INSURER 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 INSURER, 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 INSURER; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of INSURER if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if INSURER reasonably believes that the Fund may fail to so qualify; or
(g) at the option of INSURER if the Fund fails to comply with Section 817(h) of the Code or with successor or similar provisions, or if INSURER reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by INSURER 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; or
(j) at the option of INSURER or AVIF upon receipt of any necessary regulatory approvals and/or the vote of the Contract owners having an interest in the account (or any Subaccount) to substitute the shares of another investment for the corresponding AVIF Shares in accordance with the terms of the Contracts for which those Shares had been selected to serve as the underlying investment media. INSURER will give thirty (30) days' prior written notice to AVIF of the date of any proposed vote or other action taken to replace the AVIF Shares; or
(k) at the option of INSURER, if INSURER determines in its sole judgment exercised in good faith, that either AVIF or AVIF's investment adviser has suffered a material adverse change in its business, operations or financial condition since the date of this Agreement or is the subject of material adverse publicity which is likely to have a material adverse impact upon the business and operations of INSURER; or
(l) at the option of AVIF, if AVIF determines in its sole judgment exercised in good faith, that INSURER has suffered a material adverse change in its business, operations or financial condition since the date of this Agreement or is the subject of material adverse publicity which is likely to have a material adverse impact upon the business and operations of AVIF.
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:
(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 INSURER, 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 INSURER 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).
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.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
CLARENDON INSURANCE AGENCY, INC.
One Copley Place, Suite 200
Boston, Massachusetts 02116
Facsimile: (617) 348-1586
Attn: Margaret Hankard, Esq.
Senior Associate Counsel
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, INSURER 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. INSURER will vote Shares in accordance with timely instructions received from Participants. INSURER 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 INSURER 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. INSURER reserves the right to vote shares held in any Account in its own right, to the extent permitted by law. INSURER 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 in the manner required by the Mixed and Shared Funding exemptive order obtained by AVIF. AVIF will notify INSURER 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 INSURER 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 INSURER AND CLARENDON.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below,
INSURER and CLARENDON agree to indemnify and hold harmless AVIF, its
affiliates, 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, costs, expenses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
INSURER and CLARENDON) 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, costs,
expenses, 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 INSURER or CLARENDON 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 INSURER, CLARENDON or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of INSURER, CLARENDON 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 or on behalf of INSURER, CLARENDON 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
(iv) arise as a result of any failure by INSURER or CLARENDON 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 INSURER or CLARENDON in this Agreement or arise out of or result from any other material breach of this Agreement by INSURER or CLARENDON; or
(v) arise as a result of failure by the Contracts issued by INSURER 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 INSURER nor CLARENDON shall be liable under this
Section 12.1 with respect to any losses, costs, expenses, 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 INSURER nor CLARENDON shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
or AIM shall have notified INSURER and CLARENDON 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 INSURER and CLARENDON of any such action shall not relieve INSURER and CLARENDON 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, INSURER and CLARENDON 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 INSURER or CLARENDON to such Indemnified Party of INSURER's or CLARENDON's election to assume the defense thereof, the Indemnified Party will cooperate fully with INSURER and CLARENDON and shall bear the fees and expenses of any additional counsel retained by it, and neither INSURER nor CLARENDON 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 INSURER AND CLARENDON 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 INSURER, CLARENDON, their respective affiliates, and each person, if any, who controls INSURER, CLARENDON 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, costs, expenses, claims, 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, costs, expenses, 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 INSURER, CLARENDON 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 affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF or AIM or their affiliates or persons under its control (including, without limitation, their employees and "Associated Persons" as that term is defined in Section (n) of Article I 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 INSURER, CLARENDON or their respective affiliates by or on behalf of AVIF or AIM for use 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
(iv) arise as a result of any 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 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 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 interest and penalties, rescission charges, liability under state law to Participants asserting liability against INSURER 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 INSURER of Shares of another investment company or portfolio for those of any adversely affected Fund as a funding medium for each Account that INSURER 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, costs, expenses, 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 INSURER, CLARENDON, 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 its 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 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 AVIF
will not 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, INSURER, CLARENDON 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 INSURER or CLARENDON hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by INSURER 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 INSURER 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 Delaware law, without regard for that state's principles of conflict of laws.
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 INSURER or any of its affiliates (collectively, the "INSURER 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 INSURER Protected Parties or any of their employees or agents in connection with INSURER's performance of its duties under this Agreement are the valuable property of the INSURER Protected Parties. AVIF agrees that if it comes into possession of any list or compilation of the identities of or other information about the INSURER Protected Parties' customers, or any other information or property of the INSURER Protected Parties, other than such information as may be independently developed or compiled by AVIF from information supplied to it by the INSURER 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 INSURER's prior written consent; or (b) as required by law or judicial process. INSURER acknowledges that the identities of the customers of AVIF or any of its affiliates (collectively, the AAVIF 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 Agreement are the valuable property of the AVIF Protected Parties. INSURER 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 INSURER from information supplied to it by the AVIF Protected Parties' customers who also maintain accounts directly with INSURER, INSURER 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 mark "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 INSURER (the "AIM licensed marks" or the "licensor's licensed marks") and is authorized to use and to license other persons to use such marks. INSURER and its affiliates are hereby granted a non-exclusive license to use the AIM licensed marks in connection with INSURER'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 INSURER 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 INSURER 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, INSURER 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 INSURER shall have the right to continue to service outstanding Contracts bearing any of the AIM licensed marks and to use AIM licensed marks in such materials as may be necessary for filing with any regulatory authority where required by law or regulation or to enable INSURER to quote performance to existing Contract owners.
(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 and
may be obtained in connection with approval of sales materials as provided in
Section 4.5(b) hereof (i.e., approvals obtained under Section 4.5 hereof shall
be deemed approval pursuant to this Section 19).
(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 with the written approval of the licensor, then the licensee shall immediately cease distributing such disapproved materials, upon receiving notice of such failure by the licensor. 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, based upon the representations of the licensor set forth herein and without making any independent inquiry thereof, that, to the best of the knowledge of the licensee, the licensor's licensed marks are valid and enforceable trademarks and/or service marks; (ii) acknowledges and stipulates that such licensee does not own the licensor's licensed marks and claims no rights therein other than as a licensee under this Agreement; (iii) agrees never to contend otherwise in legal proceedings or in other circumstances; and (iv) 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.
SECTION 21. ACCESS TO INFORMATION BY INSURER
During ordinary business hours, AVIF shall afford INSURER, directly or through its authorized representatives, reasonable access to all files, books, records and other materials of AVIF (except for confidential or proprietary materials) which directly relate to transactions arising in connection with this Agreement and to make available appropriate personnel familiar with such items for the purpose of explaining the form and content of such items. This Section 21 shall survive the termination of this Agreement.
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/ Nancy L. Martin By: /s/ Robert H. Graham
----------------------- -------------------------------------
Nancy L. Martin Robert H. Graham
Assistant Secretary President
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
----------------------- -------------------------------------
Nancy L. Martin Michael J. Cemo
Assistant Secretary President
|
SUN LIFE INSURANCE AND ANNUITY COMPANY OF
NEW YORK, on behalf of itself and its
separate accounts
By: /s/ Edward M. Shea
-------------------------------------
Edward M. Shea
By: /s/ Norton A. Goss, II
-------------------------------------
Norton A. Goss, II
|
CLARENDON INSURANCE AGENCY, INC.
By: /s/ Norton A. Goss, II
-------------------------------------
Norton A. Goss, II
By: /s/ George E. Maden
-------------------------------------
George E. Maden
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
SUN LIFE (NY) VARIABLE ACCOUNT C
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
FUTURITY - NY VARIABLE AND FIXED ANNUITY CONTRACT
SCHEDULE B
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM and Design
[AIM LOGO]
--Registered Trademark--
SCHEDULE C
EXPENSE ALLOCATIONS
INSURER AVIF / AIM
------- ----------
preparing and filing the Account's preparing and filing the Fund's
registration statement registration statement
text composition for Account text composition for Fund
prospectuses and supplements prospectuses and supplements
text alterations of prospectuses text alterations of prospectuses
(Account) and supplements (Account) (Fund) and supplements (Fund)
printing Account and Fund prospectuses a camera ready Fund prospectus
and supplements
text composition and printing Account text composition and printing Fund
SAIs (if any) SAIs
mailing and distributing Account SAIs mailing and distributing Fund SAIs
(if any) to policy owners upon request to policy owners upon request by
by policy owners policy owners
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by or appropriate
under the Federal Securities Laws and
to prospective purchasers
text composition (Account), printing, text composition and printing of
mailing, and distributing annual and annual and semi-annual reports (Fund)
semi-annual reports for Account
text composition, printing, mailing, text composition, printing, mailing,
distributing, and tabulation of proxy distributing and tabulation of proxy
statements and voting instruction statements and voting instruction
solicitation materials to policy owners solicitation materials to policy
with respect to proxies related to the owners with respect to proxies
Account related to the Fund
preparation, printing and distributing
sales material and advertising relating
to the Funds, insofar as such materials
relate to the Contracts and 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
|
Exhibit h(77)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS,
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
AFSG SECURITIES CORPORATION AS UNDERWRITER
OF VARIABLE CONTRACTS AND POLICIES
TABLE OF CONTENTS
DESCRIPTION PAGE ----------- ---- 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................................ 2 Section 2. Processing Transactions.................................... 2 2.1 Timely Pricing and Orders..................................... 2 2.2 Timely Payments............................................... 3 2.3 Applicable Price.............................................. 3 2.4 Dividends and Distributions................................... 3 2.5 Book Entry.................................................... 3 Section 3. Costs and Expenses......................................... 4 3.1 General....................................................... 4 3.2 Registration.................................................. 4 3.3 Other (Non-Sales-Related)..................................... 4 3.4 Other (Sales-Related)......................................... 4 3.5 Parties To Cooperate.......................................... 5 Section 4. Legal Compliance........................................... 5 4.1 Tax Laws...................................................... 5 4.2 Insurance and Certain Other Laws............................. 7 4.3 Securities Laws.............................................. 7 4.4 Notice of Certain Proceedings and Other Circumstances........ 8 4.5 LIFE COMPANY To Provide Documents; Information About AVIF.... 9 4.6 AVIF To Provide Documents; Information About LIFE COMPANY.... 9 Section 5. Mixed and Shared Funding................................... 10 5.1 General...................................................... 10 5.2 Disinterested Directors...................................... 11 5.3 Monitoring for Material Irreconcilable Conflicts............. 11 5.4 Conflict Remedies............................................ 12 5.5 Notice to LIFE COMPANY....................................... 13 5.6 Information Requested by Board of Directors.................. 13 5.7 Compliance with SEC Rules.................................... 13 5.8 Other Requirements........................................... 13 Section 6. Termination................................................ 13 6.1 Events of Termination........................................ 13 6.2 Notice Requirement for Termination........................... 14 6.3 Funds To Remain Available.................................... 15 6.4 Survival of Warranties and Indemnifications.................. 15 6.5 Continuance of Agreement for Certain Purposes................ 15 Section 7. Parties To Cooperate Respecting Termination................ 15 |
Section 8. Assignment................................................. 15 Section 9. Notices.................................................... 15 Section 10. Voting Procedures......................................... 16 Section 11. Foreign Tax Credits....................................... 17 Section 12. Indemnification........................................... 17 12.1 Of AVIF by LIFE COMPANY and UNDERWRITER....................... 17 12.2 Of LIFE COMPANY and UNDERWRITER by AVIF....................... 19 12.3 Effect of Notice.............................................. 21 12.4 Successors.................................................... 21 Section 13. Applicable Law............................................ 21 Section 14. Execution in Counterparts................................. 21 Section 15. Severability.............................................. 21 Section 16. Rights Cumulative......................................... 21 Section 17. Headings.................................................. 21 Section 18. Confidentiality........................................... 21 Section 19. Trademarks and Fund Names................................. 22 Section 20. Parties to Cooperate...................................... 23 |
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 30th day of April, 2001 ("Agreement"), by and among AIM Variable Insurance Funds, a Delaware Trust ("AVIF"); Western Reserve Life Assurance Co. of Ohio, an Ohio life insurance company ("LIFE COMPANY"), 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 AFSG Securities Corporation, an affiliate of LIFE COMPANY and the principal underwriter of the Contracts ("UNDERWRITER") (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 sixteen 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, LIFE COMPANY 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, LIFE COMPANY 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, LIFE COMPANY 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
WHEREAS, to the extent permitted by applicable insurance laws and regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER 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");
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 LIFE COMPANY for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. The Board of Trustees 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 Trustees 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, 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 LIFE COMPANY with the net asset value per Share for each Fund by 6:00
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) LIFE COMPANY
is open for business.
(b) LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY in the event that AVIF is unable to meet the 6:00 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 LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of redemption proceeds by AVIF, LIFE COMPANY 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), LIFE COMPANY shall be entitled to an adjustment to the number of Shares purchased or redeemed to reflect the correct net asset value per Share. Any material error in the calculation or reporting of net asset value per Share, dividend or capital gain information shall be reported promptly upon discovery to LIFE COMPANY.
2.2. TIMELY PAYMENTS.
LIFE COMPANY 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 LIFE COMPANY by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY 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 LIFE COMPANY 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), LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY of any income dividends or capital gain distributions payable on the Shares of any Fund. LIFE COMPANY 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 LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY. Shares ordered from AVIF will be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
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) LIFE COMPANY 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) LIFE COMPANY 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) LIFE COMPANY will print in quantity and deliver to existing Participants the documents described in Section 3.3(b) above and the prospectus provided by AVIF in camera ready or computer diskette form. AVIF will print the AVIF statement of additional information, proxy materials relating to AVIF and periodic reports of AVIF.
3.4. OTHER (SALES-RELATED).
LIFE COMPANY 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 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 LIFE COMPANY 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 LIFE COMPANY 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) LIFE COMPANY agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of LIFE COMPANY or, to LIFE COMPANY's knowledge, of any Participant, that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or LIFE COMPANY otherwise becomes aware of any facts that could give rise to any claim against AVIF or its affiliates as a result of such a failure or alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF of such assertion or potential claim (subject to the Confidentiality provisions of Section 18 as to any Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) LIFE COMPANY shall use its best efforts to minimize
any liability of AVIF or its affiliates resulting
from such failure, including, without limitation,
demonstrating, pursuant to Treasury Regulations
Section 1.817-5(a)(2), to the Commissioner of the IRS
that such failure was inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal and accounting advisors to participate in any conferences, settlement discussions or other
administrative or judicial proceeding or contests (including judicial appeals thereof) with the IRS, any 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 LIFE COMPANY will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY to any such person without the express written consent of AVIF which shall not be unreasonably withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their accounting and legal advisors with such cooperation as AVIF shall reasonably request (including, without limitation, by permitting AVIF and its accounting and legal advisors to review the relevant books and records of LIFE COMPANY) in order to facilitate review by AVIF or its advisors of any written submissions provided to it pursuant to the preceding clause or its assessment of the validity or amount of any claim against its arising from such a failure or alleged failure;
(vii) LIFE COMPANY 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 LIFE COMPANY 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 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 LIFE COMPANY fails to comply with any of the foregoing clauses (i) through (vii), and such failure could be shown to have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to any compromise or settlement of any claim or liability hereunder, LIFE COMPANY may, in its discretion, authorize AVIF or its affiliates to act in the name of LIFE COMPANY in, and to control the conduct of, such conferences, discussions, proceedings, contests or appeals and all administrative or judicial appeals thereof, and in that event AVIF or its affiliates shall bear the fees and expenses associated with the conduct of the proceedings that it is so authorized to control; provided, that in no event shall LIFE COMPANY 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) LIFE COMPANY 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; LIFE COMPANY 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) LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY, including, the furnishing of information not otherwise available to LIFE COMPANY which is required by state insurance law to enable LIFE COMPANY to obtain the authority needed to issue the Contracts in any applicable state.
(b) LIFE COMPANY 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 Ohio 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 the Iowa Insurance Code 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 trust duly organized, validly existing, and in good standing under the laws of the State of Delaware 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) LIFE COMPANY 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 Iowa
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) LIFE COMPANY 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 Delaware 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 pursuant to Rule 12b-1, AVIF undertakes to have its Board of Trustees, 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 LIFE COMPANY 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 LIFE COMPANY. 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) LIFE COMPANY 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. LIFE COMPANY 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.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) LIFE COMPANY 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) LIFE COMPANY 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 AIM as the entity to receive such sales literature, until such time as AVIF appoints another designated agent by giving notice to LIFE COMPANY in the manner required by Section 9 hereof.
(c) Neither LIFE COMPANY 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) LIFE COMPANY 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.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY.
(a) AVIF will provide to LIFE COMPANY 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 LIFE COMPANY camera ready or computer diskette copies of all AVIF prospectuses and printed copies, in an amount specified by LIFE COMPANY, 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 LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, 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 LIFE COMPANY or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which LIFE COMPANY, 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 LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY, 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 LIFE COMPANY for distribution; or (iii) in sales literature or other promotional material approved by LIFE COMPANY or its affiliates, except with the express written permission of LIFE COMPANY.
(e) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning LIFE COMPANY, 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 LIFE COMPANY, 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 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 LIFE COMPANY, 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 apply pursuant to the exemptive order granted to AVIF. AVIF hereby notifies LIFE COMPANY that 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 TRUSTEES.
AVIF agrees that its Board of Trustees shall at all times consist of trustees a majority of whom (the "Disinterested Trustees") 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 trustee, 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 Trustees 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 ("Participating Plans"). LIFE COMPANY agrees to inform the Board of Trustees 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, LIFE COMPANY will assist the Board of Trustees in carrying out its responsibilities by providing the Board of Trustees with all information reasonably necessary for the Board of Trustees to consider any issue raised, including information as to a decision by LIFE COMPANY 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 Trustees or a majority of the Disinterested Trustees that a material irreconcilable conflict exists, LIFE COMPANY 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 Trustees), 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 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 LIFE COMPANY's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, LIFE COMPANY 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 LIFE COMPANY that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY 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 LIFE COMPANY conflicts with the majority of other state regulators, then LIFE COMPANY will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Trustees informs LIFE COMPANY that it has determined that such decision has created a material irreconcilable conflict, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in resolving any material irreconcilable conflict will be carried out at its expense and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Trustees 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. LIFE COMPANY 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 LIFE COMPANY.
AVIF will promptly make known in writing to LIFE COMPANY the Board of Trustees' 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.
5.6 INFORMATION REQUESTED BY BOARD OF TRUSTEES.
LIFE COMPANY and AVIF (or its investment adviser) will at least annually submit to the Board of Trustees of AVIF such reports, materials or data as the Board of Trustees may reasonably request so that the Board of Trustees 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 Trustees. All reports received by the Board of Trustees of potential or existing conflicts, and all Board of Trustees 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 Trustees 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 LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding LIFE COMPANY'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 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 LIFE COMPANY 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, LIFE COMPANY 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 LIFE COMPANY, 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 LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANY if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if LIFE
COMPANY reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by LIFE COMPANY 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:
(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 LIFE COMPANY, 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 LIFE COMPANY 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).
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
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499
Facsimile: (319) 369-2372
Attn: Division Counsel, Extraordinary Markets
AFSG SECURITIES CORPORATION
4333 Edgewood Road NE
Cedar Rapid, Iowa 52499
Facsimile: (319) 297-8290
Attn: General Counsel, Financial Markets Division
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, LIFE COMPANY 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. LIFE COMPANY will vote Shares in accordance with timely instructions received from Participants. LIFE COMPANY 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 LIFE COMPANY 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. LIFE COMPANY reserves the right to vote shares held in any Account in its own right, to the extent permitted by law. LIFE COMPANY 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 LIFE COMPANY 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 trustees and with whatever rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LIFE COMPANY 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 BY LIFE COMPANY AND UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless AVIF, its affiliates, 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 trustees 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 LIFE COMPANY and UNDERWRITER) 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 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 LIFE COMPANY or UNDERWRITER by or on behalf of AVIF 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 LIFE COMPANY, UNDERWRITER or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of LIFE COMPANY, UNDERWRITER 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 or on behalf of LIFE COMPANY, UNDERWRITER 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
(iv) arise as a result of any failure by LIFE COMPANY or UNDERWRITER 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 LIFE COMPANY or UNDERWRITER in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANY or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued by LIFE COMPANY 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 LIFE COMPANY nor UNDERWRITER 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 LIFE COMPANY nor UNDERWRITER shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
shall have notified LIFE COMPANY and UNDERWRITER 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 LIFE COMPANY and UNDERWRITER of any
such action shall not relieve LIFE COMPANY and UNDERWRITER 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, LIFE
COMPANY and UNDERWRITER 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 LIFE COMPANY or UNDERWRITER to such Indemnified Party of LIFE COMPANY's or UNDERWRITER's election to assume the defense thereof, the Indemnified Party will cooperate fully with LIFE COMPANY and UNDERWRITER and shall bear the fees and expenses of any additional counsel retained by it, and neither LIFE COMPANY nor UNDERWRITER 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 LIFE COMPANY AND UNDERWRITER BY AVIF.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, AVIF agrees to indemnify and hold harmless LIFE COMPANY,
UNDERWRITER, their respective affiliates, and each person, if any, who controls
LIFE COMPANY, UNDERWRITER 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, damages, liabilities (including amounts paid
in settlement 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 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 LIFE COMPANY, UNDERWRITER 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 its affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF or its affiliates or persons under its control (including, without limitation, their employees and "Associated Persons" as that term is defined in Section (n) of Article I 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 LIFE COMPANY, UNDERWRITER or their respective affiliates by or on behalf of AVIF for use 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
(iv) arise as a result of any 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 agrees 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 LIFE COMPANY 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 LIFE COMPANY of Shares of another investment company or
portfolio for those of any adversely affected Fund as a funding medium for each
Account that LIFE COMPANY reasonably deems necessary or appropriate as a result
of the noncompliance.
(c) AVIF shall not 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 LIFE COMPANY, UNDERWRITER, each Account or Participants.
(d) AVIF shall not be liable under this Section 12.2 with respect to any action against an Indemnified Party unless the Indemnified Party shall have notified AVIF 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 of any such action shall not relieve AVIF 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 will be entitled to participate, at its 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 named in the action, which approval shall not be unreasonably withheld. After notice from AVIF to such Indemnified Party of AVIF's election to assume the defense thereof, the Indemnified Party will cooperate fully with AVIF and shall bear the fees and expenses of any additional counsel retained by it, and AVIF will not 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 AVIF be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, LIFE COMPANY, UNDERWRITER 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 LIFE COMPANY or UNDERWRITER hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by LIFE COMPANY 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 LIFE COMPANY 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 Delaware law, without regard for that state's principles of conflict of laws.
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 LIFE COMPANY
or any of its affiliates (collectively, the "LIFE COMPANY 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
LIFE COMPANY Protected Parties or any of their employees or agents in connection
with LIFE COMPANY's performance of its duties under this Agreement are the
valuable property of the LIFE COMPANY Protected Parties. AVIF agrees that if it
comes into possession of any list or compilation of the identities of or other
information about the LIFE COMPANY Protected Parties' customers, or any other
information or property of the LIFE COMPANY Protected Parties, other than such
information as may be independently developed or compiled by AVIF from
information supplied to it by the LIFE COMPANY 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 LIFE COMPANY's prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY
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 Agreement are the valuable property of the
AVIF Protected Parties. LIFE COMPANY 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 LIFE COMPANY from information supplied to it by the AVIF
Protected Parties' customers who also maintain accounts directly with LIFE
COMPANY, LIFE COMPANY 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 mark "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 LIFE COMPANY (the "AIM licensed marks" or the "licensor's licensed
marks") and is authorized to use and to license other persons to use such marks. LIFE COMPANY and its affiliates are hereby granted a non-exclusive license to use the AIM licensed marks in connection with LIFE COMPANY'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 LIFE COMPANY 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 LIFE COMPANY 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, LIFE COMPANY 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 LIFE COMPANY 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 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.
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
Attest: /s/ P. Michelle Grace By: /s/ Robert H. Graham
------------------------ --------------------------------------
P. Michelle Grace Name: Robert H. Graham
Assistant Secretary Title: President
WESTERN RESERVE LIFE ASSURANCE CO. OF
OHIO, on behalf of itself and its
separate accounts
Attest: /s/ James R. [Unintelligible] By: /s/ Peter H. Gilman
------------------------ --------------------------------------
Name: James R. [Unintelligible] Name: Peter H. Gilman
------------------------ --------------------------------------
Title: Vice President Title: Vice President
------------------------ --------------------------------------
AFSG SECURITIES CORPORATION
Attest: /s/ Darin D. Smith By: /s/ Lisa A. Wachendorf
------------------------ --------------------------------------
Name: Darin D. Smith Name: Lisa A. Wachendorf
------------------------ --------------------------------------
Title: A. Sec Title: Chief Compliance Officer
------------------------ --------------------------------------
and Vice President
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
- AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. High Yield Fund
AIM V.I. International Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
WRL Series Life Corporate Account
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Advantage IV
WL 694 136 82 598
SCHEDULE B
- AIM VARIABLE INSURANCE FUNDS
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. High Yield Fund
AIM V.I. International Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Value Fund
- AIM and Design
[AIM FUNDS LOGO]
--Registered Trademark--
EXHIBIT h(78)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
GOLDEN AMERICAN LIFE INSURANCE COMPANY
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
DIRECTED SERVICES, INC.
TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
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...................................................................2
Section 2. Processing Transactions...............................................................................2
2.1 Timely Pricing and Orders........................................................................2
2.2 Timely Payments..................................................................................3
2.3 Applicable Price.................................................................................3
2.4 Dividends and Distributions......................................................................4
2.5 Book Entry.......................................................................................4
Section 3. Costs and Expenses....................................................................................4
3.1 General..........................................................................................4
3.2 Registration.....................................................................................4
3.3 Other (Non-Sales-Related)........................................................................5
3.4 Other (Sales-Related)............................................................................5
3.5 Parties To Cooperate.............................................................................5
Section 4. Legal Compliance......................................................................................5
4.1 Tax Laws.........................................................................................5
4.2 Insurance and Certain Other Laws.................................................................8
4.3 Securities Laws..................................................................................8
4.4 Notice of Certain Proceedings and Other Circumstances............................................9
4.5 LIFE COMPANY To Provide Documents; Information About AVIF.......................................10
4.6 AVIF To Provide Documents; Information About LIFE COMPANY.......................................11
Section 5. Mixed and Shared Funding.............................................................................12
5.1 General.........................................................................................12
5.2 Disinterested Directors.........................................................................13
5.3 Monitoring for Material Irreconcilable Conflicts................................................13
5.4 Conflict Remedies...............................................................................14
5.5 Notice to LIFE COMPANY .........................................................................15
5.6 Information Requested by Board of Directors.....................................................15
5.7 Compliance with SEC Rules.......................................................................15
5.8 Other Requirements..............................................................................16
Section 6. Termination..........................................................................................16
6.1 Events of Termination...........................................................................16
|
DESCRIPTION PAGE
----------- ----
6.2 Notice Requirement for Termination..............................................................17
6.3 Funds To Remain Available.......................................................................17
6.4 Survival of Warranties and Indemnifications.....................................................18
6.5 Continuance of Agreement for Certain Purposes...................................................18
Section 7. Parties To Cooperate Respecting Termination..........................................................18
Section 8. Assignment...........................................................................................18
Section 9. Notices..............................................................................................18
Section 10. Voting Procedures...................................................................................19
Section 11. Foreign Tax Credits.................................................................................20
Section 12. Indemnification.....................................................................................20
12.1 Of AVIF by LIFE COMPANY and DSI.................................................................20
12.2 Of LIFE COMPANY and DSI by AVIF.................................................................22
12.3 Effect of Notice................................................................................25
12.4 Successors......................................................................................25
Section 13. Applicable Law......................................................................................25
Section 14. Execution in Counterparts...........................................................................25
Section 15. Severability........................................................................................25
Section 16. Rights Cumulative...................................................................................25
Section 17. Headings............................................................................................25
Section 18. Confidentiality.....................................................................................26
Section 19. Trademarks and Fund Names...........................................................................26
Section 20. Parties to Cooperate................................................................................27
|
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 13TH day of July, 2001 ("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland corporation ("AVIF"); Golden American Life Insurance Company, a Delaware life insurance company ("LIFE COMPANY"), 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 Directed Services, Inc., an affiliate of LIFE COMPANY and the principal underwriter of the Contracts ("DSI") (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, LIFE COMPANY 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, LIFE COMPANY 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, LIFE COMPANY 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
WHEREAS, to the extent permitted by applicable insurance laws and regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, DSI 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");
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 LIFE COMPANY for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. 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, 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 LIFE COMPANY 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) LIFE COMPANY is open for business.
(b) LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of redemption proceeds by AVIF, LIFE COMPANY 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), LIFE COMPANY shall be entitled to an adjustment to the number of Shares purchased or redeemed to reflect the correct net asset value per Share. Any material error in the calculation or reporting of net asset value per Share, dividend or capital gain information shall be reported promptly upon discovery to LIFE COMPANY.
2.2 TIMELY PAYMENTS.
LIFE COMPANY 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 LIFE COMPANY by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY 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 LIFE COMPANY 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), LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY of any income dividends or capital gain distributions payable on the Shares of any Fund. LIFE COMPANY 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 LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY. Shares ordered from AVIF will be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
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) LIFE COMPANY 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) LIFE COMPANY 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) LIFE COMPANY will print in quantity and deliver to existing Participants the documents described in Section 3.3(b) above and the prospectus provided by AVIF in camera ready form. AVIF will print the AVIF statement of additional information, proxy materials relating to AVIF and periodic reports of AVIF.
3.4 OTHER (SALES-RELATED).
LIFE COMPANY 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 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 LIFE COMPANY 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 LIFE COMPANY 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) LIFE COMPANY agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of LIFE COMPANY or, to LIFE COMPANY's knowledge, of any Participant, that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or LIFE COMPANY otherwise becomes aware of any facts that could give rise to any claim against AVIF or its affiliates as a result of such a failure or alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF of such assertion or potential claim (subject to the Confidentiality provisions of Section 18 as to any Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) LIFE COMPANY shall use its best efforts to minimize
any liability of AVIF or its affiliates resulting
from such failure, including, without limitation,
demonstrating, pursuant to Treasury Regulations
Section 1.817-5(a)(2), to the Commissioner of the IRS
that such failure was inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal and accounting advisors to participate in any conferences, settlement discussions or other administrative or judicial proceeding or contests (including judicial appeals thereof) with the IRS, any 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 LIFE COMPANY will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY to any such person without the express written consent of AVIF which shall not be unreasonably withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their accounting and legal advisors with such cooperation as AVIF shall reasonably request (including, without limitation, by permitting AVIF and its accounting and legal advisors to review the relevant books and records of LIFE COMPANY) in order to facilitate review by AVIF or its advisors of any written submissions provided to it pursuant to the preceding clause or its assessment of the validity or amount of any claim against its arising from such a failure or alleged failure;
(vii) LIFE COMPANY 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 LIFE COMPANY 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 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 LIFE COMPANY fails to comply with any of the foregoing clauses (i) through (vii), and such failure could be shown to have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to any compromise or settlement of any claim or liability hereunder, LIFE COMPANY may, in its discretion, authorize AVIF or its affiliates to act in the name of LIFE COMPANY in, and to control the conduct of, such conferences, discussions, proceedings, contests or appeals and all administrative or judicial appeals thereof, and in that event AVIF or its affiliates shall bear the fees and expenses associated with the conduct of the proceedings that it is so authorized to control; provided, that in no event shall LIFE COMPANY 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) LIFE COMPANY 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; LIFE COMPANY 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) LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY, including, the furnishing of information not otherwise available to LIFE COMPANY which is required by state insurance law to enable LIFE COMPANY to obtain the authority needed to issue the Contracts in any applicable state.
(b) LIFE COMPANY 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 Colorado 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 10-7-402 of the Colorado Insurance Law 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) LIFE COMPANY represents and warrants that (i) interests in each Account pursuant to the Contracts are or 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 Colorado 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) LIFE COMPANY 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 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 LIFE COMPANY 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 LIFE COMPANY. 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) LIFE COMPANY 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. LIFE COMPANY 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.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) LIFE COMPANY 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) LIFE COMPANY 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 LIFE COMPANY in the manner required by Section 9 hereof.
(c) Neither LIFE COMPANY 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) LIFE COMPANY 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.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY.
(a) AVIF will provide to LIFE COMPANY 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 LIFE COMPANY camera ready or computer diskette copies of all AVIF prospectuses and printed copies, in an amount specified by LIFE COMPANY, 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 LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, 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 LIFE COMPANY or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which LIFE COMPANY, 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 LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY, 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 LIFE COMPANY for distribution; or (iii) in sales literature or other promotional material approved by LIFE COMPANY or its affiliates, except with the express written permission of LIFE COMPANY.
(e) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning LIFE COMPANY, 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 LIFE COMPANY, 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 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 LIFE COMPANY, 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 LIFE COMPANY that, in the event that AVIF implements Mixed and Shared Funding, it may be appropriate to include in the prospectus pursuant to which a 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 ("Participating Plans"). LIFE COMPANY 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, LIFE COMPANY 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 LIFE COMPANY 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, LIFE COMPANY 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 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 LIFE COMPANY's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, LIFE COMPANY 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 LIFE COMPANY that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY 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 LIFE COMPANY conflicts with the majority of other state regulators, then LIFE COMPANY will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Directors informs LIFE COMPANY that it has determined that such decision has created a material irreconcilable conflict, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in resolving any material irreconcilable conflict will be carried out at its expense and with a view only to the interests of 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. LIFE COMPANY 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 LIFE COMPANY .
AVIF will promptly make known in writing to LIFE COMPANY 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.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
LIFE COMPANY 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 LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding LIFE COMPANY'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 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 LIFE COMPANY 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, LIFE COMPANY 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 LIFE COMPANY, 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 LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANY if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if LIFE
COMPANY reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by LIFE COMPANY 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:
(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 LIFE COMPANY, 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 LIFE COMPANY 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).
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
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
1475 Dunwoody Drive
West Chester PA 19380
Facsimile: 610-425-3520
Attn: Myles R. Tashman Executive Vice President
DIRECTED SERVICES, INC.
1475 Dunwoody Drive
West Chester PA 19380
Facsimile: 610-425-3520
Attn: Myles R. Tashman Executive Vice President
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, LIFE COMPANY 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. LIFE
COMPANY will vote Shares in accordance with timely instructions received from Participants. LIFE COMPANY 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 LIFE COMPANY 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. LIFE COMPANY reserves the right to vote shares held in any Account in its own right, to the extent permitted by law. LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY 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 BY LIFE COMPANY AND DSI.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, LIFE COMPANY and DSI agree to indemnify and hold harmless AVIF, its
affiliates, 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 LIFE COMPANY
and DSI) 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 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 LIFE COMPANY or DSI by or on behalf of AVIF 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 LIFE COMPANY,
DSI or their respective affiliates and on which such
persons have reasonably relied) or the negligent, illegal
or fraudulent conduct of LIFE COMPANY, DSI 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 or on behalf of LIFE COMPANY, DSI 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
(iv) arise as a result of any failure by LIFE COMPANY or DSI 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 LIFE COMPANY or DSI in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANY or DSI; or
(v) arise as a result of failure by the Contracts issued by
LIFE COMPANY 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 LIFE COMPANY nor DSI 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 LIFE COMPANY nor DSI shall be liable under this Section 12.1 with respect to any action against an Indemnified Party unless AVIF shall have notified LIFE COMPANY and DSI 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 LIFE COMPANY and DSI of any such action shall not relieve LIFE COMPANY and DSI 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, LIFE COMPANY and DSI 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 LIFE COMPANY or DSI to such Indemnified Party of LIFE COMPANY's or DSI's election to assume the defense thereof, the Indemnified Party will cooperate fully with LIFE COMPANY and DSI and shall bear the fees and expenses of any additional counsel retained by it, and neither LIFE COMPANY nor DSI 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 LIFE COMPANY AND DSI BY AVIF.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e), below, AVIF agrees to indemnify and hold harmless LIFE COMPANY, DSI, their respective affiliates, and each person, if any, who controls LIFE COMPANY, DSI 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, damages, liabilities (including amounts paid in settlement 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 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 LIFE COMPANY, DSI 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 its affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF or its 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 LIFE COMPANY, DSI or their respective affiliates by or on behalf of AVIF for use 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
(iv) arise as a result of any 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 agrees 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 LIFE COMPANY 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 LIFE COMPANY of Shares of another investment company or portfolio for those of any adversely affected Fund as a funding medium for each Account that LIFE COMPANY reasonably deems necessary or appropriate as a result of the noncompliance.
(c) AVIF shall not 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 LIFE COMPANY, DSI, each Account or Participants.
(d) AVIF shall not be liable under this Section 12.2 with respect to any action against an Indemnified Party unless the Indemnified Party shall have notified AVIF 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 of any such action shall not relieve AVIF 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 will be entitled to participate, at its 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 named in the action, which approval shall not be unreasonably withheld. After notice from AVIF to such Indemnified Party of AVIF's election to assume the defense thereof, the Indemnified Party will cooperate fully with AVIF and shall bear the fees and expenses of any additional counsel retained by it, and AVIF will not 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 AVIF be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, LIFE COMPANY, DSI 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 LIFE COMPANY or DSI hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by LIFE COMPANY 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 LIFE COMPANY 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.
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 LIFE COMPANY
or any of its affiliates (collectively, the "LIFE COMPANY 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
LIFE COMPANY Protected Parties or any of their employees or agents in connection
with LIFE COMPANY's performance of its duties under this Agreement are the
valuable property of the LIFE COMPANY Protected Parties. AVIF agrees that if it
comes into possession of any list or compilation of the identities of or other
information about the LIFE COMPANY Protected Parties' customers, or any other
information or property of the LIFE COMPANY Protected Parties, other than such
information as may be independently developed or compiled by AVIF from
information supplied to it by the LIFE COMPANY 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 LIFE COMPANY's prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY
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 Agreement are the valuable property of the
AVIF Protected Parties. LIFE COMPANY 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 LIFE COMPANY from information supplied to it by the AVIF
Protected Parties' customers who also maintain accounts directly with LIFE
COMPANY, LIFE COMPANY 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 mark "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 LIFE COMPANY (the "AIM licensed marks" or the "licensor's licensed marks") and is authorized to use and to license other persons to use such marks. LIFE COMPANY and its affiliates are hereby granted a non-exclusive license to use the AIM
licensed marks in connection with LIFE COMPANY'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 LIFE COMPANY 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 LIFE COMPANY 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, LIFE COMPANY 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 LIFE COMPANY 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 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.
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/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
----------------------------- -------------------------------
Nancy L. Martin Name: Robert H. Graham
Assistant Secretary Title: President
|
GOLDEN AMERICAN LIFE INSURANCE COMPANY,
on behalf of itself and its separate
accounts
Attest: /s/ LINDA E. SENKER By: /s/ DAVID L. JACOBSON
----------------------------- -------------------------------
Name: Linda E. Senker Name: David L. Jacobson
Title: Vice President and Title: Senior Vice President
Assistant General Counsel
|
DIRECTED SERVICES, INC.
Attest: /s/ LINDA E. SENKER By: /s/ DAVID L. JACOBSON
----------------------------- -------------------------------
Name: Linda E. Senker Name: David L. Jacobson
Title: Vice President and Title: Senior Vice President
Assistant General Counsel
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS
SEPARATE ACCOUNTS UTILIZING THE FUNDS
GOLDEN AMERICAN SEPARATE ACCOUNT B
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
SMARTDESIGN VARIABLE ANNUITY
SMARTDESIGN ADVANTAGE
SCHEDULE B
o AIM VARIABLE INSURANCE FUNDS
o AIM and Design
[AIM LOGO APPEARS HERE]
--Registered Trademark--
Exhibit h(79)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS,
A I M DISTRIBUTORS, INC.,
LINCOLN BENEFIT LIFE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
AND
ALFS, INC.
TABLE OF CONTENTS
DESCRIPTION PAGE
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 ............................................ 4
3.1 General ........................................................... 4
3.2 Parties To Cooperate .............................................. 5
Section 4. Legal Compliance .............................................. 5
4.1 Tax Laws .......................................................... 5
4.2 Insurance and Certain Other Laws .................................. 7
4.3 Securities Laws ................................................... 8
4.4 Notice of Certain Proceedings and Other Circumstances ............. 8
4.5 LBL or the Underwriter To Provide Documents; Information About AVIF 9
4.6 AVIF or AIM To Provide Documents; Information About LBL and the
Underwriter ....................................................... 10
Section 5. Mixed and Shared Funding ...................................... 11
5.1 General ........................................................... 11
5.2 Disinterested Trustees ............................................ 11
5.3 Monitoring for Material Irreconcilable Conflicts .................. 11
5.4 Conflict Remedies ................................................. 12
5.5 Notice to LBL ..................................................... 13
5.6 Information Requested by Board of Trustees ........................ 14
5.7 Compliance with SEC Rules ......................................... 14
5.8 Requirements for Other Insurance Companies ........................ 14
Section 6. Termination ................................................... 14
6.1 Events of Termination ............................................. 14
6.2 Notice Requirement for Termination ................................ 16
6.3 Funds To Remain Available ......................................... 16
6.4 Survival of Warranties and Indemnifications ....................... 16
|
6.5 Continuance of Agreement for Certain Purposes ..................... 16 Section 7. Parties To Cooperate Respecting Termination ................... 17 Section 8. Assignment .................................................... 17 Section 9. Notices ....................................................... 17 Section 10. Voting Procedures ............................................ 18 Section 11. Foreign Tax Credits .......................................... 19 Section 12. Indemnification .............................................. 19 12.1 Of AVIF and AIM by LBL and the Underwriter ....................... 19 12.2 Of LBL and the Underwriter by AVIF and AIM ....................... 21 12.3 Effect of Notice ................................................. 24 12.4 Successors ....................................................... 24 Section 13. Applicable Law ............................................... 24 Section 14. Execution in Counterparts .................................... 24 Section 15. Severability ................................................. 24 Section 16. Rights Cumulative ............................................ 24 Section 17. Headings ..................................................... 24 SCHEDULE A ............................................................... 26 SCHEDULE B ............................................................... 27 SCHEDULE C ............................................................... 28 |
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 24th day of July, 2001 ("Agreement"), by and among AIM Variable Insurance Funds, a Delaware trust ("AVIF"); A I M Distributors, Inc., a Delaware corporation ("AIM"); Lincoln Benefit Life Company, a Nebraska life insurance company ("LBL"), 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 ALFS, Inc., a Delaware corporation and the principal underwriter of the Contracts and Policies referred to below ("Underwriter") (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 sixteen separate 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
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, 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
WHEREAS, AIM currently serves as the distributor for the Shares; and
WHEREAS, LBL will be the issuer of certain variable annuity contracts ("Contracts") and/or variable life insurance policies ("Policies") as set forth on Schedule A hereto, as the Parties hereto may amend from time to time, which Contracts and Policies (hereinafter collectively, the "Policies"), if required by applicable law, will be registered under the 1933 Act; and
WHEREAS, the Accounts 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, LBL 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 Policies will be registered as securities under the 1933 Act (or exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations, LBL intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Policies; and
WHEREAS, the Underwriter is a broker-dealer registered with the SEC under the 1934 Act and a member in good standing of the NASD; and
WHEREAS, the Underwriter intends to enter into Selling Group Agreements with entities that may legally sell the Policies (the "Selling Group Members"); and
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 LBL for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. The Board of Trustees 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 Trustees 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 Policies, 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, 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 LBL with the net asset value per Share for each Fund by 6:00 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, and
(ii) AVIF calculates the Fund's net asset value.
(b) LBL 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. LBL 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 LBL in the event that AVIF is unable to meet the 6:00
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 LBL.
(c) Each order to purchase or redeem Shares will separately describe the amount of Shares of each Fund to be purchased, redeemed or exchanged and will not be netted; provided, however, with respect to payment of the purchase price by LBL and of redemption proceeds by AVIF, LBL 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. Each order to purchase or redeem Shares shall also specify whether the order results from purchase payments, surrenders, partial withdrawals, routine withdrawals of charges, or requests for other transactions under Policies (collectively, "Policy transactions").
(d) If AVIF provides materially incorrect Share net asset value information, LBL 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 LBL. Materiality and reprocessing cost reimbursement shall be determined in accordance with standards established by the parties as provided in Schedule B, attached hereto and incorporated herein.
2.2 TIMELY PAYMENTS.
LBL 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 LBL by 1:00 p.m. Central Time on the same day as the Order is placed, to the extent practicable, but in any event within five (5) calendar days after the date the order is placed in order to enable LBL 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 and redemption orders that result from Policy transactions and that LBL 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), LBL shall be the designated agent of AVIF for receipt of orders relating to Policy 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 computed in accordance with Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by LBL 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 promptly to LBL of any income dividends or capital gain distributions payable on the Shares of any Fund. LBL 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 LBL 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. LBL 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 LBL. Shares ordered from AVIF will be recorded in an appropriate title for LBL, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto and made a part hereof, each Party will bear all expenses incident to its performance under this Agreement.
3.2 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 and will continue to qualify as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). AVIF will notify LBL 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 comply and 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 LBL 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.
(c) LBL agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of LBL or, to LBL's knowledge, of any Policy owner, annuitant or participant under the Policies (collectively, "Participants"), that any Fund has failed to comply with the diversification requirements of section 817(h) of the Code or LBL 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 to so comply with section 817(h) (hereinafter respectively referred to in this paragraph (c) as "failure" or "alleged failure"):
(i) LBL shall promptly notify AVIF of such assertion or
potential claim;
(ii) LBL shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) LBL 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, provided that LBL shall not be required to make any such demonstration of inadvertence unless AVIF represents or provides an opinion of counsel, which representation or opinion shall be reasonably satisfactory to LBL, to the effect that a reasonable basis exists for making such a demonstration;
(iv) LBL shall permit AVIF, its affiliates and their legal and accounting advisors to attend, advise and otherwise assist LBL (which assistance LBL shall consider and/or accept in good faith) with respect to 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 that LBL shall control, in good faith, the conduct of such conferences, discussions, proceedings, or contests or appeals thereof;
(v) any written materials to be submitted by LBL 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 LBL to AVIF (together with any supporting information or analysis) at least ten (10) business days, or such shorter period to which the Parties hereto may from time to time agree, prior to the day on which such proposed materials are to be submitted, and (b) shall not be submitted by LBL to any such person without the express written consent of AVIF which shall not be unreasonably withheld;
(vi) LBL shall provide AVIF or its affiliates and their accounting and legal advisors with such cooperation as AVIF shall reasonably request (including, without limitation, by providing AVIF and its accounting and legal advisors with copies of any relevant books and records (or portions thereof) of LBL that may be reasonably requested by or on behalf of AVIF and that LBL is permitted to provide in accordance with applicable law) 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) LBL 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 LBL shall not be required, after exhausting all administrative remedies, to appeal any adverse IRS or judicial decision unless AVIF or its affiliates shall have provided an opinion of counsel approved by LBL, which approval shall not be unreasonably withheld, to the effect that a reasonable basis exists for taking such appeal (or, in the case of an appeal to the United States Supreme Court, that LBL should be more likely than not to prevail on such appeal), and provided further that each Party shall bear one-half of the expenses of any judicial appeal; and
(viii) AVIF and its affiliates shall have no liability as a result of such failure or alleged failure if LBL 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, LBL may, in its discretion, authorize AVIF or its affiliates to act in the name of LBL 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 LBL have 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) LBL represents and warrants that the Policies currently are and at all times will be treated as annuity, endowment, or life insurance contracts under applicable provisions of the Code. LBL will notify AVIF immediately upon having a reasonable basis for believing that any of the Policies have ceased to be so treated or that they might not be so treated in the future, provided that such notice shall be kept confidential during the period of LBL's investigation of any such circumstances to the extent permitted by applicable law.
(e) LBL represents and warrants that each Account is and at all times will be 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. LBL 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 and AIM will use their best efforts to comply with any applicable state insurance laws or regulations, to the extent specifically requested in writing by LBL.
(b) LBL 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 [Nebraska] 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 Nebraska Insurance Code and the regulations thereunder, and (iii) the Policies 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 Delaware and has full power, authority, and legal right to execute, deliver, and perform its duties and comply with its obligations under this Agreement.
(d) AIM represents and warrants that it is a Delaware corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has full power, authority, and legal right to execute, deliver, and perform its duties and comply with its obligations under this Agreement.
(e) The Underwriter represents and warrants that it is a Delaware corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware 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) LBL and the Underwriter represent and warrant that (i)
interests in each Account pursuant to the Policies will be registered under the
1933 Act to the extent required by the 1933 Act, (ii) the Policies 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 Illinois 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 Policies, 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) LBL will amend the registration
statement for its Policies 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 Policies 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 and AIM represent and warrant 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 Delaware 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 Prospectus will at all times comply in all material respects with the requirements of the 1933 Act and the rules thereunder.
(c) AVIF will 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.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF and/or AIM will immediately notify LBL 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, (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 Policies issued or to be issued by LBL. 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) LBL and/or the Underwriter 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 Policies or each Account Prospectus, (ii) any request by the SEC for any amendment to such registration statement or Account Prospectus, (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 Policies, 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. LBL 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.
4.5 LBL OR THE UNDERWRITER TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) LBL or the Underwriter 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 Policies, contemporaneously with the filing of such document with the SEC or other regulatory authorities.
(b) The Underwriter will provide to AVIF or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material not prepared by AVIF or its affiliates, in which AVIF or any of its affiliates is named, at least ten (10) 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 ten (10) 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 its investment adviser as the entity to receive such sales literature, until such time as AVIF appoints another designated agent by giving notice to LBL in the manner required by Section 9 hereof.
(c) Neither LBL, the Underwriter, nor any of their respective
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 Policies 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 sales literature or other promotional material approved by AVIF, except
with the express written permission of AVIF.
(d) LBL and the Underwriter 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 Policies (i.e., information that is not intended for distribution to Participants or offerees) ("broker only materials") is so used, and neither AVIF nor any of its affiliates shall be liable for any losses, damages or expense relating to the improper use of such broker only materials.
4.6 AVIF OR AIM TO PROVIDE DOCUMENTS; INFORMATION ABOUT LBL AND THE UNDERWRITER.
(a) AVIF will provide to LBL 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 LBL or the Underwriter camera ready or computer diskette copies of all AVIF Prospectuses, proxy materials, periodic reports to shareholders and other materials required by law to be sent to Participants who have allocated any Policy value to a Fund. AVIF will provide such copies to LBL or the Underwriter in a timely manner so as to enable LBL or the Underwriter, as the case may be, to print and distribute such materials within the time required by law to be furnished to Participants.
(c) AIM will provide to LBL or its designated agent at least one
(1) complete copy of each piece of sales literature or other promotional
material in which LBL, the Underwriter or any of their respective affiliates is
named, or that refers to the Policies, at least ten (10) 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 LBL or its designated agent
objects to such use within ten (10) Business Days after receipt of such material
or such shorter period as the Parties hereto may, from time to time, agree upon.
LBL 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
LBL, the Underwriter, each Account, or the Policies other than (i) the
information or representations contained in the registration statement,
including each Account Prospectus contained therein, relating to the Policies,
as such registration statement and Account Prospectus may be amended from time
to time; or (ii) in reports or voting instruction materials for each Account; or
(iii) in sales literature or other promotional material approved by LBL or its
affiliates, except with the express written permission of LBL.
(e) AIM shall adopt and implement procedures reasonably designed to ensure that information concerning LBL, the Underwriter, and their respective affiliates that is intended for use only by brokers or agents selling the Policies (i.e., information that is not intended for distribution to Participants or offerees) ("broker only materials") is so used, and neither LBL, the Underwriter, nor any of their respective affiliates shall be liable for any losses, damages or expense relating to the improper use of such broker only materials.
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 life insurance contracts, separate accounts of insurance companies unaffiliated with LBL, 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. AVIF hereby notifies LBL that it may be appropriate to include in the prospectus pursuant to which a Policy is offered disclosure regarding the potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED TRUSTEES.
AVIF agrees that its Board of Trustees shall at all times consist of Trustees a majority of whom (the "Disinterested Trustees") 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 Trustee, 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 Trustees 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 on all qualified retirement and pension plans investing in AVIF ("Participating Plans"). LBL agrees to inform the Board of Trustees 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, LBL will assist the Board of Trustees in carrying out its responsibilities by providing the Board of Trustees with all information reasonably necessary for the Board of Trustees to consider any issue raised, including information as to a decision by LBL 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 Trustees or a majority of the Disinterested Trustees that a material irreconcilable conflict exists, LBL 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 Trustees), 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 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) 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 LBL's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, LBL 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 LBL that this provision
is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by LBL 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 LBL conflicts with the majority of other state regulators, then LBL will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Trustees informs LBL that it has determined that such decision has created a material irreconcilable conflict (after consideration of the interests of all Participants), and until such withdrawal AVIF shall continue to accept and implement orders by LBL for the purchase and redemption of Shares of AVIF.
(d) LBL 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 Trustees 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 Policies. LBL will not be required by the terms hereof to establish a new funding medium for any Policies 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 LBL.
AVIF will promptly make known in writing to LBL the Board of Trustees' 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.
5.6 INFORMATION REQUESTED BY BOARD OF TRUSTEES.
LBL and AVIF (or its investment adviser) will at least annually submit to the Board of Trustees of AVIF such reports, materials or data as the Board of Trustees may reasonably request so that the Board of Trustees may fully carry out the obligations imposed upon it by the provisions hereof or any exemptive application filed with 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 Trustees. All reports received by the Board of Trustees of potential or existing conflicts, and all Board of Trustees actions with regard to determining the existence of a conflict, notifying Participating Insurance Companies of a conflict, and determining whether any proposed action adequately remedies a conflict, will be properly recorded in the minutes of the Board of Trustees 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 Policies, 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 REQUIREMENTS FOR OTHER INSURANCE COMPANIES.
AVIF will require that each Participating Insurance Company 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 AVIF or LBL upon the approval by (i) a majority of the Disinterested Trustees, or (ii) a majority vote of the Shares of the affected Fund that are held in the corresponding Subaccount of an Account (pursuant to the procedures set forth in Section 10 of this Agreement for voting Shares in accordance with Participant instructions); or
(b) at the option of AVIF or AIM upon institution of formal proceedings against LBL or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding LBL's obligations under this Agreement or related to the sale of the Policies, the operation of each Account, or the purchase of Shares, if, in each case, AVIF or AIM 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 the Fund with respect to which the Agreement is to be terminated; or
(c) at the option of LBL 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, LBL 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 LBL, 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 Policies issued or to be issued by LBL; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of LBL if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if LBL reasonably believes that the Fund may fail to so qualify;
(g) at the option of LBL if the Fund fails to comply with Section 817(h) of the Code or with successor or similar provisions (other than by reason of the failure of the Policies issued by LBL to qualify as annuity or life insurance contracts under the Code, or the failure of any Account or Policy to meet the definition of "segregated asset account" or "variable contract"; respectively, within the meaning of the Code), or if LBL reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF or AIM if the Policies issued by LBL 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 Policies 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:
(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.
Except (a) as necessary to implement Participant-initiated transactions, (b) as required by state insurance laws or regulations, (c) as required pursuant to Section 5 of this Agreement, or (d) with respect to any Fund as to which this Agreement has terminated pursuant to Section 6.1 hereof, LBL shall not (i) redeem AVIF Shares attributable to the Policies (as opposed to AVIF Shares attributable to LBL's assets held in each Account), or (ii) prevent Participants from allocating payments to or transferring amounts from a Fund that was otherwise available under the Policies, until six (6) months after LBL shall have notified AVIF of its intention to do so and until thirty-six (36) full calendar months shall have expired from the date on which an Account (including the Accounts of Glenbrook Life and Annuity Co.) first invested in any Fund.
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 LBL 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).
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 Policies in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the written consent of each other Party; however, LBL may utilize the services or employees of its affiliated insurance companies to perform any of its duties under this Agreement. Any such delegation or allocation of
duties shall not be construed as an impermissible assignment and shall not be considered to limit any rights of LBL under this Agreement.
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:
LINCOLN BENEFIT LIFE COMPANY
2920 South 84th Street, Suite 1B3
Lincoln, Nebraska 68506
Facsimile: (402) 328-6117
Attn: William Emmons
ALFS, INC.
3100 Sanders Road, Suite J5B
Northbrook, Illinois 60062
Facsimile: (847) 326-5224
Attn: Doug Wolff
AIM VARIABLE INSURANCE FUNDS
A I M DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures established pursuant to
Section 3.1 hereof, LBL 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. LBL will vote Shares in
accordance with timely instructions received from Participants. LBL 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. Neither LBL 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, except with respect to matters as to which LBL has the right,
under Rule 6e-2 or 6e-3(T) under the 1940 Act, to vote the
Shares without regard to voting instructions from Participants. LBL reserves the right to vote shares held in any Account in its own right, to the extent permitted by law. LBL 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 any Mixed and Shared Funding exemptive order that AVIF may obtain in the future. AVIF will notify LBL (i) of any changes of interpretations or amendments to any Mixed and Shared Funding exemptive order it obtains in the future, and (ii) of any proposal to be submitted to Participants for their approval (prior to any Board of Trustees meeting of AVIF at which such proposals are presented).
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LBL 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 LBL AND THE UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, LBL and the Underwriter each agrees to indemnify and hold harmless AVIF,
its affiliates (including AIM) except Participants, and each of their respective
trustees and officers, and each person, if any, who controls AVIF or its
affiliates (including AIM) within the meaning of Section 15 of the 1933 Act
(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 LBL) 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, insofar as such losses, claims, damages, liabilities or
actions are related to the sale or acquisition of AVIF's Shares and:
(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 Policies, or sales literature or advertising for the Policies (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the 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 LBL or the Underwriter by or on behalf of AVIF for use in any Account's 1933 Act registration statement, any Account Prospectus, the Policies, or sales literature or advertising or otherwise for use in connection with the sale of
Policies 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 LBL or the Underwriter and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of LBL, the Underwriter 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 Policies 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 AIM by or on behalf of LBL, the Underwriter 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
(iv) arise as a result of any failure by LBL or the Underwriter 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 LBL or the Underwriter in this Agreement or arise out of or result from any other material breach of this Agreement by LBL or the Underwriter; or
(v) arise as a result of failure by the Policies issued by LBL to qualify as life insurance, endowment, or annuity 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 LBL nor the Underwriter 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 LBL nor the Underwriter shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
or AIM shall have notified LBL or the Underwriter 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 LBL or the Underwriter of any such
action shall not relieve LBL or the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this Section 12.1. Except as otherwise provided herein, in case
any such action is brought against an Indemnified Party, LBL or the Underwriter
shall be entitled to participate, at its own expense, in the defense of such
action and LBL or the Underwriter 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 LBL or the
Underwriter to such Indemnified Party of its election to assume the defense
thereof, the Indemnified Party will cooperate fully with LBL and shall bear the
fees and expenses of any additional counsel retained by it, and LBL will not 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 LBL AND THE UNDERWRITER BY AVIF AND AIM.
(a) Except to the extent provided in Sections 12.2(d), 12.2(e) and 12.2(f), below, to the extent permitted by law, AVIF and/or AIM each agrees to indemnify and hold harmless LBL, the Underwriter, their respective affiliates, and each of their respective directors and officers, and each person, if any, who controls LBL, the Underwriter, or their respective affiliates within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 12.2) against any and all losses, claims, 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, insofar as such losses, claims, damages, liabilities or actions are related to the sale or acquisition of AVIF's Shares and:
(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 LBL or its affiliates for use in AVIF's 1933 Act registration statement, AVIF Prospectus, or in sales literature or advertising (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 Policies, or any amendment or supplement to any of the foregoing, not supplied for use therein by or on behalf of AVIF or its affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF, its affiliates or persons under their control (including, without limitation, their employees and "Associated Persons"), 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 Policies, 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 LBL, the Underwriter, or their respective affiliates by AVIF or AIM for use in any Account's 1933 Act registration statement, any Account Prospectus, sales literature or advertising covering the Policies, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF or AIM to perform their respective obligations, provide the services (including, but not limited to, the provision of correct net asset value) 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 AVIF or AIM in this Agreement or arise out of or result from any other material breach of this Agreement by AVIF or AIM.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, AVIF agrees 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 LBL or the Underwriter pursuant to the Policies, the
costs of any ruling and closing agreement or other settlement with the IRS, and
the cost of any substitution by LBL of Shares of another investment company or
portfolio for those of any adversely affected Fund as a funding medium for each
Account that LBL reasonably deems necessary or appropriate as a result of the
noncompliance.
(c) AVIF shall not 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 LBL, each Account, the Underwriter or Participants.
(d) AVIF shall not be liable under this Section 12.2 with respect to any action against an Indemnified Party unless the Indemnified Party shall have notified AVIF 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 of any such action shall not relieve AVIF 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 will be entitled to participate, at its 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 AVIF to such Indemnified Party of AVIF's election to assume the defense thereof, the Indemnified Party will cooperate fully with AVIF and shall bear the fees and expenses of any additional counsel retained by it, and AVIF will not 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 AVIF be liable under the indemnification provisions contained in this Agreement to any individual or entity, including without limitation, LBL, the Underwriter, 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 LBL or the Underwriter hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by LBL 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 LBL or any Participating Insurance Company to maintain its variable annuity and/or variable life insurance contracts (with respect to which any Fund serves as an underlying funding vehicle) as life insurance, endowment or annuity contracts under applicable provisions of the Code; provided, however, that the limitation of liability contained in this paragraph (e) shall not apply if the breach or failures described in subparagraphs (i), (ii) and (iii), above, by LBL or any Participating Insurance Company resulted from the failure of AVIF to comply with the requirements of Subchapter M or Section 817(h) 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 Delaware law, without regard for that state's principles of conflict of laws.
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.
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
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
----------------------------- --------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
----------------------------- --------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
LINCOLN BENEFIT LIFE, on behalf of itself and its separate accounts
Attest: /s/ William F. Emmons By: /s/ Lawrence W. Dahl
----------------------------- --------------------------------
Name: William F. Emmons Name: Lawrence W. Dahl
------------------------------- ------------------------------
Title: VP, Asst. Gen. Counsel Title: Executive Vice President
------------------------------ -----------------------------
Asst. Sec
ALFS, INC.
Attest: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
----------------------------- --------------------------------
Name: [ILLEGIBLE] Name:
------------------------------- ------------------------------
Title: [ILLEGIBLE] Title:
------------------------------ -----------------------------
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE POLICIES
AIM Variable Insurance Funds
AIM V.I. Dent Demographic Trends Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Lincoln Benefit Life Variable Annuity Separate Account A
POLICIES FUNDED BY THE SEPARATE ACCOUNTS
LBL Advantage Variable Annuity
SCHEDULE B
AIM'S PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following thresholds are applied:
a. If the amount of the difference in the erroneous net asset value and the correct net asset value is less than .5% of the correct net asset value, AIM will reimburse the affected Fund to the extent of any loss resulting from the error. No other adjustments shall be made.
b. If the amount of the difference in the erroneous net asset value and the correct net asset value is .5% of the correct net asset value or greater, then AIM will determine the impact of the error to the affected Fund and shall reimburse such Fund (and/or LBL, as appropriate) to the extent of any loss resulting from the error. To the extent that an overstatement of net asset value per share is detected quickly and LBL has not mailed redemption checks to Participants, LBL and AIM agree to examine the extent of the error to determine the feasibility of reprocessing such redemption transaction (for purposes of reimbursing the Fund to the extent of any such overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to paragraph (b), above, AIM shall reimburse LBL for LBL's reprocessing costs in the amount of $3.00 per contract affected by $10 or more.
The Pricing Policies described herein may be modified by AVIF as approved by its Board of Trustees. AIM agrees to use its best efforts to notify LBL at least five (5) days prior to any such meeting of the Board of Trustees of AVIF to consider such proposed changes.
SCHEDULE C
EXPENSE ALLOCATIONS
DESCRIPTION LBL AIM/AVIF
-------------------------------- ------------------------------------ -------------------------------------
Registration
Prepare and file registration Account registration statements Fund registration statements
statements(1)
Account fees
Payment of fees Fund fees
-------------------------------- ------------------------------------ -------------------------------------
Prospectuses
Typesetting Account Prospectuses Fund Prospectuses
Printing(2) Account Prospectuses Fund Prospectuses
-------------------------------- ------------------------------------ -------------------------------------
SAIs
Typesetting Account SAIs Fund SAIs
Printing Account SAIs Fund SAIs
-------------------------------- ------------------------------------ -------------------------------------
Supplements (to Prospectuses or
SAIs)
Typesetting and Printing Account Supplements (unless changes Fund Supplements (unless changes
relate only to the Fund) relate only to the Account)
Fund Supplements (for changes that Account Supplements (for changes
relate only to Account) that relate only to Fund)
-------------------------------- ------------------------------------ -------------------------------------
Financial Reports
Typesetting Account Reports Fund Reports
Printing(2) Account Reports Fund Reports
-------------------------------- ------------------------------------ -------------------------------------
|
(1) Includes all filings and costs necessary to keep registrations current and effective; including, without limitation, filing Forms N-SAR and Rule 24f-2 Notices as required by law.
(2) To the extent that documents prepared by LBL and AIM are printed together, the printing cost shall be allocated in proportion to the number of pages attributable to each document.
-------------------------------- ------------------------------------ -------------------------------------
Mailing and Distribution(3)
To Contract owners Account and Fund Prospectuses, SAIs, Supplements (for which AIM/AVIF is
Supplements (for which LBL is responsible to typeset and print)
responsible to typeset and print) and
Reports
To Offerees Supplements (for which LBL is Account and Fund Prospectuses, SAIs,
responsible to typeset and print) Supplements (for which AIM/AVIF is
responsible to typeset and print)
and Reports
-------------------------------- ------------------------------------ -------------------------------------
Proxies(4)
Typesetting, printing and Account and Fund Proxies where Account and Fund Proxies where
mailing of proxy solicitation the matters submitted are solely the matters submitted are solely
materials and voting Account related Fund related
instruction solicitation
materials and tabulation of
proxies to Participants
-------------------------------- ------------------------------------ -------------------------------------
Other (Sales Related)
Contract owner communication Account related items Fund related items
Distribution Policies
Administration Account (Policies)
-------------------------------- ------------------------------------ -------------------------------------
|
(3) To the extent required by law.
(4) When proxy materials are required for both Account and Fund matters, the costs shall be split proportionately based upon those materials related solely to the Account and those materials related solely to the Fund. The cost with respect to joint materials shall be allocated evenly between LBL and AIM.
Exhibit h(80)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS,
A I M DISTRIBUTORS, INC.,
THE TRAVELERS INSURANCE COMPANY
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
THE TRAVELERS LIFE AND ANNUITY COMPANY
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
TRAVELERS DISTRIBUTION LLC
TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
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...................................2
Section 2. Processing Transactions............................................2
2.1 Timely Pricing and Orders........................................2
2.2 Timely Payments..................................................3
2.3 Applicable Price.................................................3
2.4 Dividends and Distributions......................................4
2.5 Book Entry.......................................................4
Section 3. Costs and Expenses.................................................4
3.1 General..........................................................4
3.2 Parties To Cooperate.............................................4
Section 4. Legal Compliance...................................................5
4.1 Tax Laws.........................................................5
4.2 Insurance and Certain Other Laws.................................7
4.3 Securities Laws..................................................8
4.4 Notice of Certain Proceedings and Other Circumstances............9
4.5 LIFE COMPANIES To Provide Documents; Information About AVIF......9
4.6 AVIF To Provide Documents; Information About LIFE COMPANIES.....10
Section 5. Mixed and Shared Funding..........................................12
5.1 General.........................................................12
5.2 Disinterested Trustees..........................................12
5.3 Monitoring for Material Irreconcilable Conflicts................12
5.4 Conflict Remedies...............................................13
5.5 Notice to LIFE COMPANIES........................................14
5.6 Information Requested by Board of Trustees......................14
5.7 Compliance with SEC Rules.......................................15
5.8 Other Requirements..............................................15
Section 6. Termination.......................................................15
6.1 Events of Termination...........................................15
6.2 Notice Requirement for Termination..............................16
6.3 Funds To Remain Available.......................................17
6.4 Survival of Warranties and Indemnifications.....................17
6.5 Continuance of Agreement for Certain Purposes...................17
ii
|
Section 7. Parties To Cooperate Respecting Termination.......................17
Section 8. Assignment........................................................17
Section 9. Notices...........................................................18
Section 10. Voting Procedures.................................................18
Section 11. Foreign Tax Credits...............................................19
Section 12. Indemnification...................................................19
12.1 Of AVIF and AIM by LIFE COMPANIES and UNDERWRITER...............19
12.2 Of LIFE COMPANIES and UNDERWRITER by AVIF and AIM...............21
12.3 Effect of Notice................................................24
12.4 Successors......................................................24
Section 13. Applicable Law...................................................24
Section 14. Execution in Counterparts........................................24
Section 15. Severability.....................................................24
Section 16. Rights Cumulative................................................24
Section 17. Headings.........................................................24
Section 18. Confidentiality..................................................25
Section 19. Trademarks and Fund Names........................................25
Section 20. Parties to Cooperate.............................................26
Section 21. Amendments.......................................................26
|
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of October, 2000 ("Agreement"), by and among AIM Variable Insurance Funds, a Delaware Trust ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"), The Travelers Life Insurance Company, a Connecticut life insurance company, and The Travelers Life and Annuity Company, a Connecticut life insurance company, (collectively, the "LIFE COMPANIES") each 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"); Travelers Distribution LLC, an affiliate of LIFE COMPANIES and the principal underwriter to the Contracts ("UNDERWRITER") (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 sixteen separate series ("Series"), shares ("Shares") 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, LIFE COMPANIES 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, LIFE COMPANIES 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, LIFE COMPANIES 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
WHEREAS, to the extent permitted by applicable insurance laws and regulations, LIFE COMPANIES intend 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");
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 LIFE COMPANIES for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. The Board of Trustees 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 Trustees 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, 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 LIFE COMPANIES with the net asset value per Share for each Fund by 6:30 p.m. Eastern Standard 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) LIFE COMPANIES are open for business.
(b) LIFE COMPANIES 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. LIFE COMPANIES 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 LIFE COMPANIES in the event that AVIF is unable to meet the 6:00 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 LIFE COMPANIES.
(c) With respect to payment of the purchase price by LIFE COMPANIES and of redemption proceeds by AVIF, LIFE COMPANIES 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), LIFE COMPANIES 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 LIFE COMPANIES. Materiality and reprocessing cost reimbursement shall be determined in accordance with standards established by the Parties as provided in Schedule B, attached hereto and incorporated herein.
2.2 TIMELY PAYMENTS.
LIFE COMPANIES 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 LIFE COMPANIES by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANIES 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 LIFE COMPANIES receive 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), LIFE COMPANIES 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 LIFE COMPANIES 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 LIFE COMPANIES of any income dividends or capital gain distributions payable on the Shares of any Fund. LIFE COMPANIES hereby elect to reinvest all dividends and capital gains distributions in additional Shares of the corresponding Fund at the ex-dividend date net asset values until LIFE COMPANIES otherwise notify 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. LIFE COMPANIES reserve 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 LIFE COMPANIES. Shares ordered from AVIF will be recorded in an appropriate title for LIFE COMPANIES, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto and made a part hereof, each Party will bear, or arrange for others to bear, all expenses incident to its performance under this Agreement.
3.2 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 LIFE COMPANIES 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 LIFE COMPANIES 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) Notwithstanding any other provision of this Agreement, but subject to the Confidentiality provisions of Section 18 as to any Participant, LIFE COMPANIES agree that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of LIFE COMPANIES or, to LIFE COMPANIES' knowledge, of any Contract owners, annuitants, insureds or participants (as appropriate) under the Contracts (collectively, "Participants"), that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or LIFE COMPANIES otherwise become 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) LIFE COMPANIES shall promptly notify AVIF of such assertion or potential claim;
(ii) LIFE COMPANIES shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) LIFE COMPANIES shall use their 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) LIFE COMPANIES 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 LIFE COMPANIES will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by LIFE COMPANIES 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 LIFE COMPANIES 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 LIFE
COMPANIES to any such person without the express written
consent of AVIF which shall not be unreasonably withheld;
(vi) LIFE COMPANIES shall provide AVIF or its affiliates and their accounting and legal advisors with such cooperation as AVIF shall reasonably request 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. AVIF or its affiliates reasonable request will not be interpreted as allowing AVIF or its affiliates unfettered access to LIFE COMPANIES' books and records.;
(vii) LIFE COMPANIES 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 LIFE COMPANIES shall not be required, after exhausting all administrative remedies, 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 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 LIFE COMPANIES fail 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, LIFE COMPANIES may, in their discretion, authorize AVIF or its affiliates to act in the name of LIFE COMPANIES 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 LIFE COMPANIES 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) LIFE COMPANIES represent and warrant 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; LIFE COMPANIES 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) LIFE COMPANIES represent and warrant 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. LIFE COMPANIES will use their 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 LIFE COMPANIES, including, the furnishing of information not otherwise available to LIFE COMPANIES which is required by state insurance law to enable LIFE COMPANIES to obtain the authority needed to issue the Contracts in any applicable state.
(b) LIFE COMPANIES represent and warrant that (i) they are insurance companies duly organized, validly existing and in good standing under the laws of the State of Connecticut 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 Connecticut insurance law 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 trust duly organized, validly existing, and in good standing under the laws of the State of Delaware 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) LIFE COMPANIES represent and warrant 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 the law(s) of LIFE COMPANIES' state(s) of organization and domicile, (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) LIFE COMPANIES 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 Delaware 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 pursuant to Rule 12b-1, AVIF undertakes to have its Board of Trustees, 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 or AIM will immediately notify LIFE COMPANIES 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 LIFE COMPANIES. AVIF and AIM 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) LIFE COMPANIES 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. LIFE COMPANIES 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.
4.5 LIFE COMPANIES TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) LIFE COMPANIES 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) LIFE COMPANIES 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 AIM as the entity to receive such sales literature, until such time as AVIF appoints another designated agent by giving notice to LIFE COMPANIES in the manner required by Section 9 hereof.
(c) Neither LIFE COMPANIES nor any of their 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) LIFE COMPANIES 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.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANIES.
(a) AVIF will provide to LIFE COMPANIES 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 LIFE COMPANIES in a format determined by LIFE COMPANIES a copy of all AVIF prospectuses. The prospectus for the shares shall state that the statement of additional information for the shares is available from AVIF or its designee. AVIF or its designee, at its expense, shall provide printed copies, in an amount specified by LIFE COMPANIES, of AVIF prospectuses, 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 LIFE COMPANIES in a timely manner so as to enable LIFE COMPANIES, 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 LIFE COMPANIES or their designated agents at least one (1) complete copy of each piece of sales literature or other promotional material in which LIFE COMPANIES, or any of their 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 LIFE COMPANIES or their designated agents object 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. LIFE COMPANIES 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 LIFE COMPANIES, 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 LIFE COMPANIES for distribution; or (iii) in sales literature or other promotional material approved by LIFE COMPANIES or their affiliates, except with the express written permission of LIFE COMPANIES.
(e) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning LIFE COMPANIES, and their 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 LIFE COMPANIES, nor any of their 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 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 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 LIFE COMPANIES, 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 LIFE COMPANIES 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 TRUSTEES.
AVIF agrees that its Board of Trustees shall at all times consist of trustees a majority of whom (the "Disinterested Trustees") 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 trustee, 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 Trustees 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 ("Participating Plans"). LIFE COMPANIES agree to inform the Board of Trustees 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, LIFE COMPANIES will assist the Board of Trustees in carrying out its responsibilities by providing the Board of Trustees with all information reasonably necessary for the Board of Trustees to consider any issue raised, including information as to a decision by LIFE COMPANIES to disregard voting instructions of Participants. LIFE COMPANIES' responsibilities in connection with the foregoing shall be carried out with a view only to the interests 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 Trustees or a majority of the Disinterested Trustees that a material irreconcilable conflict exists, LIFE COMPANIES will, if they are 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 Trustees), 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 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 LIFE COMPANIES' decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, LIFE COMPANIES 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 LIFE COMPANIES that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANIES 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 LIFE COMPANIES conflicts with the majority of other state regulators, then LIFE COMPANIES will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Trustees informs LIFE COMPANIES 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 LIFE COMPANIES for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) LIFE COMPANIES agree 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 Trustees 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. LIFE COMPANIES 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 LIFE COMPANIES.
AVIF will promptly make known in writing to LIFE COMPANIES the Board of Trustees' 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.
5.6 INFORMATION REQUESTED BY BOARD OF TRUSTEES.
LIFE COMPANIES and AVIF (or its investment adviser) will at least annually submit to the Board of Trustees of AVIF such reports, materials or data as the Board of Trustees may reasonably request so that the Board of Trustees 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 Trustees. All reports received by the Board of Trustees of potential or existing conflicts, and all Board of Trustees 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 Trustees 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 LIFE COMPANIES or their affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding LIFE COMPANIES' 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 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 LIFE COMPANIES 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, LIFE COMPANIES reasonably determine that such proceedings, or the facts on which such proceedings would be based, have a material likelihood of imposing material adverse consequences on LIFE COMPANIES, 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 LIFE COMPANIES; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANIES if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if LIFE COMPANIES reasonably believe that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANIES if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if LIFE
COMPANIES reasonably believe that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by LIFE COMPANIES 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:
(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 LIFE COMPANIES, 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 LIFE COMPANIES 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).
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 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
A I M DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
THE TRAVELERS INSURANCE COMPANY
THE TRAVELERS LIFE AND ANNUITY COMPANY
TRAVELERS DISTRIBUTION LLC
One Tower Square
Hartford, Connecticut 06183
Facsimile: 860-277-0842
Attn: General Counsel
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, LIFE COMPANIES 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. LIFE COMPANIES will vote Shares in accordance with timely instructions received from Participants. LIFE COMPANIES 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 LIFE COMPANIES nor any of their 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. LIFE COMPANIES reserve the right to vote shares held in any Account in its own right, to the extent permitted by law. LIFE COMPANIES shall be responsible for assuring that each of their 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 LIFE COMPANIES 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 trustees and with whatever rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LIFE COMPANIES 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 LIFE COMPANIES.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, LIFE COMPANIES agree to indemnify and hold harmless AVIF, AIM, their affiliates, and each person, if any, who controls AVIF, AIM, or their affiliates within the meaning of Section 15 of the 1933 Act and each of their respective trustees 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 LIFE COMPANIES and 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 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 LIFE COMPANIES 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 LIFE COMPANIES or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of LIFE COMPANIES, or their respective affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member," as that term is defined in paragraph (q) 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, AIM or their affiliates by or on behalf of LIFE COMPANIES 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
(iv) arise as a result of any failure by LIFE COMPANIES 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 LIFE COMPANIES in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANIES; or
(v) arise as a result of failure by the Contracts issued by LIFE COMPANIES 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) LIFE COMPANIES shall not 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 or AIM.
(c) LIFE COMPANIES shall not be liable under this Section 12.1 with respect to any action against an Indemnified Party unless AVIF or AIM shall have notified LIFE COMPANIES 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 LIFE COMPANIES of any such action shall not relieve LIFE COMPANIES 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, LIFE COMPANIES 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 LIFE COMPANIES to such Indemnified Party of LIFE COMPANIES' elections to assume the defense thereof, the Indemnified Party will cooperate fully with LIFE COMPANIES and shall bear the fees and expenses of any additional counsel retained by it, and neither LIFE COMPANIES 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 LIFE COMPANIES 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 LIFE
COMPANIES, their respective affiliates, and each person, if any, who controls
LIFE COMPANIES or their respective affiliates within the meaning of Section 15
of the 1933 Act and each of their respective trustees and officers,
(collectively, the "Indemnified Parties" for purposes of this Section 12.2)
against any and all losses, claims, 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 LIFE COMPANIES, 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, AIM or their affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF, AIM or their affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member" as that term is defined in Section (q) of Article I 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 LIFE COMPANIES, or their respective affiliates by or on behalf of AVIF or AIM for use 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
(iv) arise as a result of any 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.
(v) arise as a result of failure by AVIF to comply with Subchapter M and Section 817(h) of the Code.
(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 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 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 LIFE COMPANIES 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 LIFE COMPANIES of Shares of another investment company or portfolio for those of any adversely affected Fund as a funding medium for each Account that LIFE COMPANIES reasonably deem 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 LIFE COMPANIES, 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 its 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 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 AVIF
and AIM will not 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 AVIF or AIM be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, LIFE COMPANIES, 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 LIFE COMPANIES or hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by LIFE COMPANIES 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 LIFE COMPANIES 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 Delaware law, without regard for that state's principles of conflict of laws.
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 LIFE COMPANIES or any of their affiliates (collectively, the "LIFE COMPANIES 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 LIFE COMPANIES Protected Parties or any of their employees or agents in connection with LIFE COMPANIES' performance of its duties under this Agreement are the valuable property of the LIFE COMPANIES Protected Parties. AVIF agrees that if it comes into possession of any list or compilation of the identities of or other information about the LIFE COMPANIES Protected Parties' customers, or any other information or property of the LIFE COMPANIES Protected Parties, other than such information as may be independently developed or compiled by AVIF from information supplied to it by the LIFE COMPANIES 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 LIFE COMPANIES' prior written consent; or (b) as required by law or judicial process. LIFE COMPANIES acknowledge 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 Agreement are the valuable property of the AVIF Protected Parties. LIFE COMPANIES agree 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 LIFE COMPANIES from information supplied to it by the AVIF Protected Parties' customers who also maintain accounts directly with LIFE COMPANIES, LIFE COMPANIES 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) Except as may otherwise be provided in a License Agreement among A I M Management Group Inc., LIFE COMPANIES neither LIFE COMPANIES or any of their respective affiliates, shall use any trademark, trade name, service mark or logo of AVIF, AIM or any of their respective affiliates, or any variation of any such trademark, trade name, service mark or logo, without AVIF's or AIM's prior written consent, the granting of which shall be at AVIF's or AIM's sole option.
(b) Except as otherwise expressly provided in this Agreement, neither AVIF, its investment adviser, its principal underwriter, or any affiliates thereof shall use any trademark, trade name, service mark or logo of LIFE COMPANIES or any of their affiliates, or any variation of any such trademark, trade name, service mark or logo, without LIFE COMPANIES' prior written consent, the granting of which shall be at LIFE COMPANIES' sole option.
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.
SECTION 21. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner except by a written agreement executed by all parties hereto.
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
Attest: /s/ P. Michelle Grace By: /s/ Robert H. Graham
------------------------ -------------------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ P. Michelle Grace By: /s/ Michael J. Cemo
------------------------ -------------------------------------
Name: P. Michelle Grace Name: Michael J. Cemo
Title: Assistant Secretary Title: President
THE TRAVELERS INSURANCE COMPANY, on behalf
of itself and its separate accounts
Attest: /s/ Christine Murphy By: /s/ Donald Munson
------------------------ -------------------------------------
Name: Christine Murphy Name: Donald Munson
------------------------ -------------------------------------
Title: Counsel Title: Vice President
------------------------ -------------------------------------
THE TRAVELERS LIFE AND ANNUITY COMPANY, on
behalf of itself and its separate accounts
Attest: /s/ Christine Murphy By: /s/ Donald Munson
------------------------ -------------------------------------
Name: Christine Murphy Name: Donald Munson
------------------------ -------------------------------------
Title: Counsel Title: Vice President
------------------------ -------------------------------------
|
TRAVELERS DISTRIBUTION LLC
Attest: /s/ Christine Murphy By: /s/ Donald Munson
------------------------ -------------------------------------
Name: Christine Murphy Name: Donald Munson
------------------------ -------------------------------------
Title: Counsel Title: President
------------------------ -------------------------------------
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Citicorp Life Variable Annuity Separate Account First Citicorp Life Variable Annuity Separate Account The Travelers Fund BD for Variable Annuities The Travelers Fund BD II for Variable Annuities The Travelers Fund BD III for Variable Annuities The Travelers Fund BD IV for Variable Annuities The Travelers Separate Account ABD for Variable Annuities The Travelers Separate Account ABD for Variable Annuities The Travelers Separate Account Three for Variable Annuities The Travelers Separate Account Four for Variable Annuities The Travelers Separate Account Five for Variable Annuities The Travelers Separate Account Six for Variable Annuities The Travelers Separate Account TM for Variable Annuities The Travelers Separate Account TMII for Variable Annuities
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Travelers Marquis
Portfolio Architect
Portfolio Architect Select
Travelers Access Select
Portfolio Architect Xtra
Travelers Access
Travelers Retirement Annuity
Vintage
Vintage II
Vintage Xtra
CitiElite
SCHEDULE B
AIM'S PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following thresholds are applied:
a. If the amount of the difference in the erroneous net asset value and the correct net asset value is less than .5% of the correct net asset value, AIM will reimburse the affected Fund to the extent of any loss resulting from the error. No other adjustments shall be made.
b. If the amount of the difference in the erroneous net asset value and the correct net asset value is .5% of the correct net asset value or greater, then AIM will determine the impact of the error to the affected Fund and shall reimburse such Fund (and/or LIFE COMPANIES, as appropriate, such as in the event that the error was not discovered until after LIFE COMPANIES processed transactions using the erroneous net asset value) to the extent of any loss resulting from the error. To the extent that an overstatement of net asset value per share is detected quickly and LIFE COMPANIES have not mailed redemption checks to Participants, LIFE COMPANIES and AIM agree to examine the extent of the error to determine the feasibility of reprocessing such redemption transaction (for purposes of reimbursing the Fund to the extent of any such overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to paragraph (b), above, AIM shall reimburse LIFE COMPANIES for LIFE COMPANIES' reprocessing costs in an amount not to exceed $1.00 per contract affected by $10 or more.
The Pricing Policies described herein may be modified by AVIF as approved by its Board of Trustees or required by the Securities and Exchange Commission. AIM agrees to use its best efforts to notify LIFE COMPANIES at least five (5) days prior to any such meeting of the Board of Trustees of AVIF to consider such proposed changes.
SCHEDULE C
EXPENSE ALLOCATIONS
=======================================================================================
LIFE COMPANIES AVIF / AIM
---------------------------------------------------------------------------------------
preparing and filing the Account's Preparing and filing the Fund's
registration statement registration statement
---------------------------------------------------------------------------------------
text composition for Account prospectuses text composition for Fund prospectuses
and supplements and supplements
---------------------------------------------------------------------------------------
text alterations of prospectuses text alterations of prospectuses (Fund)
(Account) and supplements (Account) and supplements (Fund)
---------------------------------------------------------------------------------------
printing Account and Fund prospectuses Printing Fund prospectus and supplements
and supplements for distribution purposes for existing policy owners
---------------------------------------------------------------------------------------
text composition and printing Account SAIs text composition and printing Fund SAIs
---------------------------------------------------------------------------------------
mailing and distributing Account SAIs to Mailing and distributing Fund SAIs to
policy owners upon request by policy policy owners upon request by policy
owners owners
---------------------------------------------------------------------------------------
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by Federal Securities
Laws and to prospective purchasers
---------------------------------------------------------------------------------------
text composition (Account), printing, text composition and printing of annual
mailing, and distributing annual and and semi-annual reports (Fund)
semi-annual reports for Account (Fund and
Account as, applicable)
---------------------------------------------------------------------------------------
Mailing, distributing, and tabulation of text composition and printing of voting
proxy statements and voting instruction instruction solicitation materials to
solicitation materials to policy owners policy owners with respect to proxies
with respect to proxies related to the related to the Fund
Funds
---------------------------------------------------------------------------------------
preparation, printing and distributing
sales material and advertising relating
to the Funds, insofar as such materials
relate to the Contracts and 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
=======================================================================================
|
Exhibit h(81)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS,
A I M DISTRIBUTORS, INC.,
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
INVIVA SECURITIES CORPORATION
TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
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............................. 2
Section 2. Processing Transactions...................................... 3
2.1 Timely Pricing and Orders.................................. 3
2.2 Timely Payments............................................ 3
2.3 Applicable Price........................................... 3
2.4 Dividends and Distributions................................ 4
2.5 Book Entry................................................. 4
Section 3. Costs and Expenses........................................... 4
3.1 General.................................................... 4
3.2 Parties To Cooperate....................................... 4
Section 4. Legal Compliance............................................. 5
4.1 Tax Laws................................................... 5
4.2 Insurance and Certain Other Laws........................... 7
4.3 Securities Laws............................................ 7
4.4 Notice of Certain Proceedings and Other Circumstances...... 9
4.5 LIFE COMPANY To Provide Documents; Information About AVIF.. 9
4.6 AVIF To Provide Documents; Information About LIFE COMPANY.. 10
Section 5. Mixed and Shared Funding..................................... 12
5.1 General.................................................... 12
5.2 Disinterested Trustees..................................... 12
5.3 Monitoring for Material Irreconcilable Conflicts........... 12
5.4 Conflict Remedies.......................................... 13
5.5 Notice to LIFE COMPANY..................................... 14
5.6 Information Requested by Board of Trustees................. 14
5.7 Compliance with SEC Rules.................................. 15
5.8 Other Requirements......................................... 15
Section 6. Termination.................................................. 15
6.1 Events of Termination...................................... 15
6.2 Notice Requirement for Termination......................... 16
6.3 Funds To Remain Available.................................. 16
6.4 Survival of Warranties and Indemnifications................ 17
6.5 Continuance of Agreement for Certain Purposes.............. 17
|
Section 7. Parties To Cooperate Respecting Termination.................. 17
Section 8. Assignment................................................... 17
Section 9. Notices...................................................... 17
Section 10. Voting Procedures............................................ 18
Section 11. Foreign Tax Credits.......................................... 19
Section 12. Indemnification.............................................. 19
12.1 Of AVIF and AIM by LIFE COMPANY and UNDERWRITER............ 19
12.2 Of LIFE COMPANY and UNDERWRITER by AVIF and AIM............ 21
12.3 Effect of Notice........................................... 24
12.4 Successors................................................. 24
Section 13. Applicable Law............................................... 24
Section 14. Execution in Counterparts.................................... 24
Section 15. Severability................................................. 24
Section 16. Rights Cumulative............................................ 24
Section 17. Headings..................................................... 24
Section 18. Confidentiality.............................................. 25
Section 19. Trademarks and Fund Names.................................... 25
Section 20. Parties to Cooperate......................................... 26
Section 21. Amendments................................................... 26
Section 22. Electronic Delivery.......................................... 26
|
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1 day of November, 2001 ("Agreement"), by and among AIM Variable Insurance Funds, a Delaware Trust ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM") The American Life Insurance Company of New York, a New York life insurance company ("LIFE COMPANY"), 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 Inviva Securities Corporation, an affiliate of LIFE COMPANY and the principal underwriter of the Contracts ("UNDERWRITER") (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 eighteen separate series ("Series"), shares ("Shares") each of which are registered to the extent required 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, LIFE COMPANY will be the issuer of certain variable annuity contracts and/or 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, LIFE COMPANY 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, LIFE COMPANY 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
WHEREAS, to the extent permitted by applicable insurance laws and regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER is a broker-dealer registered with the SEC under the 1934 Act and a member in good standing of the NASD;
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");
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 LIFE COMPANY for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. The Board of Trustees 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 Trustees 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, 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 LIFE COMPANY with the net asset value per Share for each Fund by 6:00 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) LIFE COMPANY is open for business.
(b) LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY in the event that AVIF is unable to meet the 6:00 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 LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of redemption proceeds by AVIF, LIFE COMPANY 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), LIFE COMPANY shall be entitled to an adjustment to the number of Shares purchased or redeemed to reflect the correct net asset value per Share. Any material error in the calculation or reporting of net asset value per Share, dividend or capital gain information shall be reported promptly upon discovery to LIFE COMPANY. Materiality and reprocessing cost reimbursement shall be determined in accordance with standards established by the Parties as provided in Schedule B, attached hereto and incorporated herein.
2.2 TIMELY PAYMENTS.
LIFE COMPANY 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 LIFE COMPANY by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY 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 LIFE COMPANY 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), LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY of any income dividends or capital gain distributions payable on the Shares of any Fund. LIFE COMPANY 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 LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY. Shares ordered from AVIF will be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto and made a part hereof, each Party will bear, or arrange for others to bear, all expenses incident to its performance under this Agreement.
3.2 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 LIFE COMPANY 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 LIFE COMPANY 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) Notwithstanding any other provision of this Agreement, LIFE COMPANY agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of LIFE COMPANY or, to LIFE COMPANY's knowledge, of any Contract owners, annuitants, insureds or participants (as appropriate) under the Contracts (collectively, "Participants"), that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or LIFE COMPANY otherwise becomes aware of any facts that could give rise to any claim against AVIF or its affiliates as a result of such a failure or alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF of such assertion or
potential claim (subject to the Confidentiality provisions of
Section 18 as to any Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) LIFE COMPANY shall use its best efforts to minimize any liability of AVIF or its affiliates resulting from such failure, including, without limitation, demonstrating, pursuant to Treasury Regulations Section 1.817-5(a)(2), to the Commissioner of the IRS that such failure was inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal and accounting advisors to participate in any conferences, settlement discussions or other administrative or judicial proceeding or contests (including judicial appeals thereof) with the IRS, any 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 LIFE COMPANY will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by LIFE COMPANY 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 LIFE COMPANY 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 LIFE
COMPANY to any such person without the express written consent
of AVIF which shall not be unreasonably withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their accounting and legal advisors with such cooperation as AVIF shall reasonably request (including, without limitation, by permitting AVIF and its accounting and legal advisors to review the relevant books and records of LIFE COMPANY) in order to facilitate review by AVIF or its advisors of any written submissions provided to it pursuant to the preceding clause or its assessment of the validity or amount of any claim against its arising from such a failure or alleged failure;
(vii) LIFE COMPANY 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 LIFE COMPANY shall not be required, after exhausting all administrative remedies, 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 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 LIFE COMPANY fails to comply with any of the foregoing clauses (i) through (vii), and such failure could be shown to have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to any compromise or settlement of any claim or liability hereunder, LIFE COMPANY may, in its discretion, authorize AVIF or its affiliates to act in the name of LIFE COMPANY in, and to control the conduct of, such conferences, discussions, proceedings, contests or appeals and all administrative or judicial appeals thereof, and in that event AVIF or its affiliates shall bear the fees and expenses associated with the conduct of the proceedings that it is so authorized to control; provided, that in no event shall LIFE COMPANY 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) LIFE COMPANY 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; LIFE COMPANY 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) LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY, including, the furnishing of information not otherwise available to LIFE COMPANY which is required by state insurance law to enable LIFE COMPANY to obtain the authority needed to issue the Contracts in any applicable state.
(b) LIFE COMPANY 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 New York 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 4240 of the New York Insurance Law 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 lawfully organized, validly existing, and in good standing under the laws of the State of Delaware 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) LIFE COMPANY 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 the law(s) of LIFE COMPANY's state(s) of organization and domicile, (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) LIFE COMPANY 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 Delaware 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 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 or AIM will immediately notify LIFE COMPANY 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 LIFE COMPANY. AVIF and AIM 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) LIFE COMPANY or UNDERWRITER 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. LIFE COMPANY and UNDERWRITER 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.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) LIFE COMPANY 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) LIFE COMPANY 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. [In what format will we receive] 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 AIM as
the entity to receive such sales literature, until such time as AVIF appoints
another designated agent by giving notice to LIFE COMPANY in the manner required
by Section 9 hereof.
(c) Neither LIFE COMPANY 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) LIFE COMPANY 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 Sections 4.5 and 4.6 hereof, 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, 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.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY.
(a) AVIF will provide to LIFE COMPANY at least one (1) complete copy of all SEC registration statements, AVIF Prospectuses, periodic reports to shareholders, 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 LIFE COMPANY a camera ready copy of all AVIF
prospectuses and printed copies, in an amount specified by LIFE COMPANY, 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
LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, as the case may
be, to print and distribute such materials within the time required by law to be
furnished to Participants. If requested by LIFE COMPANY, AVIF shall provide
copies of the foregoing documents to LIFE COMPANY electronically, subject to
Section 22 hereof.
(c) AVIF will provide to LIFE COMPANY or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which LIFE COMPANY, 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 LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY, 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 LIFE COMPANY for
distribution; or (iii) in sales literature or other promotional material approved by LIFE COMPANY or its affiliates, except with the express written permission of LIFE COMPANY.
(e) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning LIFE COMPANY, 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 LIFE COMPANY, 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.
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 LIFE COMPANY, 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 LIFE COMPANY that, in the event that AVIF implements Mixed and Shared Funding, it may be appropriate to include in the prospectus pursuant to which a Contract is offered disclosure regarding the potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED TRUSTEES.
AVIF agrees that its Board of Trustees shall at all times consist of trustees a majority of whom (the "Disinterested Trustees") 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 Trustees 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 ("Participating Plans"). LIFE COMPANY agrees to inform the Board of Trustees 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, LIFE COMPANY will assist the Board of Trustees in carrying out its responsibilities by providing the Board of Trustees with all information reasonably necessary for the Board of Trustees to consider any issue raised, including information as to a decision by LIFE COMPANY to disregard voting instructions of Participants. LIFE COMPANY's responsibilities in connection with the foregoing shall be carried out with a view only to the interests 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 Trustees or a majority of the Disinterested Trustees that a material irreconcilable conflict exists, LIFE COMPANY 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 Trustees), 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 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 LIFE COMPANY's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, LIFE COMPANY 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 LIFE COMPANY that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY 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 LIFE COMPANY conflicts with the majority of other state regulators, then LIFE COMPANY will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Trustees informs LIFE COMPANY that it has determined that such decision has created a material irreconcilable conflict, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in resolving any material irreconcilable conflict will be carried out at its expense and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Trustees 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. LIFE COMPANY 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 LIFE COMPANY.
AVIF will promptly make known in writing to LIFE COMPANY the Board of Trustees' 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.
5.6 INFORMATION REQUESTED BY BOARD OF TRUSTEES.
LIFE COMPANY and AVIF (or its investment adviser) will at least annually submit to the Board of Trustees of AVIF such reports, materials or data as the Board of Trustees may reasonably request so that the Board of Trustees 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 Trustees. All reports received by the Board of Trustees of potential or existing conflicts, and all Board of Trustees 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 Trustees 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 LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding LIFE COMPANY'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 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 LIFE COMPANY 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, LIFE COMPANY 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 LIFE COMPANY, 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 LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANY if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if LIFE
COMPANY reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by LIFE COMPANY 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:
(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 with respect to any
Fund, AVIF will, at the option of LIFE COMPANY, 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 LIFE COMPANY 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).
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 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
A I M DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
INVIVA SECURITIES CORPORATION
300 Distillery Commons, Suite 300
Louisville, Kentucky 40206
Facsimile: 502-587-7628
Attn: General Counsel
with copy to Chief Compliance Officer
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, LIFE COMPANY 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. Subject to Section 22 hereof, LIFE COMPANY may distribute such proxy material electronically. LIFE COMPANY will vote Shares in accordance with timely instructions received from Participants. LIFE COMPANY 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 LIFE COMPANY 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. LIFE COMPANY reserves the right to vote shares held in any Account in its own right, to the extent permitted by law. LIFE COMPANY 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 LIFE COMPANY 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 trustees and with whatever rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LIFE COMPANY 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 LIFE COMPANY AND UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless AVIF, AIM, their affiliates, and each person, if any, who controls AVIF, AIM, or their affiliates within the meaning of Section 15 of the 1933 Act and each of their respective trustees 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 LIFE COMPANY and UNDERWRITER) 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 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 LIFE COMPANY or UNDERWRITER 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 LIFE COMPANY, UNDERWRITER or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of LIFE COMPANY, UNDERWRITER or their respective affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member," as that term is defined in paragraph (q) 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, AIM or their affiliates by or on behalf of LIFE COMPANY, UNDERWRITER 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
(iv) arise as a result of any failure by LIFE COMPANY or UNDERWRITER 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 LIFE COMPANY or UNDERWRITER in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANY or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued by LIFE COMPANY 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 LIFE COMPANY nor UNDERWRITER 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 or AIM.
(c) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
or AIM shall have notified LIFE COMPANY and UNDERWRITER 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 LIFE COMPANY and
UNDERWRITER of any such action shall not relieve LIFE COMPANY and UNDERWRITER
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, LIFE COMPANY and UNDERWRITER 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 LIFE COMPANY or UNDERWRITER to such Indemnified
Party of LIFE COMPANY's or UNDERWRITER's election to assume the defense thereof,
the Indemnified Party will cooperate fully with LIFE COMPANY and UNDERWRITER and
shall bear the fees and expenses of any additional counsel retained by it, and
neither LIFE COMPANY nor UNDERWRITER 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 LIFE COMPANY AND UNDERWRITER 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 LIFE COMPANY,
UNDERWRITER, their respective affiliates, and each person, if any, who controls
LIFE COMPANY, UNDERWRITER or their respective affiliates within the meaning of
Section 15 of the 1933 Act and each of their
respective trustees and officers, (collectively, the "Indemnified Parties" for purposes of this Section 12.2) against any and all losses, claims, 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 LIFE COMPANY, UNDERWRITER 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, AIM or their affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF, AIM or their affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member" as that term is defined in Section (q) of Article I 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 LIFE COMPANY, UNDERWRITER or their respective affiliates by or on behalf of AVIF or AIM for use 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
(iv) arise as a result of any 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) The Parties agree that the indemnification by AVIF under this
Section 12.2 shall not apply to any acts or omissions of AIM. 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 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 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 LIFE
COMPANY 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 LIFE
COMPANY of Shares of another investment company or portfolio for those of any
adversely affected Fund as a funding medium for each Account that LIFE COMPANY
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 LIFE COMPANY, UNDERWRITER, 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 its 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 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 AVIF and AIM will not 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 AVIF or AIM be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, LIFE COMPANY, UNDERWRITER 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 LIFE COMPANY or UNDERWRITER hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by LIFE COMPANY 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 LIFE COMPANY 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 Delaware law, without regard for that state's principles of conflict of laws.
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 LIFE COMPANY or
any of its affiliates (collectively, the "LIFE COMPANY 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
LIFE COMPANY Protected Parties or any of their employees or agents in connection
with LIFE COMPANY's performance of its duties under this Agreement are the
valuable property of the LIFE COMPANY Protected Parties. AVIF agrees that if it
comes into possession of any list or compilation of the identities of or other
information about the LIFE COMPANY Protected Parties' customers, or any other
information or property of the LIFE COMPANY Protected Parties, other than such
information as may be independently developed or compiled by AVIF from
information supplied to it by the LIFE COMPANY 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 LIFE COMPANY's prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY
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 Agreement are the
valuable property of the AVIF Protected Parties. LIFE COMPANY 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 LIFE COMPANY from information supplied to
it by the AVIF Protected Parties' customers who also maintain accounts directly
with LIFE COMPANY, LIFE COMPANY 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) Except as may otherwise be provided in a License Agreement among A I M Management Group Inc., LIFE COMPANY and UNDERWRITER, neither LIFE COMPANY nor UNDERWRITER or any of their respective affiliates, shall use any trademark, trade name, service mark or logo of AVIF, AIM or any of their respective affiliates, or any variation of any such trademark, trade name, service mark or logo, without AVIF's or AIM's prior written consent, the granting of which shall be at AVIF's or AIM's sole option.
(b) Except as otherwise expressly provided in this Agreement, neither AVIF, its investment adviser, its principal underwriter, or any affiliates thereof shall use any trademark, trade name, service mark or logo of LIFE COMPANY, UNDERWRITER or any of their affiliates, or any variation of any such trademark, trade name, service mark or logo, without LIFE COMPANY's or UNDERWRITER's prior written consent, the granting of which shall be at LIFE COMPANY's or UNDERWRITER's sole option.
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.
SECTION 21. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner except by a written agreement executed by all parties hereto.
SECTION 22. ELECTRONIC DELIVERY
22.1 GENERAL
When using electronic means, as permitted by this Agreement, to deliver or communicate any information, document, record, or other materials (collectively, "information") to AVIF, AIM, Fund shareholders, and/or existing or prospective Contract owners, or to receive the same therefrom, INSURER shall at all times comply with all applicable laws, regulations, and regulatory agency pronouncements including, without limitation, the Electronic Signatures in Global and National Commerce Act ("E-SIGN"), as the same may be amended from time to time, as well as with the Electronic Delivery Procedures described below. The foregoing use of electronic means is hereinafter referred to as "electronic delivery."
22.2 ELECTRONIC DELIVERY PROCEDURES
Following the execution of this Agreement, the Parties shall work diligently and promptly to develop mutually agreeable procedures regarding electronic delivery ("Electronic Delivery Procedures" or "Procedures"). The Procedures shall address matters such as: (a) the security and confidentiality of information to be transmitted using electronic delivery, (b) the nature of any systems integration or protocols necessary or appropriate to facilitate the accurate and timely electronic delivery of information between or among the Parties or the accurate and timely electronic delivery of any information required by law to be delivered to Fund shareholders and/or existing or prospective Contract owners (collectively, "required information"), (c) the format of any information to be delivered by AVIF or AIM to INSURER and the timing of such delivery, (d) the maintenance of any books and records to be stored electronically, and (e) the backup plans to be followed in the event of any failed electronic delivery. Notwithstanding any other provision herein, in the absence of an agreement among the Parties on the Electronic Delivery Procedures, INSURER shall not use electronic delivery to transmit any information to AVIF or AIM, or to disseminate any required information prepared by or concerning AVIF, AIM, or any Fund to any Fund shareholder or existing or prospective Contract owners and shall instead communicate or disseminate the same using the other means specified in this Agreement.
22.3 FAILED ELECTRONIC DELIVERY
INSURER shall immediately notify AVIF and AIM of any failed electronic delivery, along with a description of the steps INSURER proposes to take to rectify the same; provided, however, that in the event of any failed electronic delivery of any required materials, INSURER shall timely deliver the same in paper format.
22.4 DEFINITION OF "ELECTRONIC"
As used in this Agreement, the term "electronic" shall have the same meaning as given to it in Section 106 of E-SIGN, as the same may be amended from time to time.
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
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
----------------------------- ---------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title Assistant Secretary Title: Senior Vice President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
----------------------------- ---------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
THE AMERICAN LIFE INSURANCE COMPANY
OF NEW YORK, on behalf of itself and
its separate accounts
Attest: /s/ Craig A. Hawley By: /s/ John R. McGeeney
----------------------------- ---------------------------------
Name: Craig A. Hawley Name: John R. McGeeney
------------------------------- -------------------------------
Title: Secretary Title: General Counsel
------------------------------ ------------------------------
|
INVIVA SECURITIES CORPORATION
Attest: /s/ Craig A. Hawley By: /s/ John R. McGeeney
----------------------------- ---------------------------------
Name: Craig A. Hawley Name: John R. McGeeney
------------------------------- -------------------------------
Title: Secretary Title: President
------------------------------ ------------------------------
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
- AIM VARIABLE INSURANCE FUNDS
[LIST APPLICABLE PORTFOLIOS]
SEPARATE ACCOUNTS UTILIZING THE FUNDS
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
SCHEDULE B
AIM'S PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of a Fund's net asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following thresholds are applied:
a. If the amount of the difference in the erroneous net asset value and the correct net asset value is less than .5% of the correct net asset value, AIM will reimburse the affected Fund to the extent of any loss resulting from the error. No other adjustments shall be made.
b. If the amount of the difference in the erroneous net asset value and the correct net asset value is .5% of the correct net asset value or greater, then AIM will determine the impact of the error to the affected Fund and shall reimburse such Fund (and/or LIFE COMPANY, as appropriate, such as in the event that the error was not discovered until after LIFE COMPANY processed transactions using the erroneous net asset value) to the extent of any loss resulting from the error. To the extent that an overstatement of net asset value per share is detected quickly and LIFE COMPANY has not mailed redemption checks to Participants, LIFE COMPANY and AIM agree to examine the extent of the error to determine the feasibility of reprocessing such redemption transaction (for purposes of reimbursing the Fund to the extent of any such overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to paragraph (b), above, AIM shall reimburse LIFE COMPANY for LIFE COMPANY's reprocessing costs in an amount not to exceed $1.00 per Contract affected by $10 or more.
The Pricing Policies described herein may be modified by AVIF as approved by its Board of Trustees. AIM agrees to use its best efforts to notify LIFE COMPANY at least five (5) days prior to any such meeting of the Board of Trustees of AVIF to consider such proposed changes.
SCHEDULE C
EXPENSE ALLOCATIONS
LIFE COMPANY AVIF / AIM
preparing and filing the Account's Preparing and filing the Fund's
registration statement registration statement
------------------------------------- ---------------------------------------
text composition for Account text composition for Fund prospectuses
prospectuses and supplements and supplements
------------------------------------- ---------------------------------------
text alterations of prospectuses text alterations of prospectuses (Fund)
(Account) and supplements (Account) and supplements (Fund)
------------------------------------- ---------------------------------------
printing Account and Fund prospectuses a camera ready Fund prospectus
and supplements
------------------------------------- ---------------------------------------
text composition and printing Account text composition and printing Fund SAIs
SAIs
------------------------------------- ---------------------------------------
mailing and distributing Account SAIs mailing and distributing Fund SAIs to
to policy owners upon request by policy owners upon request by policy
policy owners owners
------------------------------------- ---------------------------------------
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by Federal
Securities Laws and to prospective
purchasers
------------------------------------- ---------------------------------------
text composition (Account), printing, text composition of annual and
mailing, and distributing annual and semi-annual reports (Fund)
semi-annual reports for Account (Fund
and Account as, applicable)
------------------------------------- ---------------------------------------
text composition, printing, mailing, text composition, printing, mailing,
distributing, and tabulation of proxy distributing and tabulation of proxy
statements and voting instruction statements and voting instruction
solicitation materials to policy solicitation materials to policy owners
owners with respect to proxies related with respect to proxies related to the
to the Account Fund
------------------------------------- ---------------------------------------
preparation, printing and distributing
sales material and advertising
relating to the Funds, insofar as such
materials relate to the Contracts and
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
|
Exhibit h(84)(a)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into as of this 1st day of July, 2001 between AIM Variable Insurance Funds (the "Trust"), on behalf of the funds listed on Exhibit "A" to this Memorandum of Agreement (the "Funds"), and A I M Advisors, Inc. ("AIM").
For and in consideration of the mutual terms and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Trust and AIM agree as follows:
The Trust and AIM agree until, the date set forth on the attached Exhibit "A," that AIM will waive its fees or reimburse expenses to the extent that the expenses (excluding Rule 12b-1 fees, if any, interest, taxes, dividend expense on short sales, extraordinary items, and increases for indirect expenses resulting from expense offset arrangements, if any) of a class of a Fund exceed the rate set forth on Exhibit "A" of the average daily net assets allocable to such class. Neither the Trust nor AIM may remove or amend the waivers or expense limitations to the Trust's detriment prior to the date set forth on Exhibit "A." AIM will not have any right to reimbursement of any amount so waived or reimbursed.
The Trust and AIM agree to review the then-current waivers or expense limitations for each class of each Fund listed on Exhibit "A" on a date prior to the date listed on that Exhibit to determine whether such waivers or limitations should be amended, continued or terminated. Unless the Trust, by vote of its Board of Trustees, or AIM terminates the waivers or limitations, or the Trust and AIM are unable to reach an agreement on the amount of the waivers or limitations to which the Trust and AIM desire to be bound, the waivers or limitations will continue for additional one-year terms at the rate to which the Trust and AIM mutually agree. Exhibit "A" will be amended to reflect that rate and the new date through which the Trust and AIM agree to be bound.
It is expressly agreed that the obligations of the Trust hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Trust personally, but shall only bind the assets and property of the Funds, as provided in the Trust's Agreement and Declaration of Trust. The execution and delivery of this Memorandum of Agreement have been authorized by the Trustees of the Trust, and this Memorandum of Agreement has been executed and delivered by an authorized officer of the Trust acting as such; neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets and property of the Funds, as provided in the Trust's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the Trust and AIM have entered into this Memorandum of Agreement as of the date first above written.
AIM Variable Insurance Funds, on behalf of each Fund listed in Exhibit "A" to this Memorandum of Agreement
By: /s/ Carol F. Relihan
-----------------------------------------
Title: Senior Vice President
--------------------------------------
|
A I M Advisors, Inc.
By: /s/ Carol F. Relihan
-----------------------------------------
Title: Senior Vice President
--------------------------------------
|
EXHIBIT "A"
AIM VARIABLE INSURANCE FUNDS
FUND EXPENSE LIMITATION COMMITTED UNTIL
---- ------------------ ---------------
AIM V.I. Aggressive Growth Fund
Series I Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
AIM V.I. Basic Value Fund
Series I Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
AIM V.I. Blue Chip Fund
Series I Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
AIM V.I. Capital Development Fund
Series I Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
AIM V.I. Dent Demographic Trends Fund
Series I Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
|
AIM V.I. Mid Cap Equity Fund
Series I Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
AIM V.I. New Technology Fund
Series I Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.30%
|
Exhibit h(84)(b)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into as of this 1st day of July, 2001 between AIM Variable Insurance Funds (the "Trust"), on behalf of the funds listed on Exhibit "A" to this Memorandum of Agreement (the "Funds"), and A I M Distributors, Inc. ("AIM Distributors").
For and in consideration of the mutual terms and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Trust and AIM Distributors agree as follows:
The Trust and AIM Distributors agree, until the date set forth on the attached Exhibit "A," that AIM Distributors will waive its Rule 12b-1 fees to the extent that the expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items, and increases for indirect expenses resulting from expense offset arrangements, if any) of a class of a Fund, taking into account any fee waivers or expense reimbursements by A I M Advisors, Inc. that are applicable to such class, exceed the rate set forth on Exhibit "A" of the average daily net assets allocable to such class. Neither the Trust nor AIM Distributors may remove or amend the waivers to the Trust's detriment prior to the date set forth on Exhibit "A." AIM Distributors will not have any right to reimbursement of any amount so waived.
The Trust and AIM Distributors agree to review the then-current waivers for each class of each Fund listed on Exhibit "A" on a date prior to the date listed on that Exhibit to determine whether such waivers should be amended, continued or terminated. Unless the Trust, by vote of its Board of Trustees, or AIM Distributors terminates the waivers, or the Trust and AIM Distributors are unable to reach an agreement on the amount of the waivers to which the Trust and AIM Distributors desire to be bound, the waivers will continue for additional one-year terms at the rate to which the Trust and AIM Distributors mutually agree. Exhibit "A" will be amended to reflect that rate and the new date through which the Trust and AIM Distributors agree to be bound.
It is expressly agreed that the obligations of the Trust hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Trust personally, but shall only bind the assets and property of the Funds, as provided in the Trust's Agreement and Declaration of Trust. The execution and delivery of this Memorandum of Agreement have been authorized by the Trustees of the Trust, and this Memorandum of Agreement has been executed and delivered by an authorized officer of the Trust acting as such; neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets and property of the Funds, as provided in the Trust's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the Trust and AIM Distributors have entered into this Memorandum of Agreement as of the date first above written.
AIM Variable Insurance Funds, on behalf of each Fund listed in Exhibit "A" to this Memorandum of Agreement
By: /s/ Carol F. Relihan
-----------------------------------------
Title: Senior Vice President
--------------------------------------
|
A I M Distributors, Inc.
By: /s/ Michael J. Cemo
-----------------------------------------
Title: President
--------------------------------------
|
EXHIBIT "A"
AIM VARIABLE INSURANCE FUNDS
FUND EXPENSE LIMITATION COMMITTED UNTIL
---- ------------------ ---------------
AIM V.I. Aggressive Growth Fund
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.45%
AIM V.I. Basic Value Fund
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.45%
AIM V.I. Blue Chip Fund
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.45%
AIM V.I. Capital Development Fund
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.45%
AIM V.I. Dent Demographic Trends Fund
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.45%
AIM V.I. Mid Cap Equity Fund
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.45%
AIM V.I. New Technology Fund
Series II Total Annual Fund Operating 6-30, 2002
Expenses Limited to 1.45%
|
EXHIBIT i(1)(K)
CONSENT OF
FOLEY & LARDNER
We hereby consent to the reference to our firm under the caption "Legal Matters" in the statement of additional information contained in Post-Effective Amendment No. 22 to the Form N-1A Registration Statement of AIM Variable Insurance Funds (File No. 33-57340).
/s/ Foley & Lardner
FOLEY & LARDNER
Washington D.C.
February 12, 2002
|
EXHIBIT l(1)(f)
[AIM FUNDS LOGO APPEARS HERE]
--Registered Trademark--
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
713-626-1919
A I M ADVISORS, INC.
September 7, 2001
Board of Trustees
AIM Variable Insurance Funds
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Re: Initial Capital Investment in the Two New Portfolios of AIM Variable Insurance Funds (the "Fund")
Gentlemen:
We are purchasing shares of the Fund for the purpose of providing initial investment for the two new investment portfolios of the Fund, the AIM V.I. Basic Value Fund and AIM V.I. Mid Cap Equity Fund. The purpose of this letter is to set out our understanding of the conditions of and our promises and representations concerning this investment.
1. We hereby agree to purchase shares equal to $1,000,000.00 in Series I shares of the AIM V.I. Basic Value Fund and purchase shares equal to $1,000,000.00 in Series I shares of the AIM V.I. Mid Cap Equity Fund.
2. We understand that the initial net asset value per share for each Fund above will be $10.00.
3. We hereby represent that we are purchasing these shares solely for our own account and solely for investment purposes without any intent of distributing or reselling said shares. We further represent that disposition of said shares will only be by direct redemption to or repurchase of the Fund.
4. We hereby agree to provide the Fund with at least 3 days' advance notice of any intended redemption and agree that we will work with the Fund with respect to the amount of such redemption so as not to place a burden on the Fund and to facilitate normal portfolio management of the Fund.
Sincerely yours,
A I M ADVISORS, INC.
By: /s/ ROBERT H. GRAHAM
------------------------
cc: Sherri Arbour
Sara Ehlert-Gerke
Mark Gregson
|
Exhibit m(b)
AMENDMENT NO. 1
TO
MASTER DISTRIBUTION PLAN
The Master Distribution Plan (the "Plan"), dated as of September 7th, 2001, pursuant to Rule 12b-1 of AIM Variable Insurance Funds, a Delaware business trust, is hereby amended as follows:
Schedule A of the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM VARIABLE INSURANCE FUNDS
(SERIES II SHARES)
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for each Portfolio (or Class thereof) designated below, a Distribution Fee determined by applying the annual rate set forth below as to each Portfolio (or Class thereof) to the average daily net assets of the Portfolio (or Class thereof) for the plan year, computed in a manner used for the determination of the offering price of shares of the Portfolio.
DISTRIBUTION
PORTFOLIO: FEE:
---------- ----
AIM V.I. Aggressive Growth Fund 0.25%
AIM V.I. Balanced Fund 0.25%
AIM V.I. Basic Value Fund 0.25%
AIM V.I. Blue Chip Fund 0.25%
AIM V.I. Capital Appreciation Fund 0.25%
AIM V.I. Capital Development Fund 0.25%
AIM V.I. Dent Demographic Trends Fund 0.25%
AIM V.I. Diversified Income Fund 0.25%
AIM V.I. Global Utilities Fund 0.25%
AIM V.I. Government Securities Fund 0.25%
AIM V.I. Growth and Income Fund 0.25%
AIM V.I. Growth Fund 0.25%
AIM V.I. High Yield Fund 0.25%
AIM V.I. International Equity Fund 0.25%
AIM V.I. Mid Cap Equity Fund 0.25%
AIM V.I. Money Market Fund 0.25%
AIM V.I. New Technology Fund 0.25%
AIM V.I. Value Fund 0.25%"
|
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
AIM VARIABLE INSURANCE FUNDS
(on behalf of its Series II Shares)
Attest: /s/ P. Michelle Grace By: /s/ Robert H. Graham
----------------------------- ---------------------------------
Assistant Secretary Robert H. Graham
President
|