Exhibit (h)(10)
AMENDED AND RESTATED PARTICIPATION AGREEMENT
as of August 1, 2005
Franklin Xxxxxxxxx Variable Insurance Products Trust
Franklin/Xxxxxxxxx Distributors, Inc.
American Centurion Life Assurance Company
American Enterprise Life Insurance Company
IDS Life Insurance Company
IDS Life Insurance Company of New York
Ameriprise Financial Services, Inc.
(formerly American Express Financial Advisors Inc.)
CONTENTS
Section Subject Matter
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1. Parties and Purpose
2. Representations and Warranties
3. Purchase and Redemption of Trust Portfolio Shares
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
5. Voting
6. Sales Material, Information and Trademarks
7. Indemnification
8. Notices
9. Termination
10. Miscellaneous
SCHEDULES TO THIS AGREEMENT
A. The Company
B. Accounts of the Company
C. Available Portfolios and Classes of Shares of the Trust;
Investment Advisers
D. Contracts of the Company
E. [this schedule is not used]
F. Rule 12b-1 Plans of the Trust
G. Addresses for Notices
H. Shared Funding Order
1. PARTIES AND PURPOSE
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THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT (the "Agreement")
supersedes and replaces the Participation Agreement, dated as of May 1,
2000,
together with all subsequent amendments ("Prior Agreement"), by and between
certain portfolios and classes of Franklin Xxxxxxxxx Variable Insurance
Products Trust specified in Schedule C of the Prior Agreement,
Franklin/Xxxxxxxxx Distributors, Inc. and the insurance companies identified
in Schedule A of the Prior Agreement on their own behalf and behalf of each
segregated asset account listed in Schedule B of the Prior Agreement. This
Agreement is between certain portfolios and classes thereof, specified below
and in Schedule C, of Franklin Xxxxxxxxx Variable Insurance Products Trust,
an open-end management investment company organized as a business trust
under Massachusetts law (the "Trust"), Franklin/Xxxxxxxxx Distributors,
Inc., a California corporation which is the principal underwriter for the
Trust (the "Underwriter," and together with the Trust, "we" or "us") and the
insurance companies identified on Schedule A ("you") and your distributor,
on your own behalf and on behalf of each segregated asset account maintained
by you that is listed on Schedule B, as that schedule may be amended from
time to time ("Account" or "Accounts").
The purpose of this Agreement is to entitle you, on behalf of the
Accounts, to purchase the shares, and classes of shares, of portfolios of
the Trust ("Portfolios") that are identified on Schedule C solely for the
purpose of funding benefits of your variable life insurance policies or
variable annuity contracts ("Contracts") that are identified on Schedule D.
This Agreement does not authorize any other purchases or redemptions of
shares of the Trust.
2. REPRESENTATIONS AND WARRANTIES
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2.1 REPRESENTATIONS AND WARRANTIES BY YOU
You represent and warrant that:
2.1.1 You are an insurance company duly organized and in
good standing under the laws of your state of incorporation.
2.1.2 All of your directors, officers, employees, and
other individuals or entities dealing with the money and/or securities of
the Trust are and shall be at all times covered by a blanket fidelity bond
or similar coverage for the benefit of the Trust, in an amount not less than
$5 million. Such bond shall include coverage for larceny and embezzlement
and shall be issued by a reputable bonding company. You agree to make all
reasonable efforts to see that this bond or another bond containing such
provisions is always in effect, and you agree to notify us in the event that
such coverage no longer applies.
2.1.3 Each Account is a duly organized, validly existing
segregated asset account under applicable insurance law and interests in
each Account are offered exclusively through the purchase of or transfer
into a "variable contract" within the meaning of such terms under Section
817 of the Internal Revenue Code of 1986, as amended ("Code") and the
regulations thereunder. You will use your best efforts to continue to meet
such definitional requirements, and will notify us 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.
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2.1.4 Each Account either: (i) has been registered or,
prior to any issuance or sale of the Contracts, will be registered as a unit
investment trust under the Investment Company Act of 1940 ("1940 Act"); or
(ii) has not been so registered in proper reliance upon an exemption from
registration under Section 3(c) of the 1940 Act; if the Account is exempt
from registration as an investment company under Section 3(c) of the 1940
Act, you will use your best efforts to maintain such exemption and will
notify us immediately upon having a reasonable basis for believing that such
exemption no longer applies or might not apply in the future.
2.1.5 The Contracts or interests in the Accounts: (i) are
or, prior to any issuance or sale will be, registered as securities under
the Securities Act of 1933, as amended (the "1933 Act"); or (ii) are not
registered because they are properly exempt from registration under Section
3(a)(2) of the 1933 Act or will be offered exclusively in transactions that
are properly exempt from registration under Section 4(2) or Regulation D of
the 1933 Act, in which case you will make every effort to maintain such
exemption and will notify us immediately upon having a reasonable basis for
believing that such exemption no longer applies or might not apply in the
future.
2.1.6 The Contracts: (i) will be sold by broker-dealers,
or their registered representatives, who are registered with the Securities
and Exchange Commission ("SEC") under the Securities and Exchange Act of
1934, as amended (the "1934 Act") and who are members in good standing of
the National Association of Securities Dealers, Inc. (the "NASD"); (ii) will
be issued and sold in compliance in all material respects with all
applicable federal and state laws; and (iii) will be sold in compliance in
all material respects with state insurance suitability requirements and NASD
suitability guidelines.
2.1.7 The Contracts currently are and will be treated as
annuity contracts or life insurance contracts under applicable provisions of
the Code and you will use your best efforts to maintain such treatment; you
will notify us 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.
2.1.8 The fees and charges deducted under each Contract,
in the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by you.
2.1.9 You will use shares of the Trust only for the
purpose of funding benefits of the Contracts through the Accounts.
2.1.10 Contracts will not be sold outside of the United
States.
2.1.11 With respect to any Accounts which are exempt from
registration under the 1940 Act in reliance on 3(c)(1) or Section 3(c)(7)
thereof:
2.1.11.1 the principal underwriter for each such
Account and any subaccounts thereof is a
registered broker-dealer with the SEC
under the 1934 Act;
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2.1.11.2 the shares of the Portfolios of the Trust
are and will continue to be the only
investment securities held by the
corresponding subaccounts; and
2.1.11.3 with regard to each Portfolio, you, on
behalf of the corresponding subaccount,
will:
(a) vote such shares held
by it in the same
proportion as the vote
of all other holders of
such shares; and
(b) refrain from
substituting shares of
another security for
such shares unless the
SEC has approved such
substitution in the
manner provided in
Section 26 of the 0000
Xxx.
2.1.12 As covered financial institutions we, only with
respect to Portfolio shareholders, and you each undertake and agree to
comply, and to take full responsibility in complying with any and all
applicable laws, regulations, protocols and other requirements relating to
money laundering including, without limitation, the International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001 (Title III of
the USA PATRIOT Act).
2.2 REPRESENTATIONS AND WARRANTIES BY THE TRUST
The Trust represents and warrants that:
2.2.1 It is duly organized and in good standing under the
laws of the State of Massachusetts.
2.2.2 All of its directors, officers, employees and others
dealing with the money and/or securities of a Portfolio are and shall be
at all times covered by a blanket fidelity bond or similar coverage for
the benefit of the Trust in an amount not less than the minimum coverage
required by Rule 17g-1 or other regulations under the 1940 Act. Such bond
shall include coverage for larceny and embezzlement and be issued by a
reputable bonding company.
2.2.3 It is registered as an open-end management
investment company under the 0000 Xxx.
2.2.4 Each class of shares of the Portfolios of the
Trust is registered under the 0000 Xxx.
2.2.5 It will amend its registration statement under the
1933 Act and the 1940 Act from time to time as required in order to effect
the continuous offering of its shares.
2.2.6 It will comply, in all material respects, with the
1933 and 1940 Acts and the rules and regulations thereunder.
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2.2.7 It is currently qualified as a "regulated investment
company" under Subchapter M of the Code, it will make every effort to
maintain such qualification, and will notify you immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.2.8 The Trust will use its best efforts to comply with
the diversification requirements for variable annuity, endowment or life
insurance contracts set forth in Section 817(h) of the Code, and the rules
and regulations thereunder, including without limitation Treasury
Regulation 1.817-5. Upon having a reasonable basis for believing any
Portfolio has ceased to comply and will not be able to comply within the
grace period afforded by Regulation 1.817-5, the Trust will notify you
immediately and will take all reasonable steps to adequately diversify the
Portfolio to achieve compliance.
2.2.9 It currently intends for one or more classes of
shares (each, a "Class") to make payments to finance its distribution
expenses, including service fees, pursuant to a plan ("Plan") adopted
under rule 12b-1 under the 1940 Act ("Rule 12b-1"), although it may
determine to discontinue such practice in the future. To the extent that
any Class of the Trust finances its distribution expenses pursuant to a
Plan adopted under rule 12b-1, the Trust undertakes to comply with any
then current SEC interpretations concerning rule 12b-1 or any successor
provisions.
2.3 REPRESENTATIONS AND WARRANTIES BY THE UNDERWRITER
The Underwriter represents and warrants that:
2.3.1 It is registered as a broker dealer with the SEC
under the 1934 Act, and is a member in good standing of the NASD.
2.3.2 Each investment adviser listed on Schedule C (each,
an "Adviser") is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state
securities law.
2.4 WARRANTY AND AGREEMENT BY BOTH YOU AND US
We received an order from the SEC dated November 16, 1993 (file no.
812-8546), which was amended by a notice and an order we received on
September 17, 1999 and October 13, 1999, respectively (file no. 812-11698)
(collectively, the "Shared Funding Order," attached to this Agreement as
Schedule H). The Shared Funding Order grants exemptions from certain
provisions of the 1940 Act and the regulations thereunder to the extent
necessary to permit shares of the Trust to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies and qualified pension and retirement
plans outside the separate account context. You and we both warrant and
agree that both you and we will comply with the "Applicants' Conditions"
prescribed in the Shared Funding Order as though such conditions were set
forth verbatim in this Agreement, including, without limitation, the
provisions regarding potential conflicts of interest between the separate
accounts which invest in the Trust and regarding contract owner voting
privileges. In order for
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the Trust's Board of Trustees to perform its duty to monitor for conflicts
of interest, you agree to inform us of the occurrence of any of the events
specified in condition 2 of the Shared Funding Order to the extent that such
event may or does result in a material conflict of interest as defined in
that order.
3. PURCHASE AND REDEMPTION OF TRUST PORTFOLIO SHARES
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3.1 AVAILABILITY OF TRUST PORTFOLIO SHARES
3.1.1 We will make shares of the Portfolios available to the
Accounts for the benefit of the Contracts. The shares will be available for
purchase at the net asset value per share next computed after we (or our
agent, or you as our designee) receive a purchase order, as established in
accordance with the provisions of the then current prospectus of the Trust.
All orders are subject to acceptance by us and by the Portfolio or its
transfer agent, and become effective only upon confirmation by us.
Notwithstanding the foregoing, the Trust's Board of Trustees ("Trustees")
may refuse to sell shares of any Portfolio to any person, or may suspend or
terminate the offering of shares of any Portfolio if such action is required
by law or by regulatory authorities having jurisdiction or if, in the sole
discretion of the Trustees, they deem such action to be in the best
interests of the shareholders of such Portfolio.
3.1.2 Without limiting the other provisions of this Section 3.1,
among other delegations by the Trustees, the Trustees have determined that
there is a significant risk that the Trust and its shareholders may be
adversely affected by investors with short term trading activity and/or
whose purchase and redemption activity follows a market timing pattern as
defined in the prospectus for the Trust, and have authorized the Trust, the
Underwriter and the Trust's transfer agent to adopt procedures and take
other action (including, without limitation, rejecting specific purchase
orders in whole or in part) as they deem necessary to reduce, discourage,
restrict or eliminate such trading and/or market timing activity. The Board
has adopted the Market Timing Trading Policy and Additional Policies that
are described in the Trust's prospectus.
We agree to give you advance written notice of material changes to the
Market Timing Trading Policy and you agree that you will not willfully
violate that policy. You have adopted and implemented, and will continue to
maintain and enforce, your own policies and procedures that are described in
your Contract prospectuses and are reasonably designed to prevent harmful
short term and/or excessive trading. You agree to make reasonable efforts to
cooperate and assist us in implementing the Market Timing Trading Policy and
its goals. Your assistance will include, but not be limited to, promptly
providing information to us concerning the source of specified trading
activity, the identity of specific broker/dealers or registered
representatives acting on behalf of contract owners with regard to specified
trading activity, and providing advance notice, to the extent reasonably
practicable, of any large anticipated trading.
3.1.3 We agree that shares of the Trust will be sold only to life
insurance companies which have entered into fund participation agreements
with the Trust ("Participating Insurance Companies") and their separate
accounts or to qualified pension and retirement plans
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in accordance with the terms of the Shared Funding Order. No shares of any
Portfolio will be sold to the general public.
3.2 This subsection 3.2 is not used.
3.3 PURCHASE AND REDEMPTION
3.3.1 You are hereby appointed as our designee for the
sole purpose of receiving from Contract owners purchase and exchange orders
and requests for redemption resulting from investment in and payments under
the Contracts that pertain to subaccounts that invest in Portfolios
("Instructions"). "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Trust calculates its net
asset value pursuant to the rules of the SEC and its current prospectus.
"Close of Trading" shall mean the close of trading on the New York Stock
Exchange, generally 4:00 p.m. Eastern Time. You represent and warrant that
all Instructions transmitted to us for processing on or as of a given
Business Day ("Day 1") shall have been received in proper form and time
stamped by you prior to the Close of Trading on Day 1. Such Instructions
shall receive the share price next calculated following the Close of Trading
on Day 1, provided that we receive such Instructions from you before 9:30
a.m. Eastern Time on the next Business Day ("Day 2"). You represent and
warrant that Instructions received in proper form and time stamped by you
after the Close of Trading on Day 1 shall be treated by you and transmitted
to us as if received on Day 2. Such Instructions shall receive the share
price next calculated following the Close of Trading on Day 2. You represent
and warrant that you have, maintain and periodically test, procedures and
systems in place reasonably designed to prevent Instructions received after
the Close of Trading on Day 1 from being executed with Instructions received
before the Close of Trading on Day 1. All Instructions we receive from you
after 9:30 a.m. Eastern Time on Day 2 shall be processed by us on the
following Business Day and shall receive the share price next calculated
following the Close of Trading on Day 2.
3.3.2 We shall calculate the net asset value per share of
each Portfolio on each Business Day, and shall communicate these net asset
values to you or your designated agent on a daily basis as soon as
reasonably practical after the calculation is completed (normally by 6:30
p.m. Eastern Time).
3.3.3 You shall submit payment for the purchase of shares
of a Portfolio on behalf of an Account in federal funds transmitted by wire
to the Trust or to its designated custodian, which must receive such wires
no later than the close of the Reserve Bank, which is 6:00 p.m. Eastern
Time, on the Business Day following the Business Day as of which such
purchases orders are made.
3.3.4 We will redeem any full or fractional shares of any
Portfolio, when requested by you on behalf of an Account, at the net asset
value next computed after receipt by us (or our agent or you as our
designee) of the request for redemption, as established in accordance with
the provisions of the then current prospectus of the Trust. We shall make
payment for such shares in the manner we establish from time to time, but in
no event shall payment be delayed for a greater period than is permitted by
the 1940 Act.
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3.3.5 Issuance and transfer of the Portfolio shares will
be by book entry only. Stock certificates will not be issued to you or the
Accounts. Portfolio shares purchased from the Trust will be recorded in the
appropriate title for each Account or the appropriate subaccount of each
Account.
3.3.6 We shall furnish, on or before the ex-dividend date,
notice to you of any income dividends or capital gain distributions payable
on the shares of any Portfolio. You hereby elect to receive all such income
dividends and capital gain distributions as are payable on shares of a
Portfolio in additional shares of that Portfolio, and you reserve the right
to change this election in the future. We will notify you of the number of
shares so issued as payment of such dividends and distributions.
3.3.7 Each party to this Agreement agrees that, in the
event of a material error resulting from incorrect information or
confirmations relating to this Section 3, the parties will seek to comply in
all material respects with the provisions of applicable federal securities
laws.
4. FEES, EXPENSES, PROSPECTUSES, PROXY MATERIALS AND REPORTS
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4.1 We shall pay no fee or other compensation to you under this
Agreement except as provided on Schedule F, if attached.
4.2 We shall prepare and be responsible for filing with the SEC,
and any state regulators requiring such filing, all shareholder reports,
notices, proxy materials (or similar materials such as voting instruction
solicitation materials), prospectuses and statements of additional
information of the Trust. We shall bear the costs of preparation and filing
of the documents listed in the preceding sentence, registration and
qualification of the Trust's shares of the Portfolios.
4.3 We shall use reasonable efforts to provide you, on a timely
basis, with such information about the Trust, the Portfolios and each
Adviser, in such form as you may reasonably require, as you shall reasonably
request in connection with the preparation of disclosure documents and
annual and semi-annual reports pertaining to the Contracts.
4.4 At your option, we shall provide you, at our expense, with
either: (i) for each Contract owner who is invested through the Account in a
subaccount corresponding to a Portfolio ("designated subaccount"), one copy
of each of the following documents on each occasion that such document is
required by law or regulation to be delivered to such Contract owner who is
invested in a designated subaccount: the Trust's current prospectus, annual
report, semi-annual report and other shareholder communications, including
any amendments or supplements to any of the foregoing, pertaining
specifically to the Portfolios ("Designated Portfolio Documents"); or (ii) a
camera ready copy of such Designated Portfolio Documents in a medium agreed
to by the parties and from which information relating to series of the Trust
other than the Portfolios has been deleted to the extent practicable. In
connection with clause (ii) of this paragraph, we will pay for proportional
printing costs for such Designated Portfolio Documents in order to provide
one copy for each Contract owner who is invested in a designated subaccount
on each occasion that such document is required by law or regulation to be
delivered
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to such Contract owner, and provided reasonable and appropriate
documentation is provided and reasonably approved by us. We shall provide
you with a copy of the Trust's current statement of additional information,
including any amendments or supplements, in a form suitable for you to
duplicate. The expenses of furnishing, including mailing, to Contract owners
the documents referred to in this paragraph shall be borne by you. For each
of the documents provided to you in accordance with clause (i) of this
paragraph 4.4, we shall provide you, upon your request and at your expense,
additional copies. In no event shall we be responsible for the costs of
printing or delivery of Designated Portfolio Documents to potential or new
Contract owners or the delivery of Designated Portfolio Documents to
existing contract owners.
4.5 We shall provide you, at our expense, with copies of any
Trust-sponsored proxy materials in such quantity as you shall reasonably
require for distribution to Contract owners who are invested in a designated
subaccount. You shall bear the costs of distributing proxy materials (or
similar materials such as voting solicitation instructions) to Contract
owners.
4.6 You assume sole responsibility for ensuring that the Trust's
prospectuses, shareholder reports and communications, and proxy materials
are delivered to Contract owners in accordance with applicable federal and
state securities laws. We will provide such materials in a reasonable time
for you to comply with such laws.
5. VOTING
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5.1 All Participating Insurance Companies shall have the
obligations and responsibilities regarding pass-through voting and conflicts
of interest corresponding to those contained in the Shared Funding Order.
5.2 If and to the extent required by law, you shall: (i) solicit
voting instructions from Contract owners; (ii) vote the Trust shares in
accordance with the instructions received from Contract owners; and (iii)
vote Trust shares for which no instructions have been received in the same
proportion as Trust shares of such Portfolio 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. You reserve the right to vote Trust shares held in
any Account in your own right, to the extent permitted by law.
5.3 So long as, and to the extent that, the SEC interprets the 1940
Act to require pass-through voting privileges for Contract owners, you shall
provide pass-through voting privileges to Contract owners whose Contract
values are invested, through the Accounts, in shares of one or more
Portfolios of the Trust. We shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and you shall be
responsible for assuring that the Accounts calculate voting privileges in
the manner established by us. With respect to each Account, you will vote
shares of each Portfolio of the Trust held by an Account and for which no
timely voting instructions from Contract owners are received in the same
proportion as those shares held by that Account for which voting
instructions are received. You and your agents will in no way recommend or
oppose or interfere with the solicitation of proxies for Portfolio shares
held to fund the Contracts without our prior written consent, which consent
may be withheld in our sole discretion.
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6. SALES MATERIAL, INFORMATION AND TRADEMARKS
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6.1 For purposes of this Section 6, "Sales literature or other
Promotional material" includes, but is not limited to, portions of the
following that use any logo or other trademark related to the Trust, or
Underwriter or its affiliates, or refer to the Trust: 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, electronic communication 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 or any other advertisement,
sales literature or published article or electronic communication),
educational or training materials or other communications distributed or
made generally available to some or all agents or employees in any media,
and disclosure documents, shareholder reports and proxy materials.
6.2 You shall furnish, or cause to be furnished to us or our
designee, at least one complete copy of each registration statement,
prospectus, statement of additional information, private placement
memorandum, retirement plan disclosure information or other disclosure
documents or similar information, as applicable (collectively "Disclosure
Documents"), as well as any report, solicitation for voting instructions,
Sales literature or other Promotional materials, and all amendments to any
of the above that relate to the Contracts or the Accounts prior to its first
use. You shall furnish, or shall cause to be furnished, to us or our
designee each piece of Sales literature or other Promotional material in
which the Trust or an Adviser is named, at least ten (10) Business Days
prior to its proposed use. No such material shall be used unless we or our
designee approve such material and its proposed use.
6.3 You and your agents shall not give any information or make any
representations or statements on behalf of the Trust or concerning the
Trust, the Underwriter or an Adviser, other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Trust shares (as such registration statement
and prospectus may be amended or supplemented from time to time), annual and
semi-annual reports of the Trust, Trust-sponsored proxy statements, or in
Sales literature or other Promotional material approved by the Trust or its
designee, except as required by legal process or regulatory authorities or
with the written permission of the Trust or its designee.
6.4 We shall not give any information or make any representations
or statements on behalf of you or concerning you, the Accounts or the
Contracts other than information or representations, including naming you as
a Trust shareholder, contained in and accurately derived from Disclosure
Documents for the Contracts (as such Disclosure Documents may be amended or
supplemented from time to time), or in materials approved by you for
distribution, including Sales literature or other Promotional materials,
except as required by legal process or regulatory authorities or with your
written permission.
6.5 Except as provided in Section 6.2, you shall not use any
designation comprised in whole or part of the names or marks "Franklin" or
"Xxxxxxxxx" or any logo or other trademark relating to the Trust or the
Underwriter without prior written consent, and upon termination of
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this Agreement for any reason, you shall cease all use of any such name or
xxxx as soon as reasonably practicable.
6.6 You shall furnish to us ten (10) Business Days prior to its
first submission to the SEC or its staff, any request or filing for
no-action assurance or exemptive relief pertaining to, or affecting, the
Trust, the Underwriter or any of the Portfolios.
7. INDEMNIFICATION
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7.1 INDEMNIFICATION BY YOU
7.1.1 You agree to indemnify and hold harmless the
Underwriter, the Trust and each person, if any, who controls the Trust
within the meaning of Section 15 of the 1933 Act and any Trustee, officer,
employee or agent of the foregoing (collectively, the "Indemnified Parties"
and individually the "Indemnified Party" for purposes of this Section 7)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with your written consent, which consent shall not be
unreasonably withheld) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage, liability or
expense and reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses"), to which the Indemnified Parties may become
subject under any statute or regulation, or at common law or otherwise,
insofar as such Losses are related to the sale or acquisition of shares of
the Trust or the Contracts and;
7.1.1.1 arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact contained in a
Disclosure Document for the Contracts or in the Contracts themselves or in
sales literature generated or approved by you on behalf of the Contracts or
Accounts (or any amendment or supplement to any of the foregoing)
(collectively, "Company Documents" for the purposes of this Section 7), or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this indemnity 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 was accurately
derived from written information furnished to you by or on behalf of the
Trust for use in Company Documents or otherwise for use in connection with
the sale of the Contracts or Trust shares; or
7.1.1.2 arise out of or result from statements or
representations (other than statements or representations contained in and
accurately derived from Trust Documents as defined below in Section 7.2) or
wrongful conduct of you or persons under your control, with respect to the
sale or acquisition of the Contracts or Trust shares; or
7.1.1.3 arise out of or result from any untrue
statement or alleged untrue statement of a material fact contained in Trust
Documents as defined below in Section 7.2 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 statement or
omission was made in reliance upon and accurately derived from written
information furnished to the Trust by or on behalf of you; or
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7.1.1.4 arise out of or result from any failure
by you to provide the services or furnish the materials required under the
terms of this Agreement;
7.1.1.5 arise out of or result from any material
breach of any representation and/or warranty made by you in this Agreement
or arise out of or result from any other material breach of this Agreement
by you; or
7.1.1.6 arise out of or result from a Contract
failing to be considered a life insurance policy or an annuity Contract,
whichever is appropriate, under applicable provisions of the Code thereby
depriving the Trust of its compliance with Section 817(h) of the Code.
7.1.2 You shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the Trust or
Underwriter, whichever is applicable. You shall also not be liable under
this indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified you 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 you of any such claim shall not relieve you 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, you shall be
entitled to participate, at your own expense, in the defense of such action.
Unless the Indemnified Party releases you from any further obligations under
this Section 7.1, you also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After notice
from you to such party of your election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and you 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.
7.1.3 The Indemnified Parties will promptly notify you of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Trust shares or the Contracts or the
operation of the Trust.
7.2 INDEMNIFICATION BY THE UNDERWRITER
7.2.1 The Underwriter agrees to indemnify and hold
harmless you, and each person, if any, who controls you within the meaning
of Section 15 of the 1933 Act and any director, officer, employee or agent
of the foregoing (collectively, the "Indemnified Parties" and individually
an "Indemnified Party" for purposes of this Section 7.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Underwriter, which consent shall not be
unreasonably withheld) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage, liability or
12
expense and reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses") to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such Losses are
related to the sale or acquisition of the shares of the Trust or the
Contracts and:
7.2.1.1 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 sales
literature of the Trust (or any amendment or supplement to any of
the foregoing) (collectively, the "Trust Documents") or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party
if such statement or omission of such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to us by or on behalf of you for use in the Registration
Statement or prospectus for the Trust or in sales literature (or
any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Trust shares; or
7.2.1.2 arise out of or as a result of statements
or representations (other than statements or representations
contained in the Disclosure Documents or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Trust, Adviser or Underwriter
or persons under their control, with respect to the sale or
distribution of the Contracts or Trust shares; or
7.2.1.3 arise out of any untrue statement or
alleged untrue statement of a material fact contained in a
Disclosure Document 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, if such statement or omission was made in
reliance upon information furnished to you by or on behalf of the
Trust; or
7.2.1.4 arise as a result of any failure by us to
provide the services and furnish the materials under the terms of
this Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the qualification
representation specified above in Section 2.2.7 and the
diversification requirements specified above in Section 2.2.8); or
7.2.1.5 arise out of or result from any material
breach of any representation and/or warranty made by the
Underwriter in this Agreement or arise out of or result from any
other material breach of this Agreement by the Underwriter; as
limited by and in accordance with the provisions of Sections 7.2.2
and 7.2.3 hereof.
7.2.2 The Underwriter shall not be liable under this
indemnification provision with respect to any Losses to which an Indemnified
Party would otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the performance of
such Indemnified Party's duties or by reason of such Indemnified Party's
reckless
13
disregard of obligations and duties under this Agreement or to you or the
Accounts, whichever is applicable.
7.2.3 The Underwriter 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
Underwriter 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 Underwriter of any such claim shall not relieve the
Underwriter 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 Underwriter will be entitled to participate, at its
own expense, in the defense thereof. Unless the Indemnified Party releases
the Underwriter from any further obligations under this Section 7.2, the
Underwriter also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Underwriter to such party of the Underwriter's election to assume the
defense thereof, the Indemnified Party shall bear the expenses of any
additional counsel retained by it, and the Underwriter 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.
7.2.4 You agree promptly to notify the Underwriter of the
commencement of any litigation or proceedings against you or the Indemnified
Parties in connection with the issuance or sale of the Contracts or the
operation of each Account.
7.3 INDEMNIFICATION BY THE TRUST
7.3.1 The Trust agrees to indemnify and hold harmless you,
and each person, if any, who controls you within the meaning of Section 15
of the 1933 Act and any director, officer, employee or agent of the
foregoing (collectively, the "Indemnified Parties" for purposes of this
Section 7.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Trust,
which consent shall not be unreasonably withheld) or litigation (including
legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements result from the gross negligence, bad faith or
willful misconduct of the Board or any member thereof, are related to the
operations of the Trust, and arise out of or result from any material breach
of any representation and/or warranty made by the Trust in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Trust; as limited by and in accordance with the provisions of Sections
7.3.2 and 7.3.3 hereof. It is understood and expressly stipulated that
neither the holders of shares of the Trust nor any Trustee, officer, agent
or employee of the Trust shall be personally liable hereunder, nor shall any
resort be had to other private property for the satisfaction of any claim or
obligation hereunder, but the Trust only shall be liable.
7.3.2 The Trust shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against any
14
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 or to you, the
Trust, the Underwriter or each Account, whichever is applicable.
7.3.3 The Trust 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
Trust in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claims 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 Trust of any such claim shall not relieve the Trust 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 Trust will be entitled to participate, at its own expense, in
the defense thereof. Unless the Indemnified Party releases the Trust from
any further obligations under this Section 7.3, the Trust also shall be
entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Trust to such party of the
Trust'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
Trust 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.
7.3.4 You agree promptly to notify the Trust of the
commencement of any litigation or proceedings against you or the Indemnified
Parties in connection with this Agreement, the issuance or sale of the
Contracts, with respect to the operation of the Account, or the sale or
acquisition of shares of the Trust.
8. NOTICES
-------
Any notice shall be sufficiently given when sent by registered or
certified mail, or by nationally recognized overnight courier services, to
the other party at the address of such party set forth in Schedule G below
or at such other address as such party may from time to time specify in
writing to the other party.
9. TERMINATION
-----------
9.1 This Agreement may be terminated by any party in its entirety
or with respect to one, some or all Portfolios for any reason by sixty (60)
days advance written notice delivered to the other parties. This Agreement
shall terminate immediately in the event of its assignment by any party
without the prior written approval of the other parties, or as otherwise
required by law.
9.2 Immediate Terminations.
9.2.1 This Agreement may be terminated immediately by us
upon written notice to you if:
15
9.2.1.1 (i) you breach any of the representations
and warranties made in this Agreement; or (ii) you inform
us that any of such representations and warranties may no
longer be true or might not be true in the future; or
(iii) any of such representations and warranties were not
true on the effective date of this Agreement, are at any
time no longer true, or have not been true during any time
since the effective date of this Agreement; or
9.2.1.2 either one or both of the Trust or the
Underwriter respectively, shall determine, in their sole
judgment exercised in good faith, that you have suffered a
material adverse change in your business, operations,
financial condition or prospects since the date of this
Agreement or are the subject of material adverse
publicity.
9.2.2 This Agreement may be terminated immediately by you
upon written notice to us if:
9.2.2.1 (i) the Trust or the Underwriter breaches
any of the representations and warranties made in this
Agreement; or (ii) the Trust or the Underwriter informs
you that any of such representations and warranties may no
longer be true or might not be true in the future; or
(iii) any of such representations and warranties were not
true on the effective date of this Agreement, are at any
time no longer true, or have not been true during any time
since the effective date of this Agreement; or (iv) the
Internal Revenue Service has formally declared that the
Trust fails to meet the diversification requirements
specified in Section 817(h) of the Code and any
regulations thereunder; or
9.2.2.2 you shall determine, in your sole
judgment exercised in good faith, that the Trust or the
Underwriter has suffered a material adverse change in its
business, operations, financial condition or prospects
since the date of this Agreement or is the subject of
material adverse publicity.
9.3 If this Agreement is terminated with respect to any
Portfolio(s) for any reason except as required by the Shared Funding Order,
we shall, at your option and pursuant to the terms and conditions of this
Agreement, continue to make available additional shares of any Portfolio for
any or all Contracts or Accounts existing on the effective date of
termination of this Agreement, provided that such further sale is not
prohibited by law, regulation, applicable regulatory body, or action by the
Trust's Board of Trustees. Further, if the Trust's Board of Trustees, in the
exercise of its fiduciary duties, determines that such termination is a
necessary and appropriate remedy for a material breach of this Agreement
that has or could have a material adverse impact on a Portfolio, including a
violation of laws, or determines such termination is appropriate upon
liquidation of a Portfolio, the Trust may redeem, at its option in kind or
for cash, the Portfolio shares held by the Accounts on the effective date of
termination of this Agreement; provided further that any such liquidation of
a Portfolio will not occur prior to up to six (6) months following written
notice to you, and during this time, the Trust will cooperate reasonably in
effecting a transfer of assets to another underlying fund pursuant to either
an exchange offer, SEC substitution order, SEC no-action letter, or other
legal and appropriate
16
means. If this Agreement is terminated as required by the Shared Funding
Order, its provisions shall govern.
9.4 The provisions of Sections 2 (Representations and Warranties),
7 (Indemnification) and 10.8 (Use and Disclosure of Confidential
Information) shall survive the termination of this Agreement. All other
applicable provisions of this Agreement shall survive the termination of
this Agreement, as long as shares of the Trust are held on behalf of
Contract owners in accordance with Section 9.3, except that we shall have no
further obligation to sell Trust shares with respect to Contracts issued
after termination.
9.5 You shall not redeem Trust shares attributable to the Contracts
(as opposed to Trust shares attributable to your assets held in the Account)
except: (i) as necessary to implement Contract owner initiated or approved
transactions; (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,
you shall promptly furnish to us the opinion of your counsel (which counsel
shall be reasonably satisfactory to us) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
you shall not prevent Contract owners from allocating payments to any
Portfolio that has been available under a Contract without first giving us
ninety (90) days advance written notice of your intention to do so.
10. MISCELLANEOUS
-------------
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions of
this Agreement or otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, all of which taken together shall constitute one and the same
instrument.
10.3 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.
10.4 This Agreement shall be construed and its provisions
interpreted under and in accordance with the laws of the State of
California. It shall also be subject to the provisions of the federal
securities laws and the rules and regulations thereunder, to any orders of
the SEC on behalf of the Trust granting it exemptive relief, and to the
conditions of such orders. We shall promptly forward copies of any such
orders to you.
10.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this
Agreement, of any and every nature whatsoever, shall be satisfied solely out
of the assets of the Trust and that no Trustee, officer, agent or holder of
shares of beneficial interest of the Trust shall be personally liable for
any such liabilities.
10.6 The parties to this Agreement agree that the assets and
liabilities of each Portfolio of the Trust are separate and distinct from
the assets and liabilities of each other Portfolio. No
17
Portfolio shall be liable or shall be charged for any debt, obligation or
liability of any other Portfolio.
10.7 Each party to this Agreement shall cooperate with each other
party and all appropriate governmental authorities (including without
limitation the SEC, the NASD, and state insurance regulators) and shall
permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
10.8 Use and Disclosure of Confidential Information
Notwithstanding anything to the contrary contained in this
Agreement, and in addition to and not in lieu of other provisions in this
Agreement:
10.8.1 Confidential Information includes without
limitation all information regarding your customers or the
customers of any of your subsidiaries, affiliates, or licensees; or
the accounts, account numbers, names, addresses, social security
numbers or any other personal identifier of such customers; or any
information derived therefrom.
10.8.2 Neither the Trust nor the Underwriter may use or
disclose Confidential Information for any purpose other than to
carry out the purpose for which Confidential Information was
provided to the Trust and/or the Underwriter as set forth in the
Agreement, and agree to cause all employees, agents and
representatives of the Trust and the Underwriter, or any other
party to whom the Trust and/or the Underwriter may provide access
to or disclose Confidential Information to limit the use and
disclosure of Confidential Information to that purpose.
10.8.3 The Trust and the Underwriter 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 of your
customers or any of your subsidiaries, affiliates, or licensees;
the Trust and the Underwriter further agree to cause all agents,
representatives or subcontractors of the Trust and the Underwriter,
or any other party to whom the Trust and/or the Underwriter may
provide access to or disclose Confidential Information to implement
appropriate measures designed to meet the objectives set forth in
this paragraph.
10.9 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 to this Agreement
are entitled to under state and federal laws.
10.10 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
10.11 Neither this Agreement nor any rights or obligations created
by it may be assigned by any party without the prior written approval of the
other parties.
18
10.12 No provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
both parties.
IN WITNESS WHEREOF, each of the parties have caused their duly
authorized officers to execute this Agreement.
The Trust: Franklin Xxxxxxxxx Variable Insurance
ONLY ON BEHALF OF EACH -------------------------------------
PORTFOLIO LISTED ON Products Trust
SCHEDULE C HEREOF. --------------
By:
---------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President
The Underwriter: Franklin/Xxxxxxxxx Distributors, Inc.
-------------------------------------
By:
---------------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
The Company: American Centurion Life Assurance Company,
------------------------------------------
American Enterprise Life Insurance Company,
-------------------------------------------
IDS Life Insurance Company, and
-------------------------------
IDS Life Insurance Company of New York
--------------------------------------
By:
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President of American Enterprise
Life Insurance Company, Executive Vice
President - Annuities of IDS Life
Insurance Company, and Vice President -
Annuities of American Centurion Life
Assurance Company and IDS Life
Insurance Company of New York
Attest: By:
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Assistant Secretary
19
Distributor for the Company: Ameriprise Financial Services, Inc.
By:
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President - General Manager
Annuities
Attest: By:
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Assistant Secretary
20
SCHEDULE A
THE COMPANY AND ITS DISTRIBUTOR
THE COMPANY
American Centurion Life Assurance Company
00 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxx 00000
Organized as a life insurance company under New York law.
American Enterprise Life Insurance Company
000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Organized as a life insurance company under Indiana law.
IDS Life Insurance Company
70100 Ameriprise Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Organized as a life insurance company under Minnesota law.
IDS Life Insurance Company of New York
00 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxx 00000
Organized as a life insurance company under New York law.
THE DISTRIBUTOR
Ameriprise Financial Services, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Organized as a corporation under Delaware law.
A
SCHEDULE B
ACCOUNTS OF THE COMPANY
1. Name: IDS Life Variable Account 10
Date Established: August 23, 1995
SEC Registration Number: 811-07355
2. Name: IDS Life of New York Variable Annuity
Account (formerly IDS Life of New York
Flexible Portfolio Annuity Account)
Date Established: April 17, 1996
SEC Registration Number: 811-07623
3. Name: IDS Life Variable Life Separate Account
Date Established: October 16, 1985
SEC Registration Number: 811-04298
4. Name: IDS Life of New York Account 8
Date Established: September 12, 1985
SEC Registration Number: 811-05213
5. Name: American Enterprise Variable Annuity
Account
Date Established: July 15, 1987
SEC Registration Number: 811- 07195
6. Name: American Enterprise Variable Life
Account
Date Established: July 15, 1987
SEC Registration Number: 811-09515
7. Name: ACL Variable Annuity Account 2
Date Established: October 12, 1995
SEC Registration Number: 811-07511
B
SCHEDULE C
AVAILABLE PORTFOLIOS AND CLASSES OF SHARES OF THE TRUST; INVESTMENT ADVISERS
Franklin Xxxxxxxxx Variable Insurance Products Trust Investment Adviser
---------------------------------------------------- ------------------
Franklin Income Securities Fund, Class 2 Franklin Advisers, Inc.
Franklin Real Estate Fund, Class 2 Franklin Advisers, Inc.
Franklin Rising Dividends Fund, Class 2 Franklin Advisory Services, LLC
Franklin Small-Mid Cap Growth Securities Fund, Class 2 Franklin Advisers, Inc.
Franklin Small Cap Value Securities Fund, Class 2 Franklin Advisory Services, LLC
Mutual Shares Securities Fund, Class 2 Franklin Mutual Advisors, LLC
Templeton Developing Markets Securities Fund, Class 1 Xxxxxxxxx Asset Management, Ltd.
Templeton Developing Markets Securities Fund, Class 2 Xxxxxxxxx Asset Management, Ltd.
Templeton Foreign Securities Fund, Class 2 Xxxxxxxxx Investment Counsel, LLC
Templeton Global Income Securities Fund, Class 2 Xxxxxxxxx Investment Counsel, LLC
Templeton Growth Securities Fund, Class 2 Xxxxxxxxx Global Advisors Limited
C
SCHEDULE D
CONTRACTS OF THE COMPANY
---------------------------------------------------------------------------------------------------------------------------------
PRODUCT NAME SEPARATE ACCOUNT NAME
# INSURANCE REGISTERED Y/N REGISTERED Y/N CLASSES OF SHARES AND PORTFOLIOS
COMPANY 1933 ACT #, STATE FORM ID 1940 ACT #
---------------------------------------------------------------------------------------------------------------------------------
1. American RiverSource(SM) Endeavor Select(SM) ACL Variable Annuity Class 2 Shares:
Centurion Variable Annuity (New York) Account 2 ---------------
Life Yes Yes Franklin Income Securities Fund
Assurance 333-101051 811-07511 Franklin Rising Dividends Securities Fund
Company 273640-NY Franklin Small Mid-Cap Growth
Securities Fund
Mutual Shares Securities Fund
Templeton Global Income Securities Fund
Templeton Growth Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
2. American RiverSource(SM) Innovations(SM) Select ACL Variable Annuity Class 2 Shares:
Centurion Variable Annuity Account 2 ---------------
Life Yes Yes Franklin Income Securities Fund
Assurance 333-00519 811-07511 Franklin Rising Dividends Fund
Company 272877-NY Franklin Small-Mid Cap Growth Securities
Fund
Mutual Shares Securities Fund
Templeton Global Income Securities Fund
Templeton Growth Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
3. American RiverSource(SM) Innovations(SM) Variable ACL Variable Annuity Class 2 Shares:
Centurion Annuity (New York) Account 2 ---------------
Life Yes Yes Franklin Real Estate Fund
Assurance 333-101051 811-07511 Franklin Small-Mid Cap Growth Securities
Company 272250, 272551, 272252 and 272253 Fund
Franklin Small Cap Value Securities Fund
Mutual Shares Securities Fund
Templeton Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
4. American Evergreen Essential(SM) Variable Annuity American Enterprise Class 2 Shares:
Enterprise Yes Variable Annuity ---------------
Life 333-92297 Account Mutual Shares Securities Fund
Insurance 240343 Yes
Company 811-7195
---------------------------------------------------------------------------------------------------------------------------------
5. American Evergreen New Solutions Select Variable American Enterprise Class 2 Shares:
Enterprise Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-92297 Yes Franklin Rising Dividends Fund
Company 272646 and 272877 and state variations 811-7195 Franklin Small-Mid Cap Growth Securities
thereof Fund
Mutual Shares Securities Fund
Xxxxxxxxx Global Income Securities Fund
Templeton Growth Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
6. American Evergreen New Solutions Variable Annuity American Enterprise Class 2 Shares:
Enterprise Yes Variable Annuity ---------------
Life 333-92297 Account Franklin Small Cap Value Securities Fund
Insurance 240343 and state variations thereof Yes Mutual Shares Securities Fund
Company 811-7195 Templeton Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
D-1
---------------------------------------------------------------------------------------------------------------------------------
PRODUCT NAME SEPARATE ACCOUNT NAME
# INSURANCE REGISTERED Y/N REGISTERED Y/N CLASSES OF SHARES AND PORTFOLIOS
COMPANY 1933 ACT #, STATE FORM ID 1940 ACT #
---------------------------------------------------------------------------------------------------------------------------------
7. American Evergreen Pathways(SM) Select Variable American Enterprise Class 2 Shares:
Enterprise Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-73958 Yes Franklin Rising Dividends Fund
Company 272876 and state variations thereof 811-7195 Franklin Small-Mid Cap Growth Securities
Fund
Mutual Shares Securities Fund
Templeton Global Income Securities Fund
Templeton Growth Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
8. American Evergreen Pathways(SM) Variable Annuity American Enterprise Class 2 Shares:
Enterprise Yes Variable Annuity ---------------
Life 333-73958 Account Franklin Small Cap Value Securities Fund
Insurance 271496 and 271491 and state variations Yes Mutual Shares Securities Fund
Company thereof 811-7195 Templeton Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
9. American Evergreen Privilege(SM) Variable Annuity American Enterprise Class 2 Shares:
Enterprise Yes Variable Annuity ---------------
Life 333-73958 Account Mutual Shares Securities Fund
Insurance 271496 and 271491 and state variations Yes
Company thereof 811-7195
----------------------------------------------------------------------------------------------------------------------------------
10. American Innovations(SM) Classic Variable Annuity American Enterprise Class 2 Shares:
Enterprise Yes Variable Annuity ---------------
Life 333-92297 Account Franklin Real Estate Fund
Insurance 240343 and state variations thereof Yes Franklin Small Cap Value Securities Fund
Company 811-7195 Franklin Small-Mid Cap Growth Securities
Fund
Mutual Shares Securities Fund
Templeton Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
11. American RiverSource(SM) AccessChoice Select(SM) American Enterprise Class 2 Shares:
Enterprise Variable Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-92297 Yes Franklin Rising Dividends Securities Fund
Company 272876 and state variations thereof 811-07195 Franklin Small Mid-Cap Growth Securities
Fund
Mutual Shares Securities Fund
Templeton Global Income Securities Fund
Templeton Growth Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
12. American RiverSource(SM) Endeavor Select(SM) American Enterprise Class 2 Shares:
Enterprise Variable Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-92297 Yes Franklin Rising Dividends Securities Fund
Company 272646 and state variations thereof 811-07195 Franklin Small Mid-Cap Growth Securities
Fund
Mutual Shares Securities Fund
Templeton Global Income Securities Fund
Templeton Growth Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
13. American RiverSource(SM) FlexChoice(SM) Select American Enterprise Class 2 Shares:
Enterprise Variable Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-73958 Yes Franklin Rising Dividends Fund
Company 272876 and state variations thereof 811-7195 Franklin Small-Mid Cap Growth Securities
Fund
Mutual Shares Securities Fund
Templeton Global Income Securities Fund
Templeton Growth Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
D-2
---------------------------------------------------------------------------------------------------------------------------------
PRODUCT NAME SEPARATE ACCOUNT NAME
# INSURANCE REGISTERED Y/N REGISTERED Y/N CLASSES OF SHARES AND PORTFOLIOS
COMPANY 1933 ACT #, STATE FORM ID 1940 ACT #
---------------------------------------------------------------------------------------------------------------------------------
14. American RiverSource(SM) FlexChoice(SM) Variable American Enterprise Class 2 Shares of:
Enterprise Annuity Variable Annuity ------------------
Life Yes Account Franklin Small-Mid Cap Growth Securities
Insurance 333-73958 Yes Fund
Company 271491 and 271496 and state variations 811-7195 Franklin Small Cap Value Securities Fund
thereof Mutual Shares Securities Fund
Templeton Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
15. American RiverSource(SM) Galaxy Premier Variable American Enterprise Class 2 Shares:
Enterprise Annuity Variable Annuity ---------------
Life Yes Account Franklin Small-Mid Cap Growth Securities
Insurance 333-82149 Yes Fund
Company 44170 and state variations thereof 811-7195 Mutual Shares Securities Fund
Templeton Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
16. American RiverSource(SM) Innovations Variable American Enterprise Class 2 Shares:
Enterprise Annuity Variable Annuity ---------------
Life Yes Account Franklin Real Estate Fund
Insurance 333-92297 Yes Securities Franklin Small-Mid Cap Growth
Company 240343 and state variations thereof 811-7195 Fund
Franklin Small Cap Value Securities Fund
Mutual Shares Securities Fund
Templeton Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
17. American RiverSource(SM) Innovations(R) Classic American Enterprise Class 2 Shares:
Enterprise Select Variable Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-92297 Yes Franklin Rising Dividends Fund
Company 272646 and 272877 and state variations 811-7195 Franklin Small-Mid Cap Growth Securities
thereof Fund
Mutual Shares Securities Fund
Xxxxxxxxx Global Income Securities Fund
Templeton Growth Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
18. American RiverSource(SM) Innovations(R) Select American Enterprise Class 2 Shares:
Enterprise Variable Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-92297 Yes Franklin Rising Dividends Fund
Company 272646 and 272877 and state variations 811-7195 Franklin Small-Mid Cap Growth Securities
thereof Fund
Mutual Shares Securities Fund
Xxxxxxxxx Global Income Securities Fund
Templeton Growth Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
19. American RiverSource(SM) New Solutions Variable American Enterprise Class 2 Shares:
Enterprise Annuity(SM) Variable Annuity ---------------
Life Yes Account Franklin Small-Mid Cap Growth Securities
Insurance 333-92297 Yes Fund
Company 240343 and state variations thereof 811-7195 Mutual Shares Securities Fund
Templeton Developing Markets Securities
Fund
Templeton Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
20. American RiverSource(SM) Pinnacle Variable American Enterprise Class 2 Shares:
Enterprise Annuity(SM) Variable Annuity ---------------
Life Yes Account Franklin Small-Mid Cap Growth Securities
Insurance 333-82149 Yes Fund
Company 44170 and state variations thereof 811-7195 Franklin Small Cap Value Securities Fund
Mutual Shares Securities Fund
Templeton Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
D-3
---------------------------------------------------------------------------------------------------------------------------------
PRODUCT NAME SEPARATE ACCOUNT NAME
# INSURANCE REGISTERED Y/N REGISTERED Y/N CLASSES OF SHARES AND PORTFOLIOS
COMPANY 1933 ACT #, STATE FORM ID 1940 ACT #
---------------------------------------------------------------------------------------------------------------------------------
21. American RiverSource(SM) Signature One Select American Enterprise Class 2 Shares:
Enterprise Variable Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-85567 Yes Franklin Rising Dividends Fund
Company 272876 and state variations thereof 811-7195 Franklin Small-Mid Cap Growth Securities
Fund
Mutual Shares Securities Fund
Templeton Global Income Securities Fund
Templeton Growth Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
22. American RiverSource(SM) Signature One Variable American Enterprise Class 2 Shares:
Enterprise Annuity(SM) Variable Annuity ---------------
Life Yes Account Franklin Real Estate Fund
Insurance 333-85567 Yes Mutual Shares Securities Fund
Company 240180 and state variations thereof 811-7195 Templeton Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
23. American RiverSource(SM) Signature Variable American Enterprise Class 2 Shares:
Enterprise Annuity(SM) Variable Annuity ---------------
Life Yes Account Franklin Real Estate Fund
Insurance 333-74865 Yes Mutual Shares Securities Fund
Company 43431 and state variations thereof 811-7195 Templeton Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
24. American RiverSource(SM) Signature Variable American Enterprise Class 2 Shares:
Enterprise Select Annuity(R) Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-74865 Yes Franklin Rising Dividends Fund
Company 272876 and state variations thereof 811-7195 Franklin Small-Mid Cap Growth Securities
Fund
Mutual Shares Securities Fund
Templeton Global Income Securities Fund
Templeton Growth Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
25. American RiverSource(SM) Signature Variable American Enterprise Class 2 Shares:
Enterprise Universal Life(SM) Variable Life Account ---------------
Life Yes Yes Franklin Real Estate Fund
Insurance 333-84121 811-09515 Mutual Shares Securities Fund
Company 37022 and state variations thereof Templeton Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
26. American Xxxxx Fargo Advantage Choice Variable American Enterprise Class 2 Shares:
Enterprise Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-73958 Yes Franklin Real Estate Fund
Company 44209 and 44210 and state variations 811-7195 Franklin Small-Mid Cap Growth Securities
thereof Fund
Franklin Small Cap Value Securities Fund
Mutual Shares Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
27. American Xxxxx Fargo Advantage(R) Builder Select American Enterprise Class 2 Shares:
Enterprise Variable Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-85567 Yes Franklin Real Estate Fund
Company 272876 and state variations thereof 811-7195 Xxxxxxxxx Global Income Securities Fund
----------------------------------------------------------------------------------------------------------------------------------
28. American Xxxxx Fargo Advantage(R) Choice Select American Enterprise Class 2 Shares:
Enterprise Variable Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-73958 Yes Franklin Real Estate Fund
Company 272876 and state variations thereof 811-7195 Xxxxxxxxx Global Income Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
D-4
---------------------------------------------------------------------------------------------------------------------------------
PRODUCT NAME SEPARATE ACCOUNT NAME
# INSURANCE REGISTERED Y/N REGISTERED Y/N CLASSES OF SHARES AND PORTFOLIOS
COMPANY 1933 ACT #, STATE FORM ID 1940 ACT #
---------------------------------------------------------------------------------------------------------------------------------
29. American Xxxxx Fargo Advantage(R) Select Variable American Enterprise Class 2 Shares:
Enterprise Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-92297 Yes Franklin Real Estate Fund
Company 272646 and 272877 and state variations 811-7195 Xxxxxxxxx Global Income Securities Fund
thereof
---------------------------------------------------------------------------------------------------------------------------------
30. American Xxxxx Fargo Advantage(SM) Builder American Enterprise Class 2 Shares:
Enterprise Variable Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-85567 Yes Franklin Real Estate Fund
Company 44209 and state variations thereof 811-7195 Franklin Small-Mid Cap Growth Securities
Fund
Mutual Shares Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
31. American Xxxxx Fargo Advantage(SM) Variable American Enterprise Class 2 Shares:
Enterprise Annuity Variable Annuity ---------------
Life Yes Account Franklin Income Securities Fund
Insurance 333-85567 Yes Franklin Real Estate Fund
Company 44209 and state variations thereof 811-7195 Franklin Small-Mid Cap Growth Securities
Fund
Franklin Small Cap Value Securities Fund
Mutual Shares Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
32. IDS Life IDS Life Flexible Portfolio Annuity IDS Life Variable Class 1 Shares:
Insurance Yes Account 10 ---------------
Company 33-62407 Yes Xxxxxxxxx Developing Markets Securities
31030, 31031, 31032-XXX and state 811-07355 Fund
variations thereof
---------------------------------------------------------------------------------------------------------------------------------
33. IDS Life RiverSource(SM) Retirement Advisor IDS Life Variable Class 2 Shares:
Insurance Advantage Plus(SM) Variable Annuity Account 10 ---------------
Company Yes Yes Franklin Real Estate Fund
31043A and state variations thereof 811-07355 Franklin Small Cap Value Securities Fund
Mutual Shares Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
34. IDS Life RiverSource(SM) Retirement Advisor IDS Life Variable Class 2 Shares:
Insurance Advantage(SM) Variable Annuity and Account 10 ---------------
Company RiverSource(SM) Retirement Advisor Yes Franklin Real Estate Fund
Advantage(sm) Variable Annuity - Band 3 811-07355 Franklin Small Cap Value Securities Fund
Yes Mutual Shares Securities Fund
333-79311
31043, 31044, 31045-XXX, 31046, 31047,
31048-XXX and state variations thereof
---------------------------------------------------------------------------------------------------------------------------------
35. IDS Life RiverSource(SM) Retirement Advisor IDS Life Variable Class 2 Shares:
Insurance Select Plus(SM) Variable Annuity Account 10 ---------------
Company Yes Yes Franklin Real Estate Fund
131041A and state variations thereof 811-07355 Franklin Small Cap Value Securities Fund
Mutual Shares Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
36. IDS Life RiverSource(SM) Retirement Advisor IDS Life Variable Class 2 Shares:
Insurance Select(SM) Variable Annuity Account 10 ---------------
Company Yes Yes Franklin Real Estate Fund
333-79311 811-07355 Franklin Small Cap Value Securities Fund
131041, 131042 and 131043 and state Mutual Shares Securities Fund
variations thereof
---------------------------------------------------------------------------------------------------------------------------------
D-5
---------------------------------------------------------------------------------------------------------------------------------
PRODUCT NAME SEPARATE ACCOUNT NAME
# INSURANCE REGISTERED Y/N REGISTERED Y/N CLASSES OF SHARES AND PORTFOLIOS
COMPANY 1933 ACT #, STATE FORM ID 1940 ACT #
---------------------------------------------------------------------------------------------------------------------------------
37. IDS Life RiverSource(SM) Retirement Advisor IDS Life Variable Class 2 Shares:
Insurance Variable Annuity(R) and American Express Account 10 ---------------
Company Retirement Advisor Variable Annuity(R) - Yes Franklin Real Estate Fund
Band 3 811-07355 Franklin Small Cap Value Securities Fund
Yes Xxxxxxxxx Foreign Securities Fund
333-79311
31043, 31044, 31045-XXX, 31046, 31047,
31048-XXX and state variations thereof
---------------------------------------------------------------------------------------------------------------------------------
38. IDS Life RiverSource(SM) Single Premium Variable IDS Life Variable Life Class 2 Shares:
Insurance Life Separate Account ---------------
Company Yes Yes Franklin Real Estate Fund
333-83456 811-4298 Franklin Small Cap Value Securities Fund
132019 and state variations thereof Mutual Shares Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
39. IDS Life RiverSource(SM) Succession Select IDS Life Variable Class 2 Shares:
Insurance Variable Life Insurance(SM) Life Separate Account ---------------
Company Yes Yes Franklin Real Estate Fund
33-62457 811-4298 Franklin Small Cap Value Securities Fund
30090 and state variations thereof Xxxxxxxxx Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
40. IDS Life RiverSource(SM) Variable Second-To-Die IDS Life Variable Life Class 2 Shares:
Insurance Life Insurance(SM) Separate Account ---------------
Company Yes Yes Franklin Real Estate Fund
33-62457 811-4298 Franklin Small Cap Value Securities Fund
30090 and state variations thereof Xxxxxxxxx Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
41. IDS Life RiverSource(SM) Variable Universal Life IDS Life Variable Life Class 2 Shares of:
Insurance III(SM) Separate Account ------------------
Company Yes Yes Franklin Real Estate Fund
333-69777 811-4298 Franklin Small Cap Value Securities Fund
30061 and state variations thereof Xxxxxxxxx Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
42. IDS Life RiverSource(SM) Variable Universal Life IDS Life Variable Life Class 2 Shares:
Insurance Insurance(SM) Separate Account ---------------
Company Yes Yes Franklin Real Estate Fund
33-11165 811-4298 Franklin Small Cap Value Securities Fund
30060 and state variations thereof Xxxxxxxxx Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
43. IDS Life RiverSource(SM) Variable Universal Life IDS Life Variable Life Class 2 Shares:
Insurance IV and American Express(R) Variable Separate Account ---------------
Company Universal Life IV -- Estate Series Yes Franklin Real Estate Fund
Yes 811-4298 Franklin Small Cap Value Securities Fund
333-69777 Mutual Shares Securities Fund
30061 and state variations thereof
---------------------------------------------------------------------------------------------------------------------------------
44. IDS Life IDS Life of New York Flexible Portfolio IDS Life of New York Class 1 Shares:
Insurance Annuity Variable Annuity ---------------
Company of Yes Account Xxxxxxxxx Developing Markets Securities
New York 333-03867 Yes Fund
31036, 31037, 31038-XXX and 31039-SEP 811-07623
---------------------------------------------------------------------------------------------------------------------------------
D-6
---------------------------------------------------------------------------------------------------------------------------------
PRODUCT NAME SEPARATE ACCOUNT NAME
# INSURANCE REGISTERED Y/N REGISTERED Y/N CLASSES OF SHARES AND PORTFOLIOS
COMPANY 1933 ACT #, STATE FORM ID 1940 ACT #
---------------------------------------------------------------------------------------------------------------------------------
45. IDS Life IDS Life of New York Succession IDS Life of New York Class 2 Shares:
Insurance Select(SM) Variable Life Insurance Account 8 ---------------
Company of 333-42257 Yes Xxxxxxxx Xxxx Xxxxxx Xxxx
Xxx Xxxx 00000X 811-5213 Franklin Small Cap Value Securities Fund
Mutual Shares Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
46. IDS Life IDS Life of New York Variable IDS Life of New York Class 2 Shares:
Insurance Second-To-Die Life Insurance Account 8 ---------------
Company of Yes Yes Franklin Real Estate Fund
New York 333-42257 811-5213 Franklin Small Cap Value Securities Fund
30090 Xxxxxxxxx Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
47. IDS Life IDS Life of New York Variable Universal IDS Life of New York Class 2 Shares of:
Insurance Life III Account 8 ------------------
Company of Yes Yes Franklin Real Estate Fund
New York 333-44644 811-5213 Franklin Small Cap Value Securities Fund
39061 Xxxxxxxxx Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
48. IDS Life IDS Life of New York Variable Universal IDS Life of New York Class 2 Shares:
Insurance Life Insurance Account 8 ---------------
Company of Yes Yes Xxxxxxxx Xxxx Xxxxxx Xxxx
Xxx Xxxx 00-00000 811-5213 Franklin Small Cap Value Securities Fund
30060 Xxxxxxxxx Foreign Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
49. IDS Life IDS Life of New York Variable Universal IDS Life of New York Class 2 Shares:
Insurance Life IV and IDS Life of New York Account 8 ---------------
Company of Variable Universal Life IV - Estate Yes Franklin Real Estate Fund
New York Series 811-5213 Franklin Small Cap Value Securities Fund
Yes Mutual Shares Securities Fund
333-44644
39061C
---------------------------------------------------------------------------------------------------------------------------------
50. IDS Life RiverSource(SM) Retirement Advisor IDS Life of New York Class 2 Shares:
Insurance Advantage(SM) Variable Annuity (New York) Variable Annuity ---------------
Company of Yes Account Franklin Real Estate Fund
New York 333-91691 Yes Franklin Small Cap Value Securities Fund
31053; 31054; 31055-SEP 811-07623 Mutual Shares Securities Fund
31056-XXX
---------------------------------------------------------------------------------------------------------------------------------
51. IDS Life RiverSource(SM) Retirement Advisor IDS Life of New York Class 2 Shares:
Insurance Select(SM) Variable Annuity (New York) Variable Annuity ---------------
Company of Yes Account Franklin Real Estate Fund
New York 333-91691 Yes Franklin Small Cap Value Securities Fund
139035, 139036, 139037 and 139038 811-07623 Mutual Shares Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
52. IDS Life RiverSource(SM) Retirement Advisor IDS Life of New York Class 2 Shares:
Insurance Variable Annuity(R) (New York) Variable Annuity ---------------
Company of Yes Account Franklin Real Estate Fund
New York 333-91691 Yes Franklin Small Cap Value Securities Fund
31053; 31054; 31055-SEP 811-07623 Xxxxxxxxx Foreign Securities Fund
31056-XXX
---------------------------------------------------------------------------------------------------------------------------------
D-7
SCHEDULE E
THIS SCHEDULE IS NOT USED
E
SCHEDULE F
RULE 12b-1 PLANS
COMPENSATION SCHEDULE
---------------------
Each Portfolio named below shall pay the following amounts pursuant to the
terms and conditions referenced below under its Class 2 Rule 12b-1
Distribution Plan, stated as a percentage per year of Class 2's average
daily net assets represented by shares of Class 2.
PORTFOLIO NAME MAXIMUM ANNUAL PAYMENT RATE
-------------- ---------------------------
Franklin Income Securities Fund 0.25%
Franklin Real Estate Fund 0.25%
Franklin Rising Dividends Fund 0.25%
Franklin Small-Mid Cap Growth Securities Fund 0.25%
Franklin Small Cap Value Securities Fund 0.25%
Mutual Shares Securities Fund 0.25%
Xxxxxxxxx Developing Markets Securities Fund 0.25%
Xxxxxxxxx Foreign Securities Fund 0.25%
Xxxxxxxxx Global Income Securities Fund 0.25%
Xxxxxxxxx Growth Securities Fund 0.25%
AGREEMENT PROVISIONS
--------------------
If the Company, on behalf of any Account, purchases Trust Portfolio
shares ("Eligible Shares") which are subject to a Rule 12b-1 plan adopted
under the 1940 Act (the "Plan"), the Company may participate in the Plan.
To the extent the Company or its affiliates, agents or designees
(collectively "you") provide any activity or service which is primarily
intended to assist in the promotion, distribution or account servicing of
Eligible Shares ("Rule 12b-1 Services") or variable contracts offering
Eligible Shares, the Underwriter, the Trust or their affiliates
(collectively, "we") may pay you a Rule 12b-1 fee. "Rule 12b-1 Services" may
include, but are not limited to, printing of prospectuses and reports used
for sales purposes, preparing and distributing sales literature and related
expenses, advertisements, education of dealers and their representatives,
and similar distribution-related expenses, furnishing personal services to
owners of Contracts which may invest in Eligible Shares ("Contract Owners"),
education of Contract Owners, answering routine inquiries regarding a
Portfolio, coordinating responses to Contract Owner inquiries regarding the
Portfolios, maintaining such accounts or providing such other enhanced
services as a Trust Portfolio or Contract may require, or providing other
services eligible for service fees as defined under NASD rules. Your
acceptance of such compensation is your acknowledgment that eligible
services have been rendered. All Rule 12b-1 fees, shall be based on the
value of Eligible Shares owned by the Company on behalf of its Accounts, and
shall be calculated on the basis and at the rates set forth in the
Compensation Schedule stated above. The aggregate annual fees paid pursuant
to each Plan shall not exceed the amounts stated as the "annual maximums" in
the Portfolio's prospectus, unless an increase is approved by shareholders
as provided in the Plan. These maximums shall be a specified percent of the
value of a Portfolio's
F-1
net assets attributable to Eligible Shares owned by the Company on behalf of
its Accounts (determined in the same manner as the Portfolio uses to compute
its net assets as set forth in its effective Prospectus). The Rule 12b-1 fee
will be paid to you within thirty (30) days after the end of the three-month
periods ending in January, April, July and October.
You shall furnish us with such information as shall reasonably be
requested by the Trust's Boards of Trustees ("Trustees") with respect to the
Rule 12b-1 fees paid to you pursuant to the Plans. We shall furnish to the
Trustees, for their review on a quarterly basis, a written report of the
amounts expended under the Plans and the purposes for which such
expenditures were made.
The Plans and provisions of any agreement relating to such Plans
must be approved annually by a vote of the Trustees, including the Trustees
who are not interested persons of the Trust and who have no financial
interest in the Plans or any related agreement ("Disinterested Trustees").
Each Plan may be terminated at any time by the vote of a majority of the
Disinterested Trustees, or by a vote of a majority of the outstanding shares
as provided in the Plan, on sixty (60) days' written notice, without payment
of any penalty. The Plans may also be terminated by any act that terminates
the Underwriting Agreement between the Underwriter and the Trust, and/or the
management or administration agreement between Franklin Advisers, Inc. and
its affiliates and the Trust. Continuation of the Plans is also conditioned
on Disinterested Trustees being ultimately responsible for selecting and
nominating any new Disinterested Trustees. Under Rule 12b-1, the Trustees
have a duty to request and evaluate, and persons who are party to any
agreement related to a Plan have a duty to furnish, such information as may
reasonably be necessary to an informed determination of whether the Plan or
any agreement should be implemented or continued. Under Rule 12b-1, the
Trust is permitted to implement or continue Plans or the provisions of any
agreement relating to such Plans from year-to-year only if, based on certain
legal considerations, the Trustees are able to conclude that the Plans will
benefit each affected Trust Portfolio and class. Absent such yearly
determination, the Plans must be terminated as set forth above. In the event
of the termination of the Plans for any reason, the provisions of this
Schedule F relating to the Plans will also terminate. Because the Rule 12b-1
fees paid to you pursuant to the Plans may be reduced or terminated at any
time and we are not liable for, and will not offset any reduction or
termination in such fees, you agree to consider whether or not your selling
agreements with persons or entities through whom you intend to distribute
the Contracts should provide that compensation paid to them may be reduced
if such Rule 12b-1 fees are reduced or terminated.
Any obligation assumed by the Trust pursuant to this Agreement shall be
limited in all cases to the assets of the Trust and no person shall seek
satisfaction thereof from shareholders of the Trust. You agree to waive
payment of any amounts payable to you by Underwriter under a Plan until such
time as the Underwriter has received such fee from the Trust.
The provisions of the Plans shall control over the provisions of the
Participation Agreement, including this Schedule F, in the event of any
inconsistency.
You agree to provide complete disclosure as required by all applicable
statutes, rules and regulations of all rule 12b-1 fees received from us in
the prospectus of the Contracts.
F-2
SCHEDULE G
ADDRESSES FOR NOTICES
To the Company: American Centurion Life Assurance Company
IDS Life Insurance Company of New York
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Vice President - Annuities
American Enterprise Life Insurance Company
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: President
IDS Life Insurance Company
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Executive Vice President - Annuities
To the Distributor: Ameriprise Financial Services, Inc.
General Counsel's Xxxxxx
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
To the Trust: Franklin Xxxxxxxxx Variable Insurance Products
Trust
Xxx Xxxxxxxx Xxxxxxx, Xxxx. 000, 0xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx,
Assistant Vice President
To the Underwriter: Franklin/Xxxxxxxxx Distributors, Inc.
000 Xxxxxxxx Xxxxxxx, 0xx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, President
If to the Trust or Underwriter
With a copy to: Franklin Xxxxxxxxx Investments
One Franklin Parkway, Bldg. 000, 0xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
G
SCHEDULE H
SHARED FUNDING ORDER
Templeton Variable Products Series Fund, et al.
File No. 812-11698
SECURITIES AND EXCHANGE COMMISSION
Release No. IC-24018
1999 SEC LEXIS 1887
September 17, 1999
ACTION: Notice of application for an amended order of exemption pursuant to
Section 6(c) of the Investment Company Act of 1940 (the "1940 Act") from the
provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder.
TEXT: Summary of Application: Xxxxxxxxx Variable Products Series Fund (the
"Xxxxxxxxx Trust"), Franklin Xxxxxxxxx Variable Insurance Products Trust
(formerly Franklin Valuemark Funds) (the "VIP Trust," and together with the
Templeton Trust, the "Funds"), Xxxxxxxxx Funds Annuity Company ("TFAC") or
any successor to TFAC, and any future open-end investment company for which
TFAC or any affiliate is the administrator, sub-administrator, investment
manager, adviser, principal underwriter, or sponsor ("Future Funds") seek an
amended order of the Commission to (1) add as parties to that order the VIP
Trust and any Future Funds and (2) permit shares of the Funds and Future
Funds to be issued to and held by qualified pension and retirement plans
outside the separate account context.
Applicants: Templeton Variable Products Series Fund, Franklin Xxxxxxxxx
Variable Insurance Products Trust, Xxxxxxxxx Funds Annuity Company or any
successor to TFAC, and any future open-end investment company for which TFAC
or any affiliate is the administrator, sub-administrator, investment
manager, adviser, principal underwriter, or sponsor (collectively, the
"Applicants").
Filing Date: The application was filed on July 14, 1999, and amended and
restated on September 17, 1999.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested persons
may request a hearing by writing to the Secretary of the Commission and
serving Applicants with a copy of the request, personally or by mail.
Hearing requests should be received by the Commission by 5:30 p.m., on
October 12, 1999, and should be accompanied by proof of service on the
Applicants in the form of an affidavit or, for lawyers, a certificate of
service. Hearing requests should state the nature of the writer's interest,
the reason for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the Secretary
of the Commission.
Addresses: Secretary, Securities and Exchange Commission, 000 Xxxxx
Xxxxxx, XX, Xxxxxxxxxx, X.X. 00000-0000.
Applicants: Templeton Variable Products Series Fund and Franklin
Xxxxxxxxx Variable Insurance Products Trust, 000 Xxxxxxxx Xxxxxx Xxxxxxxxx,
Xxx Xxxxx, Xxxxxxxxxx 00000, Attn: Xxxxx X. Xxxxxxxx, Esq.
For Further Information Contact: Xxxxx X. XxXxxxx, Senior Counsel, or
Xxxxx X. Xxxxx, Branch Chief, Office of Insurance Products, Division of
Investment Management, at (000) 000-0000.
H-1
Supplementary Information: The following is a summary of the application.
The complete application is available for a fee from the SEC's Public
Reference Branch, 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000-0000 (tel.
(000) 000-0000).
Applicants' Representations:
1. Each of the Funds is registered under the 1940 Act as an open-end
management investment company and was organized as a Massachusetts business
trust. The Templeton Trust currently consists of eight separate series, and
the VIP Trust consists of twenty-five separate series. Each Fund's
Declaration of Trust permits the Trustees to create additional series of
shares at any time. The Funds currently serve as the underlying investment
medium for variable annuity contracts and variable life insurance policies
issued by various insurance companies. The Funds have entered into
investment management agreements with certain investment managers
("Investment Managers") directly or indirectly owned by Franklin Resources,
Inc. ("Resources"), a publicly owned company engaged in the financial
services industry through its subsidiaries.
2. TFAC is an indirect, wholly owned subsidiary of Resources. TFAC is the
sole insurance company in the Franklin Xxxxxxxxx organization, and
specializes in the writing of variable annuity contracts. The Templeton
Trust has entered into a Fund Administration Agreement with Franklin
Xxxxxxxxx Services, Inc. ("FT Services"), which replaced TFAC in 1998 as
administrator, and FT Services subcontracts certain services to TFAC. FT
Services also serves as administrator to all series of the VIP Trust. TFAC
and FT Services provide certain administrative facilities and services for
the VIP and Templeton Trusts.
3. On November 16, 1993, the Commission issued an order granting
exemptive relief to permit shares of the Xxxxxxxxx Trust to be sold to and
held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (Investment
Company Act Release No. 19879, File No. 812-8546) (the "Original Order").
Applicants incorporate by reference into the application the Application for
the Original Order and each amendment thereto, the Notice of Application for
the Original Order, and the Original Order, to the extent necessary, to
supplement the representations made in the application in support of the
requested relief. Applicants represent that all of the facts asserted in the
Application for the Original Order and any amendments thereto remain true
and accurate in all material respects to the extent that such facts are
relevant to any relief on which Applicants continue to rely. The Original
Order allows the Templeton Trust to offer its shares to insurance companies
as the investment vehicle for their separate accounts supporting variable
annuity contracts and variable life insurance contracts (collectively, the
"Variable Contracts"). Applicants state that the Original Order does not (i)
include the VIP Trust or Future Funds as parties, nor (ii) expressly address
the sale of shares of the Funds or any Future Funds to qualified pension and
retirement plans outside the separate account context including, without
limitation, those trusts, plans, accounts, contracts or annuities described
in Sections 401(a), 403(a), 403(b), 408(b), 408(k), 414(d), 457(b),
501(c)(18) of the Internal Revenue Code of 1986, as amended (the "Code"),
and any other trust, plan, contract, account or annuity that is determined
to be within the scope of Treasury Regulation 1.817.5(f)(3)(iii) ("Qualified
Plans").
4. Separate accounts owning shares of the Funds and their insurance
company depositors are referred to in the application as "Participating
Separate Accounts" and "Participating Insurance Companies," respectively.
The use of a common management investment company as the underlying
investment medium for both variable annuity and variable life insurance
separate accounts of a single insurance company (or of two or more
affiliated insurance companies) is referred to as "mixed funding." The use
of a common management investment company as the underlying investment
medium for variable annuity and/or variable life insurance separate accounts
of unaffiliated insurance companies is referred to as "shared funding."
Applicants' Legal Analysis:
1. Applicants request that the Commission issue an amended order pursuant
to Section 6(c) of the 1940 Act, adding the VIP Trust and Future Funds to
the Original Order and exempting scheduled premium variable life insurance
separate accounts and flexible premium variable life insurance separate
accounts of Participating Insurance Companies (and, to the extent necessary,
any principal underwriter and depositor of such an account) and the
Applicants from Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
H-2
(and any comparable rule) thereunder, respectively, to the extent necessary
to permit shares of the Funds and any Future Funds to be sold to and held by
Qualified Plans. Applicants submit that the exemptions requested are
appropriate in the public interest, consistent with the protection of
investors, and consistent with the purposes fairly intended by the policy
and provisions of the 1940 Act.
2. The Original Order does not include the VIP Trust or Future Funds as
parties nor expressly address the sale of shares of the Funds or any Future
Funds to Qualified Plans. Applicants propose that the VIP Trust and Future
Funds be added as parties to the Original Order and the Funds and any Future
Funds be permitted to offer and sell their shares to Qualified Plans.
3. Section 6(c) of the 1940 Act provides, in part, that the Commission,
by order upon application, may conditionally or unconditionally exempt any
person, security or transaction, or any class or classes of persons,
securities or transactions from any provisions of the 1940 Act or the rules
or regulations thereunder, if and to the extent that such exemption is
necessary or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy and
provisions of the 1940 Act.
4. In connection with the funding of scheduled premium variable life
insurance contracts issued through a separate account registered under the
1940 Act as a unit investment trust ("UIT"), Rule 6e-2(b)(15) provides
partial exemptions from various provisions of the 1940 Act, including the
following: (1) Section 9(a), which makes it unlawful for certain individuals
to act in the capacity of employee, officer, or director for a UIT, by
limiting the application of the eligibility restrictions in Section 9(a) to
affiliated persons directly participating in the management of a registered
management investment company; and (2) Sections 13(a), 15(a) and 15(b) of
the 1940 Act to the extent that those sections might be deemed to require
"pass-through" voting with respect to an underlying fund's shares, by
allowing an insurance company to disregard the voting instructions of
contractowners in certain circumstances.
5. These exemptions are available, however, only where the management
investment company underlying the separate account (the "underlying fund")
offers its shares "exclusively to variable life insurance separate accounts
of the life insurer, or of any affiliated life insurance company."
Therefore, Rule 6e-2 does not permit either mixed funding or shared funding
because the relief granted by Rule 6e-2(b)(15) is not available with respect
to a scheduled premium variable life insurance separate account that owns
shares of an underlying fund that also offers its shares to a variable
annuity or a flexible premium variable life insurance separate account of
the same company or of any affiliated life insurance company. Rule
6e-2(b)(15) also does not permit the sale of shares of the underlying fund
to Qualified Plans.
6. In connection with flexible premium variable life insurance contracts
issued through a separate account registered under the 1940 Act as a UIT,
Rule 6e-3(T)(b)(15) also provides partial exemptions from Sections 9(a),
13(a), 15(a) and 15(b) of the 1940 Act. These exemptions, however, are
available only where the separate account's underlying fund offers its
shares "exclusively to separate accounts of the life insurer, or of any
affiliated life insurance company, offering either scheduled contracts or
flexible contracts, or both; or which also offer their shares to variable
annuity separate accounts of the life insurer or of an affiliated life
insurance company." Therefore, Rule 6e-3(T) permits mixed funding but does
not permit shared funding and also does not permit the sale of shares of the
underlying fund to Qualified Plans. As noted above, the Original Order
granted the Xxxxxxxxx Trust exemptive relief to permit mixed and shared
funding, but did not expressly address the sale of its shares to Qualified
Plans.
7. Applicants note that if the Funds were to sell their shares only to
Qualified Plans, exemptive relief under Rule 6e-2 and Rule 6e-3(T) would not
be necessary. Applicants state that the relief provided for under Rule
6e-2(b)(15) and Rule 6e-3(T)(b)(15) does not relate to qualified pension and
retirement plans or to a registered investment company's ability to sell its
shares to such plans.
8. Applicants state that changes in the federal tax law have created the
opportunity for each of the Funds to increase its asset base through the
sale of its shares to Qualified Plans. Applicants state that Section 817(h)
of the Internal Revenue Code of 1986, as amended (the "Code"), imposes
certain diversification standards on the assets underlying Variable
Contracts. Treasury Regulations generally require that, to meet the
diversification requirements, all of the beneficial interests in the
underlying investment company must be held by the segregated asset accounts
of
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one or more life insurance companies. Notwithstanding this, Applicants note
that the Treasury Regulations also contain an exception to this requirement
that permits trustees of a Qualified Plan to hold shares of an investment
company, the shares of which are also held by insurance company segregated
asset accounts, without adversely affecting the status of the investment
company as an adequately diversified underlying investment of Variable
Contracts issued through such segregated asset accounts (Treas. Reg.
1.817-5(f)(3)(iii)).
9. Applicants state that the promulgation of Rules 6e-2(b)(15) and
6e-3(T)(b)(15) under the 1940 Act preceded the issuance of these Treasury
Regulations. Thus, Applicants assert that the sale of shares of the same
investment company to both separate accounts and Qualified Plans was not
contemplated at the time of the adoption of Rules 6e-2(b)(15) and
6e-3(T)(b)(15).
10. Section 9(a) provides that it is unlawful for any company to serve as
investment adviser or principal underwriter of any registered open-end
investment company if an affiliated person of that company is subject to a
disqualification enumerated in Section 9(a)(1) or (2). Rules 6e-2(b)(15) and
6e-3(T)(b)(15) provide exemptions from Section 9(a) under certain
circumstances, subject to the limitations on mixed and shared funding. These
exemptions limit the application of the eligibility restrictions to
affiliated individuals or companies that directly participate in the
management of the underlying portfolio investment company.
11. Applicants state that the relief granted in Rule 6e-2(b)(15) and
6e-3(T)(b)(15) from the requirements of Section 9 limits, in effect, the
amount of monitoring of an insurer's personnel that would otherwise be
necessary to ensure compliance with Section 9 to that which is appropriate
in light of the policy and purposes of Section 9. Applicants submit that
those Rules recognize that it is not necessary for the protection of
investors or the purposes fairly intended by the policy and provisions of
the 1940 Act to apply the provisions of Section 9(a) to the many individuals
involved in an insurance company complex, most of whom typically will have
no involvement in matters pertaining to investment companies funding the
separate accounts.
12. Applicants to the Original Order previously requested and received
relief from Section 9(a) and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) to the
extent necessary to permit mixed and shared funding. Applicants maintain
that the relief previously granted from Section 9(a) will in no way be
affected by the proposed sale of shares of the Funds to Qualified Plans.
Those individuals who participate in the management or administration of the
Funds will remain the same regardless of which Qualified Plans use such
Funds. Applicants maintain that more broadly applying the requirements of
Section 9(a) because of investment by Qualified Plans would not serve any
regulatory purpose. Moreover, Qualified Plans, unlike separate accounts, are
not themselves investment companies and therefore are not subject to Section
9 of the 1940 Act.
13. Applicants state that Rules 6e-2(b)(15)(iii) and 6e-3(T)(b)(15)(iii)
provide exemptions from the pass-through voting requirement with respect to
several significant matters, assuming the limitations on mixed and shared
funding are observed. Rules 6e-2(b)(15)(iii)(A) and 6e-3(T)(b)(15)(iii)(A)
provide that the insurance company may disregard the voting instructions of
its contractowners with respect to the investments of an underlying fund or
any contract between a fund and its investment adviser, when required to do
so by an insurance regulatory authority (subject to the provisions of
paragraphs (b)(5)(i) and (b)(7)(ii)(A) of the Rules). Rules
6e-2(b)(15)(iii)(B) and 6e-3(T)(b)(15)(iii)(A)(2) provide that the insurance
company may disregard contractowners' voting instructions if the
contractowners initiate any change in such company's investment policies,
principal underwriter, or any investment adviser (provided that disregarding
such voting instructions is reasonable and subject to the other provisions
of paragraphs (b)(5)(ii) and (b)(7)(ii)(B) and (C) of the Rules).
14. Applicants assert that Qualified Plans, which are not registered as
investment companies under the 1940 Act, have no requirement to pass-through
the voting rights to plan participants. Applicants state that applicable law
expressly reserves voting rights to certain specified persons. Under Section
403(a) of the Employment Retirement Income Security Act ("ERISA"), shares of
a fund sold to a Qualified Plan must be held by the trustees of the
Qualified Plan. Section 403(a) also provides that the trustee(s) must have
exclusive authority and discretion to manage and control the Qualified Plan
with two exceptions: (1) when the Qualified Plan expressly provides that the
trustee(s) are subject to the direction of a named fiduciary who is not a
trustee, in which case the trustees are subject to proper directions made in
accordance with the terms of the Qualified Plan and not contrary to ERISA;
and (2) when the authority to manage, acquire or dispose of assets of the
Qualified Plan is delegated to one or more
H-4
investment managers pursuant to Section 402(c)(3) of ERISA. Unless one of
the two above exceptions stated in Section 403(a) applies, Qualified Plan
trustees have the exclusive authority and responsibility for voting proxies.
Where a named fiduciary to a Qualified Plan appoints an investment manager,
the investment manager has the responsibility to vote the shares held unless
the right to vote such shares is reserved to the trustees or the named
fiduciary. Where a Qualified Plan does not provide participants with the
right to give voting instructions, Applicants do not see any potential for
material irreconcilable conflicts of interest between or among variable
contract holders and Qualified Plan investors with respect to voting of the
respective Fund's shares. Accordingly, Applicants state that, unlike the
case with insurance company separate accounts, the issue of the resolution
of material irreconcilable conflicts with respect to voting is not present
with respect to such Qualified Plans since the Qualified Plans are not
entitled to pass-through voting privileges.
15. Even if a Qualified Plan were to hold a controlling interest in one
of the Funds, Applicants believe that such control would not disadvantage
other investors in such Fund to any greater extent than is the case when any
institutional shareholder holds a majority of the voting securities of any
open-end management investment company. In this regard, Applicants submit
that investment in a Fund by a Qualified Plan will not create any of the
voting complications occasioned by mixed funding or shared funding. Unlike
mixed or shared funding, Qualified Plan investor voting rights cannot be
frustrated by veto rights of insurers or state regulators.
16. Applicants state that some of the Qualified Plans, however, may
provide for the trustee(s), an investment adviser (or advisers), or another
named fiduciary to exercise voting rights in accordance with instructions
from participants. Where a Qualified Plan provides participants with the
right to give voting instructions, Applicants see no reason to believe that
participants in Qualified Plans generally or those in a particular Qualified
Plan, either as a single group or in combination with participants in other
Qualified Plans, would vote in a manner that would disadvantage Variable
Contract holders. In sum, Applicants maintain that the purchase of shares of
the Funds by Qualified Plans that provide voting rights does not present any
complications not otherwise occasioned by mixed or shared funding.
17. Applicants do not believe that the sale of the shares of the Funds to
Qualified Plans will increase the potential for material irreconcilable
conflicts of interest between or among different types of investors. In
particular, Applicants see very little potential for such conflicts beyond
that which would otherwise exist between variable annuity and variable life
insurance contractowners.
18. As noted above, Section 817(h) of the Code imposes certain
diversification standards on the underlying assets of variable contracts
held in an underlying mutual fund. The Code provides that a variable
contract shall not be treated as an annuity contract or life insurance, as
applicable, for any period (and any subsequent period) for which the
investments are not, in accordance with regulations prescribed by the
Treasury Department, adequately diversified.
19. Treasury Department Regulations issued under Section 817(h) provide
that, in order to meet the statutory diversification requirements, all of
the beneficial interests in the investment company must be held by the
segregated asset accounts of one or more insurance companies. However, the
Regulations contain certain exceptions to this requirement, one of which
allows shares in an underlying mutual fund to be held by the trustees of a
qualified pension or retirement plan without adversely affecting the ability
of shares in the underlying fund also to be held by separate accounts of
insurance companies in connection with their variable contracts (Treas. Reg.
1.817-5(f)(3)(iii)). Thus, Applicants believe that the Treasury Regulations
specifically permit "qualified pension or retirement plans" and separate
accounts to invest in the same underlying fund. For this reason, Applicants
have concluded that neither the Code nor the Treasury Regulations or revenue
rulings thereunder presents any inherent conflict of interest.
20. Applicants note that while there are differences in the manner in
which distributions from Variable Contracts and Qualified Plans are taxed,
these differences will have no impact on the Funds. When distributions are
to be made, and a Separate Account or Qualified Plan is unable to net
purchase payments to make the distributions, the Separate Account and
Qualified Plan will redeem shares of the Funds at their respective net asset
value in conformity with Rule 22c-1 under the 1940 Act (without the
imposition of any sales charge) to provide proceeds to meet distribution
needs. A Qualified Plan will make distributions in accordance with the terms
of the Qualified Plan.
H-5
21. Applicants maintain that it is possible to provide an equitable means
of giving voting rights to Participating Separate Account contractowners and
to Qualified Plans. In connection with any meeting of shareholders, the
Funds will inform each shareholder, including each Participating Insurance
Company and Qualified Plan, of information necessary for the meeting,
including their respective share of ownership in the relevant Fund. Each
Participating Insurance Company will then solicit voting instructions in
accordance with Rules 6e-2 and 6e-3(T), as applicable, and its participation
agreement with the relevant Fund. Shares held by Qualified Plans will be
voted in accordance with applicable law. The voting rights provided to
Qualified Plans with respect to shares of the Funds would be no different
from the voting rights that are provided to Qualified Plans with respect to
shares of funds sold to the general public.
22. Applicants have concluded that even if there should arise issues with
respect to a state insurance commissioner's veto powers over investment
objectives where the interests of contractowners and the interests of
Qualified Plans are in conflict, the issues can be almost immediately
resolved since the trustees of (or participants in) the Qualified Plans can,
on their own, redeem the shares out of the Funds. Applicants note that state
insurance commissioners have been given the veto power in recognition of the
fact that insurance companies usually cannot simply redeem their separate
accounts out of one fund and invest in another. Generally, time-consuming,
complex transactions must be undertaken to accomplish such redemptions and
transfers. Conversely, the trustees of Qualified Plans or the participants
in participant-directed Qualified Plans can make the decision quickly and
redeem their interest in the Funds and reinvest in another funding vehicle
without the same regulatory impediments faced by separate accounts or, as is
the case with most Qualified Plans, even hold cash pending suitable
investment.
23. Applicants also state that they do not see any greater potential for
material irreconcilable conflicts arising between the interests of
participants under Qualified Plans and contractowners of Participating
Separate Accounts from possible future changes in the federal tax laws than
that which already exist between variable annuity contractowners and
variable life insurance contractowners.
24. Applicants state that the sale of shares of the Funds to Qualified
Plans in addition to separate accounts of Participating Insurance Companies
will result in an increased amount of assets available for investment by the
Funds. This may benefit variable contractowners by promoting economies of
scale, by permitting increased safety of investments through greater
diversification, and by making the addition of new portfolios more feasible.
25. Applicants assert that, regardless of the type of shareholders in
each Fund, each Fund's Investment Manager is or would be contractually and
otherwise obligated to manage the Fund solely and exclusively in accordance
with that Fund's investment objectives, policies and restrictions as well as
any guidelines established by the Board of Trustees of such Fund (the
"Board"). The Investment Manager works with a pool of money and (except in a
few instances where this may be required in order to comply with state
insurance laws) does not take into account the identity of the shareholders.
Thus, each Fund will be managed in the same manner as any other mutual fund.
Applicants therefore see no significant legal impediment to permitting the
sale of shares of the Funds to Qualified Plans.
26. Applicants state that the Commission has permitted the amendment of a
substantially similar original order for the purpose of adding a party to
the original order and has permitted open-end management investment
companies to offer their shares directly to Qualified Plan in addition to
separate accounts of affiliated or unaffiliated insurance companies which
issue either or both variable annuity contracts or variable life insurance
contracts. Applicants state that the amended order sought in the application
is identical to precedent with respect to the conditions Applicants propose
should be imposed on Qualified Plans in connection with investment in the
Funds.
Applicants' Conditions:
If the requested amended order is granted, Applicants consent to the
following conditions:
1. A majority of the Board of each Fund shall consist of persons who are
not "interested persons" thereof, as defined by Section 2(a)(19) of the 1940
Act, and the rules thereunder and as modified by any applicable orders of
the Commission, except that if this condition is not met by reason of the
death, disqualification or bona fide resignation of any Board Member or
Members, then the operation of this condition shall be suspended: (a) for a
period of 45 days if the vacancy or vacancies may be filled by the remaining
Board Members; (b) for a period of 60 days if a vote
H-6
of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the Commission may prescribe by order upon
application.
2. The Board will monitor their respective Fund for the existence of any
material irreconcilable conflict among the interests of the Variable
Contract owners of all Separate Accounts investing in the Funds and of the
Qualified Plan participants investing in the Funds. The Board will determine
what action, if any, shall be taken in response to such conflicts. A
material irreconcilable 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
interpretive 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 the Funds
are being managed; (e) a difference in voting instructions given by variable
annuity contract owners, variable life insurance contract owners, and
trustees of Qualified Plans; (f) a decision by an insurer to disregard the
voting instructions of Variable Contract owners; or (g) if applicable, a
decision by a Qualified Plan to disregard the voting instructions of
Qualified Plan participants.
3. Participating Insurance Companies, the Investment Managers, and any
Qualified Plan that executes a fund participation agreement upon becoming an
owner of 10 percent or more of the assets of an Fund (a "Participating
Qualified Plan"), will report any potential or existing conflicts of which
it becomes aware to the Board of any relevant Fund. Participating Insurance
Companies, the Investment Managers and the Participating Qualified Plans
will be responsible for assisting the Board in carrying out its
responsibilities under these conditions by providing the Board with all
information reasonably necessary for the Board to consider any issues
raised. This responsibility includes, but is not limited to, an obligation
by each Participating Insurance Company to inform the Board whenever voting
instructions of Contract owners are disregarded and, if pass-through voting
is applicable, an obligation by each Participating Qualified Plan to inform
the Board whenever it has determined to disregard Qualified Plan participant
voting instructions. The responsibility to report such information and
conflicts, and to assist the Board, will be contractual obligations of all
Participating Insurance Companies investing in the Funds under their
agreements governing participation in the Funds, and such agreements shall
provide that these responsibilities will be carried out with a view only to
the interests of the Variable Contract owners. The responsibility to report
such information and conflicts, and to assist the Board, will be contractual
obligations of all Participating Qualified Plans under their agreements
governing participation in the Funds, and such agreements will provide that
their responsibilities will be carried out with a view only to the interests
of Qualified Plan participants.
4. If it is determined by a majority of the Board of a Fund, or by a
majority of the disinterested Board Members, that a material irreconcilable
conflict exists, the relevant Participating Insurance Companies and
Participating Qualified Plans will, at their own expense and to the extent
reasonably practicable as determined by a majority of the disinterested
Board Members, take whatever steps are necessary to remedy or eliminate the
material irreconcilable conflict, which steps could include: (a) in the case
of Participating Insurance Companies, withdrawing the assets allocable to
some or all of the Separate Account s from the Fund or any portfolio thereof
and reinvesting such assets in a different investment medium, including
another portfolio of an Fund or another Fund, or submitting the question as
to whether such segregation should be implemented to a vote of all affected
Variable Contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., variable annuity contract owners or variable life
insurance contract owners of one or more Participating Insurance Companies)
that votes in favor of such segregation, or offering to the affected
Variable Contract owners the option of making such a change; (b) in the case
of Participating Qualified Plans, withdrawing the assets allocable to some
or all of the Qualified Plans from the Fund and reinvesting such assets in a
different investment medium; and (c) establishing a new registered
management investment company or managed Separate Account. If a material
irreconcilable conflict arises because of a decision by a Participating
Insurance Company to disregard Variable Contract owner voting instructions,
and that decision represents a minority position or would preclude a
majority vote, then the insurer may be required, at the Fund's election, to
withdraw the insurer's Separate Account investment in such Fund, and no
charge or penalty will be imposed as a result of such withdrawal. If a
material irreconcilable conflict arises because of a Participating Qualified
Plan's decision to disregard Qualified Plan participant voting instructions,
if applicable, and that decision represents minority position or would
preclude a majority vote, the Participating Qualified Plan may be required,
at the Fund's election, to withdraw its investment in such Fund, and no
charge or penalty will be imposed as a result of such withdrawal. The
responsibility to take remedial action in the event of a determination by a
Board of a material irreconcilable conflict and to bear the cost of such
remedial action will be a contractual obligation of all Participating
H-7
Insurance Companies and Participating Qualified Plans under their agreements
governing participation in the Funds, and these responsibilities will be
carried out with a view only to the interest of Variable Contract owners and
Qualified Plan participants.
5. For purposes of Condition 4, a majority of the disinterested Board
Members of the applicable Board will determine whether or not any proposed
action adequately remedies any material irreconcilable conflict, but in no
event will the relevant Fund or the Investment Managers be required to
establish a new funding medium for any Contract. No Participating Insurance
Company shall be required by Condition 4 to establish a new funding medium
for any Variable Contract if any offer to do so has been declined by vote of
a majority of the Variable Contract owners materially and adversely affected
by the material irreconcilable conflict. Further, no Participating Qualified
Plan shall be required by Condition 4 to establish a new funding medium for
any Participating Qualified Plan if (a) a majority of Qualified Plan
participants materially and adversely affected by the irreconcilable
material conflict vote to decline such offer, or (b) pursuant to governing
Qualified Plan documents and applicable law, the Participating Qualified
Plan makes such decision without a Qualified Plan participant vote.
6. The determination of the Board of the existence of a material
irreconcilable conflict and its implications will be made known in writing
promptly to all Participating Insurance Companies and Participating
Qualified Plans.
7. Participating Insurance Companies will provide pass-through voting
privileges to Variable Contract owners who invest in registered Separate
Accounts so long as and to the extent that the Commission continues to
interpret the 1940 Act as requiring pass-through voting privileges for
Variable Contract owners. As to Variable Contracts issued by unregistered
Separate Accounts, pass-through voting privileges will be extended to
participants to the extent granted by issuing insurance companies. Each
Participating Insurance Company will also vote shares of the Funds held in
its Separate Accounts for which no voting instructions from Contract owners
are timely received, as well as shares of the Funds which the Participating
Insurance Company itself owns, in the same proportion as those shares of the
Funds for which voting instructions from contract owners are timely
received. Participating Insurance Companies will be responsible for assuring
that each of their registered Separate Accounts participating in the Funds
calculates voting privileges in a manner consistent with other Participating
Insurance Companies. The obligation to calculate voting privileges in a
manner consistent with all other registered Separate Accounts investing in
the Funds will be a contractual obligation of all Participating Insurance
Companies under their agreements governing their participation in the Funds.
Each Participating Qualified Plan will vote as required by applicable law
and governing Qualified Plan documents.
8. All reports of potential or existing conflicts received by the Board
of a Fund and all action by such Board with regard to determining the
existence of a conflict, notifying Participating Insurance Companies and
Participating Qualified Plans of a conflict, and determining whether any
proposed action adequately remedies a conflict, will be properly recorded in
the minutes of the meetings of such Board or other appropriate records, and
such minutes or other records shall be made available to the Commission upon
request.
9. Each Fund will notify all Participating Insurance Companies that
separate disclosure in their respective Separate Account prospectuses may be
appropriate to advise accounts regarding the potential risks of mixed and
shared funding. Each Fund shall disclose in its prospectus that (a) the Fund
is intended to be a funding vehicle for variable annuity and variable life
insurance contracts offered by various insurance companies and for qualified
pension and retirement plans; (b) due to differences of tax treatment and
other considerations, the interests of various Contract owners participating
in the Fund and/or the interests of Qualified Plans investing in the Fund
may at some time be in conflict; and (c) the Board of such Fund will monitor
events in order to identify the existence of any material irreconcilable
conflicts and to determine what action, if any, should be taken in response
to any such conflict.
10. Each Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders (which, for these purposes, will be the persons
having a voting interest in the shares of the Funds), and, in particular,
the Funds will either provide for annual shareholder meetings (except
insofar as the Commission 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 Funds are not the type of trust described in Section 16(c) of
the 1940 Act, as well as with Section 16(a) of the 1940 Act and, if and when
applicable, Section 16(b) of the 1940 Act. Further, each Fund will act in
accordance with the Commission's
H-8
interpretation of the requirements of Section 16(a) with respect to periodic
elections of Board Members and with whatever rules the Commission may
promulgate with respect thereto.
11. If and to the extent Rules 6e-2 or 6e-3(T) under the 1940 Act is
amended, or proposed Rule 6e-3 under the 1940 Act 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 on terms and conditions
materially different from any exemptions granted in the order requested in
the application, then the Funds and/or Participating Insurance Companies and
Participating Qualified Plans, as appropriate, shall take such steps as may
be necessary to comply with such Rules 6e-2 and 6e-3(T), as amended, or
proposed Rule 6e-3, as adopted, to the extent that such Rules are
applicable.
12. The Participating Insurance Companies and Participating Qualified
Plans and/or the Investment Managers, at least annually, will submit to the
Board such reports, materials or data as the Board may reasonably request so
that the Board may fully carry out obligations imposed upon it by the
conditions contained in the application. Such reports, materials and data
will be submitted more frequently if deemed appropriate by the Board. The
obligations of the Participating Insurance Companies and Participating
Qualified Plans to provide these reports, materials and data to the Board,
when the Board so reasonably requests, shall be a contractual obligation of
all Participating Insurance Companies and Participating Qualified Plans
under their agreements governing participation in the Funds.
13. If a Qualified Plan should ever become a holder of ten percent or
more of the assets of a Fund, such Qualified Plan will execute a
participation agreement with the Fund that includes the conditions set forth
herein to the extent applicable. A Qualified Plan will execute an
application containing an acknowledgment of this condition upon such
Qualified Plan's initial purchase of the shares of any Fund.
Conclusion:
Applicants assert that, for the reasons summarized above, the requested
exemptions are appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy and
provisions of the 1940 Act.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
H-9
Xxxxxxxxx Variable Products Series Fund, et al.
File No. 812-11698
SECURITIES AND EXCHANGE COMMISSION
Release No. IC-24079
1999 SEC LEXIS 2177
October 13, 1999
ACTION: Order Granting Exemptions
TEXT: Xxxxxxxxx Variable Products Series Fund ("Xxxxxxxxx Trust"), Franklin
Xxxxxxxxx Variable Insurance Products Trust ("VIP Trust"), Xxxxxxxxx Funds
Annuity Company ("TFAC") or any successor to TFAC, and any future open-end
investment company for which TFAC or any affiliate is the administrator,
sub-administrator, investment manager, adviser, principal underwriter, or
sponsor ("Future Funds") filed an application on July 14, 1999, and an
amendment on September 17, 1999 seeking an amended order of the Commission
pursuant to Section 6(c) of the Investment Company Act of 1940 ("1940 Act")
exempting them from the provisions of Sections 9(a), 13(a), 15(a) and 15(b)
of the 1940 Act and Rules 6e-2(b)(15) and 6e-3(T)(b)(15). The prior order
(Rel. No. IC-19879) granted exemptive relief to permit shares of the
Xxxxxxxxx Trust to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated life
insurance companies. The proposed relief would amend the prior order to add
as parties to that order the VIP Trust and any Future Funds and to permit
shares of the Xxxxxxxxx Trust, the VIP Trust, and Future Funds to be issued
to and held by qualified pension and retirement plans outside the separate
account context.
A notice of the filing of the application was issued on September 17,
1999 (Rel. No. IC-24018). The notice gave interested persons an opportunity
to request a hearing and stated that an order granting the application would
be issued unless a hearing should be ordered. No request for a hearing has
been filed, and the Commission has not ordered a hearing.
The matter has been considered, and it is found that granting the
requested exemptions is appropriate in the public interest and consistent
with the protection of investors and the purposes intended by the policy and
provisions of the 1940 Act.
Accordingly,
IT IS ORDERED, pursuant to Section 6(c) of the 1940 Act, that the
requested exemptions from Sections 9(a), 13(a), 15(a) and 15(b) of the 1940
Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, be, and hereby
are, granted, effective forthwith.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
H-10
