THIS AGREEMENT is made and entered into as of the 1st day of September,
2002 by and among AMERICAN ENTERPRISE LIFE INSURANCE COMPANY (the "Company"), an
Indiana corporation, on its own behalf and on behalf of each separate account of
the Company set forth on Schedule A hereto as may be amended from time to time
(each such account referred to as an "Account"), THE UNIVERSAL INSTITUTIONAL
FUNDS, INC. (the "Fund"), a Maryland corporation, and XXXXXX XXXXXXX INVESTMENT
MANAGEMENT INC. (the "Adviser"), a Delaware corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as (i) the investment vehicle for
separate accounts established by insurance companies for individual and group
life insurance policies and annuity contracts with variable accumulation and/or
pay-out provisions (hereinafter referred to individually and/or collectively as
"Variable Insurance Products") and (ii) the investment vehicle for certain
qualified pension and retirement plans ("Qualified Plans"); and
WHEREAS, insurance companies desiring to utilize the Fund as an
investment vehicle under their Variable Insurance Products enter into
participation agreements with the Fund and the Adviser (the "Participating
Insurance Companies"); and
WHEREAS, shares of the Fund are divided into several series of shares,
each representing the interest in a particular managed portfolio of securities
and other assets, any one or more of which may be made available under this
Agreement; and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule B hereto (each such series referred to as a "Portfolio"), as such
Schedule may be amended from time to time by mutual agreement of the parties
hereto, to the Account(s) of the Company (all references herein to "shares" of a
Portfolio shall mean the class or classes of shares specifically identified on
Schedule B); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission ("SEC"), dated September 19, 1996 (File No. 812-10118),
granting Participating Insurance Companies and Variable Insurance Product
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 (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 Insurance Product
separate accounts of both affiliated and unaffiliated life insurance companies
and Qualified Plans (the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, the Adviser manages the Portfolios of the Fund; and
WHEREAS, Xxxxxx Xxxxxxx & Co. Incorporated (the "Underwriter") is
registered as a broker/dealer under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), is a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD") and serves as principal
underwriter of the shares of the Fund; and
WHEREAS, the Company has registered or will register under the 1933 Act
the Variable Insurance Products identified on Schedule A hereto (the
"Contracts"), as such Schedule may be amended from time to time by mutual
written agreement of the parties hereto; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of the Company, on the date shown for such Account on Schedule A
hereto, to set aside and invest assets attributable to the Contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Portfolios, on behalf
of each Account or sub-Account thereof (together, as applicable, an "Account"),
to fund the Contracts and the Underwriter is authorized to sell such shares to
each such Account at net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Adviser agree as follows:
ARTICLE I. Purchase and Redemption of Fund Shares
1.1. The Fund agrees to make available for purchase by the Company
shares of the Portfolios and shall execute orders placed for each Account on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of such order. For purposes of this Section 1.1, the Company shall
be the designee of the Fund for receipt of such orders from each Account and
receipt by such designee shall constitute receipt by the Fund; provided that the
Fund receives notice of 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, Inc. is open for trading and on which the Fund calculates its
net asset value pursuant to SEC rules.
1.2. The Fund, so long as this Agreement is in effect, agrees to make
shares of the Portfolios available for purchase at the applicable net asset
value per share by the Company and its Accounts on those days on which the Fund
calculates its net asset value pursuant to SEC rules and the Fund shall use
reasonable efforts to calculate such net asset value on each day that the New
York Stock Exchange, Inc. is open for trading. Shares of a Portfolio will be
ordered in such quantities and at such times as determined by the Company to be
necessary to meet the requirements of the Contracts. Notwithstanding the
foregoing, the Board of Directors of the
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Fund (the "Board") may refuse to permit the Fund 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 Board acting in good faith and
in light of its fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Portfolio.
1.3. The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts and to certain
Qualified Plans. No shares of a Portfolio will be sold to the general public.
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 a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. Subject to and in
accordance with applicable laws and regulations, however, the Fund reserves the
right to redeem shares of the Portfolios for assets other than cash. For
purposes of this Section 1.4, the Company shall be the designee of the Fund for
receipt of requests for redemption from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such request for redemption by 10:00 a.m. Eastern time on the next
following Business Day.
1.5. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company will give the
Fund and the Adviser forty-five (45) days written notice prior to making
available as a funding vehicle under the Contracts any other investment company
that has similar investment objectives and policies as a Portfolio.
1.6. The Company shall pay for Portfolio shares on the next Business
Day after an order to purchase Fund shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire and the Company agrees to use its best efforts to initiate the
transmission of such funds by no later than 2:00 p.m. Eastern time on the day of
transmission. For purposes of Sections 2.9 and 2.10, upon receipt by the Fund of
the federal funds so wired, such funds shall cease to be the responsibility of
the Company and shall become the responsibility of the Fund. The Fund will pay
for a redemption request on the next Business Day after a request to redeem
Portfolio shares is made in accordance with Section 1.4 hereof, except that the
Fund reserves the right to suspend or postpone payment consistent with the 1940
Act and any rules thereunder. All payments by the Fund will be made in federal
funds transmitted by wire or other method agreed to by the parties. For purposes
of Sections 2.9 and 2.10, upon receipt by the Company of the federal funds so
transmitted, such funds shall cease to be the responsibility of the Fund and
shall become the responsibility of the Company.
1.7. Issuance and transfer of the Fund's shares will be by book entry
only. Share certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate sub-account of each Account.
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1.8. The Fund shall furnish same-day notice (by wire or telephone,
followed by written confirmation) to the Company of any income dividends or
capital gain distributions payable on Portfolio 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 of the number of shares so issued as payment of such dividends and
distributions.
1.9. 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
practical after the net asset value per share is calculated (normally by 6:30
p.m. Eastern time) and shall use its best efforts to make such net asset value
per share available by 7:00 p.m. Eastern time. The Fund will notify the Company
as soon as possible if it is determined that the net asset value per share for a
Portfolio will be available after 7:00 p.m. Eastern time, and the Fund and the
Company will mutually agree upon a final deadline for transmission of the net
asset value information.
1.10. The Company shall not redeem Fund shares attributable to the
Contracts (as distinct from Fund shares attributable to the Company's assets
held in the Account) except (i) to implement Contract owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund the opinion of counsel
for the Company (which counsel shall be reasonably satisfactory to the Fund) to
the effect that any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted under the
terms of the Contracts, the Company shall not prevent Contract owners from
allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund sixty (60) days prior written notice of
its intention to do so or such shorter notice period in the event that the
Company determines is necessary to satisfy its fiduciary obligations to Contract
owners.
1.11. Any material errors in the calculation of net asset value,
dividends or capital gain information will be reported promptly upon discovery
to the Company. An error will be deemed "material" based on the Fund's
interpretation of the SEC's position and policy with regard to materiality, as
it may be modified from time to time. If the Fund provides the Company with
materially incorrect net asset value information, through no fault of the
Company, the Account(s) will be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the correct net asset value per share.
The correction of any such errors shall be made by the Fund at the separate
account level and shall be made pursuant to the SEC's recommended guidelines
regarding such errors. Neither the Fund, the Adviser, the Underwriter nor any of
their affiliates will be liable for any information provided to the Company
pursuant to this Agreement which information is based on incorrect information
supplied by or on behalf of the Company to the Fund, the Adviser, the
Underwriter or any one of their respective duly appointed designees.
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ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that: (i) it is an insurance
company duly organized and in good standing under applicable law; (ii) it has
legally and validly established each Account prior to any issuance or sale
thereof as a segregated asset account under applicable laws and regulations; and
(iii) it has registered or, prior to any issuance or sale of the Contracts, will
register and will thereafter maintain the registration of 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. The Company further represents
and warrants that: (i) the Contracts are or will be registered and shall remain
registered under the 1933 Act; (ii) the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws;
and (iii) the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company shall amend the
registration statement for the Accounts and the Contracts under the 1940 Act and
the 1933 Act, respectively, from time to time as required in order to effect the
continuous offering of the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Maryland and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 0000 Xxx. 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. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and that it will use its every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify.
2.4. The Company represents and warrants that each Account is and will
continue to be a "segregated asset account" under applicable provisions of the
Code and applicable Treasury Regulations promulgated thereunder and that each
Contract is and will continue to be treated as a "variable contract" under
applicable provisions of the Code and applicable Treasury Regulations
promulgated thereunder. The Company further represents and warrants that it will
make every effort to maintain such treatment and that it will notify the Fund
immediately upon having a reasonable basis for believing that any Account or
Contract has ceased to be so treated or that any Account or Contract might not
be so treated in the future.
2.5. The Fund represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund
undertakes to have the Board, a majority of whom are not interested persons of
the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
-5-
2.6. The Fund makes no representation 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.
At the reasonable request of the Company, and subject to any confidentiality
obligations of the Fund and the Adviser, the Fund and the Adviser agree to make
available certain information that they maintain so that the Company can obtain
the authority needed under state insurance laws to issue the Contracts in the
various states.
2.7. The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Maryland and that it does and will
comply in all material respects with the 1940 Act.
2.8. The Adviser represents and warrants that it is and shall remain
duly registered in all material respects under all applicable federal and state
securities laws and that it will perform its obligations for the Fund in
compliance in all material respects with the laws of its state of domicile and
any applicable state and federal securities laws and that it will notify the
Company promptly if for any reason it is unable to perform its obligations under
this Agreement.
2.9. The Fund represents and warrants that all of its directors,
officers, employees, and other individuals/entities dealing with the money
and/or securities of the Fund are and shall continue to be at all times covered
by a blanket fidelity bond or similar coverage for the benefit of the Fund in an
amount not less than the minimum coverage as currently required by Rule 17g-1 of
the 1940 Act or related provisions as may be promulgated from time to time. The
aforesaid blanket fidelity bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.10. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Account(s) are and shall continue to be
at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Company and/or the Account(s) that is reasonable and customary in
light of the Company's obligations under this Agreement. The aforesaid includes
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company. The Company agrees to make all reasonable efforts to see that this bond
or another bond containing these provisions is always in effect, and agrees to
notify the Fund and the Adviser in the event that such coverage no longer
applies.
ARTICLE III. Prospectuses, Reports to Shareholders and Proxy Statements; Voting
3.1. The Fund or its designee shall provide the Company with as many
printed copies of the Fund's current prospectus and statement of additional
information (and any supplements or amendments thereto) as the Company may
reasonably request. If requested by the Company, in lieu of providing printed
copies the Fund shall provide camera-ready film, electronic transmission or
computer diskettes containing the Fund's prospectus and statement of additional
information (and any supplements or amendments thereto), and such other
assistance as is reasonably necessary in order for the Company once each year
(or more frequently if the prospectus and/or statement of additional information
for the Fund is amended during the year)
-6-
to have the prospectus for the Contracts and the Fund's prospectus printed
together in one document, and to have the statement of additional information
for the Fund and the statement of additional information for the Contracts
printed together in one document. Alternatively, the Company may print the
Fund's prospectus and/or its statement of additional information (and any
supplements or amendments thereto) in combination with other fund companies'
prospectuses and statements of additional information.
3.2. Except as provided in Article III and Article V, all expenses of
preparing, setting in type, printing and distributing Fund prospectuses and
statements of additional information (and any supplements or amendments thereto)
shall be the expense of the Company. For prospectuses and statements of
additional information (and any supplements or amendments thereto) provided by
the Company to its Contract owners who currently own shares of one or more
Portfolios ("Existing Contract Owners"), in order to update disclosure or
otherwise provide information as required by the 1933 Act and/or the 1940 Act,
the cost of preparing, setting in type and printing shall be borne by the Fund.
If the Company chooses to receive camera-ready film, electronic transmission or
computer diskettes in lieu of receiving printed copies of the Fund's prospectus
and statement of additional information (and any supplements or amendments
thereto), the Fund shall bear the cost of typesetting to provide such documents
to the Company in the format in which the Fund is accustomed to formatting them,
and the Company shall bear the expense of adjusting or changing the format to
conform with any of its documents. In such event, the Fund will reimburse the
Company in an amount equal to the product of "x" and "y", where "x" is the
number of such prospectuses and statements of additional information (and any
supplements or amendments thereto) distributed to Existing Contract Owners and
"y" is the Fund's per unit cost of printing such documents. The Company agrees
to provide the Fund or its designee with such information as may be reasonably
requested by the Fund to assure that the Fund's expenses do not include the
costs of printing, typesetting or distributing any prospectuses or statements of
additional information (or any supplements or amendments thereto) other than the
costs of printing and typesetting those prospectuses or statements of additional
information (or any supplements or amendments thereto) actually distributed to
Existing Contract Owners.
3.3. The statement of additional information of the Fund shall be
obtainable from the Fund, the Company or such other person as the Fund may
designate.
3.4. The Fund, at its expense, shall provide the Company with copies of
its proxy statements, reports to shareholders, and other communications (except
for prospectuses and statements of additional information, and any supplements
or amendments thereto, which are covered in Section 3.1) to shareholders in such
quantity as the Company shall reasonably require for distributing to Existing
Contract Owners. The Fund shall not pay any costs of distributing such proxy
materials, reports to shareholders and other communications to prospective
Contract owners.
3.5. If and to the extent required by law, the Company shall distribute
all proxy materials furnished by the Fund to Contract owners to whom voting
privileges are required to be extended and shall:
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(i) solicit voting instructions from Contract owners;
(ii) vote the Portfolio shares in accordance with
instructions received from Contract owners; and
(iii) vote Portfolio shares for which no instructions have
been received in the same proportion as Portfolio
shares for which instructions have been received;
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. The Company
reserves the right to vote Portfolio shares held in any segregated asset account
in its own right, to the extent permitted by law. If the Company is required to
solicit voting instructions, the Fund and the Company shall follow the
procedures, and shall have the corresponding responsibilities, for the handling
of proxies and voting instruction solicitations, as set forth in Schedule C
attached hereto and incorporated herein by reference. Participating Insurance
Companies shall be responsible for ensuring that each of their separate accounts
participating in the Fund (and for which the soliciting of voting instructions
is required) calculates voting privileges in a manner consistent with the
standards set forth on Schedule C, which standards will also be provided to the
other Participating Insurance Companies.
3.6. 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 (except insofar as the SEC may interpret Section 16 of the 1940
Act not to require such meetings) or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of the
0000 Xxx) as well as with Section 16(a) of the 1940 Act and, if and when
applicable, Section 16(b) of the 1940 Act. Further, the Fund will act in
accordance with the SEC's interpretation of the requirements of Section 16(a) of
the 1940 Act with respect to periodic elections of directors and with whatever
rules the SEC may promulgate with respect thereto.
3.7. The Fund will be responsible for calculating the performance
information for each Portfolio. The Company will be responsible for calculating
the performance information for the Contracts. The Fund agrees to provide the
Company with performance information for the Portfolios on a timely basis to
enable the Company to calculate performance information for the Contracts in
accordance with applicable state and federal law.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund, the Underwriter or the Adviser is named, at least
ten (10) Business Days prior to its use. No such material shall be used without
the prior approval of the Fund or its designee. The Fund shall use its
reasonable best efforts to review any such material as soon as practicable after
receipt and no later than ten (10) Business Days after receipt of such material.
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4.2. The Company shall 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 the Contracts other than the information or
representations contained in the registration statement, prospectus or statement
of additional information for the Fund shares, as such registration statement,
prospectus or statement of additional information may be amended or supplemented
from time to time, or in reports or proxy statements for the Fund which are in
the public domain or approved by the Fund for distribution to Fund shareholders,
or in sales literature or other promotional material approved by the Fund or its
designee, except with the permission of the Fund. The Fund agrees to respond to
any request for approval under this Section 4.2 on a timely basis.
4.3. The Fund or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company and/or its Account(s) or
Contract(s) are named at least ten (10) Business Days prior to its use. No such
material shall be used without the prior approval of the Company or its
designee. The Company shall use its reasonable best efforts to review any such
material as soon as practicable after receipt and no later than ten (10)
Business Days after receipt of such material.
4.4. Neither the Fund nor the Adviser shall give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts, other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement or prospectus may be amended or supplemented from time to
time, or in reports or proxy statements for each Account which are in the public
domain or approved by the Company for distribution to Contract owners, or in
sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares and are relevant to
the Company or the Contracts, as soon as reasonably practicable after the filing
of such document with the SEC.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to investment in
the Fund or the Portfolios under the Contracts, as soon as reasonably
practicable after the filing of such document with the SEC.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper,
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magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public 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 registration statements,
prospectuses, statements of additional information, shareholder reports, proxy
materials, and any other material constituting sales literature or
advertisements under the rules of the NASD, the 1933 Act or the 0000 Xxx.
4.8. The Adviser hereby authorizes the Company to use the following
branded names - "Xxx Xxxxxx and Xxxxxx Xxxxxxxx" - in the Contracts, prospectus
or statement of additional information for the Contracts, or any materials used
to market the Contracts ("Company Material"), subject to the terms and
conditions of Sections 4.1 and 4.2 of this Agreement. The Company agrees not to
use the name "Xxxxxx Xxxxxxx" in any Company Material unless permitted and
approved by the Adviser; provided, however, that the Company may use such name
where (i) in the opinion of counsel to the Company, or as directed by the SEC,
such use is necessary to make the disclosures contained in the Company Material
not misleading and (ii) the Company provides the Adviser with prompt notice of
the required disclosure. It is understood that the names "Xxxxxx Xxxxxxx," "Xxx
Xxxxxx" and "Xxxxxx Xxxxxxxx," and any derivative thereof or logos associated
with such names (collectively, the "MS Names"), are the valuable property of the
Adviser and its affiliates and that the Company shall only have the right to use
the MS Names in Company Materials subject to the constraints set forth in this
Section and with the prior approval of the Adviser. Upon termination of this
Agreement, the Company shall, as soon as is reasonably possible, cease to use
the MS Names.
ARTICLE V. Fees and Expenses
5.1. The Fund shall pay no fee or other compensation to the Company
under this Agreement, except that if the Fund or any Portfolio adopts and
implements a service plan and/or a plan pursuant to Rule 12b-1, then the
Underwriter may make payments to the Company or to the underwriter for the
Contracts pursuant to such plans if and in amounts agreed to by the Underwriter
in writing.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. Except as otherwise
set forth in Article 3 of this Agreement, the Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders, the preparation of all statements and
notices required by any federal or state law, and all taxes on the issuance or
transfer of the Fund's shares.
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5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, statement of additional information, proxy materials and reports to
owners of Contracts issued by the Company; provided, however, that the Adviser
or the Underwriter shall reimburse the Company for expenses associated with the
distribution of such materials to Existing Contract Owners and, further, that
such reimbursement shall be limited to $5,000 for the 2003 calendar year.
ARTICLE VI. Diversification
6.1. The Fund will use its best efforts to at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for annuity, endowment, or life insurance contracts
and any amendments or other modifications to such Section or Regulations. In the
event the Fund ceases to so qualify, it will take reasonable steps to (a) notify
the Company of such event and (b) adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. 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 are being managed; (e) a difference in voting instructions given
by contract owners; or (f) a decision by a Participating Insurance Company to
disregard the voting instructions of contract owners. The Fund shall promptly
inform the Company if the Board 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 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
disregarded. The Company agrees that these responsibilities will be carried out
with a view only to the interests of Contract owners. The Board will record in
its minutes, or other appropriate records, all reports received by it and all
Board action with regard to a conflict.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested members, 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
disinterested 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 (or
sub-accounts) from the Fund or any
-11-
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another portfolio of the Fund, 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 policy 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. No charge or penalty
will be imposed as a result of such withdrawal. The Company agrees that it bears
the responsibility to take remedial action in the event of a Board determination
of an irreconcilable material conflict and the cost of such remedial action, and
that these responsibilities will be carried out with a view only to the
interests of Contract owners.
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 affected Account's
investment in the Fund and terminate this Agreement with respect to such Account
(at the Company's expense); provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. No charge or penalty will be imposed as a result of such
withdrawal. The Company agrees that it bears the responsibility to take remedial
action in the event of a Board determination of an irreconcilable material
conflict and the cost of such remedial action, and that these responsibilities
will be carried out with a view only to the interests of Contract owners. Until
the end of such withdrawal under this Section 7.4 the Fund will, to the extent
permitted by law and any SEC exemptive relief granted to the Fund, continue to
accept and implement orders by the Company for the redemption of Portfolio
shares in accordance with the provisions of this Agreement.
7.5. For purposes of Sections 7.3 and 7.4 of this Agreement, a majority
of the disinterested members of the Board 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 or 7.4 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 materially adversely affected by the
irreconcilable material conflict.
7.6. 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 Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the 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 3.4, 3.5, 7.1, 7.2, 7.3 and 7.4 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.
-12-
7.7. Each of the Company and the Adviser shall at least annually submit
to the Board such reports, materials or data as the Board may reasonably request
so that the Board may fully carry out the obligations imposed upon it by the
provisions hereof and in the Shared Funding Exemptive Order. Such reports,
materials and data shall be submitted more frequently if deemed appropriate by
the Board.
ARTICLE VIII. Indemnification
8.1. Indemnification by the Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund, the
Underwriter, the Adviser and each member of the Board and each officer and
employee of the Fund, and each director, officer and employee of the Underwriter
and the Adviser, and each person, if any, who controls the Fund, the Underwriter
or the Adviser within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" and individually, an "Indemnified Party," for purposes
of this Section 8.1) against any and all losses, claims, damages, 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, 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 statements or alleged
untrue statements of any material fact contained in the
registration statement, prospectus or statement of additional
information for the Contracts or contained in the Contracts or
sales literature 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 under 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 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 any
amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or 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 or sales literature of the
Fund not supplied by the Company, or persons under its control
and other than statements or representations authorized by the
Fund, the Underwriter or the Adviser) or unlawful conduct
-13-
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 or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature 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 in light of the circumstances under which they were
made, if such a statement or omission was made in reliance upon
and in conformity with information furnished 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; or
(vi) arise out of or are based on the Company's lack of good faith,
gross negligence or willful misconduct in carrying out its duties
and responsibilities under this Agreement, or any violation of
applicable federal or state law by the Company or persons under
its control.
Each of paragraphs (i) through (v) above is limited by and in accordance with
the provisions of Sections 8.1(b) through (d) below.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from 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.
8.1(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. 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
-14-
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 incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). Except as expressly stated herein, in no event will the Company
be responsible to an Indemnified Party for any consequential, punitive or
exemplary damages of any kind arising from this Agreement.
8.1(e). The Fund or the Adviser, as applicable, will promptly notify
the Company of the commencement of any litigation or proceedings against an
Indemnified Party in connection with this Agreement, the issuance or sale of the
Fund shares or the Contracts, or the operation of the Fund.
8.2. Indemnification by the Adviser
8.2(a). The Adviser agrees to indemnify and hold harmless the Company
and each of its directors, officers and employees, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually, an "Indemnified
Party," for purposes of this Section 8.2) against any and all losses, claims,
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 shares of a Portfolio 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, prospectus, statement of additional
information or sales literature of the Fund (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 under 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 the Fund, the Underwriter or the Adviser
by or on behalf of the Company for use in the registration
statement or prospectus for the Fund or in sales literature (or
any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Portfolio 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 or sales literature for the
Contracts not supplied by the Fund or
-15-
the Adviser or persons under their respective control and other
than statements or representations authorized by the Company) or
unlawful conduct of the Fund or the Adviser or persons under
their respective control, with respect to the sale or
distribution of the Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature covering the
Contracts, 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 statement
or statements therein not misleading in light of the
circumstances under which they were made, if such statement or
omission was made in reliance upon information furnished to the
Company by or on behalf of the Fund or the Adviser; or
(iv) arise as a result of any failure by the Adviser 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 Adviser in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Adviser; or
(vi) arise out of or are based on the Adviser's lack of good faith,
gross negligence or willful misconduct in carrying out its duties
and responsibilities under this Agreement, or any violation of
applicable federal or state law by the Adviser or persons under
its control.
Each of paragraphs (i) through (v) above is limited by and in accordance with
the provisions of Sections 8.2(b) through (d) below.
8.2(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from 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 and duties under this Agreement.
8.2(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. In case any such action is brought
against the Indemnified Parties, the Adviser will be entitled to participate, at
its own expense, in
-16-
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 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.
8.2(d). Except as expressly stated herein, in no event will the Adviser
be responsible to an Indemnified Party for any consequential, punitive or
exemplary damages of any kind arising from this Agreement.
8.2(e). The Company will promptly notify the Adviser of the
commencement of any litigation or proceedings against an Indemnified Party in
connection with this Agreement, the issuance or sale of the Contracts or the
operation of the Account(s).
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 State of New York.
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 Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties, unless
otherwise agreed in writing among the parties; or
(b) termination by the Company by written notice to the Fund and the
Adviser 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; provided,
however, that said termination shall become effective ten (10)
days after receipt of notice unless the Fund makes available a
sufficient number of shares of the Portfolio to reasonably meet
the requirements of the Contracts within said ten (10) day
period; or
-17-
(c) termination by the Company by written notice to the Fund and the
Adviser with respect to any Portfolio in the event that 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) termination by the Company by written notice to the Fund and the
Adviser with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company
under Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably and in good faith
believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Adviser with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements
specified in Article VI hereof, or if the Company reasonably and
in good faith believes that the Fund may fail to so qualify; or
(f) termination by the Fund or the Adviser by written notice to the
Company if the Fund or the Adviser, as applicable, shall
determine, in its sole judgment exercised in good faith, that
the Company and/or its affiliated companies has suffered a
material adverse change in its business, operations or financial
condition since the date of this Agreement or is the subject of
material adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Adviser, if the Company shall determine, in its sole judgment
exercised in good faith, that the Fund, the Underwriter or the
Adviser has suffered a material adverse change in its business,
operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity; or
(h) termination by the Fund or the Adviser by written notice to the
Company, if the Company gives the Fund and the Adviser the
written notice specified in Section 1.5 hereof and at the time
such notice was given there was no notice of termination
outstanding under any other provision of this Agreement;
provided, however, any termination under this Section 10.1(h)
shall be effective forty-five (45) days after the notice
specified in Section 1.5 was given; or
(i) termination by any party to this Agreement upon another party's
material breach of any provision of this Agreement; or
(j) termination by the Fund or the Adviser upon institution of
formal proceedings against the Company by the NASD, the SEC, or
any state securities or insurance department or any other
regulatory body regarding the Company's duties under this
Agreement or related to the sale or administration of the
Contracts, the operation of the Account(s), or the purchase of
Fund shares, provided that the Fund or the
-18-
Adviser, as applicable, determines in its sole judgment
exercised in good faith, that any such proceedings would have a
material adverse effect on the Company's ability to perform its
obligations under this Agreement; or
(k) termination by the Company upon institution of formal
proceedings against the Fund or the Adviser by the NASD, the
SEC, or any state securities or insurance department or any
other regulatory body regarding the duties of the Fund or the
Adviser under this Agreement or related to the sale of Fund
shares or the administration of the Fund, provided that the
Company determines in its sole judgment exercised in good faith,
that any such proceedings would have a material adverse effect
on the ability of the Fund or the Adviser, as applicable, to
perform its obligations under this Agreement.
10.2. Notwithstanding any termination of this Agreement with respect
to a Portfolio, the Fund shall at the option of the Company continue to make
available additional shares of the Portfolio, 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"), unless such further
sale of Portfolio shares is proscribed by law, regulation or applicable
regulatory authority, or unless the Board determines that liquidation of the
Portfolio following termination of this Agreement is in the best interests of
the Portfolio. Specifically, subject to the foregoing, the owners of the
Existing Contracts shall be permitted to direct reallocation of investments in
the Portfolio, redemption of investments in the Portfolio and/or investment in
the Portfolio upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.2 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.
10.3. The provisions of Article VIII and Sections 12.2 and 12.3 will
survive the termination of this Agreement and, as long as shares of the
Portfolios are held under Existing Contracts in accordance with Section 10.2,
the provisions of this Agreement (to the extent applicable) will survive the
termination of this Agreement with respect to those Existing Contracts.
10.4. In the event that the Fund intends to liquidate the assets of a
Portfolio and terminate its existence, the Adviser agrees to reimburse the
Company for the Company's costs associated with substituting shares of another
registered investment company (including a cash management vehicle) for shares
of the Portfolio, provided that such costs are required, or are otherwise the
result of actions that are required, under applicable law, rules or regulations,
and are limited in amount to no more than $25,000 per Portfolio. The Adviser's
obligation to reimburse the Company's costs under this Section shall be limited
to: (i) reasonable legal expenses in preparing and filing an application for a
substitution order with the SEC (where such order is required to be obtained
under applicable law, rules or regulations), (ii) expenses for printing and
distributing disclosure of the substitution of shares or the elimination of the
Portfolio as an investment option under the Contracts, and (iii) reasonable
expenses associated with operational (i.e., systems and technology) issues to
facilitate the substitution of shares or the elimination of the Portfolio as an
investment option under the Contracts. The Company agrees to
-19-
use its best efforts to minimize any costs incurred under this Section and shall
provide the Adviser with acceptable documentation of any such costs incurred.
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 party.
If to the Fund:
The Universal Institutional Funds, Inc.
c/o Morgan Xxxxxxx Investment Management Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
If to the Adviser:
Xxxxxx Xxxxxxx Investment Management Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
If to the Company:
American Enterprise Life Insurance Company
1765 AXP Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Executive Vice President, Annuities
with a copy to:
American Enterprise Life Insurance Company
50607 AXP Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel's Office
ARTICLE XII. Miscellaneous
12.1. All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund, as
neither the Board, officers, agents or shareholders of the Fund assume any
personal liability for obligations entered into on behalf of the Fund.
-20-
12.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential any "non-public
personal information" about any "consumer" of another party (as such terms are
defined in SEC Regulation S-P) and any other information reasonably identified
as confidential in writing by another party ("Confidential Information"). Each
party agrees not to disclose, disseminate or utilize another party's
Confidential Information except: (i) as permitted by this Agreement, (ii) upon
the written consent of the other party, (iii) where the Confidential Information
comes into the public domain through no fault of the party receiving the
information, or (iv) where the Confidential Information is already known to the
receiving party through lawful means prior to disclosure, or (v) as otherwise
required or permitted under applicable law. Each party agrees to ensure the
security and confidentiality of Confidential Information, to protect such
information against any threats or hazards to the security or integrity of such
information, and to protect against unauthorized access to, or use of,
Confidential Information. Each party agrees to cause those employees, or any
other party, to whom it may provide access to or disclose Confidential
Information to limit the use and disclosure of such information in accordance
with the terms of this Agreement.
Each party acknowledges that any breach of the agreements in this
Section 12.2 could result in immediate and irreparable harm for which there
would be no adequate remedy at law and agree that, in the event of such a
breach, the party so aggrieved 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.
12.3. The Fund and the Adviser acknowledge that all computer programs
and procedures or other information developed by the Company or its affiliates
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 Company and
its affiliates.
12.4. 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.
12.5. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.6. 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.
12.7. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
National Association of Securities Dealers 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. Notwithstanding the generality of the
foregoing, each party hereto further agrees to furnish state insurance
authorities with any information or reports in connection with services provided
under this Agreement which such
-21-
authorities may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with applicable law
and regulations.
12.8. 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.
12.9. 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; provided, however, that the Adviser may assign this Agreement or
any rights or obligations hereunder to any affiliate of or company under common
control with the Adviser, if such assignee is duly licensed and registered to
perform the obligations of the Adviser under this Agreement and the Company is
provided notice of such assignment.
12.10. If requested by the Fund or the Adviser, the Company shall
furnish, or shall cause to be furnished, to the requesting party or its designee
copies of the following documents:
(a) the Company's annual report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon as practical
and in any event within ninety (90) days after the end of each
fiscal year;
(b) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon
as practical after the delivery thereof to stockholders;
(c) any registration statement (without exhibits) and financial
reports of the Company filed with the SEC or any state insurance
regulator, as soon as practical after the filing thereof; and
(d) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof.
12.11. Unless otherwise specifically provided in this Agreement, no
provision of this Agreement may be amended or modified in any manner except by a
written agreement executed by all parties.
12.12. 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.
-22-
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
specified above.
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
By: ______________________________
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President, Annuities
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
By: ______________________________
Name:
Title:
XXXXXX XXXXXXX INVESTMENT MANAGEMENT INC.
By: ______________________________
Name:
Title:
-23-
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Form Number and Name of
Date Established by Board of Directors Contract Funded by Separate Account
American Enterprise Variable Annuity Account Evergreen Pathways Variable Annuity
(established July 15, 1987) Form Numbers 271491 and 271496 (and state variations thereof)
Evergreen New Solutions Variable Annuity
Form Number 240343 (and state variations thereof)
A-1
SCHEDULE B
PORTFOLIOS OF THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
AVAILABLE UNDER THIS AGREEMENT
U.S. Real Estate Portfolio -- Class I Shares
B-1
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
o The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of
voting instructions from Contract owners and to facilitate the
establishment of tabulation procedures. At this time the Fund will
inform the Company of the Record, Mailing and Meeting dates. This will
be done verbally approximately two months before the shareholder
meeting.
o Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each Contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to
call in the number of Customers to the Fund, as soon as possible, but
no later than two weeks after the Record Date.
o The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting
instruction solicitation material. The Fund will provide the last
Annual Report to the Company pursuant to the terms of Section 3.4 of
the Participation Agreement to which this Schedule relates.
o The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Company by the Fund. The Company, at its
expense, shall produce and personalize the Voting Instruction Cards.
The Fund or its affiliate must approve the Card before it is printed.
Allow approximately 2-4 Business Days for printing information on the
Cards. Information commonly found on the Cards includes:
- name (legal name as found on account registration)
- address
- fund or account number
- coding to state number of units
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- individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
o During this time, the Fund will develop, produce and pay for the Notice
of Proxy and the Proxy Statement (one document). Printed and folded
notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by
the Company). Contents of envelope sent to Customers by the Company
will include:
- Voting Instruction Card(s)
- One proxy notice and statement (one document)
- return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
- "urge buckslip" - optional, but recommended (this is a small,
single sheet of paper that requests Customers to vote as
quickly as possible and that their vote is important; one copy
will be supplied by the Fund.)
- cover letter - optional; supplied by Company and reviewed and
approved in advance by the Fund
o The above contents should be received by the Company approximately 3-5
Business Days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to the Fund.
o Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including,) the shareholder meeting, counting backwards.
o Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort Cards on arrival by proposal
into vote categories of all yes, no, or mixed replies, and to begin
data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by the Fund in the past.
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o Signatures on Card checked against legal name on account registration
that was printed on the Card.
Note: For Example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card
and is the signature needed on the Card.
o If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter and a new Card and return envelope. The mutilated or illegible
Card is disregarded and considered to be not received for purposes of
vote tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to
why they did not complete the system. Any questions on those Cards are
usually remedied individually.
o There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to sort
the Cards as they first arrive into categories depending upon their
vote; an estimate of how the vote is progressing may then be
calculated. If the initial estimates and the actual vote do not
coincide, then an internal audit of that vote should occur. This may
entail a recount.
o The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) The Fund
must review and approve tabulation format.
o Final tabulation in shares is verbally given by the Company to the Fund
on the morning of the shareholder meeting not later than 10:00 a.m.
Eastern time. The Fund may request an earlier deadline if reasonable
and if required to calculate the vote in time for the shareholder
meeting.
o A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final
vote. The Fund will provide a standard form for each Certification.
o The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will
be permitted reasonable access to such Cards.
o All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
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PARTICIPATION AGREEMENT
Among
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.,
XXXXXX XXXXXXX INVESTMENT MANAGEMENT INC.,
and
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
Dated as of
September 1, 2002
TABLE OF CONTENTS
Page
ARTICLE I. Purchase and Redemption of Fund Shares 2
ARTICLE II. Representations and Warranties 5
ARTICLE III. Prospectuses, Reports to Shareholders
and Proxy Statements; Voting 6
ARTICLE IV. Sales Material and Information 8
ARTICLE V. Fees and Expenses 10
ARTICLE VI. Diversification 11
ARTICLE VII. Potential Conflicts 11
ARTICLE VIII. Indemnification 13
ARTICLE IX. Applicable Law 17
ARTICLE X. Termination 17
ARTICLE XI. Notices 20
ARTICLE XII. Miscellaneous 20
SCHEDULE A Separate Accounts and Associated Contracts A-1
SCHEDULE B Portfolios of The Universal Institutional Funds, Inc.
Available Under this Agreement B-1
SCHEDULE C Proxy Voting Procedures C-1
