DISTRIBUTION AGREEMENT
This Distribution Agreement, effective as of October 1, 2005 ("Agreement"), is
by and between IDS Life Insurance Company ("Distributor"), a Minnesota
corporation, and the corporations listed in Schedule A, each on behalf of their
underlying series (each a "Fund" and collectively the "Funds"). The terms "Fund"
or "Funds" are used to refer to the corporation and the underlying series as the
context requires.
Part One: APPOINTMENT OF DISTRIBUTOR
(1) The Fund covenants and agrees that, during the term of this Agreement and
any renewal or extension, Distributor shall have the exclusive right to act
as principal underwriter for the Fund and to offer for sale and to
distribute any and all shares of each class of capital stock issued or to
be issued by the Fund, upon the terms described herein and in the Fund's
prospectus and statement of additional information ("prospectus") included
in the Fund's registration statement most recently filed with the
Securities and Exchange Commission ("SEC") and effective under the
Securities Act of 1933 ("1933 Act") and the Investment Company Act of 1940
("1940 Act"), or as the Fund's prospectus may otherwise be amended or
supplemented and filed with the SEC pursuant to Rule 497 of the 1933 Act.
The exclusive right to act as principal underwriter will not apply:
(a) to transactions in connection with the merger or consolidation of any
other investment company or personal holding company with the Fund or
the acquisition by purchase or otherwise of all (or substantially all)
the assets or the outstanding shares of any such company by the Fund;
or
(b) pursuant to reinvestment of dividends or capital gains distributions.
(2) Distributor hereby covenants and agrees to act as the principal underwriter
of each class of capital shares issued and to be issued by the Fund during
the period of this Agreement and agrees to offer for sale such shares as
long as such shares remain available for sale, unless Distributor is unable
or unwilling to make such offer for sale or sales or solicitations
therefore legally because of any federal, state, provincial or governmental
law, rule or agency or for any financial reason. Distributor agrees to
devote reasonable time and effort to effect sales of shares of the Fund but
is not obligated to sell any specific number of shares. It is understood
that Distributor may act as principal underwriter for other entities
including registered investment companies.
(3) Distributor is authorized to enter into separate written agreements
regarding the sale of shares of the Fund, on terms and conditions
consistent with this Agreement and the Plan and Agreement of Distribution
(the "12b-1 Plan"), with affiliated and unaffiliated insurance companies
that have separate accounts allocated for investment in the Fund, with
their affiliated broker-dealers and with shareholders eligible to purchase
shares of the Fund pursuant to applicable Internal Revenue Code provisions
("Participation Agreements") and with broker-dealers with respect to sales
to eligible shareholders ("Selling Agreements").
The Fund will not pay any compensation under the Participation Agreements
or the Selling Agreements (collectively referred to as "Selling
Agreements").
Part Two: SALE OF FUND SHARES
(1) With respect to the offering for sale and sale of shares of each class to
be issued by the Fund, it is mutually understood and agreed that such
shares are to be sold on the following terms:
(a) Distributor has the right, as principal, to buy from the Fund the
shares needed to fill unconditional orders for shares.
(b) For orders for Fund shares placed with Distributor under Selling
Agreements, Distributor has the right, as principal, to buy from the
Fund the shares needed to fill unconditional orders.
(c) The price Distributor will pay to the Fund is the net asset value,
determined as set forth in the prospectus.
(d) The shares will be resold by Distributor at the price determined as
set forth in the prospectus. Distributor shall not give any
information or make any representations, other than those contained in
the prospectus, statement of additional information or any sales
literature specifically approved by the Fund.
(e) The Fund or its transfer agent shall be promptly advised of all orders
received.
(f) The net asset value of the shares will be determined by the Fund or
any agent of the Fund in accordance with the method set forth in the
prospectus. In the event the Fund suspends the determination of the
net asset value as permitted under Section 22(c) of the 1940 Act, the
computation of the net asset value for the purpose of determining the
number of shares or fractional shares to be acquired may be deferred
until the close of business on the first full business day upon which
the net asset value is next computed.
(g) Distributor or the Fund may in its discretion refuse to accept orders
for shares and the Distributor may provide similar discretion in
Selling Agreements.
(h) Distributor will make such reports as may be requested from time to
time by the Fund regarding Selling Agreements.
(2) The Fund agrees to make prompt and reasonable effort to do any and all
things necessary, in the opinion of Distributor, to have and to keep the
Fund and the shares properly registered or qualified in all appropriate
jurisdictions and, as to shares, in such amounts as Distributor may from
time to time designate in order that the Fund's shares may be offered or
sold in such jurisdictions.
Part Three: REPURCHASE OR REDEMPTION OF FUND SHARES
(1) In connection with the repurchase of shares, Distributor will act as agent
of the Fund. Any outstanding shares may be tendered for redemption at any
time and the Fund agrees to repurchase or redeem the shares in accordance
with the terms and conditions of the prospectus. The Fund will pay the
amount of the redemption price to shareholders on or before the seventh
business day after receiving the notice of redemption in proper form except
as provided for in paragraph (2).
(2) The net asset value of the shares will be determined by the Fund or any
agent of the Fund in accordance with the method set forth in the
prospectus. In the event the Fund suspends the determination of the net
asset value as permitted under Section 22(c) of the 1940 Act, the
computation of the net asset value for the purpose of determining the
redemption price on the number of shares or fractional shares to be
redeemed or repurchased may be deferred until the close of business on the
first full business day upon which the net asset value is next computed.
Part Four: ALLOCATION OF EXPENSES AND COMPENSATION
(1) For services rendered and expenses borne as principal underwriter,
Distributor shall receive no compensation from the Fund other than the fees
payable by the Fund pursuant to the 12b-1 Plan.
(2) Distributor shall bear all expenses incurred by it in connection with its
duties and activities under this Agreement including the payment under
Selling Agreements of any sales commissions, service fees, revenue sharing,
and expenses for sales of a Fund's shares (except such expenses as are
specifically undertaken herein by a Fund). Distributor shall bear the costs
and expenses of preparing, printing and distributing prospectuses,
statements of additional information, shareholder reports and any
supplementary sales literature used by the Distributor or furnished by it
for use under Selling Agreements in connection with the offering of the
shares for sale. Any expenses of advertising incurred in connection with
such offering will also be the obligation of the Distributor. It is
understood and agreed that, so long as a Fund's 12b-1 Plan continues in
effect, any expenses incurred by the Distributor under this Agreement may
be paid in accordance with the terms of the 12b-1 Plan.
Part Five: MISCELLANEOUS
(1) Distributor shall be deemed to be an independent contractor and, except as
expressly provided or authorized in this Agreement, shall have no authority
to act for or represent the Fund.
(2) Distributor agrees to perform such agreed anti-money laundering ("AML")
functions with respect to purchases of the Fund's shares as the Fund or its
agent may delegate to Distributor from time to time or as Distributor is
otherwise obligated to perform. In accordance with mutually-agreed
procedures, Distributor shall use its best efforts in carrying out such
agreed functions consistent with the requirements of the Fund's AML
program. Distributor agrees
to cooperate with any request from examiners of United States Government
agencies having jurisdiction over the Fund for information and records
relating to the Fund's AML program and consents to inspection by such
examiners for this purpose.
(3) Distributor and the Fund agree to conform with all applicable state and
federal laws and regulations relating to any rights or obligations under
the terms of this Agreement.
(4) The Fund agrees that it will furnish Distributor with information with
respect to the affairs and accounts of the Fund, and in such form as
Distributor may from time to time reasonably require, and further agrees
that Distributor, at all reasonable times, shall be permitted to inspect
the books and records of the Fund.
(5) Distributor agrees to indemnify and hold harmless the Fund and each person
who has been, is, or may hereafter be a member of the Board of Directors
("Board member") of the Fund against expenses reasonably incurred by any of
them in connection with any claim or in connection with any action, suit or
proceeding to which any of them may be a party, which arises out of or is
alleged to arise out of any misrepresentation or omission to state a
material fact, or out of any alleged misrepresentation or omission to state
a material fact, on the part of Distributor or any agent or employee of
Distributor or any other person for whose acts Distributor is responsible
or is alleged to be responsible, unless such misrepresentation or omission
was made in reliance upon information furnished by the Fund. Distributor
likewise agrees to indemnify and hold harmless the Fund and each such
person in connection with any claim or in connection with any action, suit
or proceeding which arises out of or is alleged to arise out of
Distributor's (or an affiliate of Distributor's) failure to exercise
reasonable care and diligence. The term "expenses" includes amounts paid in
satisfaction of judgments or in settlements that are made with
Distributor's consent. The foregoing rights of indemnification shall be in
addition to any other rights to which the Fund or a Board member may be
entitled as a matter of law.
(6) Neither this Agreement nor any transaction had pursuant hereto shall be
invalidated or in any way affected by the fact that Board members,
officers, agents and/or shareholders of the Fund are or may be interested
persons of Distributor as directors, officers, shareholders or otherwise;
that directors, officers, shareholders or agents of Distributor are or may
be interested persons of the Fund as Board members, officers, shareholders
or otherwise; or that Distributor is or may be interested in the Fund as
shareholder or otherwise, provided, however, that neither Distributor nor
any officer or director of Distributor or any officers or Board members of
the Fund shall sell to or buy from the Fund any property or security other
than a security issued by the Fund, except in accordance with a rule,
regulation or order of the SEC.
(7) For the purposes of this Agreement, a "business day" shall have the same
meaning as is given to the term in the By-laws of the Fund.
(8) Any notice under this Agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the parties to this Agreement at each
company's principal place of business in Minneapolis, Minnesota, or to such
other address as either party may designate in writing mailed to the other.
(9) Distributor agrees that no officer, director or employee of Distributor
will deal for or on behalf of the Fund with himself as principal or agent,
or with any corporation or partnership in which he may have a financial
interest, except that this shall not prohibit:
(a) Officers, directors and employees of Distributor from having a
financial interest in the Fund or in Distributor.
(b) The purchase of securities for the Fund, or the sale of securities
owned by the Fund, through a security broker or dealer, one or more of
whose partners, officers, directors or employees is an officer,
director or employee of Distributor, provided such transactions are
handled in the capacity of broker only and provided commissions
charged do not exceed customary brokerage charges for such services.
(c) Transactions with the Fund by a broker-dealer affiliate of Distributor
if allowed by rule or order of the SEC and if made pursuant to
procedures adopted by the Fund's Board of Directors.
(10) Distributor agrees that, except as otherwise provided in this Agreement or
as may be permitted consistent with the use of a broker-dealer affiliate of
Distributor under applicable provisions of the federal securities laws,
neither it nor any of its officers, directors or employees shall at any
time during the period of this Agreement make, accept or receive, directly
or indirectly, any fees, profits or emoluments of any character in
connection with the purchase or sale of securities (except securities
issued by the Fund) or other assets by or for the Fund.
(11) This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties.
(12) This Agreement is governed by the laws of the State of Minnesota.
Part Six: TERMINATION
(1) This Agreement shall continue in effect from year to year unless and until
terminated by Distributor or the Fund, except that such continuance shall
be specifically approved at least annually by a vote of a majority of the
Board members who are not parties to this Agreement or interested persons
of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and by a majority of the Board members or by vote
of a majority of the outstanding voting securities of the Fund. As used in
this paragraph, the term "interested person" shall have the meaning as set
forth in the 1940 Act.
(2) This Agreement may be terminated by Distributor or the Fund at any time by
giving the other party sixty (60) days written notice of such intention to
terminate.
(3) This agreement shall terminate in the event of its assignment, the term
"assignment" for this purpose having the same meaning as set forth in the
1940 Act.
IN WITNESS WHEREOF, the parties hereto have executed the foregoing Agreement as
of October 1, 2005.
AXP Variable Portfolio Income Series, Inc.
AXP Variable Portfolio Investment Series, Inc.
AXP Variable Portfolio Managed Series, Inc.
AXP Variable Portfolio Money Market Series, Inc.
AXP Variable Portfolio Partners Series, Inc.
AXP Variable Portfolio Select Series, Inc.
By /s/ Xxxxxx X. Xxx
------------------
Xxxxxx X. Xxx
Vice President
IDS Life Insurance Company
By /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
President
SCHEDULE A
FUNDS
Each a Minnesota corporation:
AXP Variable Portfolio Income Series, Inc.
AXP Variable Portfolio Investment Series, Inc.
AXP Variable Portfolio Managed Series, Inc.
AXP Variable Portfolio Money Market Series, Inc.
AXP Variable Portfolio Partners Series, Inc.
AXP Variable Portfolio Select Series, Inc.
