AMENDED AND RESTATED
FUND PARTICIPATION AGREEMENT
AMONG
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
IDS LIFE INSURANCE COMPANY
COLUMBIA FUNDS VARIABLE INSURANCE TRUST I
COLUMBIA MANAGEMENT ADVISORS, LLC
AND
COLUMBIA MANAGEMENT DISTRIBUTORS, INC.
MAY 1, 2006
TABLE OF CONTENTS
ARTICLE A. Amendment and Restatement; Form of Agreement............................................2
ARTICLE I. Sale and Redemption of Fund Shares......................................................3
ARTICLE II. Representations and Warranties..........................................................6
ARTICLE III. Prospectuses and Proxy Statements; Voting..............................................10
ARTICLE IV. Sales Material and Information.........................................................12
ARTICLE V. Fees and Expenses.....................................................................13
ARTICLE VI. Diversification and Qualification......................................................13
ARTICLE VII. Potential Conflicts and Compliance With Mixed and Shared Funding Exemptive Order.......14
ARTICLE VIII. Indemnification........................................................................16
ARTICLE IX. Applicable Law.........................................................................20
ARTICLE X. Termination............................................................................20
ARTICLE XI. Notices................................................................................22
ARTICLE XII. Miscellaneous..........................................................................23
AMENDED AND RESTATED
--------------------
PARTICIPATION AGREEMENT
-----------------------
THIS AMENDED AND RESTATED AGREEMENT made and entered into this 1st day of
May, 2006, by and among the following parties:
o AMERICAN ENTERPRISE LIFE INSURANCE COMPANY ("American Enterprise
Life"), organized under the laws of the State of Indiana on its
own behalf and on behalf of each of its separate accounts named
in Schedule A to this Agreement, as may be amended from time to
time (each account referred to as an "Account");
o IDS LIFE INSURANCE COMPANY ("IDS Life"), organized under the
laws of the State of Minnesota, on its own behalf and on behalf
of each of its separate accounts named in Schedule A to this
Agreement, as may be amended from (each account referred to as
the "Account");
Each of American Enterprise Life, and IDS Life hereinafter also referred to
as a "Company";
o COLUMBIA FUNDS VARIABLE INSURANCE TRUST I (successor to Nations
Separate Account Trust) ("Fund"), an open-end management
investment company organized under the laws of the Commonwealth
of Massachusetts;
o COLUMBIA MANAGEMENT INVESTMENT ADVISORS, LLC (the "Advisor"), an
Oregon limited liability company; and,
o COLUMBIA MANAGEMENT DISTRIBUTORS, INC. (the "Distributor"), a
Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts (collectively, the "Variable Insurance Products")
to be offered by insurance companies, that have entered into participation
agreements with the Fund (hereinafter "Participating Insurance Companies");
and
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each designated a "portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
and
WHEREAS, the Fund is able to rely on an order from the Securities
and Exchange Commission (hereinafter the "SEC") granting Participating
Insurance Companies and variable
annuity and variable life insurance separate accounts exemptions from the
provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (hereinafter the "1940 Act") and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Fund to be sold to and held by variable annuity and variable
life insurance separate accounts of life insurance companies that may or may
not be affiliated with one another and qualified pension and retirement
plans ("Qualified Plans") (hereinafter the "Mixed and Shared Funding
Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and shares of the portfolios are
registered under the Securities Act of 1933, as amended (hereinafter the
"1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Distributor is duly registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended, (the "1934 Act") and
is a member in good standing of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Company issues certain variable life insurance
policies and/or variable annuity contracts supported wholly or partially by
the Accounts (the "Contracts"). The Contracts are listed on Schedule A
attached hereto and incorporated herein by reference, as such schedule may
be amended from time to time by mutual written agreement of the parties; and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of
Directors of the Company, under applicable state insurance laws to set aside
and invest assets attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed
on Schedule A attached hereto and incorporated herein by reference, as such
schedule may be amended from time to time by mutual written agreement of the
parties (the "Portfolios"), on behalf of the Accounts to fund the Contracts,
and the Distributor is authorized to sell such shares to unit investment
trusts such as the Accounts at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company also intends to continue to purchase shares in
other open-end investment companies or series thereof not affiliated with
the Fund (the "Unaffiliated Funds") on behalf of the Accounts to fund the
Contracts.
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund, the Distributor and the Adviser agree as follows:
ARTICLE A. AMENDMENT AND RESTATEMENT; FORM OF AGREEMENT
--------------------------------------------
A.1 The Fund, the Adviser and the Distributor acknowledge the planned
merger of both American Enterprise Life with and into IDS Life (the
"Merger") and the "intact transfer"
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(the "Transfer") of the Accounts of American Enterprise Life to IDS Life
by operation of law and incident to the Merger, on December 31, 2006 at
10:59:59 p.m. Central Time (the "Effective Time"), subject to all
necessary regulatory approvals being obtained in connection with the
Merger and the Transfer, and the re-naming of IDS Life to RiverSource
Life Insurance Company simultaneously with the Merger. On and after
the Effective Time, all references in this Agreement and its Schedules
to American Enterprise Life and IDS Life shall mean and refer to
RiverSource Life Insurance Company. The Fund, the Adviser and the
Distributor consent to the transfer of the rights and obligations of
American Enterprise Life under this Agreement to IDS Life at the
Effective Time of the Merger.
A.2 This Agreement shall amend and supersede the following agreements as
of May 1, 2006, with respect to all investments by each Company and
its Accounts prior to the date of this Agreement, as though identical
separate agreements had been executed by the parties hereto on the
dates as indicated below:
A.2.1 Restated Participation Agreement, dated December 2, 2002,
by and between American Enterprise Life and The Galaxy VIP
Fund.
A.2.2 Participation Agreement, dated February 2, 2004, by and
among IDS Life, Liberty Variable Investment Trust and
Columbia Funds Distributor, Inc.
Although the parties have executed this Agreement in this form for
administrative convenience, this Agreement shall create separate
participation agreements between each Company and the Fund until
the Effective Time of the Merger.
ARTICLE I. Sale and Redemption of Fund Shares
----------------------------------
1.1. The Distributor agrees to sell to the Company those shares of the
Portfolios which the Account orders, executing such orders on each Business
Day at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Portfolios, subject to the terms
and conditions set forth in the Fund's then-current prospectus. For purposes
of this Section 1.1, the Company shall be the designee of the Fund for
receipt of such orders and receipt by such designee shall constitute receipt
by the Fund, provided that the Fund receives notice of any such order by
10:00 a.m. Eastern time on the next following Business Day. "Business Day"
shall mean any day on which the New York Stock Exchange is open for trading
and on which a Portfolio calculates its net asset value pursuant to the
rules of the SEC.
1.2. The Fund agrees to make shares of the Portfolios available for
purchase at the applicable net asset value per share by the Company and the
Accounts on those days on which the Fund calculates its Portfolios' net
asset value pursuant to rules of the SEC, and the Fund shall calculate such
net asset value on each day on which the New York Stock Exchange is open for
trading. Notwithstanding the foregoing, the Fund may 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 Fund
acting in good faith, necessary or appropriate in the best interests of the
shareholders of
3
such Portfolio. All orders received by the Company shall be subject to the
terms of the then current prospectus of the Fund. The Company acknowledges
that orders received by it in violation of the Fund's stated policies may be
subsequently revoked or cancelled by the Fund and that the Fund shall not be
responsible for any losses incurred by the Company or the Contract owner as
a result of such cancellation. In addition, the Company acknowledges that
the Fund has the right to refuse any purchase order for the reasons stated
in the current prospectus of the Fund.
1.3. The Fund will not sell shares of the Portfolios to any other
Participating Insurance Company separate account unless an agreement
containing provisions the substance of which are the same as Sections 2.1,
2.2 (except with respect to designation of applicable law), 3.6, 3.7, 3.8,
and Article VII of this Agreement is in effect to govern such sales.
1.4. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Portfolios held by the Company, executing
such requests on each Business Day at the net asset value next computed
after receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.4, the Company shall be the designee of the Fund
for receipt of requests for redemption and receipt by such designee shall
constitute receipt by the Fund, provided that the Fund receives notice of
any such request for redemption by 10:00 a.m. Eastern time on the next
following Business Day.
1.5. The parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive; the Fund's shares may be sold to other
Participating Insurance Companies (subject to Section 1.3) and the cash
value of the Contracts may be invested in other investment companies, the
Company's registered or unregistered modified guaranteed annuity accounts
("Guarantee Period Accounts") and the Company's fixed account.
1.6. The Company shall pay for Fund shares by 3:00 p.m. Eastern time
on the next Business Day after an order to purchase Fund shares is received
in accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire and/or by a credit for any shares redeemed
the same day as the purchase.
1.7. The Fund shall pay and transmit the proceeds of redemptions of
Fund shares by 11:00 a.m. Eastern Time on the next Business Day after a
redemption order is received in accordance with Section 1.4 hereof;
provided, however, that the Fund may delay payment in extraordinary
circumstances to the extent permitted under Section 22(e) of the 1940 Act.
Payment shall be in federal funds transmitted by wire and/or a credit for
any shares purchased the same day as the redemption.
Each party has the right to rely on information or confirmations
provided by the other party (or by an 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, or its affiliate thereof.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or the Accounts.
Shares purchased from the Fund will be recorded in an appropriate title for
the relevant Account or the relevant sub-account of an Account.
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1.9. The Fund shall furnish same day notice (by electronic
communication or telephone, followed by electronic confirmation) to the
Company of any income, dividends or capital gain distributions payable on a
Portfolio's shares. The Company hereby elects to receive all such income
dividends and capital gain distributions as are payable on a Portfolio's
shares in additional shares of that Portfolio. The Company reserves the
right to revoke this election and to receive all such income dividends and
capital gain distributions in cash. The Fund shall notify the Company by the
end of the next following Business Day of the number of shares so issued as
payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on each Business Day as soon as
reasonably practicable after the net asset value per share is calculated and
shall use its best efforts to make such net asset value per share available
by 6:00 p.m. Eastern time. In the event of an error in the computation of a
Portfolio's net asset value per share ("NAV") or any dividend or capital
gain distribution (each, a "pricing error"), the Adviser or the Fund shall
notify the Company as soon as possible after discovery of the error. Such
notification may be oral, but shall be confirmed promptly in writing. A
pricing error shall be corrected as follows: (a) if the pricing error
results in a difference between the erroneous NAV and the correct NAV of
less than $0.01 per share, then no corrective action need be taken; (b) if
the pricing error results in a difference between the erroneous NAV and the
correct NAV equal to or greater than $0.01 per share, but less than 1/2 of
1% of the Portfolio's NAV at the time of the error, then the Adviser shall
reimburse the Portfolio for any loss, after taking into consideration any
positive effect of such error; however, no adjustments to Contract owner
accounts need be made; and (c) if the pricing error results in a difference
between the erroneous NAV and the correct NAV equal to or greater than 1/2
of 1% of the Portfolio's NAV at the time of the error, then the Adviser
shall reimburse the Portfolio for any loss (without taking into
consideration any positive effect of such error) and shall reimburse the
Company for the costs of adjustments made to correct Contract owner
accounts. Upon notification by the Adviser of any overpayment due to a
material error, the Company shall promptly remit to the Adviser any
overpayment that has not been paid to Contract owners. In no event shall the
Company be liable to Contract owners for any such adjustments or
underpayment amounts. Only a pricing error within categories (b) or (c)
above shall be deemed to be "materially incorrect" or constitute a "material
error" for purposes of this Agreement. The standards set forth in this
Section 1.10 are based on the parties' understanding of the views expressed
by the staff of the SEC as of the date of this Agreement. In the event the
views of the SEC staff are later modified or superseded by SEC or judicial
interpretation, the parties shall amend the foregoing provisions of this
Agreement to comport with the appropriate applicable standards, on terms
mutually satisfactory to all parties.
1.11. The parties agree to mutually cooperate with respect to any
state insurance law restriction or requirement applicable to the Fund's
investments; provided, however, that the Fund reserves the right not to
implement restrictions or take other actions required by state insurance law
if the Fund or the Adviser determines that the implementation of the
restriction or other action is not in the best interest of Fund
shareholders.
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ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that: (a) the securities
issued by the Accounts under the Contracts are or will be registered under
the 1933 Act, or are not so registered in proper reliance upon an exemption
from such registration requirements (in the event the Company or Account
relies upon an exemption from such registration requirements, the Company
undertakes to promptly so notify the Fund); (b) the Contracts will be issued
and sold in compliance in all material respects with all applicable federal
and state laws; and (c) the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements.
2.2. The Company represents and warrants that: (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it, or
a wholly-owned subsidiary insurance company, has legally and validly
established each Account prior to any issuance or sale of units thereof as a
segregated asset account under applicable state insurance law; and (c) it
has registered each Account as a unit investment trust in accordance with
the provisions of the 1940 Act to serve as a segregated investment account
for the Contracts and will maintain such registration for so long as any
Contracts are outstanding as required by applicable law or, alternatively,
the Company has not registered one or more Accounts in proper reliance upon
an exclusion from such registration requirements.
2.3. The Fund represents and warrants that: (a) the Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act; (b) the
Fund shares sold pursuant to this Agreement shall be duly authorized for
issuance and sold in compliance with all applicable state and federal
securities laws including without limitation the 1933 Act, the 1934 Act, and
the 1940 Act; (c) the Fund is and shall remain registered under the 1940
Act; and (d) the Fund shall amend the registration statement for its shares
under the 1933 Act and the 1940 Act from time to time as required in order
to effect the continuous offering of its shares.
2.4. The Fund represents and warrants that it has adopted a plan
pursuant to Rule 12b-1 under the 1940 Act. The parties acknowledge that the
Fund reserves the right to modify its existing plan or to adopt additional
plans pursuant to Rule 12b-1 under the 1940 Act and to impose an asset-based
or other charge to finance distribution expenses as permitted by applicable
law and regulation. The Fund and the Adviser agree to comply with applicable
provisions and SEC interpretation of the 1940 Act with respect to any
distribution plan.
2.5. The Fund represents and warrants that it shall register and
qualify the shares for sale in accordance with the laws of the various
states if and to the extent required by applicable law.
2.6. The Fund represents and warrants that it is lawfully organized
and validly existing under the laws of the Commonwealth of Massachusetts and
that it does and will comply in all material respects with the 1940 Act.
2.7. The Fund makes no representations as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states.
6
2.8 The Adviser represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and
that it shall perform its obligations for the Fund in compliance in all
material respects with any applicable state and federal securities laws.
2.9. The Distributor represents and warrants that it is and shall
remain duly registered as a broker-dealer under all applicable federal and
state securities laws and is a member in good standing with the NASD and
that it shall perform its obligations for the Fund in compliance in all
material respects with the laws of any applicable state and federal
securities laws.
2.10. The Fund and the Adviser represent and warrant that all of their
respective officers, employees, investment advisers, and other individuals
or entities dealing with the money and/or securities of the Fund are, and
shall continue to be at all times, covered by one or more blanket fidelity
bonds or similar coverage for the benefit of the Fund in an amount not less
than the minimal coverage required by Rule 17g-1 under the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid
bonds shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
2.11. The Fund and the Adviser represent and warrant that they will
provide the Company with as much advance notice as is reasonably practicable
of any material change affecting the Portfolios (including, but not limited
to, any material change in the registration statement or prospectus
affecting the Portfolios) and any proxy solicitation affecting the
Portfolios and consult with the Company in order to implement any such
change in an orderly manner, recognizing the expenses of changes and
attempting to minimize such expenses by implementing them in conjunction
with regular annual updates of the prospectus for the Contracts, where
reasonably practicable.
2.12. The Company represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of 1986 as
amended (the "Code"), that the Contracts are currently and at the time of
issuance will be treated as annuity contracts or life insurance policies
under applicable provisions of the Code, and that it will make every effort
to maintain such treatment and that it will notify the Fund, the Distributor
and the Adviser immediately upon having a reasonable basis for believing
that the Contracts have ceased to be so treated or that they might not be so
treated in the future. In addition, the 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. The Company will use every effort
to continue to meet such definitional requirements, and it will notify the
Fund, the Distributor and the Adviser 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. The Company represents and warrants
that it will not purchase Fund shares with assets derived from tax-qualified
retirement plans except, indirectly, through Contracts purchased in
connection with such plans.
2.13. The Company represents and warrants that it will comply with all
applicable laws and regulations designed to prevent money laundering
including without limitation the
7
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001 (Title III of the USA PATRIOT Act), and if required by such laws or
regulations, to share with the Fund, the Distributor and the Adviser
information about individuals, entities, organizations and countries
suspected of possible terrorist or money laundering activities in accordance
with Section 314(b) of the USA PATRIOT Act.
2.14. The Fund, the Distributor and the Adviser represent and warrant
that each of them will comply with all applicable laws and regulations
designed to prevent money laundering including without limitation the
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001 (Title III of the USA PATRIOT Act), and if required by such laws or
regulations, to share with the Company information about individuals,
entities, organizations and countries suspected of possible terrorist or
money laundering activities in accordance with Section 314(b) of the USA
PATRIOT Act.
2.15. The Company represents and warrants that it is currently in
compliance, and will remain in compliance, with all applicable laws, rules
and regulations relating to consumer privacy, including, but not limited to,
Regulation S-P.
2.16. The Company represents and warrants that it has adopted, and
will at all times during the term of this Agreement maintain, reasonable and
appropriate procedures ("Late Trading Procedures") reasonably designed to
ensure that any and all orders relating to the purchase, sale or exchange of
Fund shares communicated to the Fund to be treated in accordance with
Article I of this Agreement as having been received on a Business Day, have
been received by the Valuation Time on such Business Day and were not
modified after the Valuation Time, and that all orders received from
Contract owners but not rescinded by the Valuation Time were communicated to
the Fund or its agent as received for that Business Day. "Valuation Time"
shall mean the time as of which the Fund calculates net asset value for the
shares of the Portfolios on the relevant Business Day. The Company
represents and warrants that it has adopted and implemented controls
reasonably designed to ensure that all orders received by the Company after
the close of the New York Stock Exchange on a particular Business Day will
not be aggregated with the orders received by the Company before the close
of the New York Stock Exchange on such Business Day. Each transmission of
orders by the Company shall constitute a representation by the Company that
such orders are accurate and complete and relate to orders received by the
Company by the Valuation Time on the Business Day for which the order is to
be priced and that such transmission includes all orders relating to Fund
shares received from Contract owners but not rescinded by the Valuation
Time.
2.17. Each transmission of orders by the Company shall constitute a
representation by the Company that such orders are accurate and complete and
relate to orders received by the Company by the Valuation Time on the
Business Day for which the order is to be priced and that such transmission
includes all orders relating to Fund shares received from Contract owners
but not rescinded by the Valuation Time. The Company agrees to provide the
Fund or its designee with such certifications and representations regarding
the Late Trading Procedures as the Fund or its designee may reasonably
request. The Company will promptly notify the Fund in writing of any
material change to the Late Trading Procedures.
8
2.18. Company acknowledges the Fund has adopted policies designed to
prevent frequent purchases and redemptions of any Portfolio shares in
quantities great enough to disrupt orderly management of the corresponding
Fund's investment portfolio. These policies are disclosed in the Fund's
prospectus. From time to time, the Fund and the Distributor implement
procedures reasonably designed to enforce the Fund's disruptive trading
policies and shall provide a written description of such procedures (and
revisions thereto) to the Company. The Fund and Distributor agree to give
Company prompt written notice of material changes to the Fund's disruptive
trading policies and procedures (and revisions thereto).
The Fund and Distributor acknowledge that the Company, on behalf of
its Account(s), has adopted policies and procedures reasonably designed to
detect and deter frequent transfers of Contract value among the subaccounts
of the Account(s) including those investing in Portfolio shares which are
available as investment options under the Contracts. These policies and
procedures are described in the current prospectuses of the Account(s)
through which the Contracts are offered. Company shall provide a written
description of any revisions of such policies and procedures to the Fund.
The Fund may consider the Company's policies and procedures pertaining to
frequent transfers of contract value among the subaccounts of the Account(s)
when the Board of Directors of the Fund (the "Board") deliberates upon and
subsequently adopts or amends the Fund's disruptive trading policies and
procedures from time to time. The Fund and the Distributor may invite
comment from and confer with Company regarding any proposed policy and
procedure of the Fund and the Distributor pertaining to disruptive trading
to determine prior to adopting such proposed policy or procedure the
Company's then present ability to apply such proposed policy or procedure to
Contract owners who allocate Contract value to subaccounts investing in
Portfolios available under the Contracts, including without limitation
whether the Company can apply such proposed policy or procedure without the
need to modify its automated data processing systems or to develop and staff
manual systems to accommodate the implementation of the Fund's proposed
policy or procedure.
The Company will cooperate with the Fund's and the Distributor's
reasonable requests in taking steps to deter and detect such transfers by
Contract owners. Subject to applicable law and the terms of each Contract,
the Company will furnish other information the Fund, directly or through its
agent, reasonably requests regarding frequent transfers by Contract owners
among the subaccounts investing Portfolios of the Fund which are available
under the Contracts. In compliance with Rule 22c-2 under the 1940 Act, the
Company hereby agrees to (i) provide, promptly upon request by Fund,
directly or through its agent, the taxpayer identification number of all
Contract owners that purchased, redeemed, transferred, or exchanged shares
of Portfolios of the Fund held under a Contract, and the amount and dates of
such Contract owner's purchases, redemptions, transfers, and exchanges
involving such Portfolios; and (ii) execute any instructions from the Fund,
directly or through its agent, to restrict or prohibit further purchases or
exchanges of shares of the Portfolios by a Contract owner who has been
identified by the Fund, directly or through its agent, as having engaged in
transactions in Portfolio shares that violate the policies adopted by the
Fund for the purpose of eliminating or reducing any dilution of the value of
the outstanding shares of the Portfolio. The parties shall negotiate in good
faith such additional terms and conditions pertaining to (i) requesting and
furnishing such information, (ii) giving such instructions, (iii) executing
such instructions and (iv) such other matters pertaining to the
implementation of Rule 22c-2 as the parties may wish to address, including
without limitation,
9
reimbursement of expenses the Company incurs in order to provide such
information and to process such orders of the Fund or its agent.
2.19. The Company agrees to provide the Fund or its designee with
reasonable assurance that it has implemented effective compliance policies
and procedures administered by qualified personnel as required by and in
accordance with any and all applicable laws, rules and regulations. Such
assurances by the Company shall include, but are not limited to:
o adopting and implementing written compliance policies and
procedures reasonably designed to prevent the Company from
violating the Federal Securities Laws (as defined in Rule
38a-1) in its provision of services to the Fund pursuant
to this Agreement, and
o providing access to the Chief Compliance Officer of the
Accounts who will confer as needed with the Chief
Compliance Officer of the Fund regarding the written
compliance policies and procedures of the Accounts.
2.20. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate or board action, as
applicable, by such party and when so executed and delivered this Agreement
will be the valid and binding obligation of such party enforceable in
accordance with its terms.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. At least annually, the Adviser or Distributor shall provide the
Company with as many copies of the Fund's current prospectus as the Company
may reasonably request, with expenses to be borne in accordance with
Schedule C hereof. If requested by the Company in lieu thereof, the Adviser,
Distributor or Fund shall provide such documentation (including an
electronic version of the current prospectus) and other assistance as is
reasonably necessary in order for the Company once each year (or more
frequently if the prospectus for the Fund is amended) to have the prospectus
for the Contracts and the prospectus for the Fund printed together in one
document.
3.2. If applicable state or federal laws or regulations require that
the Statement of Additional Information ("SAI") for the Fund be distributed
to all Contract owners, then the Fund, Distributor and/or the Adviser shall
provide the Company with copies of the Fund's SAI in such quantities, with
expenses to be borne in accordance with Schedule C hereof, as the Company
may reasonably require to permit timely distribution thereof to Contract
owners. The Adviser, Distributor and/or the Fund shall also provide an SAI
to any Contract owner or prospective owner who requests such SAI from the
Fund.
3.3. The Fund, Distributor and/or Adviser shall provide the Company
with copies of the Fund's proxy materials, reports to shareholders and other
communications to shareholders in such quantity, with expenses to be borne
in accordance with Schedule C hereof, as the Company may reasonably require
to permit timely distribution thereof to Contract owners. The Fund will
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provide written instruction to all Participating Insurance Companies
including the Company each time the Fund furnishes an amendment or
supplement to the Fund's current prospectus or statement of additional
information directing the Participating Insurance Companies including the
Company as to whether the amendment or supplement is to be provided (1)
immediately to existing Contract owners who have Contract value allocated to
the Fund or (2) is to be held and combined with another Fund or Contract
related mailing as permitted by applicable federal securities laws. The Fund
agrees that the instruction it gives the Company in each instance will be
identical to the instruction it provides other Participating Insurance
Companies.
3.4. It is understood and agreed that, except with respect to
information regarding the Company provided in writing by that party, the
Company shall not be responsible for the content of the prospectus or SAI
for the Fund. It is also understood and agreed that, except with respect to
information regarding the Fund, the Distributor, the Adviser or the
Portfolios provided in writing by the Fund, the Distributor or the Adviser,
neither the Fund, the Distributor nor Adviser are responsible for the
content of the prospectus or SAI for the Contracts.
3.5. In the event that the Fund initiates (i) a reorganization of a
Portfolio as defined by Section 2 of the 1940 Act, or (ii) a change in the
name of a Portfolio or the Fund, the Fund, Distributor or Adviser as they
may among themselves determine, shall reimburse the Company for the
Company's internal and out-of-pocket costs associated with the
aforementioned actions. The Company agrees to use its best efforts to
minimize any costs incurred under this Section and shall provide the Fund,
Distributor and Adviser with acceptable documentation of any such costs
incurred.
3.6. If and to the extent required by law the Company shall:
(a) solicit voting instructions from Contract owners;
(b) vote the Portfolio shares held in the Accounts in accordance
with instructions received from Contract owners;
(c) vote Portfolio shares held in the Accounts for which no
instructions have been received in the same proportion as Portfolio shares
for which instructions have been received from Contract owners, so long as
and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners; and
(d) vote Portfolio shares held in its general account or otherwise
in the same proportion as Portfolio shares for which instructions have been
received from Contract owners, so long as and to the extent that the SEC
continues to interpret the 1940 Act to require such voting by the insurance
company. The Company reserves the right to vote Fund shares in its own
right, to the extent permitted by law.
3.7. The Company shall be responsible for assuring that each of its
separate accounts holding shares of a Portfolio calculates voting privileges
as directed by the Fund and agreed to by the Company and the Fund. The Fund
agrees to promptly notify the Company of any changes of interpretations or
amendments of the Mixed and Shared Funding Exemptive Order.
11
3.8. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either
provide for annual meetings. Further, the Fund will act in accordance with
the SEC's interpretation of the requirements of Section 16(a) with respect
to periodic elections of directors or trustees and with whatever rules the
SEC may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, a copy of each piece of sales literature or other
promotional material that the Company develops or proposes to use and in
which the Fund (or Portfolio thereof), the Adviser or the Distributor is
named in connection with the Contracts, at least ten (10) business days
prior to its use. No such material shall be used if the Fund objects to such
use within five (5) business days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund in connection with the
sale of the Contracts other than the information or representations
contained in the registration statement, including the prospectus or SAI for
the Fund shares, as the same may be amended or supplemented from time to
time, or in sales literature or other promotional material approved by the
Fund, Distributor or Adviser, except with the permission of the Fund,
Distributor or Adviser.
4.3. The Fund, the Adviser or the Distributor shall furnish, or shall
cause to be furnished, to the Company, a copy of each piece of sales
literature or other promotional material in which the Company and/or its
Accounts are named at least ten (10) business days prior to its use. No such
material shall be used if the Company objects to such use within five (5)
business days after receipt of such material.
4.4. The Fund, the Distributor and the Adviser shall not give any
information or make any representations on behalf of the Company or
concerning the Company, the Accounts, or the Contracts other than the
information or representations contained in a registration statement,
including the prospectus or SAI for the Contracts, as the same may be
amended or supplemented from time to time, or in sales literature or other
promotional material approved by the Company or its designee, except with
the permission of the Company.
4.5. For purposes of Articles IV and VIII, the phrase "sales
literature and 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 media), 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, and shareholder reports, and proxy materials
(including solicitations for
12
voting instructions) and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 0000 Xxx.
4.6. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representatives of the appropriate regulatory agencies, all records, data
and access to operating procedures that may be reasonably requested in
connection with compliance and regulatory requirements related to this
Agreement or any party's obligations under this Agreement.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund, the Distributor and the 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, the Distributor or
Adviser under this Agreement; provided, however, (a) the parties will bear
their own expenses as reflected in Schedule C and other provisions of this
Agreement, (b) the parties may enter into other agreements relating to the
Company's investment in the Fund, including services agreements and (c) each
party shall in accordance with the allocation of expenses reflected in
Schedule C and other provisions of this Agreement promptly reimburse other
parties for expenses initially paid by one party but allocated to another
party.
ARTICLE VI. Diversification and Qualification
---------------------------------
6.1. The Fund, Distributor and Adviser represent and warrant that the
Fund and each Portfolio thereof will at all times comply with Section 817(h)
of the Code and Treasury Regulation Section 1.817-5, as amended from time to
time, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life
insurance contracts and any amendments or other modifications or successor
provisions to such Section or Regulations. The Fund Distributor or Adviser
shall provide to the Company a quarterly written diversification report,
which shall show the results of the quarterly Section 817(h) diversification
test and include a certification as to whether each Portfolio complies with
the Section 817(h) diversification requirement.
6.2. The Fund, the Distributor and the Adviser agree that shares of
the Portfolios will be sold only to Participating Insurance Companies and
their separate accounts and to Qualified Plans. No shares of any Portfolio
of the Fund will be sold to the general public.
6.3. The Fund, the Distributor and the Adviser represent and warrant
that the Fund and each Portfolio is currently qualified as a Regulated
Investment Company under Subchapter M of the Code, and that each Portfolio
will maintain such qualification (under Subchapter M or any successor or
similar provisions) as long as this Agreement is in effect.
6.4. The Fund, Distributor or Adviser will notify the Company
immediately upon having a reasonable basis for believing that the Fund or
any Portfolio has ceased to comply with the aforesaid Section 817(h)
diversification or Subchapter M qualification requirements or might not so
comply in the future.
13
6.5. Without in any way limiting the effect of Sections 8.2, 8.3 and
8.4 hereof and without in any way limiting or restricting any other remedies
available to the Company, the Adviser or Distributor will pay all costs
associated with or arising out of any failure, or any anticipated or
reasonably foreseeable failure, of the Fund or any Portfolio to comply with
Sections 6.1, 6.2, or 6.3 hereof, including all costs associated with
reasonable and appropriate corrections or responses to any such failure;
such costs may include, but are not limited to, the costs involved in
creating, organizing, and registering a new investment company as a funding
medium for the Contracts and/or the costs of obtaining whatever regulatory
authorizations are required to substitute shares of another investment
company for those of the failed Portfolio (including but not limited to an
order pursuant to Section 26(c) of the 1940 Act).
6.6. The Company agrees that if the Internal Revenue Service ("IRS")
asserts in writing in connection with any governmental audit or review of
the Company (or, to the Company's knowledge, of any Contract owner) that any
Portfolio has failed to comply with the diversification requirements of
Section 817(h) of the Code or the Company otherwise becomes aware of any
facts that could give rise to any claim against the Fund, Distributor or
Adviser as a result of such a failure of alleged failure, the Company shall
promptly notify the Fund, the Distributor and the Adviser of such assertion
or potential claim.
ARTICLE VII. Potential Conflicts and Compliance With Mixed and
-------------------------------------------------
Shared Funding Exemptive Order
------------------------------
7.1. The Board of Trustees of the Fund (the "Board") will monitor the
Fund for the existence of any material irreconcilable conflict between the
interests of the Contract owners of all separate accounts investing in the
Fund. An irreconcilable material conflict may arise for a variety of
reasons, including: (a) an action by any state insurance 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 Portfolio is being managed; (e) a difference in voting instructions
given by variable annuity contract and variable life insurance contract
owners or by contract owners of different Participating Insurance Companies;
or (f) a decision by a Participating Insurance Company to disregard the
voting instructions of Contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and
the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in
carrying out its responsibilities under the Mixed and Shared Funding
Exemptive Order, by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This includes, but is
not limited to, an obligation by the Company to inform the Board whenever
Contract owner voting instructions are to be disregarded. Such
responsibilities shall be carried out by the Company with a view only to the
interests of its Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of
its directors who are not interested persons of the Fund, the Distributor,
the Adviser or any subadviser to any of the
14
Portfolios (the "Independent Directors"), that a material irreconcilable
conflict exists, the Company and other Participating Insurance Companies
shall, at their expense and to the extent reasonably practicable (as
determined by a majority of the Independent Directors), take whatever steps
are necessary to remedy or eliminate the irreconcilable material conflict,
up to and including: (1) withdrawing the assets allocable to some or all of
the separate accounts from the Fund or any Portfolio and reinvesting such
assets in a different investment medium, including (but not limited to)
another Portfolio, or submitting the question whether such segregation
should be implemented to a vote of all affected Contract owners 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 Insurance Companies) that votes in favor of
such segregation, or offering to the affected contract owners the option of
making such a change; and (2) establishing a new registered management
investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract owner voting instructions and
that decision represents a minority position or would preclude a majority
vote, the Company may be required, at the Fund's election, to withdraw the
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 Independent Directors. Any such withdrawal and termination
must take place within six (6) months after the Fund gives written notice
that this provision is being implemented, and until the end of that
six-month period the Adviser, the Distributor and the Fund shall continue to
accept and implement orders by the Company for the purchase (and redemption)
of shares of the Fund, subject to the terms of the Fund's then-current
prospectus.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts
with the majority of other state regulators, then the Company will withdraw
the Account's investment in the Fund and terminate this Agreement within six
months after the Board informs the Company in writing that it has determined
that such decision has created an irreconcilable material conflict;
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 Independent Directors. Until the end of the
foregoing six-month period, the Fund shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the
Fund, subject to the terms of the Fund's then-current prospectus.
7.6. For purposes of Sections 7.3 through 7.5 of this Agreement, a
majority of the Independent Directors shall determine whether 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 the
Contracts. The Company shall not be required by Section 7.3 to establish a
new funding medium for the Contracts if an offer to do so has been declined
by vote of a majority of Contract owners affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then
the Company will withdraw the Account's investment in the Fund and terminate
this Agreement within six (6) months after the Board informs the Company in
writing
15
of the foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the Independent
Directors.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of
the 1940 Act or the rules promulgated thereunder with respect to mixed or
shared funding (as defined in the Mixed and Shared Funding Exemptive Order)
on terms and conditions materially different from those contained in the
Mixed and Shared Funding Exemptive Order, then (a) the Fund and/or the
Participating Insurance Companies, as appropriate, shall take such steps as
may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
3.6, 3.7, 3.8, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue
in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless the Fund,
the Distributor and the Adviser and each of their respective officers and
directors or trustees and each person, if any, who controls the Fund,
Distributor or Adviser within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, expenses, damages and liabilities
(including amounts paid in settlement with the written consent of the
Company) or litigation (including reasonable legal and other expenses) to
which the Indemnified Parties may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus or SAI covering the
Contracts or contained in the Contracts or sales literature or
other promotional material 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 in writing to the Company by or on behalf
of the Fund for use in the registration statement or prospectus
for the Contracts or in the Contracts or sales literature or
other promotional material (or any amendment or supplement to
any of the foregoing) or otherwise for use in connection with
the sale of the Contracts or Fund shares; or
16
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus or sales
literature or other promotional material of the Fund not
supplied by the Company or persons under its control) or
wrongful conduct of the Company or persons under its control,
with respect to the sale or distribution of the Contracts or
Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, or sales literature or other
promotional material of the Fund, or any amendment thereof or
supplement thereto, 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 information
furnished in writing to the Fund by or on behalf of the Company;
or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, including without
limitation Section 2.12 and Section 6.6 hereof,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities
or litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement.
(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim 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 the
Company of any such claim shall not relieve the Company from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision, except
to the extent that the Company has been prejudiced by such failure to give
notice. In case any such action is brought against the Indemnified Parties,
the Company shall be entitled to participate, at its own expense, in the
defense of such action. The Company also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Company to such party of the Company's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Company will not
be liable to such party under this Agreement for any legal or other expenses
subsequently
17
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
(d) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the
operation of the Fund.
8.2. Indemnification by the Adviser
(a) The Adviser agrees to indemnify and hold harmless the
Company and its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.2) against any and
all losses, claims, expenses, damages, liabilities (including amounts paid
in settlement with the written consent of the Adviser) or litigation
(including reasonable legal and other expenses) to which the Indemnified
Parties may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature
or other promotional material of the Fund prepared by the Fund,
the Distributor or the Adviser (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 in writing to the Adviser, the Distributor or the Fund
by or on behalf of the Company for use in the registration
statement, prospectus or SAI for the Fund or in sales literature
or other promotional material (or any amendment or supplement to
any of the foregoing) or otherwise for use in connection with
the sale of the Contracts or the Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI or
sales literature or other promotional material for the Contracts
not supplied by the Adviser or persons under its control) or
wrongful conduct of the Fund, the Distributor or the Adviser or
persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, or sales literature or other
promotional material covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or alleged
omission to state therein
18
a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished in writing to the Company by or on behalf of the
Adviser, the Distributor or the Fund; or
(iv) arise as a result of any failure by the Fund, the
Distributor or the Adviser or any service provider of the
foregoing Parties to provide the services and furnish the
materials under the terms of this Agreement (including a
failure, whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund, the Distributor
or the Adviser in this Agreement or arise out of or result from
any other material breach of this Agreement by the Adviser, the
Distributor or the Fund or any service provider of the foregoing
Parties; or
(vi) arise out of or result from the incorrect or untimely
calculation or reporting by the Fund, the Distributor or the
Adviser or any service provider of the foregoing Parties of the
daily net asset value per share (subject to Section 1.10 of this
Agreement) or dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Adviser specified in Article VI
hereof.
(b) The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities
or litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement.
(c) The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim 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 the
Adviser of any such claim shall not relieve the Adviser from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision, except
to the extent that the Adviser has been prejudiced by such failure to give
notice. In case any such action is brought against the Indemnified Parties,
the Adviser will be entitled to participate, at its own expense, in the
defense thereof. The Adviser also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from the Adviser to such party of the Adviser's election to assume
the defense thereof, the Indemnified Party shall bear the fees
19
and expenses of any additional counsel retained by it, and the Adviser will
not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
(d) The Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
ARTICLE IX. Applicable Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts, without regard to conflict of laws provisions.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
SEC may grant (including, but not limited to, the Mixed and Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. Termination
-----------
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with
respect to some or all Portfolios, upon sixty (60) days advance written
notice delivered to the other parties; or
(b) at the option of the Company by written notice to the other
parties with respect to any Portfolio based upon the Company's determination
that shares of such Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) at the option of the Company by written notice to the other
parties with respect to any Portfolio in the event any of the Portfolio's
shares are not registered, issued or sold in accordance with applicable
state and/or federal law or such law precludes the use of such shares as the
underlying investment media of the Contracts issued or to be issued by the
Company; or
(d) at the option of the Fund, Distributor or Adviser in the event
that formal administrative proceedings are instituted against the Company by
the NASD, the SEC, the Insurance Commissioner or like official of any state
or any other regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Contracts, the operation of any
Account, or the purchase of the Fund shares, if, in each case, the Fund,
Distributor or Adviser, as the case may be, reasonably determines in its
sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the
Company to perform its obligations under this Agreement; or
20
(e) at the option of the Company in the event that formal
administrative proceedings are instituted against the Fund, the Distributor
or the Adviser by the NASD, the SEC, or any state securities or insurance
department or any other regulatory body, if the Company reasonably
determines in its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon the
ability of the Fund, the Distributor or the Adviser to perform their
obligations under this Agreement; or
(f) at the option of the Company by written notice to the Fund with
respect to any Portfolio if the Company reasonably believes that the
Portfolio will fail to meet the Section 817(h) diversification requirements
or Subchapter M qualifications specified in Article VI hereof; or
(g) at the option of any non-defaulting party hereto in the event
of a material breach of this Agreement by any party hereto (the "defaulting
party") other than as described in Section 10.1(a)-(h); provided, that the
non-defaulting party gives written notice thereof to the defaulting party,
with copies of such notice to all other non-defaulting parties, and if such
breach shall not have been remedied within thirty (30) days after such
written notice is given, then the non-defaulting party giving such written
notice may terminate this Agreement by giving thirty (30) days written
notice of termination to the defaulting party; or
(h) at any time upon written agreement of all parties to this
Agreement.
10.2. Notice Requirement
------------------
No termination of this Agreement shall be effective unless and until
the party terminating this Agreement gives prior written notice to all other
parties of its intent to terminate, which notice shall set forth the basis
for the termination. Furthermore,
(a) in the event any termination is based upon the provisions of
Article VII, or the provisions of Section 10.1(a) of this Agreement, the
prior written notice shall be given in advance of the effective date of
termination as required by those provisions unless such notice period is
shortened by mutual written agreement of the parties;
(b) in the event any termination is based upon the provisions of
Section 10.1(d), 10.1(e) or 10.1(g) of this Agreement, the prior written
notice shall be given at least sixty (60) days before the effective date of
termination; and
(c) in the event any termination is based upon the provisions of
Section 10.1(b), 10.1(c) or 10.1(f), the prior written notice shall be given
in advance of the effective date of termination, which date shall be
determined by the party sending the notice.
10.3. Effect of Termination
---------------------
Notwithstanding any termination of this Agreement, other than as a
result of a failure by either the Fund or the Company to meet Section 817(h)
of the Code diversification requirements, the Fund, the Distributor and the
Adviser shall, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement,
21
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 shall be permitted
to reallocate investments in the Fund, 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 10.3 shall not apply
to any terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement.
10.4. Surviving Provisions
--------------------
Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII to indemnify other parties shall survive and
not be affected by any termination of this Agreement. In addition, with
respect to Existing Contracts, all provisions of this Agreement shall also
survive and not be affected by any termination of this Agreement.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify
in writing to the other parties.
If to the Company:
American Enterprise Life Insurance Company
IDS Life Insurance Company
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Executive Vice President - Annuities
If to the Fund:
Columbia Funds Variable Insurance Trust I
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Secretary
If to the Adviser:
Columbia Management Advisors, LLC
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Secretary
If to the Distributor:
Columbia Management Distributors, Inc.
22
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Secretary
ARTICLE XII. Miscellaneous
-------------
12.1. Notwithstanding anything to the contrary contained in this
Agreement, in addition to and not in lieu of other provisions in this
Agreement:
(a) "Confidential Information" includes but is not limited to all
proprietary and confidential information of the Company and its
subsidiaries, affiliates and licensees (collectively the "Protected
Parties" for purposes of this Section 12.1), including without
limitation all information regarding the customers of the Protected
Parties; or the accounts, account numbers, names, addresses, social
security numbers or any other personal identifier of such customers; or
any information derived therefrom.
(b) Neither the Fund, the Adviser, nor the Distributor may use or
disclose Confidential Information for any purpose other than to carry
out the purpose for which Confidential Information was provided to
Fund, the Adviser or the Distributor as set forth in the Agreement; and
the Fund, the Adviser and the Distributor agree to cause all their
employees, agents and representatives, or any other party to whom the
Fund, the Adviser or the Distributor may provide access to or disclose
Confidential Information to limit the use and disclosure of
Confidential Information to that purpose.
(c) The Fund, the Adviser and the Distributor acknowledge that all
computer programs and procedures or other information developed or used
by the Protected Parties or any of their employees or agents in
connection with the Company's performance of its duties under this
Agreement are the valuable property of the Protected Parties.
(d) The Fund, the Adviser and the Distributor agree to implement
appropriate measures designed to ensure the security and
confidentiality of Confidential Information, to protect such
information against any anticipated threats or hazards to the security
or integrity of such information, and to protect against unauthorized
access to, or use of, Confidential Information that could result in
substantial harm or inconvenience to any customer of the Protected
Parties; the Fund, the Adviser and the Distributor further agree to
cause all their agents, representatives or subcontractors of, or any
other party to whom the Fund, the Adviser or the Distributor may
provide access to or disclose Confidential Information to implement
appropriate measures designed to meet the objectives set forth in this
Section 12.1.
(e) the Fund, the Adviser and the Distributor acknowledge that any
breach of the agreements in this Section 12.1 would result in immediate
and irreparable harm to the Protected Parties for which there would be
no adequate remedy at law and agree that in the event of such a breach,
the Protected 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.
23
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.6. Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in a forum
jointly selected by the relevant parties (but if applicable law requires
some other forum, then such other forum) in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The number of arbitrators will be three, one of whom
will be appointed by the Company or an affiliate; one of whom will be
appointed by the Fund and/or the Adviser or an affiliate; and the third of
whom will be selected by mutual agreement, if possible, within 30 days of
the selection of the second arbitrator and thereafter by the administering
authority. The place of arbitration will be New York, NY. The arbitrators
will have no authority to award punitive damages or any other damages not
measured by the prevailing party's actual damages, and may not, in any
event, make any ruling, finding or award that does not conform to the terms
and conditions of this Agreement. Any party may make an application to the
arbitrators seeking injunctive relief to maintain the status quo until such
time as the arbitration award is rendered or the controversy is otherwise
resolved. Any party may apply to any court having jurisdiction hereof and
seek injunctive relief in order to maintain the status quo until such time
as the arbitration award is rendered or the controversy is otherwise
resolved.
12.7. 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, which the parties hereto are entitled to
under state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all
parties hereto.
12.9. The Company agrees that the obligations assumed by the Fund,
Distributor and the Adviser pursuant to this Agreement shall be limited in
any case to the Fund, Distributor and Adviser and their respective assets
and the Company shall not seek satisfaction of any such obligation from the
shareholders of the Fund, Distributor or the Adviser, the Directors,
officers, employees or agents of the Fund, Distributor or Adviser, or any of
them.
24
12.10. The Fund, the Distributor and the Adviser agree that the
obligations assumed by the Company pursuant to this Agreement shall be
limited in any case to the Company and its assets and neither the Fund,
Distributor nor Adviser shall seek satisfaction of any such obligation from
the shareholders of the Company, the directors, officers, employees or
agents of the Company, or any of them.
12.11. No provision of this Agreement may be deemed or construed to
modify or supersede any contractual rights, duties, or indemnifications, as
between the Adviser and the Fund, and the Distributor and the Fund.
12.12 The parties to this Agreement may amend this Agreement in writing
from time to time to reflect changes in or relating to the Contracts, the
Portfolios available under the Contracts and other terms of this Agreement.
25
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly
authorized representative and its seal to be hereunder affixed hereto as of
the date first above written.
AMERICAN ENTERPRISE LIFE INSURANCE
COMPANY
IDS LIFE INSURANCE COMPANY Attest:
By: /s/Xxxxx X. Xxxxxx By: /s/Xxxxx Xxxxxx
------------------------------------------- --------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx Xxxxxx
Title: President, American Enterprise Life Title: Assistant Secretary
Insurance Company
Executive Vice President - Annuities,
IDS Life Insurance Company
COLUMBIA FUNDS VARIABLE INSURANCE TRUST I
By: /s/ Xxxxx Xxxxxx
-------------------------------------------
Name: Xxxxx Xxxxxx
Title: President
COLUMBIA MANAGEMENT ADVISORS, LLC
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Managing Director
COLUMBIA MANAGEMENT DISTRIBUTORS INC.
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxx
Title: President
26
SCHEDULE A
Company, Account, Contract, Fund, Portfolios and Class of Shares
-----------------------------------------------------------------------------------------------------------------------
American Enterprise Life Insurance Company
American Enterprise Variable Annuity Account, 811-7195
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
CONTRACTS FUND PORTFOLIO AND CLASS OF SHARE
--------- ---- ----------------------------
-----------------------------------------------------------------------------------------------------------------------
RiverSource Select(SM) Variable Annuity Columbia Funds Variable Columbia High Yield Fund, Variable
Insurance Trust I Series - B
RiverSource Signature One Select Variable
Annuity
RiverSource Innovations Select(SM) Variable
Annuity
RiverSource Flex Choice(SM) Select Variable
Annuity
RiverSource Endeavor Select(SM) Variable Annuity
RiverSource AccessChoice Select(SM) Variable
Annuity
RiverSource Innovations(SM) Classic Select
Variable Annuity
-----------------------------------------------------------------------------------------------------------------------
RiverSource Galaxy Premier Variable Annuity Columbia Funds Variable Columbia High Yield Fund, Variable
Insurance Trust I Series - A
-----------------------------------------------------------------------------------------------------------------------
27
----------------------------------------------------------------------------------------------------------------------
IDS Life Insurance Company
IDS Life Variable Account 10, 811-07355
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
CONTRACTS FUND PORTFOLIO AND CLASS OF SHARE
--------- ---- ----------------------------
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Advisor 4 Advantage Columbia Funds Variable Columbia High Yield Fund, Variable
Variable Annuity Insurance Trust I Series - B
RiverSource Retirement Advisor 4 Select Columbia Xxxxxxx Growth Fund,
Variable Annuity Variable Series
RiverSource Retirement Advisor Access Variable Columbia Xxxxxxx International
Annuity Opportunities Fund, Variable Series
RiverSource Retirement Advisor Advantage Plus(SM)
Variable Annuity
RiverSource Retirement Advisor Select Plus(SM)
Variable Annuity
RiverSource Retirement Advisor Advantage Plus(SM)
Variable Annuity - Band 3
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Advisor Advantage(SM) Columbia Funds Variable Columbia Xxxxxxx Growth Fund,
Variable Annuity Insurance Trust I Variable Series
RiverSource Retirement Advisor Advantage(SM) Columbia Xxxxxxx International
Variable Annuity - Band 3 Opportunities Fund, Variable Series
RiverSource Retirement Advisor Select(SM)
Variable Annuity
RiverSource Retirement Advisor Variable Annuity(R)
RiverSource Retirement Advisor Variable
Annuity(R) - Band 3
----------------------------------------------------------------------------------------------------------------------
28
----------------------------------------------------------------------------------------------------------------------
IDS Life Insurance Company
IDS Life Variable Life Separate Account, 811-4298
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
CONTRACTS FUND PORTFOLIO AND CLASS OF SHARE
--------- ---- ----------------------------
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable Universal Life IV Columbia Funds Variable Columbia High Yield Fund, Variable
RiverSource Variable Universal Life IV - ES Insurance Trust I Series - B
----------------------------------------------------------------------------------------------------------------------
29
SCHEDULE B
THIS SCHEDULE NOT USED
30
SCHEDULE C
EXPENSES
--------
The Fund and/or the Distributor and/or Adviser, and the Company
will coordinate the functions and pay the costs of the completing these
functions based upon an allocation of costs in the tables below. Costs shall
be allocated to reflect the Fund's share of the total costs determined
according to the number of pages of the Fund's respective portions of the
documents.
------------------------------------------------------------------------------------------------------------------
ITEM FUNCTION PARTY RESPONSIBLE PARTY RESPONSIBLE
FOR COORDINATION FOR EXPENSE
------------------------------------------------------------------------------------------------------------------
Mutual Fund Prospectus Printing of combined Company Current Clients-
prospectuses Fund
Prospective -
Company
------------------------------------------------------------------------------------------------------------------
Distribution (including Company Fund
postage) to Current
Clients
------------------------------------------------------------------------------------------------------------------
Distribution (including Company Company
postage) to Prospective
Clients
------------------------------------------------------------------------------------------------------------------
Product Prospectus Printing and Distribution Company Company
for Current and
Prospective Clients
------------------------------------------------------------------------------------------------------------------
Mutual Fund Prospectus If Required by Fund, Fund, Distributor or Fund, Distributor or
Update & Distribution Distributor or Adviser Adviser Adviser
------------------------------------------------------------------------------------------------------------------
If Required by Company Company (Fund, Company
Distributor or Adviser to
provide Company with
document in PDF format)
------------------------------------------------------------------------------------------------------------------
31
------------------------------------------------------------------------------------------------------------------
ITEM FUNCTION PARTY RESPONSIBLE PARTY RESPONSIBLE
FOR COORDINATION FOR EXPENSE
------------------------------------------------------------------------------------------------------------------
Product Prospectus Update & If Required by Fund, Company Fund, Distributor or
Distribution Distributor or Adviser Adviser
------------------------------------------------------------------------------------------------------------------
If Required by Company Company Company
------------------------------------------------------------------------------------------------------------------
Mutual Fund SAI Printing Fund, Distributor or Fund, Distributor or
Adviser Adviser
------------------------------------------------------------------------------------------------------------------
Distribution (including Party who receives the Party who receives the
postage) request request
------------------------------------------------------------------------------------------------------------------
Product SAI Printing Company Company
------------------------------------------------------------------------------------------------------------------
Distribution Company Company
------------------------------------------------------------------------------------------------------------------
Proxy Material for Mutual Printing if proxy Fund, Distributor or Fund, Distributor or
Fund required by Law Adviser Adviser
------------------------------------------------------------------------------------------------------------------
Distribution (including Company Fund, Distributor or
labor) if proxy required Adviser
by Law
------------------------------------------------------------------------------------------------------------------
Printing & distribution Company Company
if required by Company
------------------------------------------------------------------------------------------------------------------
Mutual Fund Annual & Printing of reports Fund, Distributor or Fund, Distributor or
Semi-Annual Report Adviser Adviser
------------------------------------------------------------------------------------------------------------------
Distribution Company Fund, Distributor or
Adviser
------------------------------------------------------------------------------------------------------------------
Other communication to New If Required by the Fund, Company Distributor or Adviser
and Prospective clients Distributor or Adviser
------------------------------------------------------------------------------------------------------------------
If Required by Company Company Company
------------------------------------------------------------------------------------------------------------------
32
------------------------------------------------------------------------------------------------------------------
ITEM FUNCTION PARTY RESPONSIBLE PARTY RESPONSIBLE
FOR COORDINATION FOR EXPENSE
------------------------------------------------------------------------------------------------------------------
Other mutual fund related If Required by Fund, Company Fund, Distributor or
communications to Current Distributor or Adviser: Adviser
Clients, including, without distribution (including
limitation, amendments and labor, printing and
supplements to the Mutual postage)
Fund Prospectus and Mutual
Fund SAI
------------------------------------------------------------------------------------------------------------------
Other product communication If Required by Company: Company Company
to Current Clients, distribution (including
including without limitation labor, printing and
amendments and supplements postage)
to the Product Prospectus
and Product SAI
------------------------------------------------------------------------------------------------------------------
33
