PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of April, 1999 by
and between XXXXXXX XXXXX VARIABLE INSURANCE TRUST, an unincorporated business
trust formed under the laws of Delaware (the "Trust"), XXXXXXX, SACHS & CO., a
New York limited partnership (the "Distributor"), and AMERICAN ENTERPRISE LIFE
INSURANCE COMPANY, an Indiana life insurance company (the "Company"), on its own
behalf and on behalf of each separate account of the Company identified herein.
WHEREAS, the Trust is a series-type mutual fund offering shares of
beneficial interest (the "Trust shares") consisting of one or more separate
series ("Series") of shares, each such Series representing an interest in a
particular investment portfolio of securities and other assets (a "Fund"), and
which Series may be subdivided into various classes ("Classes") with each such
Class supporting a distinct charge and expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies to be offered by
insurance companies and may also be utilized by qualified retirement plans; and
WHEREAS, the Distributor has the exclusive right to distribute Trust
shares to qualifying investors; and
WHEREAS, the Company desires that the Trust serve as an investment
vehicle for a certain separate account(s) of the Company and the Distributor
desires to sell shares of certain Series and/or Class(es) to such separate
account(s);
NOW, THEREFORE, in consideration of their mutual promises, the Trust,
the Distributor and the Company agree as follows:
ARTICLE I
Additional Definitions
1.1. "Account" -- the separate account of the Company described more
specifically in Schedule 1 to this Agreement as amended by the parties from
time to time. If more than one separate account is described on Schedule 1,
the term shall refer to each separate account so described.
1.2. "Business Day" -- each day that the Trust is open for business as provided
in the Trust's Prospectus.
1.3. "Code" -- the Internal Revenue Code of 1986, as amended, and any successor
thereto.
1.4. "Contracts" -- the class or classes of variable annuity contracts and/or
variable life insurance policies issued by the Company and described more
specifically on Schedule 2 to this Agreement as amended by the parties from
time to time.
1.5. "Contract Owners" -- the owners of the Contracts, as distinguished from all
Product Owners.
1.6. "Participating Account" -- a separate account investing all or a portion of
its assets in the Trust, including the Account.
1.7. "Participating Insurance Company" -- any insurance company investing in the
Trust on its behalf or on behalf of a Participating Account, including the
Company.
1.8. "Participating Plan" -- any qualified retirement plan investing in the
Trust.
1.9. "Participating Investor" -- any Participating Account, Participating
Insurance Company or Participating Plan, including the Account and the
Company.
1.10. "Products" -- variable annuity contracts and variable life
insurance policies supported by Participating Accounts, including the
Contracts.
1.11. "Product Owners" -- owners of Products, including Contract Owners.
1.12. "Trust Board" -- the board of trustees of the Trust.
1.13."Registration Statement" -- with respect to the Trust shares or a class of
Contracts, the registration statement filed with the SEC to register such
securities under the 1933 Act, or the most recently filed amendment
thereto, in either case in the form in which it was declared or became
effective. The Contracts' Registration Statement for each class of
Contracts is described more specifically on Schedule 2 to this Agreement.
The Trust's Registration Statement is filed on Form N-1A (File No.
333-35883).
1.14."1940 Act Registration Statement" -- with respect to the Trust or the
Account, the registration statement filed with the SEC to register such
person as an investment company under the 1940 Act, or the most recently
filed amendment thereto. The Account's 1940 Act Registration Statement is
described more specifically on Schedule 1 to this Agreement. The Trust's
1940 Act Registration Statement is filed on Form N-1A (File No. 811-08361).
1.15."Prospectus" -- with respect to shares of a Series (or Class) of the Trust
or a class of Contracts, each version of the definitive prospectus or
supplement thereto filed with the SEC pursuant to Rule 497 under the 1933
Act. With respect to any provision of this Agreement requiring a party to
take action in accordance with a Prospectus, such reference thereto shall
be deemed to be to the version for the applicable Series, Class or
Contracts last so filed prior to the taking of such action. For purposes of
Article IX, the term "Prospectus" shall include any statement of additional
information incorporated therein.
1.16."Statement of Additional Information" -- with respect to the shares of the
Trust or a class of Contracts, each version of the definitive statement of
additional information or supplement thereto filed with the SEC pursuant to
Rule 497 under the 1933 Act. With respect to any provision of this
Agreement requiring a party to take action in accordance with a Statement
of Additional Information, such reference thereto shall be deemed to be the
last version so filed prior to the taking of such action.
1.17. "SEC" -- the Securities and Exchange Commission.
1.18. "NASD" -- The National Association of Securities Dealers, Inc.
1.19. "1933 Act" -- the Securities Act of 1933, as amended.
1.20. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II
Sale of Trust Shares
2.1. Availability of Shares
(a) The Trust has granted to the Distributor exclusive authority to distribute
the Trust shares and to select which Series or Classes of Trust shares
shall be made available to Participating Investors. Pursuant to such
authority, and subject to Article X hereof, the Distributor shall make
available to the Company for purchase on behalf of the Account, shares of
the Series and Classes listed on Schedule 3 to this Agreement, as amended
by the parties from time to time, such purchases to be effected at net
asset value and with no sales charge in accordance with Section 2.3 of this
Agreement. Such Series and Classes shall be made available to the Company
in accordance with the terms and provisions of this Agreement until this
Agreement is terminated pursuant to Article X or the Distributor suspends
or terminates the offering of shares of such Series or Classes in the
circumstances described in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or Classes of Trust
shares in existence now or that may be established in the future will be
made available to the Company, subject to the Distributor's rights set
forth in Article X to suspend or terminate the offering of shares of any
Series or Class or to terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may revoke the
Distributor's authority pursuant to the terms and conditions of its
distribution agreement with the Distributor; and (ii) the Trust reserves
the right in its sole discretion, exercised in good faith, to refuse to
accept a request for the purchase of Trust shares.
2.2. Redemptions. The Trust shall redeem, at the Company's request, any full or
fractional Trust shares held by the Company on behalf of the Account, such
redemptions to be effected at net asset value and with no sales charge in
accordance with Section 2.3 of this Agreement. Notwithstanding the
foregoing, (i) the Company shall not redeem Trust shares attributable to
Contract Owners except in the circumstances permitted in Article X of this
Agreement, and (ii) the Trust may delay redemption of Trust shares of any
Series or Class to the extent permitted by the 1940 Act, any rules,
regulations or orders thereunder, or the Prospectus for such Series or
Class.
2.3. Purchase and Redemption Procedures
(a) The Trust hereby appoints the Company as an agent of the Trust for the
limited purpose of receiving purchase and redemption requests on behalf of
the Account (but not with respect to any Trust shares that may be held in
the general account of the Company) for shares of those Series or Classes
made available hereunder, based on allocations of amounts to the Account or
subaccounts thereof under the Contracts, other transactions relating to the
Contracts or the Account and customary processing of the Contracts. Receipt
of any such requests (or effectuation of such transaction or processing) on
any Business Day by the Company as such limited agent of the Trust prior to
the Trust's close of business as defined from time to time in the
applicable Prospectus for such Series or Class (which as of the date of
execution of this Agreement is defined as the close of regular trading on
the New York Stock Exchange (normally 4:00 p.m. New York Time)) shall
constitute receipt by the Trust on that same Business Day, provided that
the Trust receives actual and sufficient notice of such request by 9:30
a.m. New York time (8:30 a.m. Central Time) on the next following Business
Day. The Trust reserves discretion to extend the time by which notice must
be received in accordance with the preceding sentence on a case by case
basis if a Fund experiences a delay in calculating its net asset value
which extends past 7:00 p.m. New York time (6:00 Central time) in
accordance with Section 2.4 hereof. Such notice may be communicated by
telephone to the office or person designated for such notice by the Trust,
and shall be confirmed by facsimile.
(b) The Company shall pay for shares of each Series or Class on the same day
that it provides actual notice to the Trust of a purchase request for such
shares. Payment for Series or Class shares shall be made in Federal funds
transmitted to the Trust by wire. Such wire transfer will be initiated by
the Company's bank by 1:00 p.m. Central time and received by the Trust by
the close of business of the Federal funds wire system on the day the Trust
receives actual notice of the purchase request for Series or Class shares
(unless the Trust determines and so advises the Company that sufficient
proceeds are available from redemption of shares of other Series or Classes
effected pursuant to redemption requests tendered by the Company on behalf
of the Account). In no event may proceeds from the redemption of shares
requested pursuant to an order received by the Company after the Trust's
close of business on any Business Day be applied to the payment for shares
for which a purchase order was received prior to the Trust's close of
business on such day. If the issuance of shares is canceled because Federal
funds are not timely received when required for settlement on related
purchases of portfolio securities, the Company shall indemnify the
respective Fund and Distributor for 50% of all costs, expenses and losses
relating to failure to meet such settlement obligations. Upon the Trust's
receipt of Federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the
Trust. If Federal funds are not received on time, the Series or Class
shares purchased by such payment shall be executed at the net asset value
next computed following receipt of payment.
(c) Payment for Series or Class shares redeemed by the Account or the Company
shall be made in Federal funds transmitted by wire to the Company or any
other person properly designated in writing by the Company, such funds
normally to be transmitted by 6:00 p.m. New York Time (5:00 p.m. Central
Time) on the next Business Day after the Trust receives actual notice of
the redemption order for Series or Class shares (unless redemption proceeds
are to be applied to the purchase of Trust shares of other Series or
Classes in accordance with Section 2.3(b) of this Agreement), except that
the Trust reserves the right to redeem Series or Class shares in assets
other than cash and to delay payment of redemption proceeds to the extent
permitted by the 1940 Act, any rules or regulations or orders thereunder,
or the applicable Prospectus. In any event, absent extraordinary
circumstances specified in Section 22(e) of the 1940 Act, the Trust shall
make such payment within five (5) calendar days after the date the
redemption order is placed in order to enable the Company to pay redemption
proceeds within the time specified in Section 22(e) of the 1940 Act or such
shorter period of time as may be required by law. The Trust shall not bear
any responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds by the Company; the Company alone shall be responsible
for such action.
(d) Any purchase or redemption request for Series or Class shares held or to be
held in the Company's general account shall be effected at the net asset
value per share next determined after the Trust's actual receipt of such
request, provided that, in the case of a purchase request, payment for
Trust shares so requested is received by the Trust in Federal funds prior
to close of business for determination of such value, as defined from time
to time in the Prospectus for such Series or Class. If such Federal funds
are not received on time, the Series of Class shares purchased by such
payment shall be executed at the net asset value next computed following
receipt of payment.
(e) Prior to the first purchase of any Trust shares hereunder, the Company and
the Trust shall provide each other with all information necessary to effect
wire transmissions of Federal funds to the other party and all other
designated persons pursuant to such protocols and security procedures as
the parties may agree upon. Should such information change thereafter, the
Trust and the Company, as applicable, shall notify the other in writing of
such changes, observing the same protocols and security procedures, at
least three Business Days in advance of when such change is to take effect.
The Company and the Trust shall observe customary procedures to protect the
confidentiality and security of such information, but neither party shall
be liable to the other party for any breach of security.
(f) The procedures set forth herein are subject to any additional terms set
forth in the applicable Prospectus for the Series or Class or by the
requirements of applicable law.
2.4. Net Asset Value. The Trust shall make the net asset value per share for
each Series or Class available to the Company as soon as reasonably
practicable after the net asset value per share for such Series or Class is
calculated on any Business Day, and shall use its best efforts to make the
NAV available no later than 7:00 p.m. New York Time (6:00 p.m. Central
time) on such day. The Trust will notify the Company as soon as possible if
it is determined that the net asset value per share will be available after
7:00 p.m. New York Time (6:00 p.m. Central Time) on any Business Day, and
the Trust and the Company will mutually agree upon a final deadline for
timely receipt of the NAV on such Business Day. The Trust shall calculate
such net asset value in accordance with the Prospectus for such Series or
Class.
2.5. Dividends and Distributions. The Trust shall furnish same-day notice by
wire or telephone (followed by written confirmation) on or prior to the
payment date to the Company of any income dividends or capital gain
distributions payable on any Series or Class shares. The Company, on its
behalf and on behalf of the Account, hereby elects to receive all such
dividends and distributions as are payable on any Series or Class shares in
the form of additional shares of that Series or Class. The Company reserves
the right, on its behalf and on behalf of the Account, to revoke this
election and to receive all such dividends and capital gain distributions
in cash; to be effective, such revocation must be made in writing and
received by the Trust at least ten Business Days prior to a dividend or
distribution date.
2.6. Book Entry. Issuance and transfer of Trust shares shall be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Trust shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the
Account.
2.7. Pricing Errors. Any material errors in the calculation of net asset value,
dividends or capital gain information shall be reported immediately upon
discovery to the Company. An error shall be deemed "material" based on the
Trust's interpretation of the SEC's position and policy with regard to
materiality, as it may be modified from time to time. If the Company is
provided with materially incorrect net asset value information, the Company
shall be entitled to an adjustment to the number of shares purchased or
redeemed to reflect the correct net asset value per share. Neither the
Trust, any Fund, the Distributor, nor any of their affiliates shall be
liable for any information provided to the Company pursuant to this
Agreement which information is based on incorrect information supplied by
or on behalf of the Company to the Trust or the Distributor.
2.8. Limits on Purchasers. The Distributor and the Trust shall sell Trust shares
only to insurance companies and their separate accounts and to persons or
plans ("Qualified Persons") that qualify to purchase shares of the Trust
under Section 817(h) of the Code and the regulations thereunder without
impairing the ability of the Account to consider the portfolio investments
of the Trust as constituting investments of the Account for the purpose of
satisfying the diversification requirements of Section 817(h). The
Distributor and the Trust shall not sell Trust shares to any insurance
company or separate account unless an agreement complying with Article VIII
of this Agreement is in effect to govern such sales. The Company hereby
represents and warrants that it and the Account are Qualified Persons.
ARTICLE III
Representations and Warranties
3.1. Company. The Company represents and warrants that: (i) the Company is an
insurance company duly organized and in good standing under Indiana
insurance law; (ii) the Account is a validly existing separate account,
duly established and maintained in accordance with applicable law; (iii)
each Account's 1940 Act Registration Statement has been or will be filed
with the SEC in accordance with the provisions of the 1940 Act and the
Account has been or will be duly registered as a unit investment trust
thereunder prior to the sale of the Contracts; (iv) the Contracts'
Registration Statements have been or will be filed with and declared
effective by the SEC prior to the sale of any Contracts; (v) the Contracts
will be issued in compliance in all material respects with all applicable
Federal and state laws; (vi) the Contracts will be filed, qualified and/or
approved for sale, as applicable, under the insurance laws and regulations
of the states in which the Contracts will be offered prior to the sale of
Contracts in such states; and (vii) the Account will maintain its
registration under the 1940 Act and will comply in all material respects
with the 1940 Act during the term of this Agreement. The Company will
notify the Trust promptly if for any reason it is unable to perform its
obligations under this Agreement.
3.2. Trust. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed and validly existing under the
Delaware law; (ii) the Trust's 1940 Act Registration Statement has been
filed with the SEC in accordance with the provisions of the 1940 Act and
the Trust is duly registered as an open-end management investment company
thereunder; (iii) the Trust's Registration Statement has been declared
effective by the SEC; (iv) the Trust shares will be issued in compliance in
all material respects with all applicable federal laws; (v) the Trust will
remain registered under and will comply in all material respects with the
1940 Act during the term of this Agreement; (vi) each Fund of the Trust
will maintain its qualification as a "regulated investment company" under
Subchapter M of the Code and will comply with the diversification standards
prescribed in Section 817(h) of the Code and the regulations thereunder to
the extent applicable to funds underlying insurance company separate
accounts; and (vii) the investment policies of each Fund are in material
compliance with any investment restrictions set forth on Schedule 4 to this
Agreement. The Trust, however, makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses
and investment policies) otherwise complies with the insurance laws or
regulations of any state. The Trust will notify the Company promptly if for
any reason it is unable to perform its obligations under this Agreement.
3.3. Distributor. The Distributor represents and warrants that: (i) the
Distributor is a limited partnership duly organized and in good standing
under New York law; (ii) the Distributor is registered as a broker-dealer
under federal and applicable state securities laws and is a member of the
NASD; and (iii) the Distributor is registered as an investment adviser
under federal securities laws. The Distributor will notify the Company
promptly if for any reason it is unable to perform its obligations under
this Agreement.
3.4. Legal Authority. Each party represents and warrants that the execution and
delivery of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary corporate,
partnership or trust 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 and will
not violate its charter documents or by-laws, rules or regulations, or any
agreement to which it is a party.
3.5. Bonding Requirement. Each party represents and warrants that all of its
directors, officers, partners and employees, as applicable, dealing with
the money and/or securities of the Trust are and shall continue to 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 amount required by the
applicable rules of the NASD and the federal securities laws. The aforesaid
bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. All parties shall make all
reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, shall provide evidence thereof promptly to
any other party upon written request therefor, and shall notify the other
parties promptly in the event that such coverage no longer applies.
ARTICLE IV
Regulatory Requirements
4.1. Trust Filings. The Trust shall amend the Trust's Registration Statement and
the Trust's 1940 Act Registration Statement from time to time as required
in order to effect the continuous offering of Trust shares in compliance
with applicable law and to maintain the Trust's registration under the 1940
Act for so long as Trust shares are sold.
4.2. Contracts Filings. The Company shall amend the Contracts' Registration
Statement and the Account's 1940 Act Registration Statement from time to
time as required in order to effect the continuous offering of the
Contracts in compliance with applicable law or as may otherwise be required
by applicable law, but in any event shall maintain a current effective
Contracts' Registration Statement and the Account's registration under the
1940 Act for so long as the Contracts are outstanding unless the Company
has supplied the Trust with an SEC no-action letter, opinion of counsel or
other evidence satisfactory to the Trust's counsel to the effect that
maintaining such Registration Statement on a current basis is no longer
required. The Company shall be responsible for filing all such Contract
forms, applications, marketing materials and other documents relating to
the Contracts and/or the Account with state insurance commissions, as
required or customary, and shall use its best efforts: (i) to obtain any
and all approvals thereof, under applicable state insurance law, of each
state or other jurisdiction in which Contracts are or may be offered for
sale; and (ii) to keep such approvals in effect for so long as the
Contracts are outstanding.
4.3. Voting of Trust Shares. With respect to any matter put to vote by the
holders of Trust shares ("Voting Shares"), the Company will provide
"pass-through" voting privileges to owners of Contracts registered with the
SEC as long as the 1940 Act requires such privileges in such cases. In
cases in which "pass-through" privileges apply, the Company will (i)
provide for the solicitation of voting instructions from Contract Owners of
SEC-registered Contracts; (ii) vote Voting Shares attributable to Contract
Owners in accordance with instructions or proxies timely received from such
Contract Owners; and (iii) vote Voting Shares held by it that are not
attributable to reserves for SEC-registered Contracts or for which it has
not received timely voting instructions in the same proportion as
instructions received in a timely fashion from Owners of SEC-registered
Contracts. The Company shall be responsible for ensuring that it calculates
"pass-through" votes for the Account in a manner consistent with the
provisions set forth above and with other Participating Insurance
Companies. Neither the Company nor any of its affiliates will in any way
recommend action in connection with, or oppose or interfere with, the
solicitation of proxies for the Trust shares held for such Contract Owners,
except with respect to matters as to which the Company has the right under
Rule 6e-2 or 6e-3(T) under the 1940 Act, to vote Voting Shares without
regard to voting instructions from Contract Owners. The Trust shall comply
with all provisions of the 1940 Act requiring voting by shareholders, as
they may be amended from time to time. Further, the Trust will act in
accordance with the SEC's interpretation of the requirements of Section 16
of the 1940 Act with respect to periodic elections of directors and with
whatever rules the SEC may promulgate with respect thereto.
4.4. State Insurance Restrictions. The Company: shall notify the Trust of any
applicable state insurance laws of which it becomes aware that restrict the
Trust's investments or otherwise affect the operation of the Trust or the
Distributor, shall notify the Trust of any changes in such laws and
acknowledges and agrees that neither the Trust nor the Distributor shall
bear any responsibility for determination of the applicability of such laws
to the Trust's investments or the Trust's or Distributor's operations.
Schedule 4 sets forth the investment restrictions that the Company and/or
other Participating Insurance Companies have determined are applicable to
any Fund and with which the Trust has agreed to comply as of the date of
this Agreement. The Company shall inform the Trust of any investment
restrictions imposed by state insurance law of which the Company becomes
aware that may become applicable to the Trust or a Fund from time to time
as a result of the Account's investment therein, other than those set forth
on Schedule 4 to this Agreement. Upon receipt of any such information from
the Company or any other Participating Insurance Company, the Trust shall
determine whether it is in the best interests of shareholders to comply
with any such restrictions. If the Trust determines that it is not in the
best interests of shareholders (it being understood that "shareholders" for
this purpose shall mean Product Owners) to comply with a restriction
determined to be applicable by the Company, the Trust shall so inform the
Company, and the Trust and the Company shall discuss alternative
accommodations in the circumstances up to and including giving the Company
the right to discontinue offering the Trust and/or any applicable Fund as
an investment option under the Contracts issued in a state. If the Trust
determines that it is in the best interests of shareholders to comply with
such restrictions, the Trust and the Company shall amend Schedule 4 to this
Agreement to reflect such restrictions, subject to obtaining any required
shareholder approval thereof.
4.5. Drafts of Filings. The Trust and the Company shall provide to each other
copies of draft versions of any Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or
Contract Owner reports, proxy statements, solicitations for voting
instructions, applications for exemptions, requests for no-action letters,
and all amendments or supplements to any of the above, prepared by or on
behalf of either of them and that mentions the other party by name. Such
drafts shall be provided to the other party sufficiently in advance of
filing such materials with regulatory authorities in order to allow such
other party a reasonable opportunity to review the materials.
4.6. Copies of Filings. The Trust and the Company shall provide to each other at
least one complete copy of all Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or
Contract Owner reports, proxy statements, solicitations of voting
instructions, applications for exemptions, requests for no-action letters,
and all amendments or supplements to any of the above, that relate to the
Trust, the Contracts or the Account, as the case may be, promptly after the
filing by or on behalf of each such party of such document with the SEC or
other regulatory authorities (it being understood that this provision is
not intended to require the Trust to provide to the Company copies of any
such documents prepared, filed or used by Participating Investors other
than the Company and the Account).
4.7. Regulatory Responses. Each party shall promptly provide to all other
parties copies of responses to no-action requests, notices, orders and
other rulings received by such party with respect to any filing covered by
Section 4.6 of this Agreement.
4.8. Complaints and Proceedings
(a) The Trust and/or the Distributor shall immediately notify the Company of:
(i) the issuance by any court or regulatory body of any stop order, cease
and desist order, or other similar order (but not including an order of a
regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Trust's Registration Statement or the
Prospectus of any Series or Class; (ii) any request by the SEC for any
amendment to the Trust's Registration Statement or the Prospectus of any
Series or Class; (iii) the initiation of any proceedings for that purpose
or for any other purposes relating to the registration or offering of the
Trust shares; or (iv) any other action or circumstances that may prevent
the lawful offer or sale of Trust shares or any Class or Series in any
state or jurisdiction, including, without limitation, any circumstance in
which (A) such shares are not registered and, in all material respects,
issued and sold in accordance with applicable state and federal law or (B)
such law precludes the use of such shares as an underlying investment
medium for the Contracts. The Trust will make every reasonable effort to
prevent the issuance of any such stop order, cease and desist order or
similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
(b) The Company shall immediately notify the Trust and the Distributor of: (i)
the issuance by any court or regulatory body of any stop order, cease and
desist order, or other similar order (but not including an order of a
regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Contracts' Registration Statement or the
Contracts' Prospectus; (ii) any request by the SEC for any amendment to the
Contracts' Registration Statement or Prospectus; (iii) the initiation of
any proceedings for that purpose or for any other purposes relating to the
registration or offering of the Contracts; or (iv) any other action or
circumstances that may prevent the lawful offer or sale of the Contracts or
any class of Contracts in any state or jurisdiction, including, without
limitation, any circumstance in which such Contracts are not registered,
qualified and approved, and, in all material respects, issued and sold in
accordance with applicable state and federal laws. The Company will make
every reasonable effort to prevent the issuance of any such stop order,
cease and desist order or similar order and, if any such order is issued,
to obtain the lifting thereof at the earliest possible time.
(c) Each party shall immediately notify the other parties when it receives
notice, or otherwise becomes aware of, the commencement of any litigation
or proceeding against such party or a person affiliated therewith in
connection with the issuance or sale of Trust shares or the Contracts.
(d) The Company shall provide to the Trust and the Distributor any complaints
it has received from Contract Owners pertaining to the Trust or a Fund, and
the Trust and Distributor shall each provide to the Company any complaints
it has received from Contract Owners relating to the Contracts.
4.9. Cooperation. Each party hereto shall cooperate with the other parties and
all appropriate government authorities (including without limitation the
SEC, the NASD and state securities and insurance regulators) and shall
permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry by any such authority relating
to this Agreement or the transactions contemplated hereby. However, such
access shall not extend to attorney-client privileged information. The
Trust agrees to provide the Company with any information not otherwise
available to the Company which is required by state insurance law to enable
the Company to obtain the authority needed to issue the Contract in any
applicable state.
ARTICLE V
Sale, Administration and Servicing of the Contracts
5.1. Sale of the Contracts. The responsibilities of the Company and the
Distributor as to the sale of the Contracts are as set forth on Appendix A.
5.2. Administration and Servicing of the Contracts. The responsibilities of the
Company and the Distributor as to administration and servicing of the
Contracts are as set forth in Appendix A.
5.3. Customer Complaints. The Company shall promptly address all customer
complaints and resolve such complaints consistent with high ethical
standards and principles of ethical conduct.
5.4. Trust Prospectuses and Reports. The responsibilities of the Company, the
Distributor and the Trust as to the provision of Trust prospectuses and
reports are as set forth in Appendix A.
5.5. Performance Information. The Distributor shall be responsible for
calculating the performance information for the Funds. The Company shall be
responsible for calculating the performance information for the Contracts.
The Distributor shall be liable to the Company for any material mistakes it
makes in calculating the performance information for the Funds which cause
losses to the Company. The Company shall be liable to the Distributor for
any material mistakes it makes in calculating the performance information
for the Contracts which cause losses to the Distributor. Each party shall
be liable for any material mistakes it makes in reproducing the performance
information for Contracts or the Funds, as appropriate. The Trust and the
Distributor agree to provide the Company with performance information for
the Funds on a timely basis to enable the Company to calculate performance
information for the Contracts in accordance with applicable state and
federal law.
5.6. Advertising Material. The responsibilities and obligations of the parties
with respect to the Trust's and Contracts' advertising material shall be as
set forth in Appendix A.
5.7. Trademarks, Names, Logos, etc. The parties agree that the use of any
company names, tradenames, trademarks, servicemarks and logos by the
parties shall be governed by the applicable provisions of the Master
Agreement dated February 1, 1999 between the Company, the Distributor,
American Centurion Life Assurance Company, IDS Life Insurance Company, IDS
Life Insurance Company of New York, American Express Financial Advisors
Inc., and American Express Service Corporation (the "Master Agreement").
5.8. Representations by Company. Except with the prior written consent of the
Trust, the Company shall not give any information or make any
representations or statements about the Trust or the Funds nor shall it
authorize or allow any other person to do so except information or
representations contained in the Trust's Registration Statement or the
Trust's Prospectuses or in reports or proxy statements for the Trust, or in
sales literature or other promotional material approved in writing by the
Trust or its designee in accordance with this Article V, or in published
reports or statements of the Trust in the public domain.
5.9. Representations by Trust. Except with the prior written consent of the
Company, the Trust shall not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, the Account or the Contracts nor shall it authorize or allow any
other person to do so other than the information or representations
contained in the Contracts' Registration Statement or Contracts' Prospectus
or in published reports of the Account which are in the public domain or in
sales literature or other promotional material approved in writing by the
Company or its designee in accordance with this Article V.
5.10.Advertising. For purposes of this Article V, the phrase "sales literature
or other promotional material" includes, but is not limited to, any
material constituting sales literature or advertising under the NASD rules,
the 1940 Act or the 1933 Act.
ARTICLE VI
Compliance with Code
6.1. Section 817(h). Each Fund of the Trust shall comply with Section 817(h) of
the Code and the regulations issued thereunder to the extent applicable to
the Fund as an investment company underlying the Account and the Trust and
the Distributor shall use their best efforts to ensure that each Fund will
continue to so comply. The Trust and the Distributor shall notify the
Company immediately upon having a reasonable basis for believing that a
Fund has ceased to so comply or that it might not so comply in the future.
In the event a Fund of the Trust fails to comply with such sections of the
Code or regulations thereunder, the Trust and the Distributor will take all
reasonable steps to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Treasury Regulation 1.817-5.
6.2. Subchapter M. Each Fund of the Trust shall maintain the qualification of
the Fund as a regulated investment company (under Subchapter M or any
successor or similar provision) and the Trust and the Distributor shall use
their best efforts to ensure that each Fund will continue to so qualify.
The Trust and the Distributor shall notify the Company immediately upon
having a reasonable basis for believing that a Fund has ceased to so
qualify or that it might not so qualify in the future.
6.3. Contracts. The Company ensures that the Contracts qualify for treatment as
annuity contracts, upon their availability, under the Code. The Company
shall use its best efforts to ensure that the Contracts continue to qualify
for such treatment. The Company shall notify the Distributor immediately
upon having a reasonable basis for believing that Contracts have ceased to
qualify for treatment as annuity contracts under the Code or that they
might not so qualify in the future.
ARTICLE VII
Expenses
7.1. Expenses. All expenses incident to each party's performance under this
Agreement (including expenses expressly assumed by such party pursuant to
this Agreement) shall be paid by such party to the extent permitted by law.
7.2. Trust Expenses. Expenses incident to the Trust's performance of its duties
and obligations under this Agreement are as set forth in Appendix A.
7.3. Company Expenses. Expenses incident to the Company's performance of its
duties and obligations under this Agreement are as set forth in Appendix A.
7.4. 12b-1 Payments. The Trust shall pay no fee or other compensation to the
Company under this Agreement, except that if the Trust or any Series or
Class adopts and implements a plan pursuant to Rule 12b-1 under the 1940
Act to finance distribution expenses, then payments may be made to the
Company in accordance with such plan. The Trust currently does not intend
to make any payments to finance distribution expenses pursuant to Rule
12b-1 under the 1940 Act or in contravention of such rule, although it may
make payments pursuant to Rule 12b-1 in the future. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1 and such
formulation is required by the 1940 Act or any rules or order thereunder,
the Trust undertakes to have a Board of Trustees, a majority of whom are
not interested persons of the Trust, formulate and approve any plan under
Rule 12b-1 to finance distribution expenses.
ARTICLE VIII
Potential Conflicts
8.1. Exemptive Order. The parties to this Agreement acknowledge that the Trust
has filed an application with the SEC to request an order (the "Exemptive
Order") granting relief from various provisions of the 1940 Act and the
rules thereunder to the extent necessary to permit Trust shares to be sold
to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated Participating Insurance
Companies and other Qualified Persons (as defined in Section 2.8 hereof).
It is anticipated that the Exemptive Order, when and if issued, shall
require the Trust and each Participating Insurance Company to comply with
conditions and undertakings substantially as provided in this Article VIII.
The Trust will not enter into a participation agreement with any other
Participating Insurance Company unless it imposes the same conditions and
undertakings on that company as are imposed on the Company pursuant to this
Article VIII.
8.2. Company Monitoring Requirements. The Company will monitor its operations
and those of the Trust for the purpose of identifying any material
irreconcilable conflicts or potential material irreconcilable conflicts
between or among the interests of Participating Plans, Product Owners of
variable life insurance policies and Product Owners of variable annuity
contracts, it is being understood that the Company is assuming the
obligation to monitor the operations of the Trust solely to comply with the
explicit terms of the Exemptive Order and further, that such monitoring is
for the sole purpose of identifying any conflicts that would affect its
policyowners and would be limited to monitoring the operations of the Trust
based on information provided to the Company by the Trust.
8.3. Company Reporting Requirements. The Company shall report any conflicts or
potential conflicts of which it is aware to the Trust Board and will
provide the Trust Board, at least annually, with all information reasonably
necessary for the Trust Board to consider any issues raised by such
existing or potential conflicts or by the conditions and undertakings
required by the Exemptive Order. The Company also shall assist the Trust
Board in carrying out its obligations including, but not limited to: (a)
informing the Trust Board whenever it disregards Contract Owner voting
instructions with respect to variable life insurance policies, and (b)
providing such other information and reports as the Trust Board may
reasonably request. The Company will carry out these obligations with a
view only to the interests of Contract Owners.
8.4. Trust Board Monitoring and Determination. The Trust Board shall monitor the
Trust for the existence of any material irreconcilable conflicts between or
among the interests of Participating Plans, Product Owners of variable life
insurance policies and Product Owners of variable annuity contracts and
determine what action, if any, should be taken in response to those
conflicts. A majority vote of Trustees who are not interested persons of
the Trust as defined in the 1940 Act (the "disinterested trustees") shall
represent a conclusive determination as to the existence of a material
irreconcilable conflict between or among the interests of Product Owners
and Participating Plans and as to whether any proposed action adequately
remedies any material irreconcilable conflict. The Trust Board shall give
prompt written notice to the Company and Participating Plan of any such
determination.
8.5. Undertaking to Resolve Conflict. In the event that a material
irreconcilable conflict of interest arises between Product Owners of
variable life insurance policies or Product Owners of variable annuity
contracts and Participating Plans, the Company will, at its own expense,
take whatever action is necessary to remedy such conflict as it adversely
affects Contract Owners up to and including (1) establishing a new
registered management investment company, and (2) withdrawing assets from
the Trust attributable to reserves for the Contracts subject to the
conflict and reinvesting such assets in a different investment medium
(including another Fund of the Trust) or submitting the question of whether
such withdrawal should be implemented to a vote of all affected Contract
Owners, and, as appropriate, segregating the assets supporting the
Contracts of any group of such owners that votes in favor of such
withdrawal, or offering to such owners the option of making such a change.
The Company will carry out the responsibility to take the foregoing action
with a view only to the interests of Contract Owners.
8.6. Withdrawal. If a material irreconcilable conflict arises because of the
Company's decision to disregard the voting instructions of Contract Owners
of variable life insurance policies and that decision represents a minority
position or would preclude a majority vote at any Fund shareholder meeting,
then, at the request of the Trust Board, the Company will redeem the shares
of the Trust to which the disregarded voting instructions relate. No charge
or penalty, however, will be imposed in connection with such a redemption.
8.7. Expenses Associated with Remedial Action. In no event shall the Trust be
required to bear the expense of establishing a new funding medium for any
Contract. The Company shall not be required by this Article to establish a
new funding medium for any Contract if an offer to do so has been declined
by vote of a majority of the Contract Owners materially adversely affected
by the irreconcilable material conflict.
8.8. Successor Rules. 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
provisions of the 1940 Act or the rules promulgated thereunder with respect
to mixed and shared funding on terms and conditions materially different
from those contained in the Exemptive Order, then (i) the Trust and/or the
Company, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, or Rule 6e-3, as adopted,
as applicable, to the extent such rules are applicable, and (ii) Sections
8.2 through 8.5 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 IX
Indemnification
9.1. Indemnification by the Company. The Company hereby agrees to, and shall,
indemnify and hold harmless the Trust, the Distributor and each person who
controls or is affiliated with the Trust or the Distributor within the
meaning of such terms under the 1933 Act or 1940 Act (but not any
Participating Insurance Companies or Qualified Persons) and any officer,
trustee, partner, director, employee or agent of the foregoing, against any
and all losses, claims, damages or liabilities, joint or several (including
any investigative, legal and other expenses reasonably incurred in
connection with, and with the written consent of the Company any amounts
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any material fact
contained in the Contracts Registration Statement, Contracts Prospectus,
sales literature or other promotional material prepared by the Company for
the Contracts or the Contracts themselves (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances in
which they were made; provided that this obligation to indemnify shall not
apply if such 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 Trust or the Distributor for use in the Contracts
Registration Statement, Contracts Prospectus or in the Contracts or sales
literature or promotional material for the Contracts (or any amendment or
supplement to any of the foregoing) or otherwise for use in connection with
the sale of the Contracts or Trust shares; or
(b) arise out of any untrue statement of a material fact contained in the Trust
Registration Statement, any Prospectus for Series or Classes or sales
literature or other promotional material of the Trust or the Contracts
(prepared by the Trust) (or any amendment or supplement to any of the
foregoing), or the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading
in light of the circumstances in which they were made, if such statement or
omission was made in reliance upon and in conformity with information
furnished to the Trust or Distributor in writing by or on behalf of the
Company; or
(c) arise out of or are based upon conduct set forth in Section 9.1(c) of
Appendix A; or
(d) arise as a result of any failure by the Company or persons under its
control (or subject to its authorization) to provide services, furnish
materials or make payments as required under this Agreement; or
(e) arise out of any material breach by the Company or persons under its
control (or subject to its authorization) of this Agreement; or
(f) any breach of any warranties contained in Article III hereof, any failure
to transmit a request for redemption or purchase of Trust shares or payment
therefor on a timely basis in accordance with the procedures set forth in
Article II, or any unauthorized use of the names or trade names of the
Trust or the Distributor.
This indemnification is in addition to any liability that the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the
willful misfeasance, bad faith, gross negligence or reckless disregard of duty
by the party seeking indemnification. Any loss, claim, damage or liability that
may arise out of Sections 5.7 and 10.7 and Article XIV hereof are excluded from
indemnification under this Section 9.1.
9.2. Indemnification by the Trust. The Trust hereby agrees to, and shall,
indemnify and hold harmless the Company and each person who controls or is
affiliated with the Company within the meaning of such terms under the 1933
Act or 1940 Act and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities,
joint or several (including any investigative, legal and other expenses
reasonably incurred in connection with, and with the written consent of the
Trust any amounts paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they or any of them may become subject under
any statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any material fact
contained in the Trust Registration Statement, any Prospectus for Series or
Classes or sales literature or other promotional material of the Trust (or
any amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading
in light of the circumstances in which they were made; provided that this
obligation to indemnify shall not apply if such statement or omission was
made in reliance upon and in conformity with information furnished to the
Trust or the Distributor in writing by or on behalf of the Company for use
in the Trust Registration Statement, Trust Prospectus or sales literature
or promotional material for the Trust (or any amendment or supplement to
any of the foregoing) or otherwise for use in connection with the sale of
the Contracts or Trust shares; or
(b) arise out of any untrue statement of a material fact contained in the
Contracts Registration Statement, Contracts Prospectus or sales literature
or other promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in which
they were made, if such statement or omission was made in reliance upon
information furnished in writing by the Trust or on its behalf to the
Company; or
(c) arise out of or are based upon wrongful conduct of the Trust or its
Trustees or officers with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Trust to provide services, furnish
materials or make payments as required under the terms of this Agreement
including, but not limited to, any material errors in or untimely
calculation or reporting of the daily net asset value per share or dividend
or capital gain distribution rate (referred to in this Section 9.2(d) as an
"error"); provided, that the foregoing shall not apply where such error is
the result of incorrect information supplied by or on behalf of the Company
to the Trust or the Distributor, and shall be limited to (i) reasonable
administrative costs necessary to correct such error, (ii) amounts which
the Company has overpaid Contact Owners as a result of such error and which
the parties agree it is unreasonable to recoup from such Contract Owners;
and (iii) amounts which the Company has paid out of its own resources to
make Contract Owners whole as a result of such error; or
(e) arise out of any material breach by the Trust of this Agreement (including
any breach of Section 6.1 of this Agreement and any warranties contained in
Article III hereof);
it being understood that in no way shall the Trust be liable to the Company with
respect to any violation of insurance law to which it may be subject but of
which it is unaware. This indemnification is in addition to any liability that
the Trust may otherwise have; provided, however, that no party shall be entitled
to indemnification if such loss, claim, damage or liability is caused by the
willful misfeasance, bad faith, gross negligence or reckless disregard of duty
by the party seeking indemnification. Any loss, claim, damage or liability that
may arise out of Sections 5.7 and 10.7 and Article XIV hereof are excluded from
indemnification under this Section 9.2.
9.3. Indemnification by the Distributor. The Distributor hereby agrees to, and
shall, indemnify and hold harmless the Company and each person who controls
or is affiliated with the Company within the meaning of such terms under
the 1933 Act or 1940 Act and any officer, director, employee or agent of
the foregoing, against any and all losses, claims, damages or liabilities,
joint or several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they or
any of them may become subject under any statute or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any material fact
contained in the Trust Registration Statement, any Prospectus for Series or
Classes or sales literature or other promotional material of the Trust (or
any amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading
in light of the circumstances in which they were made; provided that this
obligation to indemnify shall not apply if such statement or omission was
made in reliance upon and in conformity with information furnished in
writing by the Company to the Trust or Distributor for use in the Trust
Registration Statement, Trust Prospectus or sales literature or promotional
material for the Trust (or any amendment or supplement to any of the
foregoing) or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(b) arise out of any untrue statement of a material fact contained in the
Contracts Registration Statement, Contracts Prospectus or sales literature
or other promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in which
they were made, if such statement or omission was made in reliance upon
information furnished in writing by the Distributor or on its behalf to the
Company; or
(c) arise out of or are based upon conduct set forth in Section 9.3(c) of
Appendix A; or
(d) arise as a result of any failure by the Trust, Distributor or persons under
their respective control to provide services, furnish materials or make
payments as required under the terms of this Agreement including, but not
limited to, any material errors in or untimely calculation or reporting of
the daily net asset value per share or dividend or capital gain
distribution rate (referred to in this Section 9.3(d) as an "error");
provided, that the foregoing shall not apply where such error is the result
of incorrect information supplied by or on behalf of the Company to the
Trust or the Distributor, and shall be limited to (i) reasonable
administrative costs necessary to correct such error, (ii) amounts which
the Company has overpaid Contact Owners as a result of such error, and
which the parties agree it is unreasonable to recoup from such Contract
Owners; and (iii) amounts which the Company has paid out of its own
resources to make Contract Owners whole as a result of such error; or
(e) arise out of any material breach by the Trust, Distributor or persons under
their respective control of this Agreement (including any breach of Section
6.1 of this Agreement and any warranties contained in Article III hereof)
or any unauthorized use of the names or trade names of the Company;
it being understood that in no way shall the Distributor be liable to the
Company with respect to any violation of insurance law to which it may be
subject but of which it is unaware. This indemnification is in addition to any
liability that the Distributor may otherwise have; provided, however, that no
party shall be entitled to indemnification if such loss, claim, damage or
liability is caused by the willful misfeasance, bad faith, gross negligence or
reckless disregard of duty by the party seeking indemnification. Any loss,
claim, damage or liability that may arise out of Sections 5.7 and 10.7 and
Article XIV hereof are excluded from indemnification under this Section 9.3.
9.4. Rule of Construction. It is the parties' intention that, in the event of an
occurrence for which the Trust has agreed to indemnify the Company, the
Company shall seek indemnification from the Trust only in circumstances in
which the Trust is entitled to seek indemnification from a third party with
respect to the same event or cause thereof.
9.5. Indemnification Procedures. After receipt by a party, or any partner,
officer, director, employee or agent of any party, entitled to
indemnification under this Article IX ("indemnified party") of notice of
the commencement of any action, if a claim in respect thereof is to be made
against any person obligated to provide indemnification under this Article
IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as
practicable after the summons or other first written notification giving
information of the nature of the claim has been served upon the indemnified
party; provided that the failure to so notify the indemnifying party will
not relieve the indemnifying party from any liability under this Article
IX, except to the extent that the omission results in a failure of actual
notice to the indemnifying party and such indemnifying party is damaged
solely as a result of the failure to give such notice. The indemnifying
party, upon the request of the indemnified party, shall retain counsel
satisfactory to the indemnified party to represent the indemnified party in
the proceeding, and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless
(1) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (2) the named parties to any
such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The indemnifying party shall
not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
Relationship of the Parties; Termination
10.1.Non-Exclusivity and Non-Interference. The parties hereto acknowledge that
the arrangement contemplated by this Agreement is not exclusive; the Trust
shares may be sold to other insurance companies and investors (subject to
Section 2.8 hereof) and the cash value of the Contracts may be invested in
other investment companies; provided, however, that until this Agreement is
terminated pursuant to this Article X:
(a) the Company shall not, without prior notice to the Distributor (unless
otherwise required by applicable law), take any action to operate the
Account as a management investment company under the 1940 Act;
(b) the Company shall not, without the prior written consent of the Distributor
(unless otherwise required by applicable law), solicit, induce or encourage
Contract Owners to change or modify the Trust to change the Trust's
distributor or investment adviser, to transfer or withdraw Contract Values
allocated to a Fund, or to exchange their Contracts for contracts not
allowing for investment in the Trust;
(c) the Company shall not substitute another investment company for one or more
Funds without providing written notice to the Distributor at least 60 days
in advance of effecting any such substitution; and
(d) the Company shall not withdraw the Account's investment in the Trust or a
Fund of the Trust except as necessary to facilitate Contract Owner requests
and routine Contract processing.
10.2.Termination of Agreement. This Agreement shall not terminate until (i) the
Trust is dissolved, liquidated, or merged into another entity, or (ii) as
to any Fund that has been made available hereunder, the Account no longer
invests in that Fund and the Company has confirmed in writing to the
Distributor, if so requested by the Distributor, that it no longer intends
to invest in such Fund. After an initial term of three years from February
1, 1999 (the Effective Date of the Master Agreement), each party shall have
the right, in its sole discretion, to terminate this Agreement upon the
expiration of 180 days after the receipt by the other parties of written
notice of termination from the party terminating this Agreement. However,
certain obligations of, or restrictions on, the parties to this Agreement
may terminate as provided in Sections 10.3 through 10.5 and the Company may
be required to redeem Trust shares pursuant to Section 10.7 or in the
circumstances contemplated by Article VIII. Article IX and Sections 5.7 and
10.7 shall survive any termination of this Agreement.
10.3.Termination of Offering of Trust Shares. The obligation of the Trust and
the Distributor to make Trust shares available to the Company for purchase
pursuant to Article II of this Agreement shall terminate at the option of
the Distributor, subject to compliance with applicable law, upon written
notice to the Company as provided below:
(a) upon institution of formal proceedings against the Company, by
the NASD, the SEC, the insurance commission 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 the Account, the administration of the Contracts
or the purchase of Trust shares, which would, in the
Distributor's reasonable judgment exercised in good faith,
materially impair the Company's or Trust's ability to meet and
perform the Company's or Trust's obligations and duties
hereunder, such termination effective upon 15 days prior
written notice;
(b) in the event any of the Contracts are not registered where
required and in all material respects are not issued or sold
in accordance with applicable federal and/or state law, such
termination effective immediately upon receipt of written
notice;
(c) if the Distributor shall determine, in its sole judgment
exercised in good faith, that either (1) the Company shall
have suffered a material adverse change in its business or
financial condition or (2) the Company shall have been the
subject of material adverse publicity which is likely to have
a material adverse impact upon the business and operations of
either the Trust or the Distributor, such termination
effective upon 30 days prior written notice;
(d) if the Distributor suspends or terminates the offering of
Trust shares of any Series or Class to all Participating
Investors or only designated Participating Investors, if such
action is required by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Distributor
acting in good faith, suspension or termination is necessary
in the best interests of the shareholders of any Series or
Class (it being understood that "shareholders" for this
purpose shall mean Product Owners), such notice effective
immediately upon receipt of written notice;
(e) upon the Company's assignment of this Agreement (including,
without limitation, any transfer of the Contracts or the
Account to another insurance company pursuant to an assumption
reinsurance agreement) unless the Trust consents thereto, such
termination effective upon 30 days prior written notice;
(f) if the Company is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction
of the Trust within 10 days after written notice of such
breach has been delivered to the Company, such termination
effective upon expiration of such 10-day period; or
(g) upon the determination of the Trust's Board to dissolve,
liquidate or merge the Trust as contemplated by Section
10.2(i), upon termination of the Agreement pursuant to Section
10.2(ii), or upon notice from the Company pursuant to Section
10.4 or 10.5, such termination pursuant hereto to be effective
upon 15 days prior written notice.
Except in the case of an option exercised under clause (b) or (d) of this
Section 10.3 or under Sections 10.2(i) or (ii), the obligations shall terminate
only as to new Contracts and the Distributor shall continue to make Trust shares
available to the extent necessary to permit owners of Contracts in effect on the
effective date of such termination (hereinafter referred to as "Existing
Contracts") to reallocate investments in the Trust, redeem investments in the
Trust and/or invest in the Trust upon the making of additional purchase payments
under the Existing Contracts.
10.4.Termination of Investment in a Fund. The Company may elect to cease
investing in a Fund, promoting a Fund as an investment option under the
Contracts, or withdraw its investment or the Account's investment in a
Fund, subject to compliance with applicable law, upon written notice to the
Trust within 15 days of the occurrence of any of the following events
(unless provided otherwise below):
(a) if the Trust informs the Company pursuant to Section 4.4 that
it will not cause such Fund to comply with investment
restrictions as requested by the Company and the Trust and the
Company are unable to agree upon any reasonable alternative
accommodations;
(b) if shares in such Fund are not reasonably available to meet
the requirements of the Contracts as determined by the Company
(including any non-availability as a result of notice given by
the Distributor pursuant to Section 10.3(d)), and the
Distributor, after receiving written notice from the Company
of such non-availability, fails to make available, within 10
days after receipt of such notice, a sufficient number of
shares in such Fund or an alternate Fund to meet the
requirements of the Contracts; or
(c) if such Fund fails to meet the diversification requirements
specified in Section 817(h) of the Code and any regulations
thereunder and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure
or correct such failure.
Such termination shall apply only as to the affected Fund and shall not apply to
any other Fund in which the Company or the Account invests.
10.5.Termination of Investment by the Company. The Company may elect to cease
investing in all Series or Classes of the Trust made available hereunder,
promoting the Trust as an investment option under the Contracts, or
withdraw its investment or the Account's investment in the Trust, subject
to compliance with applicable law, upon written notice to the Trust within
15 days of the occurrence of any of the following events (unless provided
otherwise below):
(a) upon institution of formal proceedings against the Trust or
the Distributor (but only with regard to the Trust) by the
NASD, the SEC or any state securities or insurance commission
or any other regulatory body;
(b) if, with respect to the Trust or a Fund, the Trust or the Fund
ceases to qualify as a regulated investment company under
Subchapter M of the Code, as defined therein, or any successor
or similar provision, or if the Company reasonably believes
that the Trust may fail to so qualify, and the Trust, upon
written request, fails to provide reasonable assurance that it
will take action to cure or correct such failure within 30
days;
(c) if the Trust or Distributor is in material breach of a
provision of this Agreement, which breach has not been cured
to the satisfaction of the Company within 10 days after
written notice of such breach has been delivered to the Trust
or the Distributor, as the case may be such termination
effective upon expiration of such 10-day period;
(d) If the Company shall determine, in its sole judgment exercised
in good faith, that either (1) the Distributor shall have
suffered a material adverse change in its business or
financial condition or (2) the Distributor or the Trust shall
have been the subject of material adverse publicity (excluding
with respect to the Trust, market events impacting the Trust's
performance) which is likely to have a material adverse impact
upon the business and operations of the Company, such
termination effective upon 30 days' prior written notice;
(e) If the Company suspends or terminates the offering of the
Contracts, if such action is required by law or by regulatory
authorities have jurisdiction or if, in the sole discretion of
the Company acting in good faith, suspension or termination is
necessary in the best interest of Contract Owners, such notice
effective immediately upon receipt of written notice; or
(f) Upon the Distributor's or the Trust's assignment of this
Agreement unless the Company consents thereto, such
termination effective upon 30 days' prior written notice.
00.0.Xxxxxxx Required to Redeem. The parties understand and acknowledge that it
is essential for compliance with Section 817(h) of the Code that the
Contracts qualify as annuity contracts or life insurance policies, as
applicable, under the Code. Accordingly, if any of the Contracts cease to
qualify as annuity contracts or life insurance policies, as applicable,
under the Code, or if the Trust reasonably believes that any such Contracts
may fail to so qualify, the Trust shall have the right to require the
Company to redeem Trust shares attributable to such Contracts upon notice
to the Company and the Company shall so redeem such Trust shares in order
to ensure that the Trust complies with the provisions of Section 817(h) of
the Code applicable to ownership of Trust shares. Notice to the Company
shall specify the period of time the Company has to redeem the Trust shares
or to make other arrangements satisfactory to the Trust and its counsel,
such period of time to be determined with reference to the requirements of
Section 817(h) of the Code. In addition, the Company may be required to
redeem Trust shares pursuant to action taken or request made by the Trust
Board in accordance with the Exemptive Order described in Article VIII or
any conditions or undertakings set forth or referenced therein, or other
SEC rule, regulation or order that may be adopted after the date hereof.
The Company agrees to redeem shares in the circumstances described herein
and to comply with applicable terms and provisions. Also, in the event that
the Distributor suspends or terminates the offering of a Series or Class
pursuant to Section 10.3(d) of this Agreement, the Company, upon request by
the Distributor, will cooperate in taking appropriate action to withdraw
the Account's investment in the respective Fund.
10.7.Confidentiality. Each party's obligation to keep confidential any
information acquired as a result of this Agreement shall be governed by the
applicable provisions of the Master Agreement.
ARTICLE XI
Applicability to New Accounts and New Contracts
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Contracts, any Series or Class, additions of new classes of Contracts to be
issued by the Company and separate accounts therefor investing in the Trust.
Such amendments may be made effective by executing the form of amendment
included on each schedule attached hereto. The provisions of this Agreement
shall be equally applicable to each such class of Contracts, Series, Class or
separate account, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all of
the parties.
ARTICLE XII
Notice, Request or Consent
Any notice, request or consent to be provided pursuant to this
Agreement is to be made in writing and shall be given:
If to the Trust:
Xxxxxxx X. Grip
President
Xxxxxxx Sachs Variable Insurance Trust
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Distributor:
Xxxxxxx X. Grip
Vice President
Xxxxxxx Sachs & Co.
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Company:
Xxxxx X. Xxxxx
President and Chief Executive Officer
American Enterprise Life Insurance Company
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000
With a Copy To:
Law Department (Unit 52)
American Enterprise Life Insurance Company
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier or such other
method as agreed to by the parties, and shall be effective upon receipt. Notices
pursuant to the provisions of Article II may be sent by facsimile to the person
designated in writing for such notices.
ARTICLE XIII
Miscellaneous
13.1.Interpretation. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the state of
Delaware, without giving effect to the principles of conflicts of laws,
subject to the following rules:
(a) This Agreement shall be subject to the provisions of the 1933
Act, 1940 Act and Securities Exchange Act of 1934, as amended,
and the rules, regulations and rulings thereunder, including
such exemptions from those statutes, rules, and regulations as
the SEC may grant, and the terms hereof shall be limited,
interpreted and construed in accordance therewith.
(b) 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.
(c) 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.
(d) 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.
13.2.Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
00.0.Xx Assignment. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Company, the Distributor or
the Trust without the prior written consent of the other parties.
13.4.Declaration of Trust. A copy of the Declaration of Trust of the Trust is
on file with the Secretary of State of the State of Delaware, and notice is
hereby given that this instrument is executed on behalf of the Trustees of
the Trust as trustees, and is not binding upon any of the Trustees,
officers or shareholders of the Trust individually, but binding only upon
the assets and property of the Trust. No Series of the Trust shall be
liable for the obligations of any other Series of the Trust.
ARTICLE XIV
Year 2000 Warranty
The agreement among the parties with regard to Year 2000
representations and warranties shall be as set forth in Section 10.6 of the
Master Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized officer
on the date specified below.
XXXXXXX XXXXX VARIABLE INSURANCE TRUST
(Trust)
Date: April 1, 1999 By: /s/ ______________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Secretary
XXXXXXX, XXXXX & CO.
(Distributor)
Date: April 1, 1999 By:___/s/_____________________________
Name: Xxxxxxx X. Grip
Title: Managing Director
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
(Company)
Date: April 1, 1999___ By:___/s/______________________________________
Name: Xxxxx X. Xxxxx
Title: President
ATTEST
Date: April 1, 1999_ By:___/s/_____________________________
Name: Xxxx Xxxxx Xxxxxxx
Title: Assistant Secretary
Schedule 1
Accounts of the Company
Investing in the Trust
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
------------------------------- ---------------------------- ---------------------------- ============================
Date Established by
Name of Account Board of Directors of the SEC 1940 Act Registration Type of Product Supported
Company Number by Account
------------------------------- ---------------------------- ---------------------------- ============================
American Enterprise Variable July 15, 1987 811-7195 Variable Annuities
Annuity Account
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
============================== ============================ ===========================
Name of Subaccount Investing in Fund or Fund Date Established by Board
Series of Directors of the
Company
============================== ============================ ===========================
JCG Xxxxxxx Sachs VIT Capital January 20, 1999
Growth Fund
============================== ---------------------------- ===========================
JLG Xxxxxxx Xxxxx VIT CORE January 20, 1999
Large Cap Growth Fund
------------------------------ ---------------------------- ===========================
JSE Xxxxxxx Sachs VIT CORE January 20, 1999
Small Cap Equity Fund
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
JUS Xxxxxxx Xxxxx VIT CORE January 20, 1999
U.S. Equity Fund
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
JGL Xxxxxxx Sachs VIT Global January 20, 1999
Income Fund
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
JGR Xxxxxxx Xxxxx VIT Growth & January 20, 1999
Income Fund
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
JIF Xxxxxxx Sachs VIT January 20, 1999
International Equity Fund
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
JMC Xxxxxxx Xxxxx VIT Mid Cap January 20, 1999
Equity Fund
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
XXX Xxxxxxx Sachs VIT CORE January 20, 1999
International Equity Fund
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
JLV Xxxxxxx Xxxxx VIT CORE January 20, 1999
Large Cap Value Fund
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
JSD Xxxxxxx Sachs VIT Short January 20, 1999
Duration Government Fund
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
JBS Xxxxxxx Xxxxx VIT Balanced January 20, 1999
Strategy Portfolio
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
JCS Xxxxxxx Sachs VIT January 20, 1999
Conservative Strategy
Portfolio
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
JGI Xxxxxxx Xxxxx VIT Growth January 20, 1999
and Income Strategy
Portfolio
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
JGS Xxxxxxx Sachs VIT Growth January 20, 1999
Strategy Portfolio
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
JAG Xxxxxxx Xxxxx VIT January 20, 1999
Aggressive Growth Strategy
Portfolio
------------------------------ ---------------------------- ===========================
---------------------------------------------------------------------------------------
[Form of Amendment to Schedule 1]
Effective as of , the following separate accounts of the Company
are hereby added to this Schedule 1 and made subject to ------------
the Agreement:
------------------------------- ---------------------------- ---------------------------- ============================
Date Established by
Name of Account Board of Directors of the SEC 1940 Act Registration Type of Product Supported
Company Number by Account
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
============================== ============================ ===========================
Name of Subaccount Investing in Fund or Fund Date Established by Board
Series of Directors of the
Company
============================== ============================ ===========================
============================== ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
------------------------------ ---------------------------- ===========================
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby
amend this Schedule 1 in accordance with Article XI of the Agreement.
Xxxxxxx Sachs Variable Insurance Trust American Enterprise
Life Insurance Company
Xxxxxxx, Xxxxx & Co.
Attest
Schedule 2
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 1
Effective as of the date the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
------------------------------- ---------------------------- ---------------------------- ============================
SEC 1933 Act Registration
Contract Marketing Name Number Contract Form Number Annuity or Life
------------------------------- ---------------------------- ---------------------------- ============================
Xxxxxxx Sachs Variable Annuity 333-67595 43350 and state variations Annuity
thereof
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
----------------------------------------------------------------------------------------------------------------------
[Form of Amendment to Schedule 2]
Effective as of _______, the following classes of Contracts are hereby added to
this Schedule 2 and made subject to the Agreement:
------------------------------- ---------------------------- ---------------------------- ============================
Contract Marketing Name SEC 1933 Act Registration
Number Contract Form Number Annuity or Life
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
------------------------------- ---------------------------- ---------------------------- ============================
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby
amend this Schedule 2 in accordance with Article XI of the Agreement.
Xxxxxxx Xxxxx Variable Insurance Trust American Enterprise
Life Insurance Company
Xxxxxxx, Sachs & Co.
Attest
Schedule 3
Trust Classes and Series (and Corresponding Subaccount)
Available Under
Each Class of Contracts
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Contracts:
-------------------------------------------------- ============================================================
Contract Marketing Name Trust Classes and Series (Subaccount)
-------------------------------------------------- ============================================================
Xxxxxxx Xxxxx Variable Annuity Xxxxxxx Sachs VIT Capital Growth Fund (JCG)
Xxxxxxx Xxxxx VIT CORE Large Cap Growth Fund (JLG)
Xxxxxxx Sachs VIT CORE Small Cap Equity Fund (JSE)
Xxxxxxx Xxxxx VIT CORE U.S. Equity Fund (JUS)
Xxxxxxx Sachs VIT Global Income Fund (JGL)
Xxxxxxx Xxxxx VIT Growth and Income Fund (JGR)
Xxxxxxx Sachs VIT International Equity Fund (JIF)
Xxxxxxx Xxxxx VIT Mid Cap Equity Fund (JMC)
Xxxxxxx Sachs VIT CORE International Equity Fund (JIE)
Xxxxxxx Xxxxx VIT CORE Large Cap Value Fund (JLV)
Xxxxxxx Sachs VIT Short Duration Government Fund (JSD)
Xxxxxxx Xxxxx VIT Balanced Strategy Portfolio (JBS)
Xxxxxxx Sachs VIT Conservative Strategy Portfolio (JCS)
Xxxxxxx Xxxxx VIT Growth and Income Strategy Portfolio
(JGI)
Xxxxxxx Sachs VIT Growth Strategy Portfolio (JGS)
Xxxxxxx Xxxxx VIT Aggressive Growth Strategy Portfolio
(JAG)
-------------------------------------------------- ============================================================
-------------------------------------------------- ============================================================
-------------------------------------------------- ============================================================
----------------------------------------------------------------------------------------------------------------
[Form of Amendment to Schedule 3]
Effective as of __________________, this Schedule 3 is hereby amended to reflect
the following changes in Trust Classes and Series:
-------------------------------------------------- =======================================================
Contract Marketing Name Trust Classes and Series (Subaccount)
-------------------------------------------------- =======================================================
-------------------------------------------------- =======================================================
-------------------------------------------------- =======================================================
-------------------------------------------------- =======================================================
-------------------------------------------------- =======================================================
-------------------------------------------------- =======================================================
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby
amend this Schedule 3 in accordance with Article XI of the Agreement.
Xxxxxxx Sachs Variable Insurance Trust American Enterprise
Life Insurance Company
Xxxxxxx, Xxxxx & Co.
Attest
Schedule 4
Investment Restrictions
Applicable to the Trust
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Trust:
-----------------------------------------------------------------------------
[Form of Amendment to Schedule 4]
Effective as of ___________________, this Schedule 4 is hereby amended to
reflect the following changes:
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby
amend this Schedule 4 in accordance with Article XI of the Agreement.
Xxxxxxx Sachs Variable Insurance Trust American Enterprise
Life Insurance Company
Xxxxxxx, Xxxxx & Co.
Attest
Appendix A
"GS Annuity" and "AEFA Annuities" as used in this Appendix A shall have
the meanings set forth in the Master Agreement. The GS Annuity and AEFA Annuity
shall individually and collectively be referred to in this Appendix A as
"Contracts," as appropriate.
5.1 Sale of Contracts.
(a) GS Annuity. The Company shall be responsible for the sale of the GS Annuity
through selling broker-dealers and their affiliated insurance agencies
which have entered into a selling agreement for the GS Annuity with the
Company and American Express Service Corporation in accordance with the
terms of the Wholesaling Agreement dated February 1, 1999, by and among the
Company, the Distributor, American Express Service Corporation and Xxxxxxx
Sachs Insurance Agency, Inc. The Distributor, in its capacity as exclusive
wholesaler, shall be fully responsible for developing, implementing, and
managing the marketing program for, and marketing, the GS Annuity. The
parties will administer and service the GS Annuity as set forth in section
5.2 (a) in accordance with federal and state law and will allocate expenses
as between the Company and the Trust as set forth in Sections 7.3 and 7.4.
The Company, through its agreements with selling broker dealers, shall
ensure that each sale of a Contract satisfies applicable suitability
requirements under insurance and securities laws and regulations, including
without limitation the rules of the NASD. The Company shall adopt and
implement procedures reasonably designed to ensure that information
concerning the Trust and the Distributor that is intended for use only by
brokers or agents selling the GS Annuity (i.e., information that is not
intended for distribution to Contract Owners or offerees) is so used.
(b) AEFA Annuities: The Company shall be responsible for the sale and marketing
of the AEFA Annuities through selling broker-dealers and their affiliated
insurance agencies which have entered into a selling agreement for the AEFA
Annuities with Company and American Express Service Corporation in
accordance with the terms of the Master Agreement. The parties will
administer and service the AEFA Annuities as set forth in Section 5.2 (b)
in accordance with federal and state law and will allocate expenses as
between the Company and the Trust as set forth in Sections 7.3 and 7.4. The
Company shall ensure that all persons offering the AEFA Annuities are duly
licensed and registered under applicable insurance and securities laws. The
Company shall ensure that each sale of a Contract satisfies applicable
suitability requirements under insurance and securities laws and
regulations, including without limitation the rules of the NASD. The
Company shall adopt and implement procedures reasonably designed to ensure
that information concerning the Trust and the Distributor that is intended
for use only by brokers or agents selling the AEFA Annuities (i.e.,
information that is not intended for distribution to Contract Owners or
offerees) is so used.
5.2 Administration and Servicing of Contracts.
(a) GS Annuity: The Company shall be responsible for the issuance, service,
service forms, and administration of the GS Annuity and for the
administration of the Separate Accounts supporting such GS Annuity, such
functions to be performed in all respects commensurate with those standards
prevailing in the variable insurance industry. This administration will
include:
(1) preparing, typesetting, and printing current GS
Annuity prospectuses to be used in the solicitation
of new sales;
(2) preparing, typesetting, printing, and mailing annual
GS Annuity prospectuses to be sent to existing GS
Annuity owners;
(3) mailing annual Fund prospectuses to existing GS
Annuity owners;
(4) preparing, typesetting, printing, and mailing (where
required) supplements to existing GS Annuity
prospectuses;
(5) mailing (where required) supplements to existing Fund
prospectuses;
(6) mailing periodic reports for the Fund prospectuses;
and
(7) timely payment of Contract Owner redemption
requests and processing of GS Annuity transactions.
The Distributor shall be responsible for the following administrative tasks in
connection with the GS Annuity:
(1) distributing current GS Annuity prospectuses to be
used in solicitation of new sales; and
(2) preparing, typesetting, printing and distributing
current Fund prospectuses to be used in the
solicitation of new sales.
The Trust shall perform the following services:
(1) preparing, typesetting and printing annual Fund
prospectuses to be sent to existing GS Annuity
Owners;
(2) preparing, typesetting and printing supplements to
existing Fund prospectuses;
(3) preparing, typesetting, printing and mailing proxy
materials for the Funds; and
(4) preparing, typesetting and printing periodic reports
for the Funds.
(b) AEFA Annuities: The Company shall be responsible for the issuance, service,
and administration of the AEFA Annuities and for the administration of the
Separate Accounts supporting such AEFA Annuities, such functions to be
performed in all respects commensurate with those standards prevailing in
the variable insurance industry. This administration will include:
(1) preparing, typesetting, printing and distributing
current AEFA Annuities prospectuses to be used in the
solicitation of new sales;
(2) printing and distributing current Fund prospectuses
to be used in the solicitation of new sales;
(3) preparing, typesetting, printing, and mailing annual
AEFA Annuities prospectuses to existing AEFA
Annuities owners;
(4) printing and mailing annual Fund prospectuses to
existing AEFA Annuities owners;
(5) preparing, typesetting, printing, and mailing (where
required) supplements to existing AEFA Annuities
prospectuses;
(6) printing and mailing (where required) supplements
to existing Fund prospectuses;
(7) printing and mailing periodic reports for the Fund
prospectuses; and
(8) timely payment of Contract Owner redemption
requests and processing of AEFA Annuities
transactions.
The Distributor shall prepare and typeset current Fund prospectuses to be used
in solicitation of new AEFA Annuities sales.
The Trust shall perform the following services:
(1) preparing and typesetting annual Fund
prospectuses to be sent to existing AEFA
Annuities Owners;
(2) preparing and typesetting supplements to
existing Fund prospectuses;
(3) preparing, typesetting, printing and mailing
proxy materials for the Funds; and
(4) preparing and typesetting periodic
reports for the Funds.
5.4. Trust Prospectuses and Reports.
(a) GS Annuity: In order to enable the Company to fulfill its obligations under
this Agreement and the federal securities laws, the Trust shall provide the
Company with (a) printed copies of: (i) the Trust's Prospectus for the
Series and Classes listed on Schedule 3 and any supplement thereto; and
(ii) any Trust periodic shareholder reports; and (b) copies suitable for
duplication of each Statement of Additional Information and any supplement
thereto. The Trust shall provide the Company with advance written notice,
within reasonable time limits set by the Company, when any such material
(including supplements) shall become available; it being understood,
however, that circumstances surrounding certain supplements may not allow
for advance notice. The Company may not alter any material so provided by
the Trust or the Distributor (including without limitation presenting or
delivering such material in a different medium, e.g., electronic or
Internet) without the prior written consent of the Distributor which
consent shall not be unreasonably withheld.
(b) AEFA Annuities: In order to enable the Company to fulfill its obligations
under this Agreement and the federal securities laws, the Trust shall
provide the Company with (a) a copy, in camera-ready form, computer disk or
form otherwise suitable for printing or duplication of (i) the Trust's
Prospectus for the Series and Classes listed on Schedule 3 and any
supplement thereto; (ii) any Trust periodic shareholder reports; and (iii)
each Statement of Additional Information and any supplement thereto. The
Trust shall provide the Company with advance written notice, within
reasonable time limits set by the Company, when any such material
(including supplements) shall become available; it being understood,
however, that circumstances surrounding certain supplements may not allow
for advance notice. The Company may not alter any material so provided by
the Trust or the Distributor (including without limitation presenting or
delivering such material in a different medium, e.g., electronic or
Internet) without the prior written consent of the Distributor which
consent shall not be unreasonably withheld.
(c) Alternate Arrangements: The Trust and the Company from time to time may
agree upon alternate arrangements to those set forth in Sections 5.4 (a)
and (b). .
5.6. Advertising Material.
(a) GS Annuity: The Distributor shall be responsible for designing and paying
for all marketing materials that relate to the GS Annuity or the Funds.
However, no marketing material created by the Distributor can be used to
solicit sales of the GS Annuity without the prior written consent of the
Company, which consent shall not be unreasonably withheld. The Company
shall use its best efforts to review all marketing materials submitted by
the Distributor for approval, and provide a written response to such
marketing proposals, within 10 calendar days or a reasonable period of time
after receiving such marketing material; provided, however, that the
Distributor shall not interpret a lack of response by the Company within
such time period as approval to use such proposed, but unapproved,
marketing material to solicit sales of the GS Annuity. The Company shall be
responsible for approving and amending, if required, the annuity and
insurance related content of all GS Annuity marketing material. After such
approval by the Company, the Distributor shall be responsible for making
any required filings of such marketing material with the NASD and the
Company shall be responsible for making any required filings of such
marketing material with State Insurance Departments. The Distributor and
the Company shall cooperate to address comments from the NASD or Sate
Insurance Departments regarding marketing materials that have been filed
pursuant to this Section 5.6. The Distributor shall be responsible for the
accurate reproduction of this content.
The Company is responsible for providing the content for the annuity
application, replacement forms, "Procedures and Resource Manual" and all forms
in the new business kits for the GS Annuity. The Distributor is responsible for
obtaining the Company's approval of these forms after graphic layout, obtaining
NASD approval, as applicable, and printing these materials. The Distributor is
also responsible for providing these new business kits (including the GS Annuity
prospectus supplied by the Company to the Distributor) to agents that are
appropriately insurance licensed and appointed with the Company. The Company is
responsible for preparing, printing and mailing the GS Annuity Contract to new
contract owners and providing all on-going service forms to contract owners as
part of servicing the annuity contract.
(b) AEFA Annuities: The Company shall be responsible for designing and paying
for all marketing materials that relate to the AEFA Annuities; provided,
however, that the Company shall send copies of all marketing materials
created for the AEFA Annuities to the Distributor for approval prior to
use. The Distributor shall provide a written approval of such marketing
material within 10 calendar days or a reasonable period of time after
receiving such marketing material; provided, however, that the Company
shall not interpret a lack of response by the Distributor within such time
period as approval to use such proposed, but unapproved, marketing material
to solicit sales of the AEFA Annuities. The Company shall be responsible
for making any required filings of such marketing material with the NASD
and with State Insurance Departments
7.2. Trust Expenses. Expenses incident to the Trust's performance of its duties
and obligations under this Agreement include but are not limited to:
(a) registration and qualification of the Trust shares under
the federal securities laws, including preparation of the
Trust's Registration Statement;
(b) all costs attributable to the Trust set forth in Section
5.2 hereof;
(c) filing with the SEC of the Trust's Prospectuses, Trust's
Statement of Additional Information, Trust's Registration
Statement, Trust proxy materials and shareholder reports;
(d) preparation of all statements and notices required by any
federal or state securities law;
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating to the Trust,
including, without limitation, all fees due under Rule
24f-2 in connection with sales of Trust shares to
qualified retirement plans, custodial, auditing, transfer
agent and advisory fees, fees for insurance coverage and
Trustees' fees; and
(g) any expenses permitted to be paid or assumed by the Trust
pursuant to a plan, if any, under Rule 12b-1 under the
1940 Act.
7.3. Company Expenses. Expenses incident to the Company's performance of its
duties and obligations under this Agreement include, but are not limited
to, the costs of:
(a) registration and qualification of the Contracts under the federal
securities laws;
(b) filing with the SEC of the Contracts' Prospectus and Contracts'
Registration Statement;
(c) all costs attributable to the Company set forth in Section 5.2 hereof;
and
(d) payment of all applicable fees relating to the Contracts, including,
without limitation, all fees due under Rule 24f-2.
Section 9.1(c) Indemnification By the Company.
(1) GS Annuity: arise out of or are based on any wrongful conduct of, or
violation of applicable federal or state law by, the Company or persons
under its control or subject to its authorization, with respect to the
purchase of Trust Shares or the sale, marketing or distribution of the GS
Annuity, including, without limitation, any impermissible use of
broker-only material, unsuitable or improper sales of the GS Annuity or
unauthorized representations about the GS Annuity or the Trust. Persons
subject to Company's authorization with respect to the sale, marketing or
distribution of the GS Annuity include broker-dealers or agents authorized
to sell the GS Annuity (but excluding registered representatives of the
Distributor).
(2) AEFA Annuities: arise out of or are based on any wrongful conduct of, or
violation of applicable federal or state law by, the Company or persons
under its control or subject to its authorization, with respect to the
purchase of Trust Shares or the sale, marketing or distribution of the AEFA
Annuities including, without limitation, any impermissible use of
broker-only material, unsuitable or improper sales of the AEFA Annuity or
unauthorized representations about the AEFA Annuity or the Trust. Persons
subject to Company's authorization with respect to the sale, marketing or
distribution of the AEFA Annuities include broker-dealers or agents
authorized to sell the AEFA Annuities.
Section 9.3(c) Indemnification by the Distributor.
(1) GS Annuity: arise out of or are based on any wrongful conduct of, or
violation of applicable federal and state law by, the Distributor or the
Trust or persons under their respective control with respect to the sale of
Trust shares; or
(2) AEFA Annuities: arise out of or are based on any wrongful conduct of, or
violation of applicable federal and state law by, the Distributor or the
Trust or persons under their respective control with respect to the sale of
Trust shares.
