PARTICIPATION AGREEMENT
AMONG
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
AMERICAN EXPRESS FINANCIAL ADVISORS INC.,
ALLIANCE CAPITAL MANAGEMENT L.P.
AND
ALLIANCE FUND DISTRIBUTORS, INC.
DATED AS OF
January 1, 2000
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of January, 2000
("Agreement"), by and among American Enterprise Life Insurance Company, an
Indiana life insurance company ("Insurer") (on behalf of itself and its
"Separate Account," defined below);American Express Financial Advisors Inc., a
Delaware corporation ("Contracts Distributor"), the principal underwriter with
respect to the Contracts referred to below; Alliance Capital Management L.P., a
Delaware limited partnership ("Adviser"), the investment adviser of the Fund
referred to below; and Alliance Fund Distributors, Inc., a Delaware corporation
("Distributor"), the Fund's principal underwriter (collectively, the "Parties"),
WITNESSETH THAT:
WHEREAS Insurer, the Distributor, and Alliance Variable Products Series Fund,
Inc. (the "Fund") desire that Class B shares of the Fund as further described in
Exhibit A, attached hereto and incorporated by reference (the "Portfolios";
reference herein to the "Fund" includes reference to each Portfolio to the
extent the context requires) be made available by Distributor to serve as
underlying investment media for those combination fixed and variable annuity
contracts of Insurer that are the subject of Insurer's Form N-4 registration
statement filed with the Securities and Exchange Commission (the "SEC"), and
those combination fixed and variable universal life insurance policies of
Insurer that are the subject of Insurer's Forms S-6 and N-8B-2 registration
statement filed with the SEC , or such other forms as prescribed under
applicable securities laws, as further described in Exhibit A (collectively the
"Contracts"), to be offered through Contracts Distributor and other registered
broker-dealer firms as agreed to by Insurer and Contracts Distributor; and
WHEREAS the Contracts provide for the allocation of net amounts received by
Insurer to separate series (the "Divisions"; reference herein to the "Separate
Account" includes reference to each Division to the extent the context requires)
of the Separate Account for investment in Class B shares of corresponding
Portfolios of the Fund that are made available through the Separate Account to
act as underlying investment media,
NOW, THEREFORE, in consideration of the mutual benefits and promises contained
herein, the Fund and Distributor will make Class B shares of the Portfolios
available to Insurer for this purpose at net asset value and with no sales
charges, all subject to the following provisions:
Section 1. Additional Portfolios
The Fund has and may, from time to time, add additional Portfolios, which will
become subject to this Agreement, if, upon the written consent of each of the
Parties hereto, they are made available as investment media for the Contracts.
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Section 2. Processing Transactions
2.1 Timely Pricing and Orders.
The Adviser or its designated agent will provide closing net asset value,
dividend and capital gain information for each Portfolio to Insurer at the close
of trading on each day (a "Business Day") on which (a) the New York Stock
Exchange is open for regular trading, (b) the Fund calculates the Portfolio's
net asset value and (c) Insurer is open for business. The Fund or its designated
agent will use its best efforts to provide this information by 6:00 p.m.,
Eastern time, but in no event later than 7:00 p.m. Eastern time. The Fund will
notify the Insurer as soon as possible if it is determined that this information
will be available after 7:00 p.m. Eastern time, and the Fund and the Insurer
will mutually agree upon a final deadline for timely receipt of this information
on that Business Day. Insurer will use these data to calculate unit values,
which in turn will be used to process transactions that receive that same
Business Day's Separate Account Division's unit values. Such Separate Account
processing will be done the same evening, and corresponding orders with respect
to Fund shares will be placed the morning of the following Business Day. Insurer
will use its best efforts to place such orders with the Fund by 10:00 a.m.,
Eastern time.
2.2 Timely Payments.
Insurer will transmit orders for purchases and redemptions of Fund shares to
Distributor, and will wire payment for net purchases to a custodial account
designated by the Fund on the day the order for Fund shares is placed, to the
extent practicable. Payment for net redemptions will be wired by the Fund to an
account designated by Insurer on the same day as the order is placed, to the
extent practicable, and in any event be made within five calendar days after the
date the order is placed in order to enable Insurer to pay redemption proceeds
within the time specified in Section 22(e) of the Investment Company Act of
1940, as amended (the "1940 Act").
2.3 Applicable Price.
The Parties agree that Portfolio share purchase and redemption orders resulting
from Contract owner purchase payments, surrenders, partial withdrawals, routine
withdrawals of charges, or other transactions under Contracts will be executed
at the net asset values as determined as of the close of regular trading on the
New York Stock Exchange on the Business Day that Insurer receives such orders
and processes such transactions, which, Insurer agrees shall occur not earlier
than the Business Day prior to Distributor's receipt of the corresponding orders
for purchases and redemptions of Portfolio shares. For the purposes of this
section, Insurer shall be deemed to be the agent of the Fund for receipt of such
orders from holders or applicants of contracts, and receipt by Insurer shall
constitute receipt by the Fund. All other purchases and redemptions of Portfolio
shares by Insurer, will be effected at the net asset values next computed after
receipt by Distributor of the order therefor, and such orders will be
irrevocable. Insurer hereby elects to reinvest all dividends and capital gains
distributions in additional shares of the corresponding Portfolio at the
record-date net asset values until Insurer otherwise notifies the Fund in
writing, it being agreed by the Parties that the record date and the payment
date with respect to any dividend or distribution will be the same Business Day.
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Section 3. Costs and Expenses
3.1 General.
Except as otherwise specifically provided herein, each Party will bear all their
own expenses incident to its performance under this Agreement.
3.2 Registration.
The Fund will bear the cost of its registering as a management investment
company under the 1940 Act and registering its shares under the Securities Act
of 1933, as amended (the "1933 Act"), and keeping such registrations current and
effective; including, without limitation, the preparation of and filing with the
SEC of Forms N-SAR and Rule 24f-2 Notices respecting the Fund and its shares and
payment of all applicable registration or filing fees with respect to any of the
foregoing. Insurer will bear the cost of registering the Separate Account as a
unit investment trust under the 1940 Act and registering units of interest under
the Contracts under the 1933 Act and keeping such registrations current and
effective; including, without limitation, the preparation and filing with the
SEC of Forms N-SAR and Rule 24f-2 Notices respecting the Separate Account and
its units of interest and payment of all applicable registration or filing fees
with respect to any of the foregoing.
3.3 Other (Non-Sales-Related) Expenses.
The Fund will bear the costs of preparing, filing with the SEC and setting for
printing the Fund's prospectus, statement of additional information and any
amendments or supplements thereto (collectively, the "Fund Prospectus"),
periodic reports to shareholders, Fund proxy material and other shareholder
communications and any related requests for voting instructions from
Participants (as defined below). The Fund or the Distributor will bear the cost
of mailing to existing Participants (as defined below) any Fund Prospectus,
periodic report to shareholders, Fund proxy material and other shareholder
communication and any related request for voting instructions. Insurer will bear
the costs of preparing, filing with the SEC and setting for printing, the
Separate Account's prospectus, statement of additional information and any
amendments or supplements thereto (collectively, the "Separate Account
Prospectus"), any periodic reports to owners, annuitants or participants under
the Contracts (collectively, "Participants"), and other Participant
communications. The Fund and Insurer each will bear the costs of printing in
quantity and delivering to existing Participants the documents as to which it
bears the cost of preparation as set forth above in this Section 3.3, it being
understood that reasonable cost allocations will be made in cases where any such
Fund and/or Insurer documents are printed or mailed on a combined or coordinated
basis. If requested by Insurer, the Fund will provide annual Prospectus , annual
reports, semi-annual reports and other shareholder communications text to
Insurer on diskette or other medium agreed to by the Parties. The Fund or the
Distributor will bear the cost of tabulation of proxy votes.
3.4 Other Sales-Related Expenses.
Expenses of distributing the Portfolio's shares and the Contracts will be paid
by Contracts Distributor and other parties, as they shall determine by separate
agreement.
3.5 Parties to Cooperate.
The Adviser, Insurer, Contracts Distributor, and Distributor each agrees to
cooperate with the others, as applicable, in arranging to print, mail and/or
deliver combined or coordinated prospectuses or other materials of the Fund and
Separate Account.
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3.6 Use of Fund or Adviser Name by Insurer.
(a) The Insurer will furnish, or will cause to be furnished, to the
Fund or the Adviser, each piece of sales literature or other
promotional material in which the Fund or the Adviser is named,
at least ten (10) Business Days prior to its use. No such
material will be used if the Fund or the Adviser reasonably
objects to such use within five (5) Business Days after receipt
of such material.
(b) The Insurer will not give any information or make any
representations or statements on behalf of the Fund or concerning
the Fund, in connection with the sale of Contracts other than the
information or representations contained in a registration
statement, prospectus or statement of additional information for
Fund shares, as such registration statement, prospectus and
statement of additional information may be amended or
supplemented, from time to time, or in published reports for the
Fund which are in the public domain or approved by the Fund or
the Adviser for distribution, or in the sales literature or other
material provided by the Fund, except with the permission of the
Fund or the Adviser. The Fund and the Adviser agree to respond to
any request for approval on a prompt and timely basis. Nothing in
this Section will be construed as preventing the Insurer or its
employees or agents from giving advice on investment in the Fund.
(c) The Fund and the Adviser hereby consent to the Insurer's use of
the name Alliance Capital Management L.P. and Alliance Variable
Products Series Fund, Inc. and appropriate variations thereof in
connection with the marketing the Contracts, subject to the terms
of this Section. Such consent will terminate with the termination
of this Agreement.
3.7 Use of Insurer Name by Fund or Adviser.
(a) The Fund or Adviser will furnish, or will cause to be furnished,
to the Insurer or its designee, each piece of sales literature or
other promotional material in which the Insurer or its separate
account is named, at least ten (10) Business Days prior to its
use. No such material will be used if the Insurer reasonably
objects to such use within five (5) Business Days after receipt
of such material.
(b) The Fund and the Adviser will not give any information or make
any representations or statements on behalf of the Insurer or
concerning the Insurer, each Account, or the Contracts other than
the information or representations contained in a registration
statement, prospectus or statement of additional information for
the Contracts, as such registration statement, prospectus and
statement of additional information may be amended or
supplemented, from time to time, or in published reports for each
Account or the Contracts which are in the public domain or
approved by the Insurer for distribution to Contract owners, or
in the sales literature or other material provided by the
Insurer, except with the permission of the Insurer. The Insurer
agrees to respond to any request for approval on a prompt and
timely basis.
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3.8 Sales Literature and Other Promotional Materials.
For purposes of this Section 3, 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 messages), sales literature,
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, statements of
additional information, shareholder reports, and proxy materials and any other
material constituting sales literature or advertising under the rules of the
National Association of Securities Dealers, Inc. ("NASD"), the 1933 Act or the
1940 Act.
3.9 Calculation of Performance Information.
The Adviser will be responsible for calculating the performance information for
the Fund. The Insurer will be responsible for calculating the performance
information for the Contracts. The Adviser will be liable to the Insurer for any
material mistakes it makes in calculating the performance information for the
Fund which cause losses to the Insurer. The Insurer will be liable to the
Adviser for any material mistakes it makes in calculating the performance
information for the Contracts which cause losses to the Adviser. Each Party will
be liable for any material mistakes it makes in reproducing the performance
information for the Contracts or the Fund, as appropriate. The Fund and the
Adviser agree to provide the Insurer with performance information for the Fund
on a timely basis to enable the Insurer to calculate performance information for
the Contracts in accordance with applicable state and federal law.
Section 4. Legal Compliance
4.1 Tax Laws.
(a) The Adviser will use its best efforts to qualify and to
maintain qualification of each Portfolio as a regulated
investment company ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and the Adviser
or Distributor will notify Insurer immediately upon having a
reasonable basis for believing that a Portfolio has ceased to
so qualify or that it might not so qualify in the future.
(b) Insurer represents that it believes, in good faith, that the
Contracts will be treated as annuity or life insurance
contracts under applicable provisions of the Code and that it
will make every effort to maintain such treatment. Insurer
will notify the Fund and Distributor immediately upon having a
reasonable basis for believing that any of the Contracts have
ceased to be so treated or that they might not be so treated
in the future.
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(c) The Fund will use its best efforts to comply and to maintain
each Portfolio's compliance with the diversification
requirements set forth in Section 817(h) of the Code and
Section 1.817-5(b) of the regulations under the Code, and the
Fund, Adviser or Distributor will notify Insurer immediately
upon having a reasonable basis for believing that a Portfolio
has ceased to so comply or that a Portfolio might not so
comply in the future.
(d) Insurer represents that it believes, in good faith, that the
Separate Account is a "segregated asset account" and that
interests in the Separate Account are offered exclusively
through the purchase of or transfer into a "variable
contract," within the meaning of such terms under Section
817(h) of the Code and the regulations thereunder. Insurer
will make every effort to continue to meet such definitional
requirements, and it will notify the Fund and Distributor
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.
(e) The Adviser will manage the Fund as a RIC in compliance with
Subchapter M of the Code and will use its best efforts to
manage to be in compliance with Section 817(h) of the Code and
regulations thereunder. The Fund has adopted and will maintain
procedures for ensuring that the Fund is managed in compliance
with Subchapter M and Section 817(h) and regulations
thereunder.
(f) Should the Distributor or Adviser become aware of a failure of
Fund, or any of its Portfolios, to be in compliance with
Subchapter M of the Code or Section 817(h) of the Code and
regulations thereunder, they represent and agree that they
will immediately notify Insurer of such in writing.
4.2 Insurance and Certain Other Laws.
(a) The Adviser will use its best efforts to cause the Fund to
comply with any applicable state insurance laws or
regulations, to the extent specifically requested in writing
by Insurer. If it cannot comply, it will so notify Insurer in
writing. The Adviser agrees that it will or will cause the
Fund to furnish the information required by state insurance
laws so that the Insurer can obtain the authority needed to
issue the Contracts in the various states.
(b) Insurer represents and warrants that (i) it is an insurance
company duly organized, validly existing and in good standing
under the laws of the State of Indiana and has full corporate
power, authority and legal right to execute, deliver and
perform its duties and comply with its obligations under this
Agreement, (ii) it has legally and validly established and
maintains the Separate Account as a segregated asset account
under the laws of the State of Indiana, and (iii) the
Contracts comply in all material respects with all other
applicable federal and state laws and regulations.
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(c) Contracts Distributor represents and warrants that Contracts
Distributor is a business corporation duly organized, validly
existing, and in good standing under the laws of the State of
Delaware and has full corporate power, authority and legal
right to execute, deliver, and perform its duties and comply
with its obligations under this Agreement.
(d) Distributor represents and warrants that it is a business
corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has full
corporate power, authority and legal right to execute,
deliver, and perform its duties and comply with its
obligations under this Agreement.
(e) Distributor represents and warrants that the Fund is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Maryland and has full
power, authority, and legal right to execute, deliver, and
perform its duties and comply with its obligations under this
Agreement.
(f) Adviser represents and warrants that it is a limited
partnership, duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full
power, authority, and legal right to execute, deliver, and
perform its duties and comply with its obligations under this
Agreement.
4.3 Securities Laws.
(a) Insurer represents and warrants that (i) interests in the
Separate Account pursuant to the Contracts will be
registered under the 1933 Act to the extent required by the
1933 Act and the Contracts will be duly authorized for
issuance and sold in compliance with Indiana law, (ii) the
Separate Account is or will be registered and will remain
registered under the 1940 Act to the extent required by the
1940 Act, (iii) the Separate Account does and will comply in
all material respects with the requirements of the 1940 Act
and the rules thereunder, (iv) the Separate Account's 1933
Act registration statement relating to the Contracts,
together with any amendments thereto, will, at all times
comply in all material respects with the requirements of the
1933 Act and the rules thereunder, and (v) the Separate
Account Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules
thereunder.
(b) The Adviser and Distributor represent and warrant that (i)
Fund shares sold pursuant to this Agreement will be
registered under the 1933 Act to the extent required by the
1933 Act and duly authorized for issuance and sold in
compliance with Maryland law, (ii) the Fund is and will
remain registered under the 1940 Act to the extent required
by the 1940 Act, (iii) the Fund will amend the registration
statement for its shares under the 1933 Act and itself under
the 1940 Act from time to time as required in order to
effect the continuous offering of its shares, (iv) the Fund
does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, (v)
the Fund's 1933 Act registration statement, together with
any amendments thereto,
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will at all times comply in all material respects with the
requirements of the 1933 Act and rules thereunder, and (vi)
the Fund Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules
thereunder.
(c) The Fund will register and qualify its shares for sale in
accordance with the laws of any state or other jurisdiction
only if and to the extent reasonably deemed advisable by the
Fund, Insurer or any other life insurance company utilizing
the Fund.
(d) Distributor and Contracts Distributor each represents and
warrants that it is and will remain registered as a
broker-dealer with the SEC under the Securities Exchange Act
of 1934, as amended, and is and will remain a member in good
standing of the National Association of Securities Dealers
Inc. (the "NASD").
4.4 Notice of Certain Proceedings and Other Circumstances.
(a) Distributor or the Fund shall immediately notify Insurer of
(i) the issuance by any court or regulatory body of any stop
order, cease and desist order, or other similar order with
respect to the Fund's registration statement under the 1933
Act or the Fund Prospectus, (ii) any request by the SEC for
any amendment to such registration statement or Fund
Prospectus, (iii) the initiation of any proceedings for that
purpose or for any other purpose relating to the
registration or offering of the Fund's shares, or (iv) any
other action or circumstances that may prevent the lawful
offer or sale of Fund shares in any state or jurisdiction,
including, without limitation, any circumstances in which
(x) the Fund's shares are not registered and, in all
material respects, issued and sold in accordance with
applicable state and federal law or (y) such law precludes
the use of such shares as an underlying investment medium of
the Contracts issued or to be issued by Insurer. Distributor
and the Fund will make every reasonable effort to prevent
the issuance of any such stop order, cease and desist order
or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(b) Insurer and Contracts Distributor shall immediately notify the
Fund of (i) the issuance by any court or regulatory body of
any stop order, cease and desist order or similar order with
respect to the Separate Account's registration statement
under the 1933 Act relating to the Contracts or the Separate
Account Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or Separate Account
Prospectus, (iii) the initiation of any proceedings for that
purpose or for any other purpose relating to the
registration or offering of the Separate Account interests
pursuant to the Contracts, or (iv) any other action or
circumstances that may prevent the lawful offer or sale of
said interests in any state or jurisdiction, including,
without limitation, any circumstances in which said
interests are not registered and, in all material respects,
issued and sold in accordance with applicable state and
federal law. Insurer and Contracts Distributor will make
every reasonable effort to prevent the issuance of any such
stop order, cease and desist order or similar order and, if
any such order is issued, to obtain the lifting thereof at
the earliest possible time.
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4.5 Insurer to Provide Documents.
Upon request, Insurer will provide the Fund and the Distributor one complete
copy of SEC registration statements, Separate Account Prospectuses, reports, any
preliminary and final voting instruction solicitation material, applications for
exemptions, requests for no-action letters, and amendments to any of the above,
that materially relate to the Separate Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
4.6 Fund to Provide Documents.
Upon request, the Fund will provide to Insurer one complete copy of SEC
registration statements, Fund Prospectuses, reports, any preliminary and final
proxy material, applications for exemptions, requests for no-action letters, and
all amendments to any of the above, that materially relate to the Fund or its
shares, contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
Section 5. Mixed and Shared Funding
5.1 General.
The Fund has obtained an order exempting it from certain provisions of the 1940
Act and rules thereunder so that the Fund is available for investment by certain
other entities, including, without limitation, separate accounts funding
variable life insurance policies and separate accounts of insurance companies
unaffiliated with Insurer ("Mixed and Shared Funding Order"). The Parties
recognize that the SEC has imposed terms and conditions for such orders that are
substantially identical to many of the provisions of this Section 5.
5.2 Disinterested Directors.
The Fund agrees that the Fund's board of Directors (the "Board of Directors")
shall at all times consist of directors a majority of whom (the "Disinterested
Directors") are not interested persons of Adviser or Distributor within the
meaning of Section 2(a)(19) of the 1940 Act.
5.3 Monitoring for Material Irreconcilable Conflicts.
The Fund agrees that its Board of Directors will monitor for the existence of
any material irreconcilable conflict between the interests of the participants
in all separate accounts of life insurance companies utilizing the Fund,
including the Separate Account. Insurer agrees to inform the Board of Directors
of the Fund of the existence of or any potential for any such material
irreconcilable conflict of which it is aware. The concept of a "material
irreconcilable conflict" is not defined by the 1940 Act or the rules thereunder,
but the Parties recognize that such a conflict may arise for a variety of
reasons, including, without limitation:
(a) an action by any state insurance or other regulatory
authority;
(b) a change in applicable federal or state insurance, tax or
securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any
similar action by insurance, tax or securities regulatory
authorities;
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(c) an administrative or judicial decision in any relevant
proceeding;
(d) the manner in which the investments of any Portfolio are being
managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract participants or
by participants of different life insurance companies
utilizing the Fund; or
(f) a decision by a life insurance company utilizing the Fund to
disregard the voting instructions of participants.
Insurer will assist the Board of Directors in carrying out its responsibilities
by providing the Board of Directors with all information reasonably necessary
for the Board of Directors to consider any issue raised, including information
as to a decision by Insurer to disregard voting instructions of Participants.
The Board of Directors will record in its minutes, or other appropriate records,
all reports received by it and all action with regard to a material
irreconcilable conflict.
5.4 Conflict Remedies.
(a) It is agreed that if it is determined by a majority of the
members of the Board of Directors or a majority of the
Disinterested Directors that a material irreconcilable conflict
exists, Insurer and the other life insurance companies utilizing
the Fund will, at their own expense and to the extent reasonably
practicable (as determined by a majority of the Disinterested
Directors), take whatever steps are necessary to remedy or
eliminate the material irreconcilable conflict, which steps may
include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the
separate accounts (or the subaccounts of the separate
accounts) from the Fund or any Portfolio and reinvesting
such assets in a different investment medium, including
another Portfolio of the Fund, or submitting the question
whether such segregation should be implemented to a vote of
all affected participants and, as appropriate, segregating
the assets of any particular group (e.g., annuity contract
owners or participants, life insurance contract owners or
all contract owners and participants of one or more life
insurance companies utilizing the Fund) that votes in favor
of such segregation, or offering to the affected contract
owners or participants the option of making such a change;
and
(ii) establishing a new registered investment company of the type
defined as a "Management Company" in Section 4(3) of the
1940 Act or a new separate account that is operated as a
Management Company.
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(b) If the material irreconcilable conflict arises because of
Insurer's decision to disregard Participant voting instructions
and that decision could conflict with the majority of Participant
voting instructions and represents a minority position or would
preclude a majority vote, Insurer may be required, at the Fund's
election, to withdraw the Separate Account's (or sub-account's)
investment in the Fund provided, however, that such withdrawal
and termination will be limited to the extent required by the
foregoing irreconcilable material conflict as determined by a
majority of the disinterested directors of the Board of
Directors. No charge or penalty will be imposed as a result of
such withdrawal. Any such withdrawal must take place within six
months after the Fund gives notice to Insurer that this provision
is being implemented, and until the end of such six-month period,
Distributor and the Fund shall continue to accept and implement
orders by Insurer for the purchase and redemption of shares of
the Fund.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to Insurer
conflicts with the majority of other state regulators, then
Insurer will withdraw the Separate Account's (or sub-account's)
investment in the Fund within six months after the Fund's Board
of Directors informs Insurer that it has determined that such
decision has created a material irreconcilable conflict, provided
that such withdrawal will be limited to the extent required by
the irreconcilable material conflict as determined by a majority
of the disinterested directors of the Fund Board. No charge or
penalty will be imposed as a result of such withdrawal. Until the
end of such six-month period, Distributor and Fund shall continue
to accept and implement orders by Insurer for the purchase and
redemption of shares of the Fund.
(d) Insurer agrees that any remedial action taken by it in resolving
any material irreconcilable conflict will be carried out at its
expense and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors
will determine whether or not any proposed action adequately
remedies any material irreconcilable conflict. In no event,
however, will the Fund or Distributor be required to establish a
new funding medium for any Contracts. Insurer will not be
required by the terms hereof to establish a new funding medium
for any Contracts if an offer to do so has been declined by vote
of a majority of Participants materially adversely affected by
the material irreconcilable conflict.
5.5 Notice to Insurer.
The Fund will promptly make known in writing to Insurer the Board of Directors'
determination of the existence of a material irreconcilable conflict, a
description of the facts that give rise to such conflict and the implications of
such conflict.
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5.6 Information Requested by Board of Directors.
Insurer and the Fund will at least annually submit to the Board of Directors of
the Fund such reports, materials or data as the Board of Directors may
reasonably request so that the Board of Directors may fully carry out the
obligations imposed upon it by the provisions hereof, and said reports,
materials and data will be submitted at any reasonable time deemed appropriate
by the Board of Directors. All reports received by the Board of Directors of
potential or existing conflicts, and all Board of Directors actions with regard
to determining the existence of a conflict, notifying life insurance companies
utilizing the Fund of a conflict, and determining whether any proposed action
adequately remedies a conflict, will be properly recorded in the minutes of the
Board of Directors or other appropriate records, and such minutes or other
records will be made available to the SEC upon request.
5.7 Compliance with SEC Rules.
If, at any time during which the Fund is serving as an investment medium for
variable life insurance policies, 1940 Act Rules 6e-3(T) or, if applicable, 6e-2
are amended or Rule 6e-3 is adopted to provide exemptive relief with respect to
mixed and shared funding, the Parties agree that they will comply with the terms
and conditions thereof and that the terms of this Section 5 shall be deemed
modified if and only to the extent required in order also to comply with the
terms and conditions of such exemptive relief that is afforded by any of said
rules that are applicable.
Section 6. Termination
6.1 Events of Termination.
Subject to Section 6.4 below, this Agreement will terminate as to a Portfolio:
(a) at the option of Insurer or Distributor upon at least sixty
days' advance written notice to the other Parties, or if
later, upon the receipt of any required exemptive relief or
orders from the SEC, unless otherwise agreed in a separate
written agreement among the Parties; or
(b) at the option of the Fund upon (i) at least sixty days'
advance written notice to the other Parties, and (ii) approval
by (x) a majority of the disinterested Directors upon a
finding that a continuation of this Contract is contrary to
the best interests of the Fund, or (y) a majority vote of the
shares of the affected Portfolio in the corresponding Division
of the Separate Account (pursuant to the procedures set forth
in Section 11 of this Agreement for voting Trust shares in
accordance with Participant instructions); or
(c) at the option of the Fund, upon receipt of the written notice
to the other Parties by the Fund, upon institution of formal
proceedings against Insurer or Contracts Distributor by the
NASD, the SEC, any state insurance regulator or any other
regulatory body regarding Insurer's obligations under this
Agreement or related to the sale of the Contracts, the
operation of the Separate Account, or the purchase of the
Fund shares, if, in each case, the Fund reasonably
determines in good faith that such proceedings, or the facts
on which such proceedings would be based, have a material
likelihood of imposing material adverse consequences on the
Portfolio to be terminated; or
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(d) at the option of Insurer, upon receipt of the written notice
to the other Parties by the Insurer, upon institution of
formal proceedings against the Fund, Adviser, or Distributor
by the NASD, the SEC, or any state insurance regulator or
any other regulatory body regarding the Fund's, Adviser's or
Distributor's obligations under this Agreement or related to
the operation or management of the Fund or the purchase of
Fund shares, if, in each case, Insurer reasonably determines
that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of
imposing material adverse consequences on Insurer, Contracts
Distributor or the Division corresponding to the Portfolio
to be terminated; or
(e) at the option of any Party, upon receipt of the written notice
to the other Parties, in the event that (i) the Portfolio's
shares are not registered and, in all material respects,
issued and sold in accordance with any applicable state and
federal law or (ii) such law precludes the use of such shares
as an underlying investment medium of the Contracts issued or
to be issued by Insurer; or
(f) upon termination of the corresponding Division's investment in
the Portfolio pursuant to Section 5 hereof; or
(g) at the option of Insurer, upon receipt of the written notice
to the other Parties by the Insurer, if the Portfolio ceases
to qualify as a RIC under Subchapter M of the Code or under
successor or similar provisions; or
(h) at the option of Insurer, upon receipt of the written notice
to the other Parties by the Insurer, if the Portfolio fails to
comply with Section 817(h) of the Code or with successor or
similar provisions; or
(i) at the option of Insurer, upon receipt of the written notice
to the other Parties by the Insurer, if Insurer reasonably
believes that any change in a Fund's investment adviser or
investment practices will materially increase the risks
incurred by Insurer.
6.2 Funds to Remain Available.
Except (i) as necessary to implement Participant-initiated transactions, (ii) as
required by state insurance laws or regulations, (iii) as required pursuant to
Section 5 of this Agreement, or (iv) with respect to any Portfolio as to which
this Agreement has terminated, Insurer shall not (x) redeem Fund shares
attributable to the Contracts, or (y) prevent Participants from allocating
payments to or transferring amounts from a Portfolio that was otherwise
available under the Contracts, until, in either case, 60 calendar days after
Insurer shall have notified the Fund or Distributor of its intention to do so.
6.3 Survival of Warranties and Indemnifications.
All warranties and indemnifications will survive the termination of this
Agreement.
6.4 Continuance of Agreement for Certain Purposes.
Notwithstanding any termination of this Agreement, the Distributor shall
continue to make available shares of the Portfolios pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective date
of termination of this Agreement (the "Existing Contracts"), except as
-13-
otherwise provided under Section 5 of this Agreement. Specifically, and without
limitation, the Distributor shall facilitate the sale and purchase of shares of
the Portfolios as necessary in order to process premium payments, surrenders and
other withdrawals, and transfers or reallocations of values under Existing
Contracts.
Section 7. Parties to Cooperate Respecting Termination
The other Parties hereto agree to cooperate with and give reasonable assistance
to Insurer in taking all necessary and appropriate steps for the purpose of
ensuring that the Separate Account owns no shares of a Portfolio after the Final
Termination Date with respect thereto.
Section 8. Assignment
This Agreement may not be assigned by any Party, except with the written consent
of each other Party.
Section 9. Class B Distribution Payments
From time to time during the term of this Agreement the Distributor may
make payments to the Insurer pursuant to a distribution plan adopted by the Fund
with respect to the Class B shares of the Portfolios pursuant to Rule 12b-1
under the 1940 Act (the "Rule 12b-1 Plan) in consideration of the Insurer's
furnishing distribution services relating to the Class B shares of the
Portfolios and providing administrative, accounting and other services,
including personal service and/or the maintenance of Participant accounts, with
respect to such shares. The Distributor has no obligation to make any such
payments, and the Insurer waives any such payment, until the Distributor
receives monies therefor from the Fund. Any such payments made pursuant to this
Section 9 shall be subject to the following terms and conditions:
(a) Any such payments shall be in such amounts as the Distributor
may from time to time advise the Insurer in writing but in any
event not in excess of the amounts permitted by the Rule 12b-1
Plan. Such payments may include a service fee in the amount of
.25 of 1% per annum of the average daily net assets of the
Fund attributable to the Class B shares of a Portfolio held by
clients of the Insurer. Any such service fee shall be paid
solely for personal service and/or the maintenance of
Participant accounts.
(b) The provisions of this Section 9 relate to a plan adopted by
the Fund pursuant to Rule 12b-1. In accordance with Rule
12b-1, any person authorized to direct the disposition of
monies paid or payable by the Fund pursuant to this Section 9
shall provide the Fund's Board of Directors, and the Directors
shall review, at least quarterly, a written
-14-
report of the amounts so expended and the purposes for which
such expenditures were made.
(c) The provisions of this Section 9 shall remain in effect for
not more than a year and thereafter for successive annual
periods only so long as such continuance is specifically
approved at least annually in conformity with Rule 12b-1 and
the 1940 Act. The provisions of this Section 9 shall
automatically terminate in the event of the assignment (as
defined by the 0000 Xxx) of this Agreement, in the event the
Rule 12b-1 Plan terminates or is not continued. In addition,
the provisions of this Section 9 may be terminated at any
time, without penalty, by either the Distributor or the
Insurer with respect to any Portfolio on not more than 60
days' nor less than 30 days' written notice delivered or
mailed by registered mail, postage prepaid, to the other
Party. Notwithstanding termination of this Section 9 or
termination of this Agreement, provided that the Rule 12b-1
Plan or any such similar plan remain in effect, the
provisions of this Section 9 shall remain in effect with
regard to Existing Contracts and the Insurer shall continue
to receive payments therefore.
Section 10. Notices
Notices and communications required or permitted by Section 2 hereof will be
given by means mutually acceptable to the Parties concerned. Each other notice
or communication required or permitted by this Agreement will be given to the
following persons at the following addresses by registered, certified or
overnight mail and facsimile numbers, or such other persons, addresses or
facsimile numbers as the Party receiving such notices or communications may
subsequently direct in writing:
Insurer
American Enterprise Life Insurance Company
1765 AXP Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Executive Vice President, Annuities
FAX: (000) 000-0000
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Contracts Distributor
American Express Financial Advisors Inc.
1765 AXP Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Vice President, Annuities
FAX: (000) 000-0000
If to Insurer or Contracts Distributor,
a copy to:
American Express Financial Advisors Inc.
50607 AXP Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Counsel
FAX: (000) 000-0000
Alliance Fund Distributors, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx XX 00000
Attn.: Xxxxxx X. Xxxxxx
FAX: (000) 000-0000
Alliance Capital Management L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx XX 00000
Attn: Xxxxxx X. Xxxxxx
FAX: (000) 000-0000
Section 11. Voting Procedures
Subject to the cost allocation procedures set forth in Section 3 hereof, Insurer
will provide such information regarding Participants so that Distributor can
distribute all proxy material furnished by the Fund to Participant. Insurer will
vote Fund shares in accordance with instructions received from Participants.
Insurer will vote Fund shares that are (a) not attributable to Participants or
(b) attributable to Participants, but for which no instructions have been
received, in the same proportion as Fund shares for which said instructions have
been received from Participants. Insurer agrees that it will disregard
Participant voting instructions only to the extent it would be permitted to do
so pursuant to Rule 6e-3 (T)(b)(15)(iii) under the 1940 Act if the Contracts
were variable life insurance policies subject to that rule. Other participating
life insurance companies utilizing the Fund will be responsible for calculating
voting privileges in a manner consistent with that of Insurer, as prescribed by
this Section 11.
The Fund will comply with all provisions of the 1940 Act requiring voting by
shareholders, and in particular, the Fund either will provide for annual
meetings (except insofar as the SEC may interpret Section 16 of the 1940 Act not
to require such meetings) or, as the Fund currently intends, to comply with
Section 16(c) of the 1940 Act (although the Fund is not one of the trusts
described in Section
-16-
16(c) of that Act) as well as with Sections 16(a) and, if and when applicable,
16(b). Further, the Fund will act is accordance with the SEC's interpretation of
the requirements of Section 16(a) with respect to periodic elections of
directors and with whatever rules the SEC may promulgate with respect thereto.
Section 12. Foreign Tax Credits
The Adviser agrees to consult in advance with Insurer concerning any decision to
elect or not to elect pursuant to Section 853 of the Code to pass through the
benefit of any foreign tax credits to the Fund's shareholders.
Section 13. Indemnification
13.1 Indemnification of Fund, Distributor and Adviser by Insurer.
(a) Except to the extent provided in Sections 13.1(b) and 13.1(c),
below, Insurer agrees to indemnify and hold harmless the Fund,
Distributor and Adviser and each person, if any, who controls the
Fund, Distributor or Adviser within the meaning of Section 15 of
the 1933 Act, and each of their directors and officers,
(collectively, the "Indemnified Parties" for purposes of this
Section 13. 1) against any and all losses, claims, expenses,
damages, liabilities (including amounts paid in settlement with
the written consent of Insurer) or actions in respect thereof
(including, to the extent reasonable, legal and other expenses),
to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such
losses, claims, expenses, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Separate Account's 1933 Act registration statement, the
Separate Account Prospectus, the Contracts or, to the extent
prepared by Insurer or Contracts Distributor, sales
literature or advertising for the Contracts (or any
amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading in light of the circumstances in which they
were made; provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished
to Insurer or Contracts Distributor by or on behalf of the
Fund, Distributor or Adviser for use in the Separate
Account's 1933 Act registration statement, the Separate
Account Prospectus, the Contracts, or sales literature or
advertising (or any amendment or supplement to any of the
foregoing); or
-17-
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in the Fund's 1933 Act registration statement,
Fund Prospectus, sales literature or advertising of the
Fund, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of
Insurer or Contracts Distributor) or the negligent, illegal
or fraudulent conduct of Insurer or Contracts Distributor or
persons under their control (including, without limitation,
their employees and "Associated Persons," as that term is
defined in paragraph (m) of Article I of the NASD's
By-Laws), in connection with the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Fund's 1933 Act registration statement, Fund Prospectus,
sales literature or advertising of the Fund, or any
amendment or supplement to any of the foregoing, or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to the Fund, Adviser or Distributor by
or on behalf of Insurer or Contracts Distributor for use in
the Fund's 1933 Act registration statement, Fund Prospectus,
sales literature or advertising of the Fund, or any
amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by Insurer or Contracts
Distributor to perform the obligations, provide the services
and furnish the materials required of them under the terms
of this Agreement.
(b) Insurer shall not be liable under this Section 13.1 with respect
to any losses, claims, expenses, damages, liabilities or actions
to which an Indemnified Party would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in
the performance by that Indemnified Party of its duties or by
reason of that Indemnified Party's reckless disregard of
obligations or duties under this Agreement or to Distributor or
to the Fund.
(c) Insurer shall not be liable under this Section 13.1 with respect
to any action against an Indemnified Party unless the Fund,
Distributor or Adviser shall have notified Insurer in writing
within a reasonable time after the summons or other first legal
process giving information of the nature of the action shall have
been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify Insurer of any such
action shall not relieve Insurer from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this Section 13. 1, except to the
extent that the failure to notify results in the failure of
actual notice to Insurer and Insurer is damaged solely as a
result of the failure to give such notice. In case any such
action is brought against an Indemnified Party, Insurer shall be
entitled to participate, at its own expense, in the defense of
such
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action. Insurer also shall be entitled to assume the defense
thereof, with counsel approved by the Indemnified Party named in
the action, which approval shall not be unreasonably withheld.
After notice from Insurer to such Indemnified Party of Insurer's
election to assume the defense thereof, the Indemnified Party
will cooperate fully with Insurer and shall bear the fees and
expenses of any additional counsel retained by it, and Insurer
will not be liable to such Indemnified Party under this Agreement
for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense
thereof, other than reasonable costs of investigation.
13.2 Indemnification of Insurer and Contracts Distributor by Adviser.
(a) Except to the extent provided in Sections 13.2(d) and 13.2(e),
below, Adviser agrees to indemnify and hold harmless Insurer and
Contracts Distributor and each person, if any, who controls
Insurer or Contracts Distributor within the meaning of Section 15
of the 1933 Act, and each of their directors and officers,
(collectively, the "Indemnified Parties" for purposes of this
Section 13.2) against any and all losses, claims, expenses,
damages, liabilities (including amounts paid in settlement with
the written consent of Adviser) or actions in respect thereof
(including, to the extent reasonable, legal and other expenses)
to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such
losses, claims, expenses, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Fund's 1933 Act registration statement, Fund Prospectus,
sales literature or advertising of the Fund or, to the
extent not prepared by Insurer or Contracts Distributor,
sales literature or advertising for the Contracts (or any
amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading in light of the circumstances in which they
were made; provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished
to Distributor, Adviser or the Fund by or on behalf of
Insurer or Contracts Distributor for use in the Fund's 1933
Act registration statement, Fund Prospectus, or in sales
literature or advertising (or any amendment or supplement to
any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in the Separate Account's 1933 Act registration
statement, Separate Account Prospectus, sales literature or
advertising for the Contracts, or any amendment or
supplement to any of the foregoing, not supplied for use
therein by or on behalf of Distributor, Adviser, or the
Fund) or the negligent, illegal or fraudulent conduct of the
Fund, Distributor,
-19-
Adviser or persons under their control (including, without
limitation, their employees and Associated Persons), in
connection with the sale or distribution of the Contracts or
Fund shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Separate Account's 1933 Act registration statement,
Separate Account Prospectus, sales literature or advertising
covering the Contracts, or any amendment or supplement to
any of the foregoing, or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading
in light of the circumstances in which they were made, if
such statement or omission was made in reliance upon and in
conformity with information furnished to Insurer or
Contracts Distributor by or on behalf of the Fund,
Distributor or Adviser for use in the Separate Account's
1933 Act registration statement, Separate Account
Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by the Fund, Adviser or
Distributor or persons under their respective control or
subject to their authorization to perform the obligations,
provide the services and furnish the materials required of
them under the terms of this Agreement including, but not
limited to, a failure, whether unintentional, in good faith
or otherwise, any material error in or untimely calculation
or reporting of the daily net asset value per share or
dividend or capital gain distribution rate (referred to in
this Section 13.2(a)(iv) as an "error"); provided, however,
that the foregoing will not apply where such error is the
result of incorrect information supplied by or on behalf of
the Insurer to the Fund or the Adviser, and will be limited
to (i) reasonable administrative costs necessary to correct
such error, and (ii) amounts which the Insurer has paid out
of its own resources to make Contract owners whole as a
result of such error; or
(v) arise out of or result from any material breach of any
representation and/or any warranty made by the Adviser or
the Fund in this Agreement, or arise out of or result from
any other material breach of this Agreement by the Adviser
or the Fund or persons under their respective control or
subject to their authorization.
(b) Except to the extent provided in Sections 13.2(d) and 13.2(e)
hereof, Adviser agrees to indemnify and hold harmless the
Indemnified Parties from and against any and all losses, claims,
expenses, damages, liabilities (including amounts paid in
settlement thereof with, except as set forth in Section 13.2(c)
below, the written consent of Adviser) or actions in respect
thereof (including, to the extent reasonable, legal and other
expenses) to which the Indemnified Parties may become subject
directly or indirectly under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, expenses,
damages, liabilities or actions directly or indirectly result
from or arise out of the failure of any Portfolio to operate as a
regulated investment company in compliance with (i) Subchapter M
of the Code and regulations thereunder
-20-
and (ii) Section 817(h) of the Code and regulations thereunder
(except to the extent that such failure is caused by Insurer),
including, without limitation, any income taxes and related
penalties, rescission charges, liability under state law to
Contract owners or Participants asserting liability against
Insurer or Contracts Distributor pursuant to the Contracts, the
costs of any ruling and closing agreement or other settlement
with the Internal Revenue Service, and the cost of any
substitution by Insurer of shares of another investment company
or portfolio for those of any adversely affected Portfolio as a
funding medium for the Separate Account that Insurer deems
necessary or appropriate as a result of the noncompliance.
(c) The written consent of Adviser referred to in Section 13.2(b)
above shall not be required with respect to amounts paid in
connection with any ruling and closing agreement or other
settlement with the Internal Revenue Service.
(d) Adviser shall not be liable under this Section 13.2 with respect
to any losses, claims, expenses, damages, liabilities or actions
to which an Indemnified Party would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in
the performance by that Indemnified Party of its duties or by
reason of such Indemnified Party's reckless disregard of its
obligations and duties under this Agreement or to Insurer,
Contracts Distributor or the Separate Account.
(e) Adviser shall not be liable under this Section 13.2 with respect
to any action against an Indemnified Party unless Insurer or
Contracts Distributor shall have notified Adviser in writing
within a reasonable time after the summons or other first legal
process giving information of the nature of the action shall have
been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify Adviser of any such
action shall not relieve Adviser from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this Section 13.2. In case any such
action is brought against an Indemnified Party, Adviser will be
entitled to participate, at its own expense, in the defense of
such action. Adviser also shall be entitled to assume the defense
thereof (which shall include, without limitation, the conduct of
any ruling request and closing agreement or other settlement
proceeding with the Internal Revenue Service), with counsel
approved by the Indemnified Party named in the action, which
approval shall not be unreasonably withheld. After notice from
Adviser to such Indemnified Party of Adviser's election to assume
the defense thereof, the Indemnified Party will cooperate fully
with Adviser and shall bear the fees and expenses of any
additional counsel retained by it, and Adviser will not be liable
to such Indemnified Party under this Agreement for any legal or
other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof, other than
reasonable costs of investigation.
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13.3 Effect of Notice.
Any notice given by the indemnifying Party to an Indemnified Party referred to
in Section 13.1(c) or 13.2(e) above of participation in or control of any action
by the indemnifying Party will in no event be deemed to be an admission by the
indemnifying Party of liability, culpability or responsibility, and the
indemnifying Party will remain free to contest liability with respect to the
claim among the Parties or otherwise.
Section 14. Limitation of Liability
Except as previously stated herein, as between the Parties, in no event will any
Party to this Agreement be responsible to any other Party for any incidental,
indirect, consequential, punitive or exemplary damages of any kind arising from
this Agreement, including, without limitation, lost revenues, loss of profits or
loss of business.
Section 15. Arbitration
Any controversy of claim arising or relating to this Agreement, or the breach
thereof, will be settled by arbitration administered by the American Arbitration
Association in accordance with its Commercial Arbitration Rules and Title 9 of
the U.S. Code. Judgment on 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 Insurer 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 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.
Section 16. Confidentiality
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 Contracts Distributor, Insurer and
their subsidiaries, affiliates and licensees (collectively the "Protected
Parties" for purposes of this Section 16), 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.
-22-
(b) Neither the Distributor nor the Adviser may use or disclose Confidential
Information for any purpose other than to carry out the purpose for which
Confidential Information was provided to Distributor and/or Adviser as set
forth in the Agreement; and the Distributor and the Adviser agree to cause
all their employees, agents and representatives, or any other Party to whom
the Distributor and/or the Adviser may provide access to or disclose
Confidential Information to limit the use and disclosure of Confidential
Information to that purpose.
(c) The Distributor and the Adviser 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 Insurer's
performance of its duties under this Agreement are the valuable property of
the Protected Parties.
(d) The Distributor and the Adviser 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 Distributor and the Adviser further agree to cause
all their agents, representatives or subcontractors of, or any other Party
to whom the Distributor and/or the Adviser may provide access to or
disclose Confidential Information to implement appropriate measures
designed to meet the objectives set forth in this Section 16.
(e) The Distributor and the Adviser acknowledge that any breach of the
agreements in this Section 16 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. The provisions contained in this Section 16
will survive any termination of this Agreement.
Section 17. Applicable Law
This Agreement will be construed and the provisions hereof interpreted under and
in accordance with New York law, without regard for that state's principles of
conflict of laws.
Section 18. Execution in Counterparts
This Agreement may be executed simultaneously in two or more counterparts, each
of which taken together will constitute one and the same instrument.
-23-
Section 19. Severability
If any provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby.
Section 20. Rights Cumulative
The rights, remedies and obligations contained in this Agreement are cumulative
and are in addition to any and all rights, remedies and obligations, at law or
in equity, that the Parties are entitled to under federal and state laws.
Section 21. Restrictions on Sales of Fund Shares
Insurer agrees that the Fund will be permitted (subject to the other terms of
this Agreement) to make its shares available to separate accounts of other life
insurance companies.
Section 22. Headings
The Table of Contents and headings used in this Agreement are for purposes of
reference only and shall not limit or define the meaning of the provisions of
this Agreement.
-24-
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in
their names and on their behalf by and through their duly authorized officers
signing below.
Attest: AMERICAN ENTERPRISE LIFE INSURANCE COMPANY,
/s/ Xxxx Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------- -----------------------
Name: Xxxx Xxxxx Xxxxxxx Name: Xxxxx X. Xxxxxx
Title: Assistant Secretary Title: Executive Vice President, Annuities
Attest: AMERICAN EXPRESS FINANCIAL ADVISORS INC.,
/s/ Xxxx Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------- -----------------------
Name: Xxxx Xxxxx Xxxxxxx Name: Xxxxx X. Xxxxxx
Title: Assistant Secretary Title: Executive Vice President, Annuities
ALLIANCE CAPITAL MANAGEMENT LP
By: Alliance Capital Management Corporation,
its General Partner
By: /s/
--------------------------
Name:
Title:
ALLIANCE FUND DISTRIBUTORS, INC.
By: /s/
--------------------------
Name:
-25-
EXHIBIT A
Funds--Class B shares of:
Alliance VP Premier Growth Portfolio, Alliance VP Technology Portfolio, Alliance
VP U.S. Government/High Grade Portfolio
Combination Fixed and Variable Annuity Contracts:
Contract Name SEC Registration Number
None
Combination Fixed and Variable Life Insurance Policies:
American Express Signature Variable Universal Life(SM) 333-84121
