EX-99.B.8.41
FORM OF FUND PARTICIPATION AGREEMENT
BETWEEN
LORD ▇▇▇▇▇▇ SERIES FUND, INC.
AND
AETNA LIFE INSURANCE AND ANNUITY COMPANY
EX-99.B.8.41
FORM OF FUND PARTICIPATION AGREEMENT
BETWEEN
LORD ▇▇▇▇▇▇ SERIES FUND, INC.
AND
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Aetna Life Insurance and Annuity Company ("Aetna"), Lord ▇▇▇▇▇▇ Series Fund,
Inc. (the "Fund") and Lord, ▇▇▇▇▇▇ & Co. (the "Adviser") hereby agree to an
arrangement whereby the Fund shall be made available to serve as underlying
investment media for Variable Annuity or Variable Life Contracts ("Contracts")
to be issued by Aetna.
1. Establishment of Accounts; Availability of Fund.
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(a) Aetna represents that it has established Variable Annuity Accounts B,
C, D and Variable Life Accounts B and C and may establish such other
accounts as may be set forth in Schedule A attached hereto and as may
be amended from time to time with the mutual consent of the parties
hereto (the "Accounts"), each of which is a separate account under
Connecticut Insurance law, and has registered or will register each of
the Accounts (except for such Accounts for which no such registration
is required) as a unit investment trust under the Investment Company
Act of 1940 (the "1940 Act"), to serve as an investment vehicle for the
Contracts. Each Contract provides for the allocation of net amounts
received by Aetna to an Account for investment in the shares of one of
more specified open-end management investment companies available
through that Account as underlying investment media. Selection of a
particular investment management company and changes therein from time
to time are made by the participant or Contract owner, as applicable
under a particular Contract.
(b) The Fund and the Adviser represent and warrant that the investments of
the series of the Fund (each designated a "Portfolio") specified in
Schedule B attached hereto (as may be amended from time to time with
the mutual consent of the parties hereto) will at all times be
adequately diversified within the meaning of Section 817(h) of the
Internal Revenue Service Code of 1986, as amended (the "Code"), and the
Regulations thereunder, and that at all times while this agreement is
in effect, all beneficial interests will be owned by one or more
insurance companies or by any other party permitted under Section
1.817-5(f)(3) of the Regulations promulgated under the Code or by the
successor thereto, or by any other party permitted under a Revenue
Ruling or private letter ruling granted by the Internal Revenue
Service.
2. Pricing Information; Orders; Settlement.
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(a) The Fund will make Fund shares available to be purchased by Aetna, and
will accept redemption orders from Aetna, on behalf of each Account at
the net asset value
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applicable to each order on those days on which the Fund calculates its
net asset value (a "Business Day"). Fund shares shall be purchased and
redeemed in such quantity and at such time determined by Aetna to be
necessary to meet the requirements of those Contracts for which the
Fund serve as underlying investment media, provided, however, that the
Board of Trustees of the Fund (hereinafter the "Trustees") may upon
reasonable notice to Aetna, refuse to sell shares of any Portfolio to
any person, or suspend or terminate the offering of shares of any
Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the
Trustees, acting in good faith and in the best interests of the
shareholders of any Portfolio and is acting in compliance with their
fiduciary obligations under federal and/or any applicable state laws.
(b) The Fund will provide to Aetna closing net asset value, dividend and
capital gain information at the close of trading each day that the New
York Stock Exchange the "Exchange" is open (each such day a "Business
Day"). The Fund will use its best efforts to provide such information
by 6:30 p.m. Eastern Standard time on such Business Day, but shall in
no event provide such information later than 7:00 p.m. Eastern Standard
time absent extraordinary circumstances. In the event of an anticipated
delay past 7:00 p.m, the Fund shall notify Aetna by 7:00 p.m. of the
anticipated delay. Aetna will send via facsimile or electronic
transmission to the Fund or its specified agent orders to purchase
and/or redeem Fund shares by 9:00 a.m. Eastern Standard Time the
following business day. Payment for net purchases will be wired by
Aetna to an account designated by the Fund to coincide with the order
for shares of the Fund.
(c) The Fund hereby appoints Aetna as its agent for the limited purpose of
accepting purchase and redemption orders for Fund shares relating to
the Contracts from Contract owners or participants. Orders from
Contract owners or participants received from any distributor of the
Contracts (including affiliates of Aetna) by Aetna, acting as agent for
the Fund, prior to the close of the Exchange on any given business day
will be executed by the Fund at the net asset value determined as of
the close of the Exchange on such Business Day, provided that the Fund
receives written (or facsimile) notice of such order by 9 a.m. Eastern
Standard Time on the next following Business Day. Any orders received
by Aetna acting as agent on such day but after the close of the
Exchange will be executed by the Fund at the net asset value determined
as of the close of the Exchange on the next business day following the
day of receipt of such order, provided that the Fund receives written
(or facsimile) notice of such order by 9 a.m. Eastern Standard Time
within two days following the day of receipt of such order.
(d) Payments for net redemptions of shares of the Fund will be wired by the
Fund to an account designated by Aetna, and payments for net purchase
of the Fund will be wired by Aetna to an account designated by the
Fund, on the same Business Day as Aetna places an order to purchase or
redeem Fund shares. Payments shall be in federal funds transmitted by
wire.
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(e) In lieu of applicable provisions set forth in paragraphs 2(a) through
2(d) above, the parties may agree to provide pricing information,
execute orders and wire payments for purchases and redemptions through
National Securities Clearing Corporation's Fund/SERV system in which
case such activities will be governed by the provisions set forth in
Exhibit I to this Agreement.
(f) Each party has the right to rely on information or confirmations
provided by the other party (or by any affiliate of the other party),
and shall not be liable in the event that an error is a result of any
misinformation supplied by the other party.
(g) Aetna agrees to purchase and redeem the shares of the Portfolios named
in Schedule B offered by the then current prospectus and statement of
additional information of the Fund in accordance with the provisions of
such prospectus and statement of additional information. Aetna shall
not permit any person other than a Contract owner or Participant to
give instructions to Aetna which would require Aetna to redeem or
exchange shares of the Fund. This provision shall not be construed to
prohibit Aetna from substituting shares of another fund, as permitted
by law.
3. Expenses.
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(a) Except as otherwise provided in this Agreement, all expenses incident
to the performance by the Fund under this Agreement shall be paid by
the Fund, including the cost of registration of Fund shares with the
Securities and Exchange Commission (the "SEC") and in states where
required. The Fund and Adviser shall pay no fee or other compensation
to Aetna under this Agreement, and Aetna shall pay no fee or other
compensation to the Fund or Adviser, except as provided herein and in
Schedule C attached hereto and made a part of this Agreement as may be
amended from time to time with the mutual consent of the parties
hereto. All expenses incident to performance by each party of its
respective duties under this Agreement shall be paid by that party,
unless otherwise specified in this Agreement.
(b) The Fund or the Adviser shall provide to Aetna Post Script files of
periodic fund reports to shareholders and other materials that are
required by law to be sent to Contract owners. In addition, the Fund or
the Adviser shall provide Aetna with a sufficient quantity of its
prospectuses, statements of additional information and any supplements
to any of these materials, to be used in connection with the offerings
and transactions contemplated by this Agreement. In addition, the Fund
shall provide Aetna with a sufficient quantity of its proxy material
that is required to be sent to Contract owners. The Adviser shall be
permitted to review and approve the typeset form of such material prior
to such printing provided such material has been provided by the
Adviser to Aetna within a reasonable period of time prior to
typesetting.
(c) In lieu of the Fund's or Adviser's providing printed copies of
prospectuses, statements of additional information and any supplements
to any of these materials, and periodic fund reports to shareholders,
Aetna shall have the right to request that the Fund transmit a copy of
such materials in an electronic format (Post Script files), which Aetna
may use to have such materials printed together with similar materials
of other
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Account funding media that Aetna or any distributor will distribute to
existing or prospective Contract owners or participants.
4. Representations.
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Aetna agrees that it and its agents shall not, without the written
consent of the Fund or the Adviser, make representations concerning the
Fund, or its shares except those contained in the then current
prospectuses and in current printed sales literature approved by or
deemed approved by the Fund or the Adviser.
5. Termination.
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This agreement shall terminate as to the sale and issuance of new
Contracts:
(a) at the option of either Aetna, the Adviser or the Fund, upon sixty days
advance written notice to the other parties;
(b) at the option of Aetna, upon one week advance written notice to the
Adviser and the Fund, if Fund shares are not available for any reason
to meet the requirement of Contracts as determined by Aetna. Reasonable
advance notice of election to terminate shall be furnished by Company;
(c) at the option of either Aetna, the Adviser or the Fund, immediately
upon institution of formal proceedings against the broker-dealer or
broker-dealers marketing the Contracts, the Account, Aetna, the Fund or
the Adviser by the National Association of Securities Dealers, Inc.
(the "NASD"), the SEC or any other regulatory body;
(d) upon the determination of the Accounts to substitute for the Fund's
shares the shares of another investment company in accordance with the
terms of the applicable Contracts. Aetna will give 60 days written
notice to the Fund and the Adviser of any decision to replace the
Fund's' shares;
(e) upon assignment of this Agreement, unless made with the written consent
of all other parties hereto;
(f) if Fund shares are not registered, issued or sold in conformance with
Federal law or such law precludes the use of Fund shares as an
underlying investment medium for Contracts issued or to be issued by
Aetna. Prompt notice shall be given by the appropriate party should
such situation occur.
6. Continuation of Agreement.
-------------------------
Termination as the result of any cause listed in Section 5 shall not
affect the Fund's obligation to furnish its shares to Contracts then in force
for which its shares serve or may serve
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as the underlying medium unless such further sale of Fund shares is prohibited
by law or the SEC or other regulatory body, or is determined by the Fund's Board
to be necessary to remedy or eliminate an irreconcilable conflict pursuant to
Section 10 hereof.
7. Advertising Materials; Filed Documents.
--------------------------------------
(a) Advertising and sales literature with respect to the Fund prepared by
Aetna or its agents for use in marketing its Contracts will be
submitted to the Fund or its designee for review before such material
is submitted to any regulatory body for review. The Fund or its
designee shall advise the submitting part in writing within ten (10)
Business Days of its approval or disapproval of such materials. If and
to the extent required by securities laws, Aetna will file and clear
such advertising and literature with the NASD, SEC or any other
required regulatory body. If such filing and clearance is required,
Aetna will provide satisfactory evidence of such filing and clearance
to the Fund upon request, and will provide to the Fund copies of any
SEC or NASD comment letters relating to such materials when and if they
are received.
(b) The Fund will provide additional copies of its financials as soon as
available to Aetna and at least one complete copy of all registration
statements, prospectuses, statements of additional information, annual
and semi-annual reports, proxy statements and all amendments or
supplements to any of the above that relate to the Fund promptly after
the filing of such document with the SEC or other regulatory
authorities. At the Adviser's request, Aetna will provide to the
Adviser at least one complete copy of all registration statements,
prospectuses, statements of additional information, annual and
semi-annual reports, proxy statements, and all amendments or
supplements to any of the above that relate to the Account promptly
after the filing of such document with the SEC or other regulatory
authority.
(c) The Fund or the Adviser will provide via Excel spreadsheet diskette
format or in electronic transmission to Aetna at least quarterly
portfolio information necessary to update Fund profiles with seven
business days following the end of each quarter.
(d) The Fund will reimburse Aetna for any incorrect information provided to
Aetna under this Section as provided for in Schedule C.
8. Proxy Voting.
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(a) Aetna shall provide pass-through voting privileges on Fund shares held
by registered separate accounts to all Contract owners and participants
to the extent the SEC continues to interpret the 1940 Act as requiring
such privileges. Aetna shall provide pass-through voting privileges on
Fund shares held by unregistered separate accounts to all Contract
owners.
(b) Aetna will distribute to Contract owners and participants, as
appropriate, all proxy material furnished by the Fund and will vote
Fund shares in accordance with instructions received from such Contract
owners and participants. If and to the extent required by law, Aetna,
with respect to each group Contract and in each Account,
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shall vote Fund shares for which no instructions have been received in
the same proportion as shares for which such instructions have been
received. Aetna and its agents shall not oppose or interfere with the
solicitation of proxies for Fund shares held for such Contract owners
and participants.
9. Indemnification.
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(a) Aetna agrees to indemnify and hold harmless the Fund and the Adviser,
and its directors, officers, employees, agents and each person, if any,
who controls the Fund or its Adviser within the meaning of the
Securities Act of 1933 (the "1933 Act") against any losses, claims,
damages or liabilities to which the Fund or any such director, officer,
employee, agent, or controlling person may become subject, under the
1933 Act or otherwise, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, prospectus or sales
literature of Aetna 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, or arise out of or as a result of conduct, statements or
representations (other than statements or representations contained in
the prospectuses or sales literature of the Fund) of Aetna or its
agents, with respect to the sale and distribution of Contracts for
which Fund shares are the underlying investment. Aetna will reimburse
any legal or other expenses reasonably incurred by the Fund or any such
director, officer, employee, agent, investment adviser, or controlling
person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that Aetna will
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon (i) an untrue
statement or omission or alleged omission made in such Registration
Statement or prospectus in conformity with written materials furnished
to Aetna by the Fund specifically for use therein or (ii) the willful
misfeasance, bad faith, or gross negligence by the Fund or Adviser in
the performance of its duties or the Fund's or Adviser's reckless
disregard of obligations or duties under this Agreement or to Aetna,
whichever is applicable. This indemnity agreement will be in addition
to any liability which Company may otherwise have.
(b) The Fund and the Adviser agree to indemnify and hold harmless Aetna and
its directors, officers, employees, agents and each person, if any, who
controls Aetna within the meaning of the 1933 Act against any losses,
claims, damages or liabilities to which Aetna or any such director,
officer, employee, agent or controlling person may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, prospectuses or
sales literature of the Fund 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 material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Fund will reimburse any legal or other expenses reasonably incurred by
Aetna or any such director, officer, employee, agent, or controlling
person in connection with investigating or defending any such
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loss, claim, damage, liability or action; provided, however, that the
Fund will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an
untrue statement or omission or alleged omission made in such
Registration Statement or prospectuses which are in conformity with
written materials furnished to the Fund by Aetna specifically for use
therein.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than
under this Section 10. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish to, assume the
defense thereof, with counsel satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party
of its election to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 9 for
any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable
costs of investigation.
10. Potential Conflicts.
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(a) Aetna has received a copy of an application for exemptive relief, as
amended, filed by the Fund on and with the SEC and the order issued by
the SEC dated ________ (File No. _______) in response thereto (the
"Mixed and Shared Funding Exemptive Order"). Aetna has reviewed the
conditions to the requested relief set forth in such application for
exemptive relief. As set forth in such application, the Board of
Directors of Fund (the "Board") will monitor the Fund for the existence
of any material irreconcilable conflict between the interests of the
contractholders of all separate accounts ("Participating Companies")
investing in the Fund. An irreconcilable material conflict may arise
for a variety of reasons, including: (i) an action by any state
insurance regulatory authority; (ii) 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 actions by insurance, tax or securities regulatory
authorities; (iii) an administrative or judicial decision in any
relevant proceeding; (iv) the manner in which the investments of any
portfolio are being managed; (v) a difference in voting instructions
given by variable annuity contractholders and variable life insurance
contractholders; or (vi) a decision by an insurer to disregard the
voting instructions of contractholders. The Board shall promptly inform
Aetna if it determines that an irreconcilable material conflict exists
and the implications thereof.
(b) Aetna will report any potential or existing conflicts of which it is
aware to the Board. Aetna will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order by providing
the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited
7
to, an obligation by Aetna to inform the Board whenever contractholder
voting instructions are disregarded.
(c) If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists with
regard to contractholder investments in a Fund, the Board shall give
prompt notice to all Participating Companies. If the Board determines
that Aetna is responsible for causing or creating said conflict, Aetna
shall at its sole cost and expense, and to the extent reasonably
practicable (as determined by a majority of the disinterested Board
members), take such action as is necessary to remedy or eliminate the
irreconcilable material conflict. Such necessary action may include but
shall not be limited to:
(i) withdrawing the assets allocable to the Account from the Fund and
reinvesting such assets in a different investment medium or
submitting the question of whether such segregation should be
implemented to a vote of all affected contractholders and as
appropriate, segregating the assets of any appropriate group (i.e.,
annuity contract owners, life insurance contract owners, or
variable contract owners of one or more Participating Companies)
that votes in favor of such segregation, or offering to the
affected contractholders the option of making such a change; and/or
(ii)establishing a new registered management investment company or
managed separate account.
(d) If a material irreconcilable conflict arises as a result of a decision
by Aetna to disregard its contractholder voting instructions and said
decision represents a minority position or would preclude a majority
vote by all of its contractholders having an interest in the Fund,
Aetna at its sole cost, may be required, at the Board's election, to
withdraw an Account's investment in the Fund and terminate this
Agreement; provided, however, that such withdrawal and termination
shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
(e) For the purpose of this Section 10, a majority of the disinterested
Board members shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no
event will the Fund be required to establish a new funding medium for
any Contract. Aetna shall not be required by this Section 11 to
establish a new funding medium for any Contract if an offer to do so
has been declined by vote of a majority of the Contract owners or
participants materially adversely affected by the irreconcilable
material conflict.
11. Miscellaneous.
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(a) Amendment and Waiver. Neither this Agreement, nor any provision hereof,
may be amended, waived, discharged or terminated orally, but only by an
instrument in writing signed by all parties hereto.
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(b) Notices. All notices and other communications hereunder shall be given
or made in writing and shall be delivered personally, or sent by telex,
telecopier or registered or certified mail, postage prepaid, return
receipt requested, or recognized overnight courier service to the party
or parties to whom they are directed at the following addresses, or at
such other addresses as may be designated by notice from such party to
all other parties.
To Aetna:
Aetna Life Insurance and Annuity Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Counsel
To the Fund:
Lord ▇▇▇▇▇▇ Series Fund, Inc.
_________________________
_________________________
_________________________
Attn: __________________
To the Adviser:
Lord, ▇▇▇▇▇▇ & Co.
_________________________
_________________________
_________________________
Attn: __________________
Any notice, demand or other communication given in a manner prescribed in
this subsection (b) shall be deemed to have been delivered on receipt.
(c) Successors and Assigns. This agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective permitted
successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
agreement, and any party hereto may execute this Agreement by signing
any such counterpart.
(e) Severability. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby.
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(f) Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto and supersedes all prior
agreement and understandings relating to the subject matter hereof.
(g) Governing Law. This Agreement shall be governed and interpreted in
accordance with the laws of the State of Connecticut.
(h) It is understood by the parties that this Agreement is not an exclusive
arrangement in any respect.
(i) The terms of this Agreement and the Schedules thereto will be held
confidential by each party except to the extent that either party or
its counsel may deem it necessary to disclose such terms.
12. Limitation on Liability of Trustees, etc.
-----------------------------------------
This agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his or her capacity as an officer of the Fund. The
obligations of this agreement shall be binding upon the assets and property of
the Fund only and shall not be binding on any Trustee, officer or shareholder of
the Fund individually.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by their
duly authorized officers effective as of the ____ day of _________, 2001.
AETNA LIFE INSURANCE AND ANNUITY COMPANY
By:________________________________________________
Name:
Title:
LORD ▇▇▇▇▇▇ SERIES FUND, INC.
By:________________________________________________
Name:
Title:
LORD, ▇▇▇▇▇▇ & CO.
By:________________________________________________
Name:
Title:
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SCHEDULE A
(For any future separate accounts - See Section 1(a))
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SCHEDULE B
(List of portfolios available--See Section 1(b))
Lord ▇▇▇▇▇▇ Growth and Income Portfolio
Lord ▇▇▇▇▇▇ Mid-Cap Value Portfolio
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SCHEDULE C
The following costs, expenses and reimbursements will be paid by the party
indicated:
1. For purposes of Sections 2 and 7, the Fund or the Adviser shall be liable to
Aetna for any amount Aetna is required to pay to Contract owners or
participants due to (i) an incorrect calculation of a Fund's daily net asset
value, dividend rate, or capital gain distribution rate or (ii) incorrect or
late reporting of the daily net asset value, capital gain distribution rate
of a Fund, upon written notification by Aetna, with supporting data, to the
Adviser. In addition, the Fund or the Adviser shall be liable to Aetna for
systems and out of pocket costs incurred by Aetna in making a Contract
owner's or a participant's account whole, subject to the limits set forth
below, if such costs or expenses are a result of the Fund's failure to
provide timely or correct net asset values, dividend and capital gains or
financial information and if such information is not corrected by 4pm EST of
the next business day after releasing such incorrect information provided
the incorrect NAV as well as the correct NAV for each day that the error
occurred is provided. If a mistake is caused in supplying such information
or confirmations, which results in a reconciliation with incorrect
information, the amount required to make a Contract owner's or a
Participant's account whole shall be borne by the party providing the
incorrect information, regardless of when the error is corrected.
The following limits shall apply to the collective liabilities of the Fund
or the Adviser to Aetna for systems and out of pocket costs incurred by
Aetna if such costs or expenses are a result of the Fund's failure to
provide Aetna with correct or timely information: (i) $1,000 per day for
each day that incorrect information provided by the Fund is not corrected,
if such period does not include a month-end or a fiscal quarter-end, (ii)
$1,500 per day for each day that such incorrect information provided by the
Fund is not corrected, if such period does include a month-end or a fiscal
quarter-end, and (iii) up to $5,000 per occurrence in the aggregate under
(i) or (ii) above. However, Aetna's postage costs resulting from mailing
corrected communications to Contract owners or participants resulting from
the error shall not be subject to the $5,000 per occurrence limit, but shall
be subject to the daily limits. Any incorrect information that has as a
common nexus any single error shall be deemed to be one occurrence for these
purposes provided all corrections are provided at the same time.
2. For purposes of Section 3, the Fund or the Adviser shall pay for the cost of
typesetting and printing periodic fund reports to shareholders,
prospectuses, prospectus supplements, statements of additional information
and other materials that are required by law to be sent to Contract owners
or participants, as well as the cost of distributing such materials. Aetna
shall pay for the cost of prospectuses and statements of additional
information and the distribution thereof for prospective Contract owners or
participants. Each party shall be provided with such supporting data as may
reasonably be requested for determining expenses under Section 3.
3. The Fund shall pay all expenses in connection with the provision to Aetna of
a sufficient quantity of its proxy material under Section 3. The cost
associated with proxy preparation, group authorization letters, programming
for tabulation and necessary
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materials (including postage) will be paid by the Fund, subject to the
maximum amount allowed under applicable law.
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EXHIBIT I
TO
PARTICIPATION AGREEMENT
Procedures for Pricing and Order/Settlement Through National Securities
Clearing Corporation's Mutual Fund Profile System and Mutual Fund Settlement,
Entry and Registration Verification System
1. As provided in Section 2(e) of the Fund Participation Agreement, the parties
hereby agree to provide pricing information, execute orders and wire payments
for purchases and redemptions of Fund shares through National Securities
Clearing Corporation ("NSCC") and its subsidiary systems as follows:
(a) Distributor or the Funds will furnish to Aetna or its affiliate through
NSCC's Mutual Fund Profile System ("MFPS") (1) the most current net asset
value information for each Fund, (2) a schedule of anticipated dividend and
distribution payment dates for each Fund, which is subject to change
without prior notice, ordinary income and capital gain dividend rates on
the Fund's ex-date, and (3) in the case of fixed income funds that declare
daily dividends, the daily accrual or the interest rate factor. All such
information shall be furnished to Aetna or its affiliate by 6:30 p.m.
Eastern Time on each business day that the Fund is open for business (each
a "Business Day") or at such other time as that information becomes
available. Changes in pricing information will be communicated to both NSCC
and Aetna.
(b) Upon receipt of Fund purchase, exchange and redemption instructions for
acceptance as of the time at which a Fund's net asset value is calculated
as specified in such Fund's prospectus ("Close of Trading") on each
Business Day ("Instructions"), and upon its determination that there are
good funds with respect to Instructions involving the purchase of Shares,
Aetna or its affiliate will calculate the net purchase or redemption order
for each Fund. Orders for net purchases or net redemptions derived from
Instructions received by Aetna or its affiliate prior to the Close of
Trading on any given Business Day will be sent to the Defined Contribution
Interface of NSCC's Mutual Fund Settlement, Entry and Registration
Verification System ("Fund/SERV") by 5:00 a.m. Eastern Time on the next
Business Day. Subject to Aetna's or its affiliate's compliance with the
foregoing, Aetna or its affiliate will be considered the agent of the
Distributor and the Funds, and the Business Day on which Instructions are
received by Aetna or its affiliate in proper form prior to the Close of
Trading will be the date as of which shares of the Funds are deemed
purchased, exchanged or redeemed pursuant to such Instructions.
Instructions received in proper form by Aetna or its affiliate after the
Close of Trading on any given Business Day will be treated as if received
on the next following Business Day. Dividends and capital gains
distributions will be automatically reinvested at net asset value in
accordance with the Fund's then current prospectuses.
(c) Aetna or its affiliate will wire payment for net purchase orders by the
Fund's NSCC Firm Number, in immediately available funds, to an NSCC
settling bank account designated by Aetna or its affiliate no later than
5:00 p.m. Eastern time on the same Business Day such purchase orders are
communicated to NSCC. For purchases of shares of daily dividend accrual
funds, those shares will not begin to accrue dividends until the day the
payment for those shares is received.
15
(d) NSCC will wire payment for net redemption orders by Fund, in immediately
available funds, to an NSCC settling bank account designated by Aetna or
its affiliate, by 5:00 p.m. Eastern Time on the Business Day such
redemption orders are communicated to NSCC, except as provided in a Fund's
prospectus and statement of additional information.
(e) With respect to (c) or (d) above, if Distributor does not send a
confirmation of Aetna's or its affiliate's purchase or redemption order to
NSCC by the applicable deadline to be included in that Business Day's
payment cycle, payment for such purchases or redemptions will be made the
following Business Day.
(f) If on any day Aetna or its affiliate, or Distributor is unable to meet the
NSCC deadline for the transmission of purchase or redemption orders, it may
at its option transmit such orders and make such payments for purchases and
redemptions directly to Distributor or Aetna or its affiliate, as
applicable, as is otherwise provided in the Agreement.
(g) These procedures are subject to any additional terms in each Fund's
prospectus and the requirements of applicable law. The Funds reserve the
right, at their discretion and without notice, to suspend the sale of
shares or withdraw the sale of shares of any Fund.
2. Aetna or its affiliate, Distributor and clearing agents (if applicable) are
each required to have entered into membership agreements with NSCC and met all
requirements to participate in the MFPS and Fund/SERV systems before these
procedures may be utilized. Each party will be bound by the terms of their
membership agreement with NSCC and will perform any and all duties, functions,
procedures and responsibilities assigned to it and as otherwise established by
NSCC applicable to the MFPS and Fund/SERV system and the Networking Matrix Level
utilized.
3. Except as modified hereby, all other terms and conditions of the Agreement
shall remain in full force and effect. Unless otherwise indicated herein, the
terms defined in the Agreement shall have the same meaning as in this Exhibit.
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