FUND PARTICIPATION AGREEMENT
AMONG
AMERICAN CENTURION LIFE ASSURANCE COMPANY
IDS LIFE INSURANCE COMPANY OF NEW YORK
COLUMBIA FUNDS VARIABLE INSURANCE TRUST I
COLUMBIA MANAGEMENT ADVISORS, LLC
AND
COLUMBIA MANAGEMENT DISTRIBUTORS, INC.
MAY 1, 2006
TABLE OF CONTENTS
ARTICLE A. Merger and Renaming: Form of Agreement ................... 2
ARTICLE I. Sale and Redemption of Fund Shares ....................... 3
ARTICLE II. Representations and Warranties ........................... 5
ARTICLE III. Prospectuses and Proxy Statements; Voting ................ 10
ARTICLE IV. Sales Material and Information ........................... 12
ARTICLE V. Fees and Expenses ........................................ 13
ARTICLE VI. Diversification and Qualification ........................ 13
ARTICLE VII. Potential Conflicts and Compliance With Mixed and Shared
Funding Exemptive Order .................................. 14
ARTICLE VIII. Indemnification .......................................... 16
ARTICLE IX. Applicable Law ........................................... 20
ARTICLE X. Termination .............................................. 20
ARTICLE XI. Notices .................................................. 22
ARTICLE XII. Miscellaneous ............................................ 22
PARTICIPATION AGREEMENT
-----------------------
THIS AGREEMENT made and entered into this 1st day of May, 2006, by and among
the following parties:
o AMERICAN CENTURION LIFE ASSURANCE COMPANY ("American Centurion
Life"), organized under the laws of the State of New York on its
own behalf and on behalf of each of its separate accounts named in
Schedule A to this Agreement, as may be amended from time to time
(each account referred to as an "Account");
o IDS LIFE INSURANCE COMPANY OF NEW YORK ("IDS Life of New York"),
organized under the laws of the State of New York, on its own
behalf and on behalf of each of its separate accounts named in
Schedule A to this Agreement, as may be amended from (each account
referred to as the "Account");
Each of American Centurion Life, and IDS Life of New York hereinafter also
referred to as a "Company";
o COLUMBIA FUNDS VARIABLE INSURANCE TRUST I (successor to Nations
Separate Account Trust) ("Fund"), an open-end management
investment company organized under the laws of the Commonwealth of
Massachusetts;
o COLUMBIA MANAGEMENT INVESTMENT ADVISORS, LLC (the "Advisor"), an
Oregon limited liability company; and,
o COLUMBIA MANAGEMENT DISTRIBUTORS, INC. (the "Distributor"), a
Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts (collectively, the "Variable Insurance Products")
to be offered by insurance companies, that have entered into participation
agreements with the Fund (hereinafter "Participating Insurance Companies");
and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "portfolio" and representing the interest
in a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund is able to rely on an order from the Securities and
Exchange Commission (hereinafter the "SEC") granting Participating Insurance
Companies and variable annuity and variable life insurance separate accounts
exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of
the Investment Company Act of 1940, as amended, (hereinafter the "1940 Act")
and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary
to
permit shares of the Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of life insurance companies that may
or may not be affiliated with one another and qualified pension and retirement
plans ("Qualified Plans") (hereinafter the "Mixed and Shared Funding Exemptive
Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the portfolios are registered under
the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Distributor is duly registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, (the "1934 Act") and is a member
in good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Company issues certain variable life insurance policies
and/or variable annuity contracts supported wholly or partially by the
Accounts (the "Contracts"). The Contracts are listed on Schedule A attached
hereto and incorporated herein by reference, as such schedule may be amended
from time to time by mutual written agreement of the parties; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, under applicable state insurance laws to set aside and invest assets
attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed
on Schedule A attached hereto and incorporated herein by reference, as such
schedule may be amended from time to time by mutual written agreement of the
parties (the "Portfolios"), on behalf of the Accounts to fund the Contracts,
and the Distributor is authorized to sell such shares to unit investment
trusts such as the Accounts at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company also intends to continue to purchase shares in other
open-end investment companies or series thereof not affiliated with the Fund
(the "Unaffiliated Funds") on behalf of the Accounts to fund the Contracts.
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund, the Distributor and the Adviser agree as follows:
ARTICLE A. Merger and Renaming; Form of Agreement
--------------------------------------
A.1 The Fund, the Adviser and the Distributor acknowledge the planned merger
of both American Centurion Life with and into IDS Life of New York (the
"Merger") and the "intact transfer" (the "Transfer") of the Accounts of
American Centurion Life to IDS Life of New York by operation of law and
incident to the Merger, on December 31, 2006 at 10:59:59 p.m. Central
Time (the "Effective Time"), subject to all necessary regulatory
2
approvals being obtained in connection with the Merger and the Transfer,
and the re-naming of IDS Life of New York to RiverSource Life Insurance
Co. of New York simultaneously with the Merger. On and after the
Effective Time, all references in this Agreement and its Schedules to
American Centurion Life and IDS Life of New York shall mean and refer to
RiverSource Life Insurance Co. of New York. The Fund, the Adviser and
the Distributor consent to the transfer of the rights and obligations of
American Centurion Life under this Agreement to IDS Life of New York at
the Effective Time of the Merger.
A.2 Although the parties have executed this Agreement in this form for
administrative convenience, this Agreement shall create separate
participation agreements between each Company and the Fund until the
Effective Time of the Merger.
ARTICLE I. Sale and Redemption of Fund Shares
----------------------------------
1.1. The Distributor agrees to sell to the Company those shares of the
Portfolios which the Account orders, executing such orders on each Business
Day at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Portfolios, subject to the terms
and conditions set forth in the Fund's then-current prospectus. For purposes
of this Section 1.1, the Company shall be the designee of the Fund for receipt
of such orders and receipt by such designee shall constitute receipt by the
Fund, provided that the Fund receives notice of any such order by 10:00 a.m.
Eastern time on the next following Business Day. "Business Day" shall mean any
day on which the New York Stock Exchange is open for trading and on which a
Portfolio calculates its net asset value pursuant to the rules of the SEC.
1.2. The Fund agrees to make shares of the Portfolios available for
purchase at the applicable net asset value per share by the Company and the
Accounts on those days on which the Fund calculates its Portfolios' net asset
value pursuant to rules of the SEC, and the Fund shall calculate such net
asset value on each day on which the New York Stock Exchange is open for
trading. Notwithstanding the foregoing, the Fund may refuse to sell shares of
any Portfolio to any person, or suspend or terminate the offering of shares of
any Portfolio if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Fund acting in good
faith, necessary or appropriate in the best interests of the shareholders of
such Portfolio. All orders received by the Company shall be subject to the
terms of the then current prospectus of the Fund. The Company acknowledges
that orders received by it in violation of the Fund's stated policies may be
subsequently revoked or cancelled by the Fund and that the Fund shall not be
responsible for any losses incurred by the Company or the Contract owner as a
result of such cancellation. In addition, the Company acknowledges that the
Fund has the right to refuse any purchase order for the reasons stated in the
current prospectus of the Fund.
1.3. The Fund will not sell shares of the Portfolios to any other
Participating Insurance Company separate account unless an agreement
containing provisions the substance of which are the same as Sections 2.1, 2.2
(except with respect to designation of applicable law), 3.6, 3.7, 3.8, and
Article VII of this Agreement is in effect to govern such sales.
3
1.4. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Portfolios held by the Company, executing
such requests on each Business Day at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.4, the Company shall be the designee of the Fund
for receipt of requests for redemption and receipt by such designee shall
constitute receipt by the Fund, provided that the Fund receives notice of any
such request for redemption by 10:00 a.m. Eastern time on the next following
Business Day.
1.5. The parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive; the Fund's shares may be sold to other
Participating Insurance Companies (subject to Section 1.3) and the cash value
of the Contracts may be invested in other investment companies, the Company's
registered or unregistered modified guaranteed annuity accounts ("Guarantee
Period Accounts") and the Company's fixed account.
1.6. The Company shall pay for Fund shares by 3:00 p.m. Eastern time on
the next Business Day after an order to purchase Fund shares is received in
accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire and/or by a credit for any shares redeemed
the same day as the purchase.
1.7. The Fund shall pay and transmit the proceeds of redemptions of
Fund shares by 11:00 a.m. Eastern Time on the next Business Day after a
redemption order is received in accordance with Section 1.4 hereof; provided,
however, that the Fund may delay payment in extraordinary circumstances to the
extent permitted under Section 22(e) of the 1940 Act. Payment shall be in
federal funds transmitted by wire and/or a credit for any shares purchased the
same day as the redemption.
Each party has the right to rely on information or confirmations
provided by the other party (or by an affiliate of the other party), and shall
not be liable in the event that an error is a result of any misinformation
supplied by the other party, or its affiliate thereof.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or the Accounts.
Shares purchased from the Fund will be recorded in an appropriate title for
the relevant Account or the relevant sub-account of an Account.
1.9. The Fund shall furnish same day notice (by electronic
communication or telephone, followed by electronic confirmation) to the
Company of any income, dividends or capital gain distributions payable on a
Portfolio's shares. The Company hereby elects to receive all such income
dividends and capital gain distributions as are payable on a Portfolio's
shares in additional shares of that Portfolio. The Company reserves the right
to revoke this election and to receive all such income dividends and capital
gain distributions in cash. The Fund shall notify the Company by the end of
the next following Business Day of the number of shares so issued as payment
of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on each Business Day as soon as reasonably
practicable after the net asset value per
4
share is calculated and shall use its best efforts to make such net asset
value per share available by 6:00 p.m. Eastern time. In the event of an error
in the computation of a Portfolio's net asset value per share ("NAV") or any
dividend or capital gain distribution (each, a "pricing error"), the Adviser
or the Fund shall notify the Company as soon as possible after discovery of
the error. Such notification may be oral, but shall be confirmed promptly in
writing. A pricing error shall be corrected as follows: (a) if the pricing
error results in a difference between the erroneous NAV and the correct NAV of
less than $0.01 per share, then no corrective action need be taken; (b) if the
pricing error results in a difference between the erroneous NAV and the
correct NAV equal to or greater than $0.01 per share, but less than 1/2 of 1%
of the Portfolio's NAV at the time of the error, then the Adviser shall
reimburse the Portfolio for any loss, after taking into consideration any
positive effect of such error; however, no adjustments to Contract owner
accounts need be made; and (c) if the pricing error results in a difference
between the erroneous NAV and the correct NAV equal to or greater than 1/2 of
1% of the Portfolio's NAV at the time of the error, then the Adviser shall
reimburse the Portfolio for any loss (without taking into consideration any
positive effect of such error) and shall reimburse the Company for the costs
of adjustments made to correct Contract owner accounts. Upon notification by
the Adviser of any overpayment due to a material error, the Company shall
promptly remit to the Adviser any overpayment that has not been paid to
Contract owners. In no event shall the Company be liable to Contract owners
for any such adjustments or underpayment amounts. Only a pricing error within
categories (b) or (c) above shall be deemed to be "materially incorrect" or
constitute a "material error" for purposes of this Agreement. The standards
set forth in this Section 1.10 are based on the parties' understanding of the
views expressed by the staff of the SEC as of the date of this Agreement. In
the event the views of the SEC staff are later modified or superseded by SEC
or judicial interpretation, the parties shall amend the foregoing provisions
of this Agreement to comport with the appropriate applicable standards, on
terms mutually satisfactory to all parties.
1.11. The parties agree to mutually cooperate with respect to any state
insurance law restriction or requirement applicable to the Fund's investments;
provided, however, that the Fund reserves the right not to implement
restrictions or take other actions required by state insurance law if the Fund
or the Adviser determines that the implementation of the restriction or other
action is not in the best interest of Fund shareholders.
ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that: (a) the securities
issued by the Accounts under the Contracts are or will be registered under the
1933 Act, or are not so registered in proper reliance upon an exemption from
such registration requirements (in the event the Company or Account relies
upon an exemption from such registration requirements, the Company undertakes
to promptly so notify the Fund); (b) the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state
laws; and (c) the sale of the Contracts shall comply in all material respects
with state insurance suitability requirements.
2.2. The Company represents and warrants that: (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it, or a
wholly-owned subsidiary insurance company, has legally and validly established
each Account prior to any issuance or sale
5
of units thereof as a segregated asset account under applicable state
insurance law; and (c) it has registered each Account as a unit investment
trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts and will maintain such
registration for so long as any Contracts are outstanding as required by
applicable law or, alternatively, the Company has not registered one or more
Accounts in proper reliance upon an exclusion from such registration
requirements.
2.3. The Fund represents and warrants that: (a) the Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act; (b) the
Fund shares sold pursuant to this Agreement shall be duly authorized for
issuance and sold in compliance with all applicable state and federal
securities laws including without limitation the 1933 Act, the 1934 Act, and
the 1940 Act; (c) the Fund is and shall remain registered under the 1940 Act;
and (d) the Fund shall amend the registration statement for its shares under
the 1933 Act and the 1940 Act from time to time as required in order to effect
the continuous offering of its shares.
2.4. The Fund represents and warrants that it has adopted a plan
pursuant to Rule 12b-1 under the 1940 Act. The parties acknowledge that the
Fund reserves the right to modify its existing plan or to adopt additional
plans pursuant to Rule 12b-1 under the 1940 Act and to impose an asset-based
or other charge to finance distribution expenses as permitted by applicable
law and regulation. The Fund and the Adviser agree to comply with applicable
provisions and SEC interpretation of the 1940 Act with respect to any
distribution plan.
2.5. The Fund represents and warrants that it shall register and
qualify the shares for sale in accordance with the laws of the various states
if and to the extent required by applicable law.
2.6. The Fund represents and warrants that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that
it does and will comply in all material respects with the 1940 Act.
2.7. The Fund makes no representations as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states.
2.8 The Adviser represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and
that it shall perform its obligations for the Fund in compliance in all
material respects with any applicable state and federal securities laws.
2.9. The Distributor represents and warrants that it is and shall
remain duly registered as a broker-dealer under all applicable federal and
state securities laws and is a member in good standing with the NASD and that
it shall perform its obligations for the Fund in compliance in all material
respects with the laws of any applicable state and federal securities laws.
2.10. The Fund and the Adviser represent and warrant that all of their
respective officers, employees, investment advisers, and other individuals or
entities dealing with the money
6
and/or securities of the Fund are, and shall continue to be at all times,
covered by one or more blanket fidelity bonds or similar coverage for the
benefit of the Fund in an amount not less than the minimal coverage required
by Rule 17g-1 under the 1940 Act or related provisions as may be promulgated
from time to time. The aforesaid bonds shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.11. The Fund and the Adviser represent and warrant that they will
provide the Company with as much advance notice as is reasonably practicable
of any material change affecting the Portfolios (including, but not limited
to, any material change in the registration statement or prospectus affecting
the Portfolios) and any proxy solicitation affecting the Portfolios and
consult with the Company in order to implement any such change in an orderly
manner, recognizing the expenses of changes and attempting to minimize such
expenses by implementing them in conjunction with regular annual updates of
the prospectus for the Contracts, where reasonably practicable.
2.12. The Company represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of 1986 as
amended (the "Code"), that the Contracts are currently and at the time of
issuance will be treated as annuity contracts or life insurance policies under
applicable provisions of the Code, and that it will make every effort to
maintain such treatment and that it will notify the Fund, the Distributor and
the Adviser immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they might not be so treated in
the future. In addition, the Company represents and warrants that each Account
is a "segregated asset account" and that interests in each Account are offered
exclusively through the purchase of or transfer into a "variable contract"
within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. The Company will use every effort to continue to meet
such definitional requirements, and it will notify the Fund, the Distributor
and the Adviser immediately upon having a reasonable basis for believing that
such requirements have ceased to be met or that they might not be met in the
future. The Company represents and warrants that it will not purchase Fund
shares with assets derived from tax-qualified retirement plans except,
indirectly, through Contracts purchased in connection with such plans.
2.13. The Company represents and warrants that it will comply with all
applicable laws and regulations designed to prevent money laundering including
without limitation the International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001 (Title III of the USA PATRIOT Act), and
if required by such laws or regulations, to share with the Fund, the
Distributor and the Adviser information about individuals, entities,
organizations and countries suspected of possible terrorist or money
laundering activities in accordance with Section 314(b) of the USA PATRIOT
Act.
2.14. The Fund, the Distributor and the Adviser represent and warrant
that each of them will comply with all applicable laws and regulations
designed to prevent money laundering including without limitation the
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001 (Title III of the USA PATRIOT Act), and if required by such laws or
regulations, to share with the Company information about individuals,
entities, organizations and
7
countries suspected of possible terrorist or money laundering activities in
accordance with Section 314(b) of the USA PATRIOT Act.
2.15. The Company represents and warrants that it is currently in
compliance, and will remain in compliance, with all applicable laws, rules and
regulations relating to consumer privacy, including, but not limited to,
Regulation S-P.
2.16. The Company represents and warrants that it has adopted, and will
at all times during the term of this Agreement maintain, reasonable and
appropriate procedures ("Late Trading Procedures") reasonably designed to
ensure that any and all orders relating to the purchase, sale or exchange of
Fund shares communicated to the Fund to be treated in accordance with Article
I of this Agreement as having been received on a Business Day, have been
received by the Valuation Time on such Business Day and were not modified
after the Valuation Time, and that all orders received from Contract owners
but not rescinded by the Valuation Time were communicated to the Fund or its
agent as received for that Business Day. "Valuation Time" shall mean the time
as of which the Fund calculates net asset value for the shares of the
Portfolios on the relevant Business Day. The Company represents and warrants
that it has adopted and implemented controls reasonably designed to ensure
that all orders received by the Company after the close of the New York Stock
Exchange on a particular Business Day will not be aggregated with the orders
received by the Company before the close of the New York Stock Exchange on
such Business Day. Each transmission of orders by the Company shall constitute
a representation by the Company that such orders are accurate and complete and
relate to orders received by the Company by the Valuation Time on the Business
Day for which the order is to be priced and that such transmission includes
all orders relating to Fund shares received from Contract owners but not
rescinded by the Valuation Time.
2.17. Each transmission of orders by the Company shall constitute a
representation by the Company that such orders are accurate and complete and
relate to orders received by the Company by the Valuation Time on the Business
Day for which the order is to be priced and that such transmission includes
all orders relating to Fund shares received from Contract owners but not
rescinded by the Valuation Time. The Company agrees to provide the Fund or its
designee with such certifications and representations regarding the Late
Trading Procedures as the Fund or its designee may reasonably request. The
Company will promptly notify the Fund in writing of any material change to the
Late Trading Procedures.
2.18 Company acknowledges the Fund has adopted policies designed to
prevent frequent purchases and redemptions of any Portfolio shares in
quantities great enough to disrupt orderly management of the corresponding
Fund's investment portfolio. These policies are disclosed in the Fund's
prospectus. From time to time, the Fund and the Distributor implement
procedures reasonably designed to enforce the Fund's disruptive trading
policies and shall provide a written description of such procedures (and
revisions thereto) to the Company. The Fund and Distributor agree to give
Company prompt written notice of material changes to the Fund's disruptive
trading policies and procedures (and revisions thereto).
The Fund and Distributor acknowledge that the Company, on behalf of its
Account(s), has adopted policies and procedures reasonably designed to detect
and deter frequent transfers of
8
Contract value among the subaccounts of the Account(s) including those
investing in Portfolio shares which are available as investment options under
the Contracts. These policies and procedures are described in the current
prospectuses of the Account(s) through which the Contracts are offered.
Company shall provide a written description of any revisions of such policies
and procedures to the Fund. The Fund may consider the Company's policies and
procedures pertaining to frequent transfers of contract value among the
subaccounts of the Account(s) when the Board of Directors of the Fund (the
"Board") deliberates upon and subsequently adopts or amends the Fund's
disruptive trading policies and procedures from time to time. The Fund and the
Distributor may invite comment from and confer with Company regarding any
proposed policy and procedure of the Fund and the Distributor pertaining to
disruptive trading to determine prior to adopting such proposed policy or
procedure the Company's then present ability to apply such proposed policy or
procedure to Contract owners who allocate Contract value to subaccounts
investing in Portfolios available under the Contracts, including without
limitation whether the Company can apply such proposed policy or procedure
without the need to modify its automated data processing systems or to develop
and staff manual systems to accommodate the implementation of the Fund's
proposed policy or procedure.
The Company will cooperate with the Fund's and the Distributor's
reasonable requests in taking steps to deter and detect such transfers by
Contract owners. Subject to applicable law and the terms of each Contract, the
Company will furnish other information the Fund, directly or through its
agent, reasonably requests regarding frequent transfers by Contract owners
among the subaccounts investing Portfolios of the Fund which are available
under the Contracts. In compliance with Rule 22c-2 under the 1940 Act, the
Company hereby agrees to (i) provide, promptly upon request by Fund, directly
or through its agent, the taxpayer identification number of all Contract
owners that purchased, redeemed, transferred, or exchanged shares of
Portfolios of the Fund held under a Contract, and the amount and dates of such
Contract owner's purchases, redemptions, transfers, and exchanges involving
such Portfolios; and (ii) execute any instructions from the Fund, directly or
through its agent, to restrict or prohibit further purchases or exchanges of
shares of the Portfolios by a Contract owner who has been identified by the
Fund, directly or through its agent, as having engaged in transactions in
Portfolio shares that violate the policies adopted by the Fund for the purpose
of eliminating or reducing any dilution of the value of the outstanding shares
of the Portfolio. The parties shall negotiate in good faith such additional
terms and conditions pertaining to (i) requesting and furnishing such
information, (ii) giving such instructions, (iii) executing such instructions
and (iv) such other matters pertaining to the implementation of Rule 22c-2 as
the parties may wish to address, including without limitation, reimbursement
of expenses the Company incurs in order to provide such information and to
process such orders of the Fund or its agent.
2.19. The Company agrees to provide the Fund or its designee with
reasonable assurance that it has implemented effective compliance policies and
procedures administered by qualified personnel as required by and in
accordance with any and all applicable laws, rules and regulations. Such
assurances by the Company shall include, but are not limited to:
o adopting and implementing written compliance policies
and procedures reasonably designed to prevent the
Company from violating the Federal
9
Securities Laws (as defined in Rule 38a-1) in its
provision of services to the Fund pursuant to this
Agreement, and
o providing access to the Chief Compliance Officer of
the Accounts who will confer as needed with the Chief
Compliance Officer of the Fund regarding the written
compliance policies and procedures of the Accounts.
2.20. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate or board action, as
applicable, by such party and when so executed and delivered this Agreement
will be the valid and binding obligation of such party enforceable in
accordance with its terms.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. At least annually, the Adviser or Distributor shall provide the
Company with as many copies of the Fund's current prospectus as the Company
may reasonably request, with expenses to be borne in accordance with Schedule
C hereof. If requested by the Company in lieu thereof, the Adviser,
Distributor or Fund shall provide such documentation (including an electronic
version of the current prospectus) and other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if the
prospectus for the Fund is amended) to have the prospectus for the Contracts
and the prospectus for the Fund printed together in one document.
3.2. If applicable state or federal laws or regulations require that
the Statement of Additional Information ("SAI") for the Fund be distributed to
all Contract owners, then the Fund, Distributor and/or the Adviser shall
provide the Company with copies of the Fund's SAI in such quantities, with
expenses to be borne in accordance with Schedule C hereof, as the Company may
reasonably require to permit timely distribution thereof to Contract owners.
The Adviser, Distributor and/or the Fund shall also provide an SAI to any
Contract owner or prospective owner who requests such SAI from the Fund.
3.3. The Fund, Distributor and/or Adviser shall provide the Company
with copies of the Fund's proxy materials, reports to shareholders and other
communications to shareholders in such quantity, with expenses to be borne in
accordance with Schedule C hereof, as the Company may reasonably require to
permit timely distribution thereof to Contract owners. The Fund will provide
written instruction to all Participating Insurance Companies including the
Company each time the Fund furnishes an amendment or supplement to the Fund's
current prospectus or statement of additional information directing the
Participating Insurance Companies including the Company as to whether the
amendment or supplement is to be provided (1) immediately to existing Contract
owners who have Contract value allocated to the Fund or (2) is to be held and
combined with another Fund or Contract related mailing as permitted by
applicable federal securities laws. The Fund agrees that the instruction it
gives the Company in each instance will be identical to the instruction it
provides other Participating Insurance Companies.
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3.4. It is understood and agreed that, except with respect to
information regarding the Company provided in writing by that party, the
Company shall not be responsible for the content of the prospectus or SAI for
the Fund. It is also understood and agreed that, except with respect to
information regarding the Fund, the Distributor, the Adviser or the Portfolios
provided in writing by the Fund, the Distributor or the Adviser, neither the
Fund, the Distributor nor Adviser are responsible for the content of the
prospectus or SAI for the Contracts.
3.5. In the event that the Fund initiates (i) a reorganization of a
Portfolio as defined by Section 2 of the 1940 Act, or (ii) a change in the
name of a Portfolio or the Fund, the Fund, Distributor or Adviser as they may
among themselves determine, shall reimburse the Company for the Company's
internal and out-of-pocket costs associated with the aforementioned actions.
The Company agrees to use its best efforts to minimize any costs incurred
under this Section and shall provide the Fund, Distributor and Adviser with
acceptable documentation of any such costs incurred.
3.6 If and to the extent required by law the Company shall:
(a) solicit voting instructions from Contract owners;
(b) vote the Portfolio shares held in the Accounts in accordance
with instructions received from Contract owners;
(c) vote Portfolio shares held in the Accounts for which no
instructions have been received in the same proportion as Portfolio shares for
which instructions have been received from Contract owners, so long as and to
the extent that the SEC continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners; and
(d) vote Portfolio shares held in its general account or
otherwise in the same proportion as Portfolio shares for which instructions
have been received from Contract owners, so long as and to the extent that the
SEC continues to interpret the 1940 Act to require such voting by the
insurance company. The Company reserves the right to vote Fund shares in its
own right, to the extent permitted by law.
3.7. The Company shall be responsible for assuring that each of its
separate accounts holding shares of a Portfolio calculates voting privileges
as directed by the Fund and agreed to by the Company and the Fund. The Fund
agrees to promptly notify the Company of any changes of interpretations or
amendments of the Mixed and Shared Funding Exemptive Order.
3.8. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings. Further, the Fund will act in accordance with the SEC's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of directors or trustees and with whatever rules the SEC may
promulgate with respect thereto.
11
ARTICLE IV. Sales Material and Information
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, a copy of each piece of sales literature or other
promotional material that the Company develops or proposes to use and in which
the Fund (or Portfolio thereof), the Adviser or the Distributor is named in
connection with the Contracts, at least ten (10) business days prior to its
use. No such material shall be used if the Fund objects to such use within
five (5) business days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund in connection with the
sale of the Contracts other than the information or representations contained
in the registration statement, including the prospectus or SAI for the Fund
shares, as the same may be amended or supplemented from time to time, or in
sales literature or other promotional material approved by the Fund,
Distributor or Adviser, except with the permission of the Fund, Distributor or
Adviser.
4.3. The Fund, the Adviser or the Distributor shall furnish, or shall
cause to be furnished, to the Company, a copy of each piece of sales
literature or other promotional material in which the Company and/or its
Accounts are named at least ten (10) business days prior to its use. No such
material shall be used if the Company objects to such use within five (5)
business days after receipt of such material.
4.4. The Fund, the Distributor and the Adviser shall not give any
information or make any representations on behalf of the Company or concerning
the Company, the Accounts, or the Contracts other than the information or
representations contained in a registration statement, including the
prospectus or SAI for the Contracts, as the same may be amended or
supplemented from time to time, or in sales literature or other promotional
material approved by the Company or its designee, except with the permission
of the Company.
4.5. For purposes of Articles IV and VIII, the phrase "sales literature
and other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media; e.g., on-line networks such as the Internet or other electronic
media), sales literature (i.e., any written communication distributed or made
generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other communications
distributed or made generally available to some or all agents or employees,
and shareholder reports, and proxy materials (including solicitations for
voting instructions) and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 0000 Xxx.
4.6. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representatives of the appropriate regulatory agencies, all records, data and
access to operating procedures that may be reasonably requested in
12
connection with compliance and regulatory requirements related to this
Agreement or any party's obligations under this Agreement.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund, the Distributor and the Adviser shall pay no fee or
other compensation to the Company under this Agreement, and the Company shall
pay no fee or other compensation to the Fund, the Distributor or Adviser under
this Agreement; provided, however, (a) the parties will bear their own
expenses as reflected in Schedule C and other provisions of this Agreement,
(b) the parties may enter into other agreements relating to the Company's
investment in the Fund, including services agreements and (c) each party shall
in accordance with the allocation of expenses reflected in Schedule C and
other provisions of this Agreement promptly reimburse other parties for
expenses initially paid by one party but allocated to another party.
ARTICLE VI. Diversification and Qualification
---------------------------------
6.1. The Fund, Distributor and Adviser represent and warrant that the
Fund and each Portfolio thereof will at all times comply with Section 817(h)
of the Code and Treasury Regulation ss.1.817-5, as amended from time to time,
and any Treasury interpretations thereof, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications or successor provisions to such Section
or Regulations. The Fund Distributor or Adviser shall provide to the Company a
quarterly written diversification report, which shall show the results of the
quarterly Section 817(h) diversification test and include a certification as
to whether each Portfolio complies with the Section 817(h) diversification
requirement.
6.2. The Fund, the Distributor and the Adviser agree that shares of the
Portfolios will be sold only to Participating Insurance Companies and their
separate accounts and to Qualified Plans. No shares of any Portfolio of the
Fund will be sold to the general public.
6.3. The Fund, the Distributor and the Adviser represent and warrant
that the Fund and each Portfolio is currently qualified as a Regulated
Investment Company under Subchapter M of the Code, and that each Portfolio
will maintain such qualification (under Subchapter M or any successor or
similar provisions) as long as this Agreement is in effect.
6.4. The Fund, Distributor or Adviser will notify the Company
immediately upon having a reasonable basis for believing that the Fund or any
Portfolio has ceased to comply with the aforesaid Section 817(h)
diversification or Subchapter M qualification requirements or might not so
comply in the future.
6.5. Without in any way limiting the effect of Sections 8.2, 8.3 and
8.4 hereof and without in any way limiting or restricting any other remedies
available to the Company, the Adviser or Distributor will pay all costs
associated with or arising out of any failure, or any anticipated or
reasonably foreseeable failure, of the Fund or any Portfolio to comply with
Sections 6.1, 6.2, or 6.3 hereof, including all costs associated with
reasonable and appropriate corrections or responses to any such failure; such
costs may include, but are not limited to, the
13
costs involved in creating, organizing, and registering a new investment
company as a funding medium for the Contracts and/or the costs of obtaining
whatever regulatory authorizations are required to substitute shares of
another investment company for those of the failed Portfolio (including but
not limited to an order pursuant to Section 26(c) of the 1940 Act).
6.6. The Company agrees that if the Internal Revenue Service ("IRS")
asserts in writing in connection with any governmental audit or review of the
Company (or, to the Company's knowledge, of any Contract owner) that any
Portfolio has failed to comply with the diversification requirements of
Section 817(h) of the Code or the Company otherwise becomes aware of any facts
that could give rise to any claim against the Fund, Distributor or Adviser as
a result of such a failure of alleged failure, the Company shall promptly
notify the Fund, the Distributor and the Adviser of such assertion or
potential claim.
ARTICLE VII. Potential Conflicts and Compliance With Mixed and
Shared Funding Exemptive Order
-------------------------------------------------
7.1. The Board of Trustees of the Fund (the "Board") will monitor the
Fund for the existence of any material irreconcilable conflict between the
interests of the Contract owners of all separate accounts investing in the
Fund. An irreconcilable material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
is being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners or by contract
owners of different Participating Insurance Companies; or (f) a decision by a
Participating Insurance Company to disregard the voting instructions of
Contract owners. The Board shall promptly inform the Company if it determines
that an irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Mixed and Shared Funding Exemptive Order,
by providing the Board with all information reasonably necessary for the Board
to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever Contract owner voting
instructions are to be disregarded. Such responsibilities shall be carried out
by the Company with a view only to the interests of its Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of
its directors who are not interested persons of the Fund, the Distributor, the
Adviser or any subadviser to any of the Portfolios (the "Independent
Directors"), that a material irreconcilable conflict exists, the Company and
other Participating Insurance Companies shall, at their expense and to the
extent reasonably practicable (as determined by a majority of the Independent
Directors), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including: (1) withdrawing the
assets allocable to some or all of the separate accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment medium,
including
14
(but not limited to) another Portfolio, or submitting the question whether
such segregation should be implemented to a vote of all affected Contract
owners and, as appropriate, segregating the assets of any appropriate group
(i.e., annuity contract owners, life insurance contract owners, or variable
contract owners of one or more Participating Insurance Companies) that votes
in favor of such segregation, or offering to the affected contract owners the
option of making such a change; and (2) establishing a new registered
management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the Account's
investment in the Fund and terminate this Agreement; provided, however, that
such withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
Independent Directors. Any such withdrawal and termination must take place
within six (6) months after the Fund gives written notice that this provision
is being implemented, and until the end of that six-month period the Adviser,
the Distributor and the Fund shall continue to accept and implement orders by
the Company for the purchase (and redemption) of shares of the Fund, subject
to the terms of the Fund's then-current prospectus.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six
months after the Board informs the Company in writing that it has determined
that such decision has created an irreconcilable material conflict; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the Independent Directors. Until the end of the foregoing
six-month period, the Fund shall continue to accept and implement orders by
the Company for the purchase (and redemption) of shares of the Fund, subject
to the terms of the Fund's then-current prospectus.
7.6. For purposes of Sections 7.3 through 7.5 of this Agreement, a
majority of the Independent Directors shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by
vote of a majority of Contract owners affected by the irreconcilable material
conflict. In the event that the Board determines that any proposed action does
not adequately remedy any irreconcilable material conflict, then the Company
will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in writing
of the foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the Independent
Directors.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated
15
thereunder with respect to mixed or shared funding (as defined in the Mixed
and Shared Funding Exemptive Order) on terms and conditions materially
different from those contained in the Mixed and Shared Funding Exemptive
Order, then (a) the Fund and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.6, 3.7, 3.8, 7.1, 7.2, 7.3, 7.4, and
7.5 of this Agreement shall continue in effect only to the extent that terms
and conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless the Fund,
the Distributor and the Adviser and each of their respective officers and
directors or trustees and each person, if any, who controls the Fund,
Distributor or Adviser within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, expenses, damages and liabilities
(including amounts paid in settlement with the written consent of the Company)
or litigation (including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, expenses, damages or
liabilities (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact contained in the
registration statement or prospectus or SAI covering the Contracts
or contained in the Contracts or sales literature or other
promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this
Agreement to indemnify shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of
the Fund for use in the registration statement or prospectus for
the Contracts or in the Contracts or sales literature or other
promotional material (or any amendment or supplement to any of the
foregoing) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus or sales
literature or other promotional material of the Fund not supplied
by the Company or persons under its control) or wrongful conduct
of the Company or persons under its control, with respect to the
sale or distribution of the Contracts or Fund Shares; or
16
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, or sales literature or other
promotional material of the Fund, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, if such a statement
or omission was made in reliance upon information furnished in
writing to the Fund by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms of
this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Company, including without limitation
Section 2.12 and Section 6.6 hereof,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities
or litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement.
(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Company of
any such claim shall not relieve the Company from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision, except to the extent that
the Company has been prejudiced by such failure to give notice. In case any
such action is brought against the Indemnified Parties, the Company shall be
entitled to participate, at its own expense, in the defense of such action.
The Company also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Company
to such party of the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Company will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
(d) The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the operation
of the Fund.
17
8.2. Indemnification by the Adviser
(a) The Adviser agrees to indemnify and hold harmless the
Company and its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.2) against any and
all losses, claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Adviser) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or acquisition of
the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature or
other promotional material of the Fund prepared by the Fund, the
Distributor or the Adviser (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein
not misleading, provided that this Agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished in
writing to the Adviser, the Distributor or the Fund by or on
behalf of the Company for use in the registration statement,
prospectus or SAI for the Fund or in sales literature or other
promotional material (or any amendment or supplement to any of the
foregoing) or otherwise for use in connection with the sale of the
Contracts or the Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI or sales
literature or other promotional material for the Contracts not
supplied by the Adviser or persons under its control) or wrongful
conduct of the Fund, the Distributor or the Adviser or persons
under their control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, or sales literature or other
promotional material covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance
upon information furnished in writing to the Company by or on
behalf of the Adviser, the Distributor or the Fund; or
(iv) arise as a result of any failure by the Fund, the
Distributor or the Adviser or any service provider of the
foregoing Parties to provide the services
18
and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund, the Distributor
or the Adviser in this Agreement or arise out of or result from
any other material breach of this Agreement by the Adviser, the
Distributor or the Fund or any service provider of the foregoing
Parties; or
(vi) arise out of or result from the incorrect or untimely
calculation or reporting by the Fund, the Distributor or the
Adviser or any service provider of the foregoing Parties of the
daily net asset value per share (subject to Section 1.10 of this
Agreement) or dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Adviser specified in Article VI
hereof.
(b) The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities
or litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement.
(c) The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Adviser of
any such claim shall not relieve the Adviser from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision, except to the extent that
the Adviser has been prejudiced by such failure to give notice. In case any
such action is brought against the Indemnified Parties, the Adviser will be
entitled to participate, at its own expense, in the defense thereof. The
Adviser also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Adviser
to such party of the Adviser's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Adviser will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
(d) The Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of the Account.
19
ARTICLE IX. Applicable Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts, without regard to conflict of laws provisions.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
SEC may grant (including, but not limited to, the Mixed and Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. Termination
-----------
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with
respect to some or all Portfolios, upon sixty (60) days advance written notice
delivered to the other parties; or
(b) at the option of the Company by written notice to the other
parties with respect to any Portfolio based upon the Company's determination
that shares of such Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) at the option of the Company by written notice to the other
parties with respect to any Portfolio in the event any of the Portfolio's
shares are not registered, issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of such shares as the
underlying investment media of the Contracts issued or to be issued by the
Company; or
(d) at the option of the Fund, Distributor or Adviser in the
event that formal administrative proceedings are instituted against the
Company by the NASD, the SEC, the Insurance Commissioner or like official of
any state or any other regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts, the operation of any
Account, or the purchase of the Fund shares, if, in each case, the Fund,
Distributor or Adviser, as the case may be, reasonably determines in its sole
judgment exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Company to perform
its obligations under this Agreement; or
(e) at the option of the Company in the event that formal
administrative proceedings are instituted against the Fund, the Distributor or
the Adviser by the NASD, the SEC, or any state securities or insurance
department or any other regulatory body, if the Company reasonably determines
in its sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the Fund,
the Distributor or the Adviser to perform their obligations under this
Agreement; or
(f) at the option of the Company by written notice to the Fund
with respect to any Portfolio if the Company reasonably believes that the
Portfolio will fail to meet the Section
20
817(h) diversification requirements or Subchapter M qualifications specified
in Article VI hereof; or
(g) at the option of any non-defaulting party hereto in the
event of a material breach of this Agreement by any party hereto (the
"defaulting party") other than as described in Section 10.1(a)-(h); provided,
that the non-defaulting party gives written notice thereof to the defaulting
party, with copies of such notice to all other non-defaulting parties, and if
such breach shall not have been remedied within thirty (30) days after such
written notice is given, then the non-defaulting party giving such written
notice may terminate this Agreement by giving thirty (30) days written notice
of termination to the defaulting party; or
(h) at any time upon written agreement of all parties to this
Agreement.
10.2. Notice Requirement
------------------
No termination of this Agreement shall be effective unless and until the
party terminating this Agreement gives prior written notice to all other
parties of its intent to terminate, which notice shall set forth the basis for
the termination. Furthermore,
(a) in the event any termination is based upon the provisions of
Article VII, or the provisions of Section 10.1(a) of this Agreement, the prior
written notice shall be given in advance of the effective date of termination
as required by those provisions unless such notice period is shortened by
mutual written agreement of the parties;
(b) in the event any termination is based upon the provisions of
Section 10.1(d), 10.1(e) or 10.1(g) of this Agreement, the prior written
notice shall be given at least sixty (60) days before the effective date of
termination; and
(c) in the event any termination is based upon the provisions of
Section 10.1(b), 10.1(c) or 10.1(f), the prior written notice shall be given
in advance of the effective date of termination, which date shall be
determined by the party sending the notice.
10.3. Effect of Termination
---------------------
Notwithstanding any termination of this Agreement, other than as a
result of a failure by either the Fund or the Company to meet Section 817(h)
of the Code diversification requirements, the Fund, the Distributor and the
Adviser shall, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, the owners of the Existing Contracts shall
be permitted to reallocate investments in the Fund, redeem investments in the
Fund and/or invest in the Fund upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 10.3 shall
not apply to any terminations under Article VII and the effect of such Article
VII terminations shall be governed by Article VII of this Agreement.
21
10.4. Surviving Provisions
--------------------
Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII to indemnify other parties shall survive and
not be affected by any termination of this Agreement. In addition, with
respect to Existing Contracts, all provisions of this Agreement shall also
survive and not be affected by any termination of this Agreement.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in
writing to the other parties.
If to the Company:
American Centurion Life Assurance Company
IDS Life Insurance Company of New York
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Vice President - Annuities
If to the Fund:
Columbia Funds Variable Insurance Trust I
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Secretary
If to the Adviser:
Columbia Management Advisors, LLC
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Secretary
If to the Distributor:
Columbia Management Distributors, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Secretary
ARTICLE XII. Miscellaneous
-------------
12.1. Notwithstanding anything to the contrary contained in this
Agreement, in addition to and not in lieu of other provisions in this
Agreement:
22
(a) "Confidential Information" includes but is not limited to
all proprietary and confidential information of the Company and its
subsidiaries, affiliates and licensees (collectively the "Protected
Parties" for purposes of this Section 12.1), including without
limitation all information regarding the customers of the Protected
Parties; or the accounts, account numbers, names, addresses, social
security numbers or any other personal identifier of such customers; or
any information derived therefrom.
(b) Neither the Fund, the Adviser, nor the Distributor may use
or disclose Confidential Information for any purpose other than to carry
out the purpose for which Confidential Information was provided to Fund,
the Adviser or the Distributor as set forth in the Agreement; and the
Fund, the Adviser and the Distributor agree to cause all their
employees, agents and representatives, or any other party to whom the
Fund, the Adviser or the Distributor may provide access to or disclose
Confidential Information to limit the use and disclosure of Confidential
Information to that purpose.
(c) The Fund, the Adviser and the Distributor acknowledge that
all computer programs and procedures or other information developed or
used by the Protected Parties or any of their employees or agents in
connection with the Company's performance of its duties under this
Agreement are the valuable property of the Protected Parties.
(d) The Fund, the Adviser and the Distributor agree to implement
appropriate measures designed to ensure the security and confidentiality
of Confidential Information, to protect such information against any
anticipated threats or hazards to the security or integrity of such
information, and to protect against unauthorized access to, or use of,
Confidential Information that could result in substantial harm or
inconvenience to any customer of the Protected Parties; the Fund, the
Adviser and the Distributor further agree to cause all their agents,
representatives or subcontractors of, or any other party to whom the
Fund, the Adviser or the Distributor may provide access to or disclose
Confidential Information to implement appropriate measures designed to
meet the objectives set forth in this Section 12.1.
(e) the Fund, the Adviser and the Distributor acknowledge that
any breach of the agreements in this Section 12.1 would result in
immediate and irreparable harm to the Protected Parties for which there
would be no adequate remedy at law and agree that in the event of such a
breach, the Protected Parties will be entitled to equitable relief by
way of temporary and permanent injunctions, as well as such other relief
as any court of competent jurisdiction deems appropriate.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
23
12.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.6. Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in a forum
jointly selected by the relevant parties (but if applicable law requires some
other forum, then such other forum) in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The number of arbitrators will be three, one of whom
will be appointed by the Company or an affiliate; one of whom will be
appointed by the Fund and/or the Adviser or an affiliate; and the third of
whom will be selected by mutual agreement, if possible, within 30 days of the
selection of the second arbitrator and thereafter by the administering
authority. The place of arbitration will be New York, NY. The arbitrators will
have no authority to award punitive damages or any other damages not measured
by the prevailing party's actual damages, and may not, in any event, make any
ruling, finding or award that does not conform to the terms and conditions of
this Agreement. Any party may make an application to the arbitrators seeking
injunctive relief to maintain the status quo until such time as the
arbitration award is rendered or the controversy is otherwise resolved. Any
party may apply to any court having jurisdiction hereof and seek injunctive
relief in order to maintain the status quo until such time as the arbitration
award is rendered or the controversy is otherwise resolved.
12.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
12.9. The Company agrees that the obligations assumed by the Fund,
Distributor and the Adviser pursuant to this Agreement shall be limited in any
case to the Fund, Distributor and Adviser and their respective assets and the
Company shall not seek satisfaction of any such obligation from the
shareholders of the Fund, Distributor or the Adviser, the Directors, officers,
employees or agents of the Fund, Distributor or Adviser, or any of them.
12.10. The Fund, the Distributor and the Adviser agree that the
obligations assumed by the Company pursuant to this Agreement shall be limited
in any case to the Company and its assets and neither the Fund, Distributor
nor Adviser shall seek satisfaction of any such obligation from the
shareholders of the Company, the directors, officers, employees or agents of
the Company, or any of them.
24
12.11. No provision of this Agreement may be deemed or construed to
modify or supersede any contractual rights, duties, or indemnifications, as
between the Adviser and the Fund, and the Distributor and the Fund.
12.12 The parties to this Agreement may amend this Agreement in writing
from time to time to reflect changes in or relating to the Contracts, the
Portfolios available under the Contracts and other terms of this Agreement.
25
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
first above written.
AMERICAN CENTURION LIFE ASSURANCE COMPANY Attest:
IDS LIFE INSURANCE COMPANY OF NEW YORK
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxx
------------------------------------------- ----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx Xxxxxx
Title: Vice President - Annuities Title: Assistant Secretary
American Centurion Life Assurance
Company and IDS Life Insurance Company
of New York
COLUMBIA FUNDS VARIABLE INSURANCE TRUST I
By: /s/ Xxxxx Xxxxxx
-------------------------------------------
Name: Xxxxx Xxxxxx
Title: President
COLUMBIA MANAGEMENT ADVISORS, LLC
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxx
Title: President
COLUMBIA MANAGEMENT DISTRIBUTORS INC.
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxx
Title: President
26
SCHEDULE A
Company, Account, Contract, Fund, Portfolios and Class of Shares
American Centurion Life Insurance Company
ACL Variable Account 2, 811-07511
------------------------------------------------------------------------------------------------------------
CONTRACTS FUND PORTFOLIO AND CLASS OF SHARE
------------------------------------------------------------------------------------------------------------
RiverSource Innovations Select(SM) Variable Columbia Funds Variable Columbia High Yield Fund, Variable
Annuity Insurance Trust I Series - B
RiverSource Endeavor Select(SM) Variable
Annuity
IDS Life Insurance Company of New York
IDS Life of New York Variable Annuity Account, 811-07623
------------------------------------------------------------------------------------------------------------
CONTRACTS FUND PORTFOLIO AND CLASS OF SHARE
------------------------------------------------------------------------------------------------------------
RiverSource Retirement Advisor 4 Columbia Funds Variable Columbia High Yield Fund, Variable
Advantage(SM) Variable Annuity Insurance Trust I Series - B
RiverSource Retirement Advisor 4 Select(SM) Columbia Xxxxxxx Growth Fund,
Variable Annuity Variable Series
RiverSource Retirement Advisor Access(SM) Columbia Xxxxxxx International
Variable Annuity Opportunities Fund, Variable Series
RiverSource Retirement Advisor Advantage
Plus(SM) Variable Annuity
RiverSource Retirement Advisor Select
Plus(SM) Variable Annuity
RiverSource Retirement Advisor Advantage
Plus(SM) Variable Annuity - Band 3
27
------------------------------------------------------------------------------------------------------------
CONTRACTS FUND PORTFOLIO AND CLASS OF SHARE
------------------------------------------------------------------------------------------------------------
RiverSource Retirement Advisor Advantage(SM) Columbia Funds Variable Columbia Xxxxxxx Growth Fund,
Variable Annuity Insurance Trust I Variable Series
RiverSource Retirement Advisor Advantage(SM) Columbia Xxxxxxx International
Variable Annuity - Band 3 Opportunities Fund, Variable Series
RiverSource Retirement Advisor Select(SM)
Variable Annuity
RiverSource Retirement Advisor Variable
Annuity(R)
RiverSource Retirement Advisor Variable
Annuity(R) - Band 3
28
SCHEDULE B
THIS SCHEDULE NOT USED
29
SCHEDULE C
EXPENSES
--------
The Fund and/or the Distributor and/or Adviser, and the Company will
coordinate the functions and pay the costs of the completing these functions
based upon an allocation of costs in the tables below. Costs shall be
allocated to reflect the Fund's share of the total costs determined according
to the number of pages of the Fund's respective portions of the documents.
-------------------------------------------------------------------------------------------------------------
PARTY RESPONSIBLE FOR PARTY RESPONSIBLE FOR
ITEM FUNCTION COORDINATION EXPENSE
-------------------------------------------------------------------------------------------------------------
Mutual Fund Prospectus Printing of combined Company Current Clients- Fund
prospectuses
Prospective - Company
-------------------------------------------------------------------------------------------------------------
Distribution (including Company Fund
postage) to Current
Clients
-------------------------------------------------------------------------------------------------------------
Distribution (including Company Company
postage) to Prospective
Clients
-------------------------------------------------------------------------------------------------------------
Product Prospectus Printing and Distribution Company Company
for Current and
Prospective Clients
-------------------------------------------------------------------------------------------------------------
Mutual Fund Prospectus If Required by Fund, Fund, Distributor or Fund, Distributor or
Update & Distribution Distributor or Adviser Adviser Adviser
-------------------------------------------------------------------------------------------------------------
If Required by Company Company (Fund, Company
Distributor or Adviser to
provide Company with
document in PDF format)
-------------------------------------------------------------------------------------------------------------
Product Prospectus Update & If Required by Fund, Company Fund, Distributor or
Distribution Distributor or Adviser Adviser
-------------------------------------------------------------------------------------------------------------
If Required by Company Company Company
-------------------------------------------------------------------------------------------------------------
Mutual Fund SAI Printing Fund, Distributor or Fund, Distributor or
Adviser Adviser
30
-------------------------------------------------------------------------------------------------------------
PARTY RESPONSIBLE FOR PARTY RESPONSIBLE FOR
ITEM FUNCTION COORDINATION EXPENSE
-------------------------------------------------------------------------------------------------------------
Distribution (including Party who receives the Party who receives the
postage) request request
-------------------------------------------------------------------------------------------------------------
Product SAI Printing Company Company
-------------------------------------------------------------------------------------------------------------
Distribution Company Company
-------------------------------------------------------------------------------------------------------------
Proxy Material for Mutual Printing if proxy Fund, Distributor or Fund, Distributor or
Fund required by Law Adviser Adviser
-------------------------------------------------------------------------------------------------------------
Distribution (including Company Fund, Distributor or
labor) if proxy required Adviser
by Law
-------------------------------------------------------------------------------------------------------------
Printing & distribution Company Company
if required by Company
-------------------------------------------------------------------------------------------------------------
Mutual Fund Annual & Printing of reports Fund, Distributor or Fund, Distributor or
Semi-Annual Report Adviser Adviser
-------------------------------------------------------------------------------------------------------------
Distribution Company Fund, Distributor or
Adviser
-------------------------------------------------------------------------------------------------------------
Other communication to New If Required by the Fund, Company Distributor or Adviser
and Prospective clients Distributor or Adviser
-------------------------------------------------------------------------------------------------------------
If Required by Company Company Company
-------------------------------------------------------------------------------------------------------------
Other mutual fund related If Required by Fund, Company Fund, Distributor or
communications to Current Distributor or Adviser: Adviser
Clients, including, without distribution (including
limitation, amendments and labor, printing and
supplements to the Mutual postage)
Fund Prospectus and Mutual
Fund SAI
-------------------------------------------------------------------------------------------------------------
Other product communication If Required by Company: Company Company
to Current Clients, distribution (including
including without limitation labor, printing and
postage)
-------------------------------------------------------------------------------------------------------------
31
-------------------------------------------------------------------------------------------------------------
PARTY RESPONSIBLE FOR PARTY RESPONSIBLE FOR
ITEM FUNCTION COORDINATION EXPENSE
-------------------------------------------------------------------------------------------------------------
amendments and supplements
to the Product Prospectus
and Product SAI
-------------------------------------------------------------------------------------------------------------
32
