AMENDED AND RESTATED
PARTICIPATION AGREEMENT
By and Among
THIRD AVENUE VARIABLE SERIES TRUST
And
THIRD AVENUE MANAGEMENT LLC
And
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
And
IDS LIFE INSURANCE COMPANY
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT ("Agreement"), made
and entered into as of this 12th day of October, 2006 by and among the
following parties:
o AMERICAN ENTERPRISE LIFE INSURANCE COMPANY ("American Enterprise
Life"), an Indiana life insurance company, on its own behalf and
on behalf the separate accounts set forth on Schedule 1 hereto
as may be amended from time to time by mutual consent (each such
account referred to as an "Account");
o IDS LIFE INSURANCE COMPANY ("IDS Life"), a Minnesota life
insurance company, on its own behalf and on behalf of the
separate accounts set forth on Schedule 1 hereto as may be
amended from time to time by mutual consent (each such account
referred to as an "Account");
(Each of American Enterprise Life Insurance Company and IDS Life
Insurance Company, are also hereinafter individually referred to as a
"Company")
o THIRD AVENUE VARIABLE SERIES TRUST, an open-end management
investment company organized under the laws of Delaware (the
"Fund"); and,
o THIRD AVENUE MANAGEMENT LLC, a limited liability company
organized under the laws of Delaware (the "Adviser").
WHEREAS, the Fund was established for the purpose of serving as the
investment vehicle for insurance company separate accounts supporting
variable annuity contracts and variable life insurance policies to be
offered by insurance companies that have entered into participation
agreements with the Fund and the Adviser (the "Participating Insurance
Companies"), and
WHEREAS, beneficial interests in the Fund currently consist of one series of
shares representing the interest in a particular managed portfolio of
securities and other assets; and
WHEREAS, the Fund has received an order from the Securities & Exchange
Commission (the "SEC") granting Participating Insurance Companies and their
separate accounts relief from the provisions of Sections 9(a), 13(a), 15(a),
and 15(b) of the 1940 Act and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold
to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated Participating Insurance
Companies and certain qualified pension and retirement plans outside of the
separate account context (the "Exemptive Order"); and
WHEREAS, the Company has registered or will register certain variable
annuity contracts and/or variable life insurance policies (the "Contracts")
under the 1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the portfolios named
in Schedule 2 to this Agreement, as may be amended from time to time, (the
"Portfolios") on behalf of the Account to fund the Contracts; and
WHEREAS, under the terms and conditions set forth in this Agreement, the
Adviser desires to make shares of the Fund available as investment options
under the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the parties agree
as follows:
ARTICLE A. AMENDMENT AND RESTATEMENT; FORM OF AGREEMENT
--------------------------------------------
A.1 The Fund and the Adviser acknowledge the planned merger of American
Enterprise Life with and into IDS Life (the "Merger") and the "intact
transfer" ("Transfer") of the Accounts of American Enterprise Life to
IDS Life by operation of law and incident to the Merger, on December
31, 2006 at 10:59:59 p.m. Central Time ("Effective Time"), subject to
all necessary regulatory approvals being obtained in connection with
the Merger and the Transfer, and the re-naming of IDS Life to
RiverSource Life Insurance Company simultaneously with the Merger. On
and after the Effective Time, all references in this Agreement and its
Schedules to American Enterprise Life and to IDS Life Insurance
Company and to Company shall mean and refer to RiverSource Life
Insurance Company. The Fund and the Adviser consent to the transfer of
the rights and obligations of American Enterprise Life under this
Agreement to IDS Life Insurance Company at the Effective Time of the
Merger.
A.2. This Agreement shall amend and supersede the following agreements as
of the date stated above among the parties to this Agreement with
respect to all investments by each Company and its Accounts prior to
the date of this Agreement, as though identical separate agreements
had been executed by the parties hereto on the dates as indicated
below:
(a) Participation Agreement dated June 5, 2002 by and among American
Enterprise Life, the Fund and the Adviser; and,
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(b) Participation Agreement dated June 5, 2002 by and among IDS
Life, the Fund and the Adviser.
In addition, the foregoing parties hereby amend and restate their
agreements as set forth herein in contemplation of the Transfer of the
Accounts of American Enterprise Life to IDS Life on December 31, 2006
incident to the Merger. Although the parties have executed this
Agreement in this form for administrative convenience, this Agreement
shall create a separate participation agreement with each Company
until the Effective Time of the Merger.
ARTICLE I. SALE AND REDEMPTION OF FUND SHARES
----------------------------------
1.1. The Fund will sell to the Company those shares of the Portfolios that
each Account orders, executing such orders on a daily basis at the net
asset value next computed after receipt and acceptance by the Fund (or
its agent). Shares of a particular Portfolio of the Fund will be
ordered in such quantities and at such times as determined by the
Company to be necessary to meet the requirements of the Contracts. The
Board of Trustees of the Fund (the "Fund Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the
offering of shares of any Portfolio if such action is required by law
or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Fund Board, acting in good faith and in light of its
fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Portfolio.
1.2. The Fund will redeem any full or fractional shares of any Portfolio
when requested by the Company on behalf of an Account at the net asset
value next computed after receipt by the Fund (or its agent) of the
request for redemption, as established in accordance with the
provisions of the then current prospectus of the Fund.
1.3. For purposes of Sections 1.1 and 1.2, the Fund hereby appoints the
Company as its agent for the limited purpose of receiving and
accepting purchase and redemption orders resulting from investment in
and payments under the Contracts. Receipt by the Company will
constitute receipt by the Fund provided that: (a) such orders are
received by the Company in good order prior to the time the net asset
value of each Portfolio is priced in accordance with its prospectus;
and (b) the Fund receives notice of such orders by 9:00 a.m. Central
Time on the next following Business Day. "Business Day" will mean any
day on which the New York Stock Exchange is open for trading and on
which the Fund calculates its net asset value pursuant to the rules of
the SEC.
1.4. The Company will pay for a purchase order on the same Business Day as
the Fund receives notice of the purchase order in accordance with
Section 1.3. The Fund will pay for a redemption order on the same
Business Day as the Fund receives notice of the redemption order in
accordance with Section 1.3 and in the manner established from time to
time by the Fund, except that the Fund reserves the right to suspend
payment consistent with Section 22(e) of the Investment Company Act of
1940, as amended (the "1940 Act") and any rules thereunder. In any
event, absent extraordinary circumstances specified in Section 22(e)
of the 1940 Act, the Fund will make such payment within five (5)
calendar
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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. All payments will be made in federal funds
transmitted by wire or other method agreed to by the parties.
1.5. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate subaccount of
each Account.
1.6. The Fund will furnish same day notice (by wire or telephone, followed
by written confirmation) to the Company of the declaration of any
income, dividends or capital gain distributions payable on each
Portfolio's shares. The Company hereby elects to receive all such
dividends and distributions as are payable on the Portfolio shares in
the form of additional shares of that Portfolio. The Company reserves
the right to revoke this election and to receive all such dividends
and distributions in cash. The Fund will notify the Company of the
number of shares so issued as payment of such dividends and
distributions.
1.7. The Fund will make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and will
use its best efforts to make such net asset value per share available
by 5:30 p.m. Central Time, but in no event later than 6:00 p.m.
Central Time each Business Day. The Fund will notify the Company as
soon as possible if it is determined that the net asset value per
share will be available after 6:00 p.m. Central Time on any Business
Day, and the Fund and the Company will mutually agree upon a final
deadline for timely receipt of the net asset value on such Business
Day.
1.8. Any material errors in the calculation of net asset value, dividends
or capital gain information will be reported immediately upon
discovery to the Company. An error will be deemed "material" based on
the Fund's interpretation of the SEC's position and policy with regard
to materiality, as it may be modified from time to time. If the
Company is provided with materially incorrect net asset value
information, the Company will be entitled to an adjustment to the
number of shares purchased or redeemed to reflect the correct net
asset value per share. Neither the Fund, the Adviser nor any of their
affiliates will be liable for any information provided to the Company
pursuant to this Agreement which information is based on incorrect
information supplied by or on behalf of the Company to the Fund or the
Adviser.
1.9. The Fund agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain
qualified pension and retirement plans to the extent permitted by the
Exemptive Order. No shares of any Portfolio will be sold directly to
the general public. The Company agrees that Fund shares purchased by
the Company will be used only for the purposes of funding the
Contracts and Accounts listed in Schedule 1, as amended from time to
time.
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1.10. The Fund agrees that all Participating Insurance Companies will have
the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 3.4
and Article IV of this Agreement.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
------------------------------
2.1. The Company represents and warrants that:
(a) it is an insurance company duly organized and in good standing
under applicable law;
(b) it has legally and validly established or will legally and
validly establish each Account as a separate account under
applicable state law;
(c) it has registered or will register to the extent necessary each
Account as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment
account for the Contracts;
(d) it has filed or will file to the extent necessary the Contracts'
registration statements under the Securities Act of 1933 (the
"1933 Act") and these registration statements will be declared
effective by the SEC prior to the sale of any Contracts;
(e) the Contracts will be filed and 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
(f) it will amend the registration statement under the 1933 Act for
the Contracts and the registration statement under the 1940 Act
for the Account from time to time as required in order to effect
the continuous offering of the Contracts or as may otherwise be
required by applicable law, but in any event it will maintain a
current effective Contracts' and Account's registration
statement for so long as the Contracts are outstanding unless
the Company has supplied the Fund with an SEC no-action letter,
opinion of counsel or other evidence satisfactory to the Fund's
counsel to the effect that maintaining such registration
statement on a current basis is no longer required.
2.2. The Company represents and warrants that the Contracts are intended to
be treated as annuity or life insurance contracts under applicable
provisions of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), and that it will make every effort to
maintain such treatment and that it will notify the Fund and the
Adviser immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be
so treated in the future.
2.3. The Fund represents and warrants that:
(a) it is duly organized and validly existing under applicable state
law;
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(b) it has registered with the SEC as an open-end management
investment company under the 1940 Act;
(c) Fund shares of the Portfolios offered and sold pursuant to this
Agreement will be registered under the 1933 Act and duly
authorized for issuance in accordance with applicable law;
(d) it is and will remain registered under the 1940 Act for as long
as such shares of the Portfolios are sold;
(e) it will amend the registration statement for its shares under
the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares;
(f) it expects to qualify as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code, it will make every
effort to maintain such qualification (under Subchapter M or any
successor or similar provision) and it will notify the Company
immediately upon having a reasonable basis for believing that it
has ceased to so qualify or that it might not so qualify in the
future; and
(g) it will register and qualify the shares of the Portfolios for
sale in accordance with the laws of the various states to the
extent deemed advisable by the Fund. The Fund makes no
representation as to whether any aspect of its operations
(including, but not limited to, fees and expenses and investment
policies, objectives and restrictions) complies with the
insurance laws and regulations of any state. The Fund and the
Adviser agree that they will furnish the information required by
state insurance laws and requested by the Company so that the
Company can obtain the authority needed to issue the Contracts
in the various states.
2.4. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it reserves the right to make such payments in the
future. To the extent that the Fund decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have its Fund
Board, a majority of whom are not "interested" persons of the Fund,
formulate and. approve any plan under Rule 12b-1 to finance
distribution expenses.
2.5. The Fund and the Adviser represent and warrant that they will invest
money from the Contracts in such a manner as to ensure that the
Contracts will be treated as variable annuity contracts and variable
life insurance policies under the Internal Revenue Code and the
regulations issued thereunder. Without limiting the scope of the
foregoing, the Fund and the Adviser further represent and warrant that
they will comply with Section 817(h) of the Internal Revenue Code and
Treasury Regulation 1.817-5, as amended from time to time, relating to
the diversification requirements for variable annuity, endowment, or
life insurance contracts and any amendments or other modifications to
such Section or
6
Regulation. In the event of a breach of this representation and
warranty by the Fund and/or the Adviser, they will take all reasonable
steps:
(a) to notify the Company of such breach; and
(b) to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Treasury Regulation 1.817-5.
2.6. The Adviser represents and warrants that:
(a) it is and will remain duly registered under all applicable
federal and state securities laws; and
(b) it will perform its obligations for the Fund in accordance with
applicable state and federal securities laws and that it will
notify the Company promptly if for any reason it is unable to
perform its obligations under this Agreement.
2.7. Each party represents and warrants that, as applicable, all of its
directors, officers, employees, investment advisers, and other
individual entities having access to the funds and/or securities of
the Fund are and will continue to be at all times covered by a blanket
fidelity bond or similar coverage in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act
or related provisions as may be promulgated from time to time. The
aforesaid bond includes coverage for larceny and embezzlement and is
issued by a reputable bonding company.
2.8. The parties to this Agreement represent and warrant that they shall
comply with all the applicable laws and regulations designed to
prevent money laundering including without limitation the
International Money Laundering Abatement and Anti-Terrorist Financing
Act of 2001 (Title III of the USA PATRIOT ACT), and if required by
such laws or regulations will share information with each other about
individuals, entities, organizations and countries suspected of
possible terrorist or money laundering activities in accordance with
Section 314(b) of the USA PATRIOT ACT. Each Company represents and
warrants that its AML Program includes written policies and procedures
regarding the (i) verification of the identity of its customers and
potential customers who seek to purchase a Contract and the source of
such customers' funds to be applied to the Contract, and (ii)
reporting of any suspicious transactions in a customer's Contract with
the Company. Each Company agrees to cooperate with the Fund to satisfy
the Fund's AML due diligence policies, which may include annual AML
compliance certifications, periodic AML due diligence reviews and/or
other requests deemed necessary to ensure its compliance with the AML
regulations. Each Company will (but only to the extent consistent with
applicable law) take all steps necessary and appropriate to provide
the Fund with any requested information about any Contract owner and
his or her investment in the Fund through the Contract in the event
that the Fund requests such information due to an inquiry or
investigation by any law enforcement, regulatory, or administrative
authority.
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2.9. The Company acknowledges the Fund has adopted policies and procedures
reasonably designed to prevent frequent or excessive purchases,
exchanges and redemptions of the shares of Portfolios in quantities
great enough to disrupt orderly management of the corresponding
investment portfolio. These policies are disclosed in the Fund's
current prospectus.
The Fund acknowledges that the Company, on behalf of its Accounts, has
adopted policies and procedures reasonably designed to detect and
deter frequent transfers of Contract value among the subaccounts of
the Accounts including those investing in Portfolios available as
investment options under the Contracts. These policies are described
in the current prospectuses of the Accounts through which the
Contracts are offered.
The Company will cooperate with the Fund's reasonable requests in
taking steps to deter and detect such transfers by any Contract owner.
Subject to applicable law and the terms of each Contract, the Company
will provide promptly upon request by the Fund, directly or through
its designee, the following information:
o the Taxpayer Identification Number of all Contract owners
that purchased, redeemed, transferred, or exchanged shares
of a Fund held under a Contract; and,
o the amount and dates of such Contract owners purchases,
redemptions, transfers and exchanges in subaccounts
available under the Contract which invest in shares of any
Fund.
Requests must set forth a specific period, not to exceed ninety (90)
days from the date of the request, for which transaction information
is sought. The Fund may request transaction information older than
ninety (90) days from the date of the request as it deems necessary to
investigate compliance with policies established by the Fund for the
purpose of eliminating or reducing any dilution of the value of the
outstanding shares issued by the Fund.
Company agrees to transmit the requested information that is on its
books and records to the Fund or its designee promptly, but in any
event not later than ten (10) Business Days, after receipt of a
request. If the requested information is not on the Company's books
and records, Company agrees to use reasonable efforts to: (i) promptly
obtain and transmit the requested information; (ii) obtain assurances
from the Contract owner that the requested information will be
provided directly to the Fund promptly; or (iii) if directed by the
Fund, block further purchases of Fund shares from such Contract owner.
In such instance, Company agrees to inform the Fund whether it plans
to perform (i), (ii) or (iii). Responses required by this paragraph
must be communicated in writing and in a format mutually agreed upon
by the parties. To the extent practicable, the format for any
transaction information provided to the Fund should be consistent with
the NSCC Standardized Data Reporting Format.
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The Fund agrees that all information received from the Company under
this Section 2.9 is subject to the confidentiality standards set forth
in Section 9.2 of this Agreement.
Company agrees to execute written instructions from the Fund to
restrict or prohibit further purchases or exchanges of subaccounts
available under the Contract which invest in shares of the Fund by a
Contract owner that has been identified by the Fund as having engaged
in transactions in the Fund's shares (directly or indirectly through
the Company's Account) that violate policies established by the Fund
for the purpose of eliminating or reducing any dilution of the value
of the outstanding shares issued by the Fund.
Instructions must include the TIN and the specific restriction(s) to
be executed. If the TIN is not known, the Fund or its designee will
contact the Company and the Company will again provide the Fund with
the TIN.
Company agrees to execute instructions as soon as reasonably
practicable, but not later than seven (7) Business Days after receipt
of the instructions by the Company.
Company must provide written confirmation to the Fund that
instructions have been executed. Company agrees to provide
confirmation as soon as reasonably practicable, but not later than ten
(10) Business Days after the instructions have been executed.
When the Fund or its designee has given the Company a written
instruction pursuant to this Section 2.9 to restrict or prohibit
further purchases by a Contract owner of the Fund's shares, the Fund
or its designee may request and the Company will provide the Fund or
its designee with the name or other identifier of any investment
professional who is listed on the Company's records as the agent of
record for the restricted Contract if the investment professional is
employed by a broker dealer affiliate of the Company. If the
restricted Contract was sold by a broker dealer firm unaffiliated with
the Company, the Company will provide the Fund or its designee with
the name of the selling broker dealer firm.
The parties shall negotiate in good faith such additional terms and
conditions regarding implementation of the foregoing obligations of
the parties under Rule 22c-2 as any party may wish to address.
ARTICLE III. OBLIGATIONS OF THE PARTIES
--------------------------
3.1. The Fund will prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports,
notices, proxy materials (or similar materials such as voting
instruction solicitation materials), prospectuses and statements of
additional information of the Fund. The Fund will bear the costs of
registration and qualification of its shares, preparation and filing
of documents listed in this Section 3.1 and all taxes to which an
issuer is subject on the issuance and transfer of its shares. In the
event that the Fund initiates (i) a reorganization as defined by
Section 2 of the 1940 Act of the Fund or a Portfolio, or (ii) a change
in the name of the Fund or a Portfolio, the Fund or its designee shall
reimburse the Company for the Company's reasonable internal
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and out-of-pocket costs associated with the aforementioned actions.
The Company agrees to use its best efforts to minimize any costs
incurred under this Section and shall provide the Fund or its designee
with acceptable documentation of any such costs incurred.
3.2. At the option of the Company, the Fund will either: (a) provide the
Company with as many copies of the Fund's current prospectus,
statement of additional information, annual report, semi-annual report
and other shareholder communications, including any amendments or
supplements to any of the foregoing, as the Company will reasonably
request; or (b) provide the Company with a camera-ready copy, computer
disk or other medium agreed to by the parties of such documents in a
form suitable for printing. The Fund will bear one-half of the cost of
typesetting and printing such documents and of distributing such
documents to existing Contract owners, with the Company bearing the
remainder of the cost. To the extent that such documents for the Fund
are printed in combination with such documents for other funds, the
Fund will bear its pro-rata share of the cost of typesetting, printing
and distributing such combined document. The Company will bear the
cost of distributing all such documents to prospective Contract owners
and applicants as required. The fund will provide written instruction
to all Participating Insurance Companies including Company each time
the Fund amends its current Prospectus, directing the Participating
Insurance Companies as to whether the amendment or supplement is to be
provided (a) immediately to Contract owners who have Contract value
allocated to a Portfolio or (b) is to be held and combined with
another Fund or Contract related mailing as permitted by applicable
federal securities laws. The Fund agrees that the instruction it gives
Company in each instance will be identical to the instruction it
provides other Participating Insurance Companies.
3.3. The Fund, at its expense, either will:
(a) distribute its proxy materials directly to the appropriate
Contract owners; or
(b) provide the Company or its mailing agent with copies of its
proxy materials in such quantity as the Company will reasonably
require and the Company will distribute the materials to
existing Contract owners and will xxxx the Fund for the
reasonable cost of such distribution. The Fund will bear the
cost of tabulation of proxy votes.
3.4. If and to the extent required by law the Company will:
(a) provide for the solicitation of voting instructions from
Contract owners;
(b) vote the shares of the Portfolios held in the Account in
accordance with instructions received from Contract owners; and
(c) vote shares of the Portfolios held in the Account for which no
timely instructions have been received, in the same proportion
as shares of such Portfolio for which instructions have been
received from the Company's Contract owners;
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so long as and to the extent that the SEC continues to interpret the
1940 Act to require pass-through voting privileges for variable
contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent
permitted by law.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular, the Fund either will
provide for annual meetings (except insofar as the SEC may interpret
Section 16 of the 1940 Act not to require such meetings) or, as the
Fund currently intends, to comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c)
of that Act) as well as with Sections 16(a) and, if and when
applicable, 16(b). Further, the Fund will act in accordance with the
SEC's interpretation of the requirements of Section 16(a) with respect
to periodic elections of directors and with whatever rules the SEC may
promulgate with respect thereto.
3.6. The Company will prepare and be responsible for filing with the SEC
and any state regulators requiring such filing all shareholder
reports, notices, prospectuses and statements of additional
information of the Contracts. The Company will bear the cost of
registration and qualification of the Contracts and preparation and
filing of documents listed in this Section 3.6. The Company also will
bear the cost of typesetting, printing and distributing the documents
listed in this Section 3.6 to existing and prospective Contract
owners.
3.7. The Company will furnish, or will cause to be furnished, to the Fund
or the Adviser, each piece of sales literature or other promotional
material in which the Fund or the Adviser is named, at least ten (10)
Business Days prior to its use. No such material will be used if the
Fund or the Adviser reasonably objects to such use within five (5)
Business Days after receipt of such material.
3.8. The Company will not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information
or representations contained in the registration statement, prospectus
or statement of additional information for Fund shares, as such
registration statement, prospectus and statement of additional
information may be amended or supplemented from time to time, or in
reports or proxy statements for the Fund, or in published reports for
the Fund which are in the public domain or approved by the Fund or the
Adviser for distribution, or in sales literature or other material
provided by the Fund or by the Adviser, except with permission of the
Fund or the Adviser. The Fund and the Adviser agree to respond to any
request for approval on a prompt and timely basis. Nothing in this
Section 3.8 will be construed as preventing the Company or its
employees or agents from giving advice on investment in the Fund.
3.9. The Fund or the Adviser will furnish, or will cause to be furnished,
to the Company or its designee, each piece of sales literature or
other promotional material in which the Company or an Account is
named, at least ten (10) Business Days prior to its use. No
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such material will be used if the Company reasonably objects to such
use within five (5) Business Days after receipt of such material.
3.10. The Fund and the Adviser will not give any information or make any
representations or statements on behalf of the Company or concerning
the Company, each Account, or the Contracts other than the information
or representations contained in a registration statement, prospectus
or statement of additional information for the Contracts, as such
registration statement, prospectus and statement of additional
information may be amended or supplemented from time to time, or in
published reports for each Account or the Contracts which are in the
public domain or approved by the Company for distribution to Contract
owners, or in sales literature or other material provided by the
Company, except with permission of the Company. The Company agrees to
respond to any request for approval on a prompt and timely basis.
3.11. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate
to the Fund or its shares, contemporaneously with the filing of such
document with the SEC or the NASD.
3.12. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for
exemptions, requests for no action letters, and all amendments to any
of the above, that relate to the Contracts or each Account,
contemporaneously with the filing of such document with the SEC or the
NASD.
3.13. For purposes of this Article III, the phrase "sales literature or
other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical), radio, television,
telephone or tape recording, videotape display, signs or billboards,
motion pictures, or other public media, (e.g., on-line networks such
as the Internet or other electronic messages), sales literature (i.e.,
any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or
excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications
distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, statements of
additional information, shareholder reports, and proxy materials and
any other material constituting sales literature or advertising under
the NASD rules, the 1933 Act or the 0000 Xxx.
3.14. The Fund and the Adviser hereby consent to the Company's use of the
name Third Avenue Funds in connection with marketing the Contracts,
subject to the terms of Sections 3.7 and 3.8 of this Agreement. Such
consent will terminate with the termination of this Agreement.
12
3.15. The Adviser will be responsible for calculating the performance
information for the Fund. The Company will be responsible for
calculating the performance information for the Contracts. The Fund
and the Adviser agree to provide the Company with performance
information for the Fund on a timely basis to enable the Company to
calculate performance information for the Contracts in accordance with
applicable state and federal law.
ARTICLE IV. POTENTIAL CONFLICTS
-------------------
4.1. Subject to Section 4.2 of this Agreement, the Fund Board will monitor
the Fund for the existence of any irreconcilable material conflict
among the interests of the contract owners of all separate accounts
investing in the Fund, An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretative letter, or
any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any
Portfolio are being managed; (e) a difference in voting instructions
given by Participating Insurance Companies or by variable annuity and
variable life insurance contract owners; or (f) a decision by an
insurer to disregard the voting instructions of contract owners. The
Fund Board will promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
A majority of the Fund Board will consist of persons who are not
"interested" persons of the Fund.
4.2. The Company will report any potential or existing conflicts of which
it is aware to the Fund Board. The Company agrees to assist the Fund
Board in carrying out its responsibilities, as delineated in the
Exemptive Order, by providing the Fund Board with all information
reasonably necessary for the Fund Board to consider any issues raised.
This includes, but is not limited to, an obligation by the Company to
inform the Fund Board whenever Contract owner voting instructions are
to be disregarded. The Fund Board will record in its minutes, or other
appropriate records, all reports received by it and all action with
regard to a conflict.
4.3. If it is determined by a majority of the Fund Board, or a majority of
its disinterested directors, that an irreconcilable material conflict
exists, the Company and other Participating Insurance Companies will,
at their expense and to the extent reasonably practicable (as
determined by a majority of the disinterested directors), take
whatever steps are necessary to remedy or eliminate the irreconcilable
material conflict, up to and including: (a) withdrawing the assets
allocable to some or all of the Accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another portfolio of the Fund,
or submitting the question whether such segregation should be
implemented to a vote of all affected contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e.,
variable annuity contract owners or variable life insurance contract
owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected
13
contract owners the option of making such a change; and (b)
establishing a new registered management investment company or managed
separate account.
4.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions, and such
disregard of voting instructions could conflict with the majority of
contract owner voting instructions, and the Company's judgment
represents a minority position or would preclude a majority vote, the
Company maybe required, at the Fund's election, to withdraw the
affected subaccount of the Account's investment in the Fund and
terminate this Agreement with respect to such subaccount; provided,
however, that such withdrawal and termination will be limited to the
extent required by the foregoing irreconcilable material conflict as
determined by a majority of the disinterested directors of the Fund
Board. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination must take place within
six (6) months after the Fund gives written notice to the Company that
this provision is being implemented. Until the end of such six-month
period the Adviser and Fund will, to the extent permitted by law and
any exemptive relief previously granted to the Fund, continue to
accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
4.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company
conflicts with the majority of other state insurance regulators, then
the Company will withdraw the affected subaccount of the Accounts
investment in the Fund and terminate this Agreement with respect to
such subaccount; provided, however, that such withdrawal and
termination will be limited to the extent required by the foregoing
irreconcilable material conflict as determined by a majority of the
disinterested directors of the Fund Board. No charge or penalty will
be imposed as a result of such withdrawal. Any such withdrawal and
termination must take place within six (6) months after the Fund gives
written notice to the Company that this provision is being
implemented. Until the end of such six-month period the Adviser and
Fund will, to the extent permitted by law and any exemptive relief
previously granted to the Fund, continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of
the Fund.
4.6. For purposes of Sections 4.3 through 4.6 of this Agreement, a majority
of the disinterested members of the Fund Board will determine whether
any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a new
funding medium for the Contracts. The Company will not be required by
this Article IV to establish a new funding medium for the Contracts if
an offer to do so has been declined by vote of a majority of Contract
owners affected by the irreconcilable material conflict.
4.7. The Company will at least annually submit to the Fund Board such
reports, materials or data as the Fund Board may reasonably request so
that the Fund Board may fully carry out the duties imposed upon it as
delineated in the Exemptive Order, and said reports, materials and
data will be submitted more frequently if deemed appropriate by the
Fund Board.
14
4.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the 1940 Act or the rules promulgated thereunder with respect to
mixed or shared funding (as defined in the Exemptive Order) on terms
and conditions materially different from those contained in the
Exemptive Order, then: (a) the Fund and/or the Participating Insurance
Companies, as appropriate, will take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as
adopted, to the extent such rules are applicable; and (b) Sections
3.4, 3.5, 4.1, 4.2, 4.3, 4.4, and 4.5 of this Agreement will 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 V. INDEMNIFICATION
---------------
5.1. Indemnification By The Company
------------------------------
(a) The Company agrees to indemnify and hold harmless the Fund, the
Adviser, and each person, if any, who controls or is associated
with the Fund or the Adviser within the meaning of such terms
under the federal securities laws (but not any Participating
Insurance Companies) and any director, trustee, officer,
partner, employee or agent of the foregoing (collectively, the
"Indemnified Parties" for purposes of this Section 5.1) against
any and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written consent
of the Company) or litigation (including reasonable legal and
other expenses), to which the Indemnified Parties may become
subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements:
(1) arise out of or are based on any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement, prospectus or statement of
additional information for the Contracts or contained in
the Contracts or sales literature or other promotional
material for the Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein
a material fact required to be stated or necessary to make
such statements not misleading in light of the
circumstances in which they were made; provided that this
agreement to indemnify will not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon
and in conformity with information furnished to the
Company by or on behalf of the Adviser or the Fund for use
in the registration statement, prospectus or statement of
additional information for the Contracts or in the
Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(2) arise out of or are based on any untrue statement or
alleged untrue statement of a material fact contained in
the Fund registration statement,
15
prospectus, statement of additional information or sales
literature or other promotional material of the Fund (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 Fund or Adviser in writing by or on
behalf of the Company or persons under its control; or
(3) 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 Fund shares
or the sale, marketing or distribution of the Contracts;
or
(4) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of
this Agreement including, but not limited to, a material
mistake in calculating the performance information for the
Contracts which causes losses to the Adviser or material
mistakes it makes in reproducing performance information
for the Fund in accordance with Section 3.15 of this
Agreement; or
(5) arise out of any material breach of any representation
and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of
this Agreement by the Company or persons under its control
or subject to its authorization; except to the extent
provided in Sections 5.1(b) and 5.4 hereof. This
indemnification will be in addition to any liability that
the Company otherwise may have.
(b) No party will be entitled to indemnification under Section
5.1(a) if such loss, claim, damage, liability or litigation is
due to the willful misfeasance, bad faith, or gross negligence
in the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard of its
obligations or duties under this Agreement by the party seeking
indemnification.
(c) The Indemnified Parties promptly will notify the Company of the
commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Fund shares or the Contracts or
the operation of the Fund.
5.2. Indemnification By The Adviser
------------------------------
(a) The Adviser agrees to indemnify and hold harmless the Company
and each person, if any, who controls or is associated with the
Company within the meaning of such terms under the federal
securities laws and any director, trustee, officer, partner,
employee or agent of the foregoing (collectively, the
"Indemnified Parties" for purposes of this Section 5.2) against
any and all losses, claims,
16
expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Adviser) or
litigation (including reasonable legal and other expenses), to
which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
(1) arise out of or arc based on any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement, prospectus or statement of
additional information for the Fund or sales literature or
other promotional material produced by the Fund (or any
amendment or supplement to any of the foregoing), or arise
out of or are based on the omission or alleged omission to
state therein a material fact required to be stated or
necessary to make such statements not misleading in light
of the circumstances in which they were made; provided
that this agreement to indemnify will not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon
and in conformity with information furnished to the
Adviser or Fund by or on behalf of the Company for use in
the registration statement, prospectus or statement of
additional information for the Fund or in sales literature
of the Fund (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or
Fund shares; or
(2) arise out of or are based on any untrue statement or
alleged untrue statement of a material fact contained in
the Contract registration statement, prospectus or
statement of additional information or sales literature or
other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
the statements therein not misleading in light of the
circumstances in which they were made, if such statement
or omission was made in reliance upon and in conformity
with information furnished to the Company in writing by or
on behalf of the Adviser or persons under its control; or
(3) arise out of or are based on any wrongful conduct of, or
violation of applicable federal and state law by, the
Adviser or the Fund or persons under their respective
control or subject to their authorization with respect to
the sale of Fund shares; or
(4) arise as a result of any failure by the Fund, the Adviser
or persons under their respective control or subject to
their authorization to provide the services and furnish
the materials under the terms of this Agreement including,
but not limited to, a failure, whether unintentional or in
good faith or otherwise, to comply with the
diversification requirements and procedures related
thereto specified in Section 2.5 of this Agreement; a
17
material mistake in calculating the performance
information for the Fund which causes losses to the
Company or material mistakes it makes in reproducing
performance information for the Contracts in accordance
with Section 3.15 or this Agreement; or 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
5.2(a)(4) as an "error"); provided, that the foregoing
will not apply where such error is the result of incorrect
information supplied by or on behalf of the Company to the
Fund or the Adviser, and will be limited to (i) reasonable
administrative costs necessary to correct such error, and
(ii) amounts which the Company has paid out of its own
resources to make Contract owners whole as a result of
such error; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser or the
Fund in this Agreement, or arise out of or result from any
other material breach of this Agreement by the Adviser or
the Fund or persons under their respective control or
subject to their authorization;
except to the extent provided in Sections 5.2(b) and 5.4 hereof.
This indemnification will be in addition to any liability that
the Company otherwise may have.
(b) No party will be entitled to indemnification under Section
5.2(a) if such loss, claim, damage, liability or litigation is
due to the willful misfeasance, bad faith, or gross negligence
in the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard of its
obligations or duties under this Agreement by the party seeking
indemnification.
(c) The Indemnified Parties will promptly notify the Adviser and the
Fund of the commencement of any litigation, proceedings,
complaints or actions by regulatory authorities against them in
connection with the issuance or sale of the Contracts or the
operation of the Account.
5.3. Indemnification by the Fund
---------------------------
(a) To the extent, and only to the extent of proceeds of any
applicable insurance coverage of the Fund, the Fund agrees to
indemnify and hold harmless the Company and each person, if any,
who controls or is associated with the Company within the
meaning of such terms under the federal securities laws and any
director, trustee, officer, partner, employee or agent of the
foregoing (collectively, the "Indemnified Parties" for purposes
of this Section 5.3) against any and all losses, claims,
expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Adviser) or
litigation (including reasonable legal and other expenses), to
which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar
18
as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the
operations of the Fund and:
(1) arise out of or are based on any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement, prospectus or statement of
additional information for the Fund or sales literature or
other promotional material produced by the Fund (or any
amendment or supplement to any of the foregoing), or arise
out of or are based on the omission or alleged omission to
state therein a material fact required to be stated or
necessary to make such statements not misleading in light
of the circumstances in which they were made; provided
that this agreement to indemnify will not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Fund
by or on behalf of the Company for use in the registration
statement, prospectus or statement of additional
information for the Fund or in sales literature of the
Fund (or any amendment or supplement) or otherwise for use
in connection with the sale of Fund shares; or
(2) arise out of or are based on any untrue statement or
alleged untrue statement of a material fact contained in
the Contract registration statement, prospectus or
statement of additional information or sales literature or
other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
the statements therein not misleading in light of the
circumstances in which they were made, if such statement
or omission was made in reliance upon and in conformity
with information furnished to the Company in writing by or
on behalf of the Fund or persons under its control; or
(3) arise out of or are based on any wrongful conduct of the
Fund or its Fund Board or officers with respect to the
sale of Fund shares; or
(4) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of
this Agreement including, but not limited to, a failure,
whether unintentional or in good faith or otherwise, to
comply with the diversification requirements and
procedures related thereto specified in Section 2.5 of
this Agreement; a material mistake in calculating the
performance information for the Fund which causes losses
to the Company or material mistakes it makes in
reproducing performance information for the Contracts in
accordance with Section 3.15 or this Agreement; or 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
5.3(a)(4) as an "error"); provided, that the foregoing
will not apply where such error is the result of
19
incorrect information supplied by or on behalf of the
Company to the Fund or the Adviser, and will be limited to
(i) reasonable administrative costs necessary to correct
such error, and (ii) amounts which the Company has paid
out of its own resources to make Contract owners whole as
a result of such error; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement, or arise out of or result from any other
material breach of this Agreement by the Fund or persons
under its control or subject to its authorization;
except to the extent provided in Sections 5.3(b) and 5.4 hereof.
(b) No party will be entitled to indemnification under Section
5.3(a) if such loss, claim, damage, liability or litigation is
due to the willful misfeasance, bad faith, or gross negligence
in the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard of its
obligations or duties under this Agreement by the party seeking
indemnification.
(c) The indemnified Parties will promptly notify the Fund of the
commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Contracts or the operation of
the Account.
5.4. Indemnification Procedure
-------------------------
Any person obligated to provide indemnification under this Article V
("Indemnifying Party" for the purpose of this Section 5.4) will not be
liable under the indemnification provisions of this Article V with
respect to any claim made against a party entitled to indemnification
under this Article V ("Indemnified Party" for the purpose of this
Section 5.4) unless such Indemnified Party will have notified the
Indemnifying Party in writing within a reasonable time after the
summons or other first legal process giving information of the nature
of the claim will have been served upon such Indemnified Party (or
after such party will have received notice of such service on any
designated agent), but failure to notify the Indemnifying Party of any
such claim will not relieve the Indemnifying Party from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of the indemnification provision of
this Article V, except to the extent that the failure to notify
results in the failure of actual notice to the Indemnifying Party and
such Indemnifying Party is damaged as a result of failure to give such
notice. In case any such action is brought against the Indemnified
Party, the Indemnifying Party will be entitled to participate, at its
own expense, in the defense thereof. The Indemnifying Party also will
be entitled to assume the defense thereof, with counsel reasonably
satisfactory to the party named in the action. After notice from the
Indemnifying Party to the Indemnified Party of the Indemnifying
Party's election to assume the defense thereof, the Indemnified Party
will bear the fees and expenses of any additional counsel retained by
it, and the Indemnifying Party will not be liable to such
20
party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation,
unless: (a) the Indemnifying Party and the Indemnified Party will have
mutually agreed to the retention of such counsel; or (b) 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 will not be liable for any settlement of
any proceeding effected without its written consent but if settled
with such consent or if there is 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 will be
entitled to the benefits of the indemnification contained in this
Article V. The indemnification provisions contained in this Article V
will survive any termination of this Agreement.
5.5. Limitation of Liability
-----------------------
Except as expressly stated herein, as between the parties, in no event
will any party to this Agreement be responsible to any other party for
any incidental, indirect, consequential, punitive or exemplary damages
of any kind arising from this Agreement, including without limitation,
lost revenues, loss of profits or loss of business.
5.6. Arbitration
-----------
Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, will be settled by arbitration administered by
the American Arbitration Association in accordance with its Commercial
Arbitration Rules and Title 9 of the U.S. Code. Judgment on the award
rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The number of arbitrators will be three, one of
whom will be appointed by the Company or an affiliate; one of whom
will be appointed by the Fund and/or the Adviser or an affiliate; and
the third of whom will be selected by mutual agreement, if possible,
within 30 days of the selection of the second arbitrator and
thereafter by the administering authority. The place of arbitration
will be Minneapolis, Minnesota or New York, New York. The arbitrators
will have no authority to award punitive damages or any other damages
not measured by the prevailing party's actual damages, and may not, in
any event, make any ruling, finding or award that does not conform to
the terms and conditions of this Agreement. Any party may make an
application to the arbitrators seeking injunctive relief to maintain
the status quo until such time as the arbitration award is rendered or
the controversy is otherwise resolved. Any party may apply to any
court having jurisdiction hereof and seek injunctive relief in order
to maintain the status quo until such time as the arbitration award is
rendered or the controversy is otherwise resolved.
21
ARTICLE VI. APPLICABLE LAW
--------------
6.1. This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Minnesota.
6.2. This Agreement will be subject to the provisions of the 1933 Act, the
Securities Exchange Act of 1934 and the 1940 Act, and the rules and
regulations and rulings thereunder, including such exemptions from
those statutes, rules and regulations as the SEC may grant (including,
but not limited to, the Exemptive Order) and the terms hereof will be
interpreted and construed in accordance therewith.
ARTICLE VII. TERMINATION
-----------
7.1. This Agreement will terminate:
(a) at the option of any party, with or without cause, with respect
to some or all of the Portfolios, upon sixty (60) days' advance
written notice to the other parties or, if later, upon receipt
of any required exemptive relief or orders from the SEC, unless
otherwise agreed in a separate written agreement among the
parties; (b) at the option of the Company, upon receipt of the
Company's written notice by the other parties, with respect to
any Portfolio if shares of the Portfolio are not reasonably
available to meet the requirements of the Contracts as
determined in good faith by the Company, or
(b) at the option of the Company, upon receipt of the Company's
written notice by the other parties, with respect to any
Portfolio in the event any of the Portfolio's shares are not
registered, issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued or to
be issued by Company; or
(c) at the option of the Fund, upon receipt of the Fund's written
notice by the other parties, 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 administration of the
Contracts, the operation of the Account, or the purchase of the
Fund shares, provided that the Fund determines in its sole
judgment, exercised in good faith, that any such proceeding
would have a material adverse effect on the Company's ability to
perform its obligations under this Agreement; or
(d) at the option of the Company, upon receipt of the Company's
written notice by the other parties, upon institution of formal
proceedings against the Fund or the Adviser by the NASD, the
SEC, or any state securities or insurance department or any
other regulatory body, regarding the Fund's or the Adviser's
duties under this Agreement or related to the sale of Fund
shares or the administration of the Fund,
22
provided that the Company determines in its sole judgment,
exercised in good faith, that any such proceeding would have a
material adverse effect on the Fund's or the Adviser's ability to
perform its obligations under this Agreement; or
(e) at the option of the Company, upon receipt of the Company's
written notice by the other parties, if the Fund ceases to
qualify as a Regulated Investment Company under Subchapter M of
the Internal Revenue Code, or under any successor or similar
provision, or if the Company reasonably and in good faith
believes that the Fund may fail to so qualify; or
(f) at the option of the Company, upon receipt of the Company's
written notice by the other parties, with respect to any
Portfolio if the Fund fails to meet the diversification
requirements specified in Article VII hereof or if the Company
reasonably and in good faith believes the Fund may fail to meet
such requirements; or
(g) at the option of any party to this Agreement, upon written
notice to the other parties, upon another party's material
breach of any provision of this Agreement; or
(h) at the option of the Company or the Fund upon a determination by
a majority of the Fund Board, or a majority of the disinterested
Fund Board members, that an irreconcilable material conflict
exists among the interests of: (i) all contract owners of
variable insurance products of all separate accounts; or (ii)
the interests of the Participating Insurance Companies investing
in the Fund as set forth in Article IV of this Agreement; or
(i) at the option of the Fund in the event any of the Contracts are
not issued or sold in accordance with applicable federal and/or
state law. Termination will be effective immediately upon such
occurrence without notice.
7.2. Notwithstanding any termination of this Agreement, the Fund and the
Adviser will, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the
Existing Contracts will be permitted to reallocate investments in the
Portfolios (as in effect on such date), redeem investments in the
Portfolios and/or invest in the Portfolios upon the making of
additional purchase payments under the Existing Contracts. The parties
agree that this Section 7.2 will not apply to any terminations under
Article IV and the effect of such Article IV terminations will be
governed by Article IV of this Agreement.
7.3. The provisions of Article V will survive the termination of this
Agreement and as long as shares of the Fund are held under Existing
Contracts in accordance with Section 7.2, the provisions of this
Agreement will survive the termination of this Agreement with respect
to those Existing Contracts.
23
ARTICLE VIII. NOTICES
-------
Any notice will be deemed duly given when sent by registered or certified
mail (or other method agreed to by the parties) to each other party at the
address of such party set forth below or at such other address as such party
may from time to time specify in writing to the other parties.
If to the Company:
American Enterprise Life Insurance Company
IDS Life Insurance Company
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
ATTN: Vice President
With a copy to:
Riversource Distributors, Inc.
00000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
ATTN: Vice President and Group Counsel
If to the Fund:
Third Avenue Variable Series Trust
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
ATTN: General Counsel
If to the Adviser:
Third Avenue Management LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
ATTN: General Counsel
ARTICLE IX. MISCELLANEOUS
-------------
9.1. All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither
the directors, trustees, officers, partners, employees, agents or
shareholders assume any personal liability for obligations entered
into on behalf of the Fund.
9.2. Use and Disclosure of Confidential Information
----------------------------------------------
Notwithstanding anything to the contrary contained in this Agreement,
and in addition to and not in lieu of other provisions in this
Agreement:
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(a) Confidential Information includes without limitation all
information of the Company or its subsidiaries, affiliates, or
licensees; or the accounts, account numbers, names, addresses,
social security numbers or any other personal identifier of such
customers; or any information derived therefrom.
(b) Neither the Fund nor the Adviser may use or disclose
Confidential Information for any purpose other than to carry out
the purpose for which Confidential Information was provided to
the Fund and/or the Adviser as set forth in the Agreement, and
agree to cause all employees, agents and representatives of the
Fund and the Adviser, or any other party to whom the Fund and/or
the Adviser may provide access to or disclose Confidential
Information to limit the use and disclosure of Confidential
Information to that purpose.
(c) The Fund and the Adviser agree to implement appropriate measures
designed to ensure the security and confidentiality of
Confidential Information, to protect such information against
any anticipated threats or hazards to the security or integrity
of such information, and to protect against unauthorized access
to, or use of, Confidential Information that could result in
substantial harm or inconvenience to any of the customers of the
Company or any of its subsidiaries, affiliates, or licensees;
the Fund and the Adviser further agree to cause all agents,
representatives or subcontractors of the Fund and the Adviser,
or any other party to whom the Fund and/or the Adviser may
provide access to or disclose Confidential Information to
implement appropriate measures designed to meet the objectives
set forth in this paragraph.
9.3. 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,
9.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
9.5. If any provision of this Agreement will be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement will not be affected thereby.
9.6. This Agreement will not be assigned by any party hereto without the
prior written consent of all the parties. The parties agree that the
contemplated sale of an interest in the Adviser to Affiliated
Management Group shall not constitute as assignment of this Agreement.
9.7. Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including without limitation
the SEC, the NASD and state insurance regulators) and will permit each
other and such authorities reasonable access to its books and records
in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
25
9.8. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein
have been duly authorized by all necessary corporate or board action,
as applicable, by such party and when so executed and delivered this
Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms.
9.9. The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating to the
Contracts, the Accounts or the Portfolios of the Fund or other
applicable terms of this Agreement
26
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized representative as
of the date specified above.
THIRD AVENUE VARIABLE SERIES THIRD AVENUE MANAGEMENT LLC
TRUST
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxx
---------------------------------- -----------------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
Title: CFO Title: CFO
AMERICAN ENTERPRISE LIFE
INSURANCE COMPANY
IDS LIFE INSURANCE COMPANY ATTEST:
By: /s/ Xxxxxxx X. Xxxxx III By: /s/ Xxxxx Xxxxxx
---------------------------------- -----------------------------------
Name: Xxxxxxx X. Xxxxx III Name: Xxxxx Xxxxxx
Title: Vice President of each Company Title: Assistant Secretary of
each Company
27
Schedule 1
PARTICIPATION AGREEMENT
By and Among
THIRD AVENUE VARIABLE SERIES TRUST
And
THIRD AVENUE MANAGEMENT LLC
And
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
And
IDS LIFE INSURANCE COMPANY
The following Accounts of IDS Life Insurance Company are permitted in
accordance with the provisions of this Agreement to invest in Portfolios of
the Fund shown in Schedule 2:
IDS LIFE VARIABLE ACCOUNT 10
(Effective January 2, 2007: RiverSource Variable Account 10)
IDS LIFE VARIABLE LIFE SEPARATE ACCOUNT
(Effective January 2, 2007: RiverSource Variable Life Separate
Account)
The following Accounts of American Enterprise Life Insurance Company are
permitted in accordance with the provisions of this Agreement to invest in
Portfolios of the Fund shown in Schedule 2:
AMERICAN ENTERPRISE VARIABLE ANNUITY ACCOUNT
(Effective January 2, 2007: RiverSource Variable Annuity Account)
28
Schedule 2
PARTICIPATION AGREEMENT
By and Among
THIRD AVENUE VARIABLE SERIES TRUST
And
THIRD AVENUE MANAGEMENT LLC
And
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
And
IDS LIFE INSURANCE COMPANY
The Accounts shown on Schedule 1 may invest in the following Portfolios:
Third Avenue Value Portfolio
29
