FUND PARTICIPATION AGREEMENT
among
▇▇▇▇▇▇▇ RESPONSIBLY INVESTED BALANCED PORTFOLIO
and
▇▇▇▇▇▇▇ ASSET MANAGEMENT COMPANY, INC.
and
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Aetna Life Insurance and Annuity Company (the "Company"), ▇▇▇▇▇▇▇
RESPONSIBLY INVESTED BALANCED PORTFOLIO (the "Fund") and ▇▇▇▇▇▇▇ ASSET
MANAGEMENT COMPANY, INC. (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 the
Company.
1. Establishment of Accounts; Availability of Fund.
(a) The Company represents that it has established Variable Annuity
Accounts B, C, D and Variable Life Account B 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 the Company to an Account for investment in the shares of
one or 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, beneficiary or
Contract owner, as applicable under a particular Contract.
(b) The Adviser represents and warrants 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 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.
(a) The Fund will make Fund shares available to be purchased by the
Company, and will accept redemption orders from the Company, on behalf
of each Account at the net asset value 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 the Company 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
Directors of the Fund (hereinafter the "Directors") may upon reasonable
notice to the Company, 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 Directors, 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 the Company 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"), and in no event later than 7:00 p.m. Eastern Standard
Time on such Business Day. The Company will send via facsimile or
electronic transmission to the Fund or its specified agent orders to
purchase and/or redeem Fund shares by 10:00 a.m. Eastern Standard Time
the following business day. Payment for net purchases will be wired by
the Company to an account designated by the Fund to coincide with the
order for shares of the Fund.
(c) The Fund hereby appoints the Company 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, participants or beneficiaries received from any
distributor of the Contracts (including affiliates of the Company) by
the Company, 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 10 a.m. Eastern Standard Time on the next
following Business Day. Any orders received by the Company 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
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10 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 the Company. Payments for net
purchases of the Fund will be wired by the Company to an account
designated by the Fund on the same Business Day the Company places an
order to purchase Fund shares. Payments shall be in federal funds
transmitted by wire.
(e) 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.
(f) The Company 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.
The Company shall not permit any person other than a Contract owner,
participant or beneficiary to give instructions to the Company which
would require the Company to redeem or exchange shares of the Fund.
This provision shall not be construed to prohibit the Company from
substituting shares of another fund, as permitted by law.
3. Expenses.
(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 or the Adviser, 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 the Company under this Agreement, and the Company 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 the Company 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 the Company 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
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Agreement. In addition, the Fund shall provide the Company 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 the Company
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, the Company shall have the right to request
that the Fund transmit a copy of such materials in an electronic format
(Post Script files), which the Company may use to have such materials
printed together with similar materials of other Account funding media
that the Company or any distributor will distribute to existing or
prospective Contract owners, participants or beneficiaries.
4. Representations.
The Company 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.
This Agreement shall terminate as to the sale and issuance of new Contracts:
(a) at the option of either the Company, the Adviser or the Fund, upon
sixty days advance written notice to the other parties;
(b) at the option of the Company, 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 the
Company. Reasonable advance notice of election to terminate shall be
furnished by Company;
(c) at the option of either the Company, the Adviser or the Fund,
immediately upon institution of formal proceedings against the
broker-dealer or broker-dealers marketing the Contracts, the Account,
the Company, 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. The Company will give 60 days
written notice to the Fund and the Adviser of any decision to replace
the Fund's' shares;
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(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
the Company. 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 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 Directors 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
the Company 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. No such material shall
be used if the Fund or its designee reasonably object to such use in
writing, transmitted by facsimile within two business days after
receipt of such material.
(b) At the Company's request, the Fund will provide additional copies of
its financials as soon as available to the Company and at least one
complete copy of all registration statements, prospectuses, statements
of additional information, annual and semi-annual reports, proxy
statements and/or 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, the
Company 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 the Company at least quarterly
portfolio information necessary to update Fund profiles within seven
business days following the end of each quarter.
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(d) The Adviser will reimburse the Company for any incorrect information
provided to the Company under this Section as provided for in Schedule
C.
8. Proxy Voting.
(a) The Company 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. The Company shall provide pass-through
voting privileges on Fund shares held by unregistered separate accounts
to all Contract owners.
(b) The Company will distribute to Contract owners, participants and
beneficiaries, as appropriate, all proxy material furnished by the Fund
and will vote Fund shares in accordance with instructions received from
such Contract owners, participants and beneficiaries. If and to the
extent required by law, the Company, with respect to each group
Contract and in each Account, shall vote Fund shares for which no
instructions have been received in the same proportion as shares for
which such instructions have been received. The Company and its agents
shall not oppose or interfere with the solicitation of proxies for Fund
shares held for such Contract owners, participants and beneficiaries.
9. Indemnification.
(a) The Company agrees to indemnify and hold harmless 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 the
Company 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 the Company or its agents, with
respect to the sale and distribution of Contracts for which Fund shares
are the underlying investment. The Company 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 the Company will
not be liable in any such case to the extent that any such loss, claim,
damage or
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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 the
Company 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 the
Company, whichever is applicable. This indemnity agreement will be in
addition to any liability which Company may otherwise have.
(b) The Adviser agree to indemnify and hold harmless the Company and its
directors, officers, employees, agents and each person, if any, who
controls the Company within the meaning of the 1933 Act against any
losses, claims, damages or liabilities to which the Company 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 Adviser will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer,
employee, agent, or controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided, however, that the Adviser 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 Adviser by the
Company 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 9. 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
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expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation.
10. Potential Conflicts.
(a) The Company 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 11/21/88 (File No. 812-7095) in response thereto (the
"Shared Funding Exemptive Order"). The Company has reviewed the
conditions to the requested relief set forth in such application for
exemptive relief. As set forth in such application, the Directors 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 the Company if it
determines that an irreconcilable material conflict exists and the
implications thereof.
(b) The Company will report any potential or existing conflicts of which it
is aware to the Directors. The Company will assist the Directors in
carrying out its responsibilities under the Shared Funding Exemptive
Order by providing the Directors with all information reasonably
necessary for the Directors to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform
the Directors whenever contractholder voting instructions are
disregarded.
(c) If a majority of the Directors, or a majority of its disinterested
Directors, determines that a material irreconcilable conflict exists
with regard to contractholder investments in a Fund, the Directors
shall give prompt notice to all Participating Companies. If the
Directors determines that the Company is responsible for causing or
creating said conflict, the Company shall at its sole cost and expense,
and to the extent reasonably practicable (as determined by a majority
of the disinterested Directors), 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:
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(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 the Company 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, the Company at its sole cost, may be required, at the Directors'
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 Directors.
(e) For the purpose of this Section 10, a majority of the disinterested
Directors 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.
The Company shall not be required by this Section 10 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, participants or
beneficiaries materially adversely affected by the irreconcilable
material conflict.
11. Miscellaneous.
(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.
(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.
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To the Company:
Aetna Life Insurance and Annuity Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Counsel
To the Fund:
▇▇▇▇▇▇▇ Group, Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Department
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.
(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.
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(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 and on
behalf of the Advisor by an undersigned officer of the Advisor in his or her
capacity as an officer of the Advisor. Any obligations imposed on the Fund by
this Agreement shall be binding upon the assets and property of the Fund only
and shall not be binding on any Director, 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 1st day of December, 1997.
AETNA LIFE INSURANCE AND ANNUITY COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Date: December 8, 1997
------------------------------------------
▇▇▇▇▇▇▇ RESPONSIBILITY INVESTED
BALANCED PORTFOLIO
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Secretary
Date: November 26, 1997
------------------------------------------
▇▇▇▇▇▇▇ ASSET MANAGEMENT
COMPANY, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Associate General Counsel
Date: November 26, 1997
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