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EX. 99-B.8.49
FUND PARTICIPATION AGREEMENT
BETWEEN
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND
PAX WORLD BALANCED FUND, INC.
AETNA LIFE INSURANCE AND ANNUITY COMPANY (the "Company") and PAX WORLD
BALANCED FUND, INC. (the "Fund") hereby agree to an arrangement whereby the Fund
shall be made available to serve as underlying investment media for Variable
Annuity Contracts ("Contracts") to be issued by the Company.
1. ESTABLISHMENT OF ACCOUNTS; AVAILABILITY OF FUND.
The Company represents that it has established the Variable Annuity
Accounts set forth on Schedule A attached hereto, as the same 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, as
amended (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
of more specified open-end management investment companies available
through that Account as underlying investment media. Selection of a
particular investment management company and changes therein from time to
time are made by the participant or Contract owner, as applicable under a
particular Contract.
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(s) 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 the Fund to any person, or
suspend or terminate the offering of shares of the Fund 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 the Fund 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
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(the "Exchange") is open (each such day a "Business Day"), and in
no event later than 6:30 p.m. New York 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 8:00 p.m. New York time on such Business
Day (or, due to unforeseen circumstances, by 8:30 a.m. New York
time on 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 or participants
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 8:00 p.m. New York time on such Business Day (or,
due to unforeseen circumstances, by 8:30 a.m. New York time on
the 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 by the Company, provided that
the Fund receives written (or facsimile) notice of such order by
8:00 p.m. New York time on the next Business Day following
receipt of such order by the Company (or, due to unforeseen
circumstances, by 8:30 a.m. New York time on the second Business
Day following the day of receipt of such order by the Company).
(d) Payments for net redemptions of shares of the Fund will be wired
by the Fund to an account designated by the Company on the same
Business Day the Company places an order to redeem Fund Shares.
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) In lieu of applicable provisions set forth in paragraphs 2(a)
through 2(d) above, the parties may agree to provide pricing
information, execute orders and wire payments for purchases and
redemptions through National Securities Clearing Corporation's
Fund/SERV system in which case such activities will be governed by
the provisions set forth in an Exhibit to this Agreement.
(f) Each party has the right to rely on information or confirmations
provided by the other party (or by any affiliate of the other
party), and shall not be liable in the event that an error is a
result of any misinformation supplied by the other party.
(g) The Fund shall indemnify and hold the Company harmless, from the
effective date of this Agreement, against any amount the Company
is required to pay to Contract
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owners or participants due to: (i) an incorrect calculation by
the Fund of a Fund's daily net asset value, dividend rate, or
capital gains distribution rate or (ii) incorrect or late
reporting by the Fund of the daily net asset value, dividend
rate, or capital gain distribution rate of the Fund. In
addition, the Fund shall be liable to the Company for systems and
out of pocket costs incurred by the Company in making a Contract
owner's or a participant's account whole, if such costs or
expenses are a result of the Fund's failure to provide timely or
correct net asset values, dividend and capital gains or financial
information and if such information is not corrected by 4:00 p.m.
New York time of the next Business day after releasing such
incorrect information provided the incorrect NAV as well as the
correct NAV for each day that the error occurred is provided. If
a mistake is caused in supplying such information or
confirmations, which results in a reconciliation with incorrect
information, the amount required to make a Contract owner's or a
participant's account whole shall be borne by the party providing
the incorrect information, regardless of when the error is
corrected.
(h) The Company agrees to purchase and redeem the shares of the Fund
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.
3. FEES.
In consideration of services provided by the Company under this
Agreement, the Fund shall pay fees to the Company as set forth in
Schedule B.
4. EXPENSES.
(a) Except as provided in this Agreement, all expenses incident to
the performance by the Fund under this Agreement shall be paid by
the Fund, including the cost of registration of Fund shares with
the Securities and Exchange Commission (the "SEC") and in states
where required. The Fund 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, except as provided herein
and in Schedule B 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 shall provide to the Company, at the location designated
by the Company, periodic fund reports to shareholders and other
materials that are required by law to be sent to Contract owners
or participants. In addition, the Fund 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 Agreement.
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(c) The Fund shall provide the Company with a sufficient quantity of
its proxy material that is required to be sent to Contract owners
or participants. The cost associated with proxy preparation, group
authorization letters, programming for tabulation and necessary
materials (including postage) will be paid by the Fund.
5. REPRESENTATIONS.
The Company agrees that it and its agents shall not, without the written
consent of the Fund make representations concerning the Fund or its
shares except those contained in the then current prospectuses and in
current printed sales literature approved by the Fund.
In addition, the Company hereby represents and warrants to the Fund as
follows:
(a) Each Account of the Company set forth on Schedule A is either (i)
registered with the SEC as a unit investment trust under the 1940
Act or (ii) not required to be registered under the 1940 Act
pursuant to applicable exemptions or exclusions;
(b) it will comply with all applicable requirements of laws, rules and
regulations of governmental or self-regulatory authorities having
jurisdiction for its acts and duties under this Agreement; and
(c) it will promptly notify the Fund in the event that the Company is
for any reason unable to perform any of its obligations under this
Agreement.
6. TERMINATION.
This agreement shall terminate as to the sale and issuance of new
Contracts:
(a) at the option of either the Company 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 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 or the Fund, immediately upon
institution of formal proceedings against the broker-dealer or
broker-dealers marketing the Contracts, the Account, the Company
OR the Fund 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 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.
7. CONTINUATION OF AGREEMENT.
Termination as the result of any cause listed in Section 6 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.
8. 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. The
Fund or its designee shall advise the submitting party in writing
within three (3) Business Days of receipt of such materials of its
approval or disapproval of such materials. No such material shall
be used if such regulatory body objects to such use.
(b) 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
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 Fund's request, the
Company will provide to the Fund 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 will provide via Excel spreadsheet diskette format or in
electronic transmission to the Company at least quarterly
portfolio information necessary to update Fund profiles with seven
Business days following the end of each quarter.
9. 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.
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(b) The Company will distribute to Contract owners and participants,
as appropriate, all proxy material furnished by the Fund and will
vote Fund shares in accordance with instructions received from
such Contract owners and participants. If and to the extent
required by law, 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 and
participants.
10. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the Fund and
its officers, directors, shareholders, employees, agents and each
person, if any, who controls the Fund within the meaning of the
Securities Act of 1933, as amended (the "1933 Act"), against any
losses, claims, damages or liabilities to which the Fund or any
such officer, director, shareholder, 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
result from (i) a breach by the Company of any of the terms or
conditions of this Agreement, (ii) the willful misfeasance, bad
faith or gross negligence by the Company in the performance of
its duties hereunder, (iii) any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement, prospectus or sales literature of the
Company or 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 (iv) 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 and each such
officer, director, shareholder, employee, agent 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 liability arises out of or
is based upon (i) an untrue statement or omission made in such
Registration Statement, prospectus or sales literature in
conformity with written materials furnished to the Company by the
Fund specifically for use therein or (ii) the willful misfeasance
or gross negligence by the Fund in the performance of its duties
hereunder, whichever is applicable. This indemnity agreement
will be in addition to any liability which the Company may
otherwise have.
(b) The Fund agrees 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,
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claims, damages or liabilities (or actions in respect thereof)
arise out of or result from (i) a breach by the Fund of any of
the terms or conditions of this Agreement, (ii) the willful
misfeasance, bad faith or gross negligence by the Fund in the
performance of its duties hereunder or, (iii) any untrue
statement of any material fact contained in the Registration
Statement, prospectuses or sales literature of the Fund or the
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading. The Fund will reimburse any legal or other expenses
reasonably incurred by 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 Fund will not be
liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement, prospectuses or
sales literature which are in conformity with written materials
furnished to the Fund by the Company specifically for use therein
or (ii) the willful misfeasance or gross negligence by the
Company in the performance of its duties hereunder, whichever is
applicable.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of an action, such indemnified party
will, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party of
the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under this
Section 10. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish to,
assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party
to such indemnified party of its election to assume the defense
thereof, the indemnifying party will not be liable to such
indemnified party under this Section 10 for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs
of investigation.
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
151 Farmington Avenue
Hartford, CT 06156
Attention: Julie E. Rockmore, Counsel
To the Fund:
Pax World Balanced Fund, Inc.
c/o Pax World Management Corp.
222 State Street
Portsmouth, NH 03801-3853
Attn: Thomas W. Grant, President
With a copy to:
Kurzman Karelsen & Frank, LLP
230 Park Avenue
New York, NY 10169
Attn: Kevin J. Lake, Esq.
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 New Hampshire.
(h) NON EXCLUSIVITY. It is understood by the parties that this
Agreement is not an exclusive arrangement in any respect.
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(i) CONFIDENTIALITY. 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 OFFICERS, DIRECTORS, ETC.
This Agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his or her capacity as an officer of the Fund. The
obligations of this Agreement shall be binding upon the assets and
property of the Fund only and shall not be binding on any officer,
director or shareholder of the Fund individually.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by their
duly authorized officers effective as of the 8th day of August, 2000.
AETNA LIFE INSURANCE AND ANNUITY COMPANY
By: /s/ Laurie M. LeBlanc
-------------------------
Name: Laurie M. LeBlanc
Title: Vice President
PAX WORLD BALANCED FUND, INC.
By: /s/ Thomas W. Grant
-------------------------
Name: Thomas W. Grant
Title: President
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SCHEDULE A
Variable Annuity Accounts
Variable Annuity Account B
Variable Annuity Account C
Variable Annuity Account D
Variable Annuity Account F
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