EXHIBIT 8h
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
KEYPORT BENEFIT LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
KEYPORT FINANCIAL SERVICES CORP.
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
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
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 UNDERWRITER..............20
12.2 Of LIFE COMPANY and UNDERWRITER 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..............................28
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 13th day of July, 1998
("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); Keyport Benefit Life Insurance Company, 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 Keyport Financial Services Corp., 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 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, 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
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 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 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) 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 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 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 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) 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
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 0000 Xxx.
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, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
Keyport Benefit Life Insurance Company
Keyport Financial Corp.
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxxxx, General Counsel
Xxxxx X. Xxxxxxx, Clerk
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 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 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
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 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 xxxx "AIM" and such other tradenames, trademarks and
service marks as may be set forth on Schedule B, as amended from time to
time by written notice from AIM to 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/Xxxxx X. Xxxxxx By: /s/Xxxxxx X. Xxxxxx
Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Assistant Secretary Title: President
KEYPORT BENEFIT LIFE INSURANCE
COMPANY, on behalf of itself and
its separate accounts
Attest: /s/Xxxxx X. Xxxxxxx By: /s/Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxxxxx
Title: Secretary Title: Vice President
KEYPORT FINANCIAL SERVICES CORP.
Attest: /s/Xxxxxx X. Xxxxxx By: /s/Xxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxxx
Title: Assistant Clerk Title: Clerk
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. International Equity Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Variable Account A
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
DVA
SCHEDULE B
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. International Equity Fund
AIM and Design
LOGO
SCHEDULE C
EXPENSE ALLOCATIONS
Life Company AVIF
preparing and filing the preparing and filing the
Account's registration statement Fund's 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 a camera ready Fund prospectus
prospectuses and supplements
text composition and printing text composition and printing
Account SAIs Fund SAIs
mailing and distributing Account mailing and distributing Fund
SAIs to policy owners upon SAIs to policy owners upon
request by policy owners request by policy owners
mailing and distributing
prospectuses (Account and Fund) and
supplements (Account and Fund) to
policy owners of record as required
Federal Securities Laws and to
prospective purchasers
text composition (Account), text composition of annual and
printing, mailing, and distributing, semi-annual reports (Fund)
annual and semi-annual reports for
Account (Fund and Account as,
applicable)
text composition, printing, mailing, text composition, printing,
distributing, and tabulation of mailing, distributing and
proxy statements and voting tabulation of proxy statements
instruction solicitation materials and voting instruction
to policy owners with respect to solicitation materials to
proxies related to the Account policy owners with respect to
proxies 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
