AMENDED AND RESTATED
PARTICIPATION AGREEMENT
AMONG
XXX XXXXXX LIFE INVESTMENT TRUST,
XXX XXXXXX ASSET MANAGEMENT,
XXX XXXXXX FUNDS INC.,
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY,
AND
IDS LIFE INSURANCE COMPANY
DATED MAY 1, 2006
TABLE OF CONTENTS
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Page
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ARTICLE A Amendment and Restatement; Form of Agreement 3
ARTICLE I. Purchase and Redemption of Fund Shares 3
ARTICLE II. Representations and Warranties 6
ARTICLE III. Prospectuses, Reports to Shareholders
and Proxy Statements; Voting 10
ARTICLE IV. Sales Material and Information 12
ARTICLE V. Fees and Expenses 14
ARTICLE VI. Diversification 14
ARTICLE VII. Potential Conflicts 14
ARTICLE VIII. Indemnification 16
ARTICLE IX. Applicable Law 21
ARTICLE X. Termination 21
ARTICLE XI. Notices 23
ARTICLE XII. Miscellaneous 25
SCHEDULE A American Enterprise Life Separate Accounts and Associated
Contracts
SCHEDULE A-1 IDS Life Separate Accounts and Associated Contracts
SCHEDULE B Portfolios of Xxx Xxxxxx Life Investment Trust
Available Under this Agreement for American Enterprise Life
SCHEDULE B-1 Portfolios of Xxx Xxxxxx Life Investment Trust
Available Under this Agreement for IDS Life
SCHEDULE C Proxy Voting Procedures
THIS AGREEMENT is made and entered into this 1st day of May, 2006 by and
among the following parties:
o AMERICAN ENTERPRISE LIFE INSURANCE COMPANY ("American Enterprise
Life"), an Indiana corporation, on its own behalf and on behalf of
each separate account of the Company set forth on Schedule A
hereto as may be amended from time to time (each such account
referred to as an "Account");
o IDS LIFE INSURANCE COMPANY ("IDS Life"), a Minnesota corporation,
on its own behalf and on behalf of each separate account of the
Company set forth on Schedule A-1 hereto as may be amended from
time to time (each such account referred to as an "Account")(each
of American Enterprise Life and IDS Life, hereinafter a
"Company");
o XXX XXXXXX LIFE INVESTMENT TRUST, a Delaware business trust, (the
"Fund");
o XXX XXXXXX FUNDS INC., a Delaware Corporation, (the
"Underwriter"); and,
o XXX XXXXXX ASSET MANAGEMENT, a Delaware Corporation, (the
"Adviser").
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as (i) the investment vehicle for
separate accounts established by insurance companies for individual and group
life insurance policies and annuity contracts with variable accumulation
and/or pay-out provisions (hereinafter referred to individually and/or
collectively as "Variable Insurance Products"); and
WHEREAS, insurance companies desiring to utilize the Fund as an
investment vehicle under their Variable Insurance Products enter into
participation agreements with the Fund, the Underwriter and the Adviser (the
"Participating Insurance Companies"); and
WHEREAS, shares of the Fund are divided into several series of shares,
each representing the interest in a particular managed portfolio of securities
and other assets, any one or more of which may be made available under this
Agreement; and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule B hereto (each such series referred to as a "Portfolio"), as such
Schedule may be amended from time to time by mutual agreement of the parties
hereto, to the Account(s) of American Enterprise Life (all references herein
to "shares" of a Portfolio shall mean the class or classes of shares
specifically identified on Schedule B); and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule B-1 hereto (each such series referred to as a "Portfolio"), as such
Schedule may be amended from time to time by mutual agreement of the parties
hereto, to the Account(s) of IDS Life (all references herein to "shares" of a
Portfolio shall mean the class or classes of shares specifically identified on
Schedule B-1); and
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WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC"), dated September 19, 1990 (File No.812-7552), granting
Participating Insurance Companies and Variable Insurance Product separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended (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 Insurance Product
separate accounts of both affiliated and unaffiliated life insurance companies
(the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, the Adviser manages the Portfolios of the Fund; and
WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD") and serves as principal underwriter of the shares of the Fund; and
WHEREAS, American Enterprise Life has registered or will register under
the 1933 Act the Variable Insurance Products identified on Schedule A hereto
and IDS Life has registered or will register under the 1933 Act the Variable
Insurance Products identified on Schedule A-1 hereto (the "Contracts"), as
such Schedules may be amended from time to time by mutual written agreement of
the parties hereto; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of American Enterprise Life and IDS Life respectively, on the date
shown for such Account on Schedule A or Schedule A-1 hereto, to set aside and
invest assets attributable to the Contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Portfolios, on
behalf of each Account or sub-Account thereof (together, as applicable, an
"Account"), to fund the Contracts and the Underwriter is authorized to sell
such shares to each such Account at net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund, the Underwriter and the Adviser agree as follows:
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ARTICLE A. AMENDMENT AND RESTATEMENT; FORM OF AGREEMENT
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A.1. The Fund, the Underwriter 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
IDS Life Insurance Company shall mean and refer to RiverSource Life Insurance
Company. The Fund, the Underwriter 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 Participation
Agreement dated as of September 1, 2002 among the Fund, the Underwriter, the
Adviser, and American Enterprise Life, as amended on April 30, 2004 with
respect to all investments by American Enterprise Life or its separate
accounts in each Portfolio of the Fund prior to the date of this Agreement. In
addition, the foregoing parties hereby amend and restate their agreements as
set forth herein to include among other agreements, the addition of IDS Life
as a party to this agreement in respect of its Accounts as set forth in
Schedule A-1 to this Agreement, and in contemplation of the Transfer of the
Accounts of American Enterprise Life to IDS Life on December 31, 2006,
incident to the Merger. This agreement shall amend and supersede the
Participation Agreement dated September 30, 2003 among the Fund, the
Underwriter, the Adviser and IDS Life. 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. PURCHASE AND REDEMPTION OF FUND SHARES
1.1. The Fund and the Underwriter agree to make available for purchase
by the Company shares of the Portfolio(s) and shall execute purchase orders
placed for each Account on each Business Day at the net asset value next
computed after receipt by the Fund or its designee of such purchase order. For
purposes of this Section 1.1, the Company shall be the designee of the Fund
and the Underwriter for receipt of such purchase orders from each Account and
receipt by such designee shall constitute receipt by the Fund; provided that
the Fund receives notice of such order by 10:00 a.m. Eastern time on the next
following Business Day. "Business Day" shall mean any day on which the New
York Stock Exchange, Inc. is open for trading and on which the Fund calculates
its net asset value pursuant to SEC rules.
1.2. The Fund, so long as this Agreement is in effect, agrees to make
shares of the Portfolios available for purchase at the applicable net asset
value per share by the Company and its Accounts on those days on which the
Fund calculates its net asset value pursuant to SEC rules and the Fund shall
use reasonable efforts to calculate such net asset value on each day that the
New York Stock Exchange, Inc. is open for trading. Shares of a Portfolio will
be ordered in such
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quantities and at such times as determined by the Company to be necessary to
meet the requirements of the Contracts. Notwithstanding the foregoing, the
Board of Directors of the Fund (the "Board") may refuse to permit the Fund 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 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.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of a Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter agree to redeem for cash, on the
Company's request, any full or fractional shares of the Portfolio(s) held by
the Company, executing such redemption requests for each Account on each
Business Day at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. Subject to and in accordance with
applicable laws and regulations, however, the Fund reserves the right to
redeem shares of the Portfolios for assets other than cash. For purposes of
this Section 1.4, the Company shall be the designee of the Fund and the
Underwriter for receipt of requests for redemption from each Account and
receipt by such designee shall constitute receipt by the Fund; provided that
the Fund receives notice of such request for redemption by 10:00 a.m. Eastern
time on the next following Business Day.
1.5. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company will give the
Fund and the Adviser forty-five (45) days written notice prior to making
available as a funding vehicle under the Contracts any other investment
company that has similar investment objectives and policies as a Portfolio.
1.6. The Company shall pay for Portfolio shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire and the Company agrees to use its best efforts to initiate
the transmission of such funds by no later than 2:00 p.m. Eastern time on the
day of transmission. For purposes of Sections 2.9 and 2.10, upon receipt by
the Fund of the federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the Fund.
The Fund will pay for a redemption request on the next Business Day after a
request to redeem Portfolio shares is made in accordance with Section 1.4
hereof, except that the Fund reserves the right to suspend or postpone payment
consistent with the 1940 Act and any rules thereunder. All payments by the
Fund will be made in federal funds transmitted by wire or other method agreed
to by the parties. For purposes of Sections 2.9 and 2.10, upon receipt by the
Company of the federal funds so transmitted, such funds shall cease to be the
responsibility of the Fund and shall become the responsibility of the Company.
1.7. Issuance and transfer of the Fund's shares will be by book entry
only. Share certificates will not be issued to the Company or any Account.
Shares ordered from the Fund
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will be recorded in an appropriate title for each Account or the appropriate
sub-account of each Account.
1.8. The Fund shall furnish same-day notice (by wire or telephone,
followed by written confirmation) to the Company of any income dividends or
capital gain distributions payable on Portfolio shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on a Portfolio's shares in additional shares of that Portfolio.
The Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.9. The Fund shall make the net asset value per share for each
Portfolio available to the Company on each Business Day as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Eastern time) and shall use its best efforts to make such net asset value
per share available by 7:00 p.m. Eastern time. The Fund will notify the
Company as soon as possible if it is determined that the net asset value per
share for a Portfolio will be available after 7:00 p.m. Eastern time, and the
Fund and the Company will mutually agree upon a final deadline for
transmission of the net asset value information.
1.10. The Company shall not redeem Fund shares attributable to the
Contracts (as distinct from Fund shares attributable to the Company's assets
held in the Account) except (i) to implement Contract owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act.
Upon request, the Company will promptly furnish to the Fund the opinion of
counsel for the Company (which counsel shall be reasonably satisfactory to the
Fund) to the effect that any redemption pursuant to clause (ii) above is a
Legally Required Redemption. Furthermore, except in cases where permitted
under the terms of the Contracts, the Company shall not prevent Contract
owners from allocating payments to a Portfolio that was otherwise available
under the Contracts without first giving the Fund sixty (60) days prior
written notice of its intention to do so or such shorter notice period in the
event that the Company determines is necessary to satisfy its fiduciary
obligations to Contract owners.
1.11. Any material errors in the calculation of net asset value,
dividends or capital gain information will be reported promptly 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 Fund provides the Company with
materially incorrect net asset value information, through no fault of the
Company, the Account(s) will be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the correct net asset value per share.
The correction of any such errors shall be made by the Fund at the separate
account level and shall be made pursuant to the SEC's recommended guidelines
regarding such errors. Neither the Fund, the Adviser, the Underwriter 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, the Adviser, the
Underwriter or any one of their respective duly appointed designees.
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ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that: (i) it is an insurance
company duly organized and in good standing under applicable law; (ii) it has
legally and validly established each Account prior to any issuance or sale
thereof as a segregated asset account under applicable laws and regulations;
and (iii) it has registered or, prior to any issuance or sale of the
Contracts, will register and will thereafter maintain the registration of 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. The
Company further represents and warrants that: (i) the Contracts are or will be
registered and shall remain registered under the 1933 Act; (ii) the Contracts
will be issued and sold in compliance in all material respects with all
applicable federal and state laws; and (iii) the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements.
The Company shall amend the registration statement for the Accounts and the
Contracts under the 1940 Act and the 1933 Act, respectively, from time to time
as required in order to effect the continuous offering of the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Delaware and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 0000 Xxx. The Fund shall amend the registration
statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and that it will use its every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify.
2.4. The Company represents and warrants that each Account is and will
continue to be a "segregated asset account" under applicable provisions of the
Code and applicable Treasury Regulations promulgated thereunder and that each
Contract is and will continue to be treated as a "variable contract" under
applicable provisions of the Code and applicable Treasury Regulations
promulgated thereunder. The Company further represents and warrants that it
will make every effort to maintain such treatment and that it will notify the
Fund immediately upon having a reasonable basis for believing that any Account
or Contract has ceased to be so treated or that any Account or Contract might
not be so treated in the future.
2.5. The Fund represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund
undertakes to have the 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.
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2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states. At the reasonable request of the Company, and subject to any
confidentiality obligations of the Fund and the Adviser, the Fund and the
Adviser agree to make available certain information that they maintain so that
the Company can obtain the authority needed under state insurance laws to
issue the Contracts in the various states.
2.7. The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Delaware and that it does and will
comply in all material respects with the 1940 Act.
2.8. The Adviser represents and warrants that it is and shall remain
duly registered in all material respects under all applicable federal and
state securities laws and that it will perform its obligations for the Fund in
compliance in all material respects with the laws of its state of domicile and
any 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.
2.9. The Fund represents and warrants that all of its directors,
officers, employees, and other individuals/entities dealing with the money
and/or securities of the Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund in an amount not less than the minimum coverage as currently required by
Rule 17g-1 of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid blanket fidelity bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
2.10. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Account(s) are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Company and/or the Account(s) that is
reasonable and customary in light of the Company's obligations under this
Agreement. The aforesaid includes coverage for larceny and embezzlement and
shall be issued by a reputable bonding company. The Company agrees to make all
reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, and agrees to notify the Fund and the Adviser
in the event that such coverage no longer applies.
2.11 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 Portfolio's
investment portfolio. These policies are disclosed in the current prospectus
for the Portfolios of the Fund.
The Fund, the Underwriter and the Adviser acknowledge 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
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investing in Portfolios of the Fund which are available as investment options
under the Contracts. These policies and procedures are described in the
current prospectuses of the Account through which the Contracts are offered.
The Fund, the Underwriter and the Adviser may consider the Company's
policies and procedures pertaining to frequent transfers of Contract value
among the subaccounts of its Accounts, including those investing in Portfolios
of the Fund, when the Fund periodically reviews or amends the Fund's
disruptive trading policies and procedures. The Fund, the Underwriter and the
Adviser may invite comment from and confer with the Company regarding any
proposed policy and procedure of the Fund, the Underwriter or the Adviser
pertaining to disruptive trading to determine, prior to adopting such proposed
policy or procedure, the Company's then-present ability to apply such proposed
policy or procedure to owners of Contracts who allocate Contract value to
subaccounts investing in Portfolios of the Fund which are available under the
Contracts, including without limitation whether the Company can apply such
proposed policy or procedure without the need to modify its automated data
processing systems or to develop and staff manual systems to accommodate the
implementation of the Fund's proposed policy or procedure.
The Company will cooperate with the Fund's, the Underwriter's and the
Adviser's reasonable requests in taking steps to deter and detect such
transfers by Contract owners. Subject to applicable law and the terms of each
Contract, the Company will furnish other information the Fund, directly or
through its agent, reasonably requests regarding frequent transfers by
Contract owners among the subaccounts investing Portfolios of the Fund which
are available under the Contracts. In compliance with Rule 22c-2 under the
1940 Act, the Company hereby agrees to (i) provide, promptly upon request by
Fund, directly or through its agent, the taxpayer identification number of all
Contract owners that purchased, redeemed, transferred, or exchanged shares of
Portfolios of the Fund held under a Contract, and the amount and dates of such
Contract owner's purchases, redemptions, transfers, and exchanges involving
such Portfolios; and (ii) execute any instructions from the Fund, directly or
through its agent, to restrict or prohibit further purchases or exchanges of
shares of the Portfolios by a Contract owner who has been identified by the
Fund, directly or through its agent, as having engaged in transactions in
Portfolio shares that violate the policies adopted by the Fund for the purpose
of eliminating or reducing any dilution of the value of the outstanding shares
of the Portfolio. The parties shall negotiate in good faith such additional
terms and conditions pertaining to (i) requesting and furnishing such
information, (ii) giving such instructions, (iii) executing such instructions
and (iv) such other matters pertaining to the implementation of Rule 22c-2 as
the parties may wish to address, including without limitation, reimbursement
of expenses the Company incurs in order to provide such information and to
process such orders of the Fund or its agent.
2.12
a. Company represents and warrants that it is in compliance and will
continue to be in compliance with all applicable anti-money laundering laws
and regulations, including the Bank Secrecy Act, as amended by the USA PATRIOT
Act, and implementing regulations of the Bank Secrecy Act ("BSA Regulations")
and applicable guidance issued by the SEC and the guidance and rules of the
applicable Exchanges, SROs and the NASD (collectively, "Guidance").
8
b. In connection with the Fund's reliance on Company to perform Customer
Identification Program ("CIP") procedures on its behalf, Company represents
and warrants that (1) Company is subject to a rule implementing 31 U.S.C.
5318(h) and maintains an anti-money laundering program consistent with the USA
PATRIOT Act and the rules thereunder; (2) Company is regulated by a Federal
functional regulator as that term is defined under 31.C.F.R. ss.103.120(a)(2);
(3) Company has implemented a CIP compliant with Section 326 and 31 C.F.R.
ss.103.137(b) that enables Company to form a reasonable belief that it knows
the true identity of its customers, including procedures to obtain information
from and verify the identity of customers, maintain records of the information
used to verify identity, determine whether the customer appears on any
government list of known or suspected terrorists or terrorist organizations,
and provide customers with adequate notice that the institution is requesting
information to verify their identities; and (4) Company will certify annually
that it has implemented its anti-money laundering program and that it or its
agent will perform all aspects of its CIP procedures with respect to customers
referred to the Fund by the Company.
c. Company represents and warrants that to the extent that any owner of
a Contract which provides for the allocation of purchase payments and Contract
value to subaccounts investing in shares of a Portfolio is a current or former
Senior Foreign Political Figure ("SFPF"), an immediate family member of a
SFPF, a person who is widely known (or is actually known by the Company) to
maintain a close personal relationship with any such individual, or a
corporation, business or other entity that has been formed by or for the
benefit of such individual, it has conducted appropriate due diligence of such
customer consistent with Section 312 of the USA PATRIOT Act and any applicable
BSA Regulations and Guidance.
d. Company represents and warrants that to the extent any owner of a
Contract is a foreign bank, it has taken reasonable measures and has obtained
certifications and will obtain re-certifications that indicate that such
Contract owner is not a foreign shell bank, as defined in the BSA Regulations.
e. Company will take all reasonable and practicable steps to ensure that
it does not accept or maintain investments in any Contract from:
(i) A person or entity (A) who is or becomes subject to
sanctions administered by the U.S. Office of Foreign Assets
Control ("OFAC"), is included in any executive order or is
on the list of Specially Designated Nationals and Blocked
Persons maintained by OFAC, or (B) whose name appears on
such other lists of prohibited persons and entities as may
be mandated by applicable U.S. law or regulation.
(ii) A foreign shell bank (i.e., a bank with no physical presence
in any country).
f. Company agrees that if the Fund, Underwriter or Adviser is required
to supply information, documentation or guidance to a securities regulatory
organization ("SRO") or government department or agency about the CIP of the
Fund or the Underwriter or the Adviser or the measures taken to obtain
information and to verify the identity of any owner of a Contract
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who has allocated purchase payments or Contract value to Portfolios available
under the Contract, Company shall allow such SRO or government department or
agency to examine its files pertaining to such Contract owner.
ARTICLE III. PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS;
VOTING
3.1. The Fund or its designee shall provide the Company with as many
printed copies of the Fund's current prospectus and statement of additional
information (and any supplements or amendments thereto) as the Company may
reasonably request. If requested by the Company, in lieu of providing printed
copies the Fund shall provide camera-ready film, electronic transmission or
computer diskettes containing the Fund's prospectus and statement of
additional information (and any supplements or amendments thereto), and such
other assistance as is reasonably necessary in order for the Company once each
year (or more frequently if the prospectus and/or statement of additional
information for the Fund is amended during the year) to have the prospectus
for the Contracts and the Fund's prospectus printed together in one document,
and to have the statement of additional information for the Fund and the
statement of additional information for the Contracts printed together in one
document. Alternatively, the Company may print the Fund's prospectus and/or
its statement of additional information (and any supplements or amendments
thereto) in combination with other fund companies' prospectuses and statements
of additional information. Upon request by the Company, the Fund will provide
written instruction to all Participating Insurance Companies including the
Company each time the Fund amends or supplements a Portfolio's current
prospectus or statement of additional information directing the Participating
Insurance Companies including the Company as to whether the amendment or
supplement is to be provided (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 the Company in
each instance will be identical to the instruction it provides other
Participating Insurance Companies.
3.2. Except as provided in Article III and Article V, all expenses of
preparing, setting in type, printing and distributing Fund prospectuses and
statements of additional information (and any supplements or amendments
thereto) shall be the expense of the Company. For prospectuses and statements
of additional information (and any supplements or amendments thereto) provided
by the Company to its Contract owners who currently own shares of one or more
Portfolios ("Existing Contract Owners"), in order to update disclosure or
otherwise provide information as required by the 1933 Act and/or the 1940 Act,
the cost of preparing, setting in type and printing shall be borne by the
Fund. If the Company chooses to receive camera-ready film, electronic
transmission or computer diskettes in lieu of receiving printed copies of the
Fund's prospectus and statement of additional information (and any supplements
or amendments thereto), the Fund shall bear the cost of typesetting to provide
such documents to the Company in the format in which the Fund is accustomed to
formatting them, and the Company shall bear the expense of adjusting or
changing the format to conform with any of its documents. In such event, the
Fund will reimburse the Company in an amount equal to the product of "x" and
"y", where "x" is the number of such prospectuses and statements of additional
information (and any supplements or amendments thereto) distributed to
Existing Contract Owners and "y" is the
10
Fund's per unit cost of printing such documents. The Company agrees to provide
the Fund or its designee with such information as may be reasonably requested
by the Fund to assure that the Fund's expenses do not include the costs of
printing, typesetting or distributing any prospectuses or statements of
additional information (or any supplements or amendments thereto) other than
the costs of printing and typesetting those prospectuses or statements of
additional information (or any supplements or amendments thereto) actually
distributed to Existing Contract Owners.
3.3. The statement of additional information of the Fund shall be
obtainable from the Fund, the Company or such other person as the Fund may
designate.
3.4. The Fund, at its expense, shall provide the Company with copies of
its proxy statements, reports to shareholders, and other communications
(except for prospectuses and statements of additional information, and any
supplements or amendments thereto, which are covered in Section 3.1) to
shareholders in such quantity as the Company shall reasonably require for
distributing to Existing Contract Owners. The Fund shall not pay any costs of
distributing such proxy materials, reports to shareholders and other
communications to prospective Contract owners.
3.5. If and to the extent required by law, the Company shall distribute
all proxy materials furnished by the Fund to Contract owners to whom voting
privileges are required to be extended and shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Portfolio shares in accordance with instructions
received from Contract owners; and
(iii) vote Portfolio shares for which no instructions have been
received in the same proportion as Portfolio shares for
which instructions have been received;
so long as and to the extent that the SEC continues to interpret the 1940 Act
to require pass-through voting privileges for variable contract owners. The
Company reserves the right to vote Portfolio shares held in any segregated
asset account in its own right, to the extent permitted by law. If the Company
is required to solicit voting instructions, the Fund and the Company shall
follow the procedures, and shall have the corresponding responsibilities, for
the handling of proxies and voting instruction solicitations, as set forth in
Schedule C attached hereto and incorporated herein by reference. Participating
Insurance Companies shall be responsible for ensuring that each of their
separate accounts participating in the Fund (and for which the soliciting of
voting instructions is required) calculates voting privileges in a manner
consistent with the standards set forth on Schedule C, which standards will
also be provided to the other Participating Insurance Companies.
3.6. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as
11
the SEC may interpret Section 16 of the 1940 Act not to require such meetings)
or comply with Section 16(c) of the 1940 Act (although the Fund is not one of
the trusts described in Section 16(c) of the 0000 Xxx) as well as with Section
16(a) of the 1940 Act and, if and when applicable, Section 16(b) of the 1940
Act. Further, the Fund will act in accordance with the SEC's interpretation of
the requirements of Section 16(a) of the 1940 Act with respect to periodic
elections of directors and with whatever rules the SEC may promulgate with
respect thereto.
3.7. The Fund will be responsible for calculating the performance
information for each Portfolio. The Company will be responsible for
calculating the performance information for the Contracts. The Fund agrees to
provide the Company with performance information for the Portfolios 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. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund, the Underwriter or the Adviser is named, at least
ten (10) Business Days prior to its use. No such material shall be used
without the prior approval of the Fund or its designee. The Fund shall use its
reasonable best efforts to review any such material as soon as practicable
after receipt and no later than ten (10) Business Days after receipt of such
material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund 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 the Fund shares, as such registration
statement, prospectus or statement of additional information may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund
which are in the public domain or approved by the Fund for distribution to
Fund shareholders, or in sales literature or other promotional material
approved by the Fund or its designee, except with the permission of the Fund.
The Fund agrees to respond to any request for approval under this Section 4.2
on a timely basis.
4.3. The Fund or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company and/or its Account(s) or
Contract(s) are named at least ten (10) Business Days prior to its use. No
such material shall be used without the prior approval of the Company or its
designee. The Company shall use its reasonable best efforts to review any such
material as soon as practicable after receipt and no later than ten (10)
Business Days after receipt of such material.
4.4. Neither the Fund nor the Adviser shall give any information or make
any representations 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 or prospectus for the Contracts, as such
registration statement or prospectus may be amended or supplemented from time
to time, or in reports or proxy statements for each Account which are in
12
the public domain or approved by the Company for distribution to Contract
owners, or in sales literature or other promotional material approved by the
Company or its designee, except with the permission of the Company.
4.5. 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 and
are relevant to the Company or the Contracts, as soon as reasonably
practicable after the filing of such document with the SEC.
4.6. 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
investment in the Fund or the Portfolios under the Contracts, as soon as
reasonably practicable after the filing of such document with the SEC.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: 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), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational
or training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, statements of additional information, shareholder reports, proxy
materials, and any other material constituting sales literature or
advertisements under the rules of the NASD, the 1933 Act or the 0000 Xxx.
4.8. The Adviser hereby authorizes the Company to use the following
branded names - "Xxx Xxxxxx" - in the Contracts, prospectus or statement of
additional information for the Contracts, or any materials used to market the
Contracts ("Company Material"), subject to the terms and conditions of
Sections 4.1 and 4.2 of this Agreement. The Company agrees not to use the name
"Xxxxxx Xxxxxxx" in any Company Material unless permitted and approved by the
Adviser; provided, however, that the Company may use such name where (i) in
the opinion of counsel to the Company, or as directed by the SEC, such use is
necessary to make the disclosures contained in the Company Material not
misleading and (ii) the Company provides the Adviser with prompt notice of the
required disclosure. It is understood that the names "Xxxxxx Xxxxxxx" and "Xxx
Xxxxxx" and any derivative thereof or logos associated with such names
(collectively, the "MS Names"), are the valuable property of the Adviser and
its affiliates and that the Company shall only have the right to use the MS
Names in Company Materials subject to the constraints set forth in this
Section and with the prior approval of the Adviser. Upon termination
13
of this Agreement, the Company shall, as soon as is reasonably possible, cease
to use the MS Names.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund shall pay no fee or other compensation to the Company
under this Agreement, except that if the Fund or any Portfolio adopts and
implements a service plan and/or a plan pursuant to Rule 12b-1, then the
Underwriter may make payments to the Company or to the underwriter for the
Contracts pursuant to such plans if and in amounts agreed to by the
Underwriter in writing.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by the Fund,
in accordance with applicable state laws prior to their sale. Except as
otherwise set forth in Article 3 of this Agreement, the Fund shall bear the
expenses for the cost of registration and qualification of the Fund's shares,
preparation and filing of the Fund's prospectus and registration statement,
proxy materials and reports, setting the prospectus in type, setting in type
and printing the proxy materials and reports to shareholders, the preparation
of all statements and notices required by any federal or state law, and all
taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, statement of additional information, proxy materials and reports
to owners of Contracts issued by the Company; provided, however, that the
Adviser or the Underwriter shall reimburse the Company for expenses associated
with the distribution of such materials to Existing Contract Owners.
ARTICLE VI. DIVERSIFICATION
6.1. The Fund will use its best efforts to at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event the Fund ceases to so qualify, it will take
reasonable steps to (a) notify the Company of such event and (b) adequately
diversify the Fund so as to achieve compliance within the grace period
afforded by Regulation 1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities;
14
(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 contract owners; or (f) a decision
by a Participating Insurance Company to disregard the voting instructions of
contract owners. The Fund shall promptly inform the Company if the Board
determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever Contract owner voting instructions are
disregarded. The Company agrees that these responsibilities will be carried
out with a view only to the interests of Contract owners. The Board will
record in its minutes, or other appropriate records, all reports received by
it and all Board action with regard to a conflict.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined by a majority of the
disinterested directors), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts (or
sub-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., annuity contract
----
owners, life insurance policy owners, or variable contract owners of one or
more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected contract owners the option of making
such a change; and (2) establishing a new registered management investment
company or managed separate account. No charge or penalty will be imposed as a
result of such withdrawal. The Company agrees that it bears the responsibility
to take remedial action in the event of a Board determination of an
irreconcilable material conflict and the cost of such remedial action, and
that these responsibilities will be carried out with a view only to the
interests of Contract owners.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account (at the Company's expense); provided, however that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. No charge or penalty will be imposed as a
result of such withdrawal. The Company agrees that it bears the responsibility
to take remedial action in the event of a Board determination of an
irreconcilable material conflict and the cost of such remedial action, and
that these responsibilities will be carried out with a view only to the
interests of Contract owners. Until the end of such withdrawal under this
Section 7.4 the Fund will, to the extent permitted by law and any SEC
15
exemptive relief granted to the Fund, continue to accept and implement orders
by the Company for the redemption of Portfolio shares in accordance with the
provisions of this Agreement.
7.5. For purposes of Sections 7.3 and 7.4 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 or 7.4 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 materially adversely
affected by the irreconcilable material conflict.
7.6. 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 Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3 and
7.4 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.
7.7. Each of the Company and the Adviser shall at least annually submit
to the Board such reports, materials or data as the Board may reasonably
request so that the Board may fully carry out the obligations imposed upon it
by the provisions hereof and in the Shared Funding Exemptive Order. Such
reports, materials and data shall be submitted more frequently if deemed
appropriate by the Board.
ARTICLE VIII. INDEMNIFICATION
8.1. Indemnification by the Company
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the
Fund, the Underwriter, the Adviser and each member of the Board and each
officer and employee of the Fund, and each director, officer and employee of
the Underwriter and the Adviser, and each person, if any, who controls the
Fund, the Underwriter or the Adviser within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" and individually, an
"Indemnified Party," for purposes of this Section 8.1) against any and all
losses, claims, 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 or regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
16
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact
contained in the registration statement, prospectus or
statement of additional information for the Contracts
or contained in the Contracts or sales literature for
the Contracts (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein
a material fact required to be stated therein or
necessary to make the statements therein not
misleading in light of the circumstances under which
they were made, provided that this agreement to
indemnify shall not apply as to any Indemnified Party
if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to the Company
by or on behalf of the Fund for use in the
registration statement or prospectus for the Contracts
or in the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus or sales literature of the Fund
not supplied by the Company, or persons under its
control and other than statements or representations
authorized by the Fund, the Underwriter or the
Adviser) or unlawful conduct of the Company or persons
under its control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained
in a registration statement, prospectus, or sales
literature of the Fund or any amendment thereof or
supplement thereto or the omission or alleged omission
to state therein a material fact required to be stated
therein or necessary to make the statements therein
not misleading in light of the circumstances under
which they were made, if such a statement or omission
was made in reliance upon and in conformity with
information furnished to the Fund by or on behalf of
the Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under
the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in
this Agreement or arise
17
out of or result from any other material breach of
this Agreement by the Company; or
(vi) arise out of or are based on the Company's lack of
good faith, gross negligence or willful misconduct in
carrying out its duties and responsibilities under
this Agreement, or any violation of applicable federal
or state law by the Company or persons under its
control.
Each of paragraphs (i) through (v) above is limited by and in accordance with
the provisions of Sections 8.1(b) through (d) below.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may arise
from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Company of
any such claim shall not relieve the Company from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The Company
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Company
to such party of the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Company will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
8.1(d). Except as expressly stated herein, in no event will the
Company be responsible to an Indemnified Party for any consequential, punitive
or exemplary damages of any kind arising from this Agreement.
8.1(e). The Fund or the Adviser, as applicable, will promptly
notify the Company of the commencement of any litigation or proceedings
against an Indemnified Party in connection with this Agreement, the issuance
or sale of the Fund shares or the Contracts, or the operation of the Fund.
18
8.2. Indemnification by the Adviser
------------------------------
8.2(a). The Adviser agrees to indemnify and hold harmless the
Company and each of its directors, officers and employees, and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually, an "Indemnified
Party," for purposes of this Section 8.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Adviser) or litigation (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of shares of a Portfolio
and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact
contained in the registration statement, prospectus,
statement of additional information or sales
literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state
therein a material fact required to be stated therein
or necessary to make the statements therein not
misleading in light of the circumstances under which
they were made, provided that this agreement to
indemnify shall not apply as to any Indemnified Party
if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to the Fund, the
Underwriter or the Adviser by or on behalf of the
Company for use in the registration statement or
prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Portfolio
shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus or sales literature for the
Contracts not supplied by the Fund or the Adviser or
persons under their respective control and other than
statements or representations authorized by the
Company) or unlawful conduct of the Fund or the
Adviser or persons under their respective control,
with respect to the sale or distribution of the
Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained
in a registration statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statement or statements therein not misleading in
light of the circumstances under which
19
they were made, if such statement or omission was made
in reliance upon information furnished to the Company
by or on behalf of the Fund or the Adviser; or
(iv) arise as a result of any failure by the Adviser to
provide the services and furnish the materials under
the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser in
this Agreement or arise out of or result from any
other material breach of this Agreement by the
Adviser; or
(vi) arise out of or are based on the Adviser's lack of
good faith, gross negligence or willful misconduct in
carrying out its duties and responsibilities under
this Agreement, or any violation of applicable federal
or state law by the Adviser or persons under its
control.
Each of paragraphs (i) through (v) above is limited by and in accordance with
the provisions of Sections 8.2(b) through (d) below.
8.2(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may arise
from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties under
this Agreement.
8.2(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Adviser of
any such claim shall not relieve the Adviser from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Adviser will be entitled to
participate, at its own expense, in the defense thereof. The Adviser also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Adviser to such party of
the Adviser's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Adviser will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
20
8.2(d). Except as expressly stated herein, in no event will the
Adviser be responsible to an Indemnified Party for any consequential, punitive
or exemplary damages of any kind arising from this Agreement.
8.2(e). The Company will promptly notify the Adviser of the
commencement of any litigation or proceedings against an Indemnified Party in
connection with this Agreement, the issuance or sale of the Contracts or the
operation of the Account(s).
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may
grant (including, but not limited to, the Shared Funding Exemptive Order) and
the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties, unless otherwise agreed
in writing among the parties; or
(b) termination by the Company by written notice to the Fund and
the Adviser with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably available to
meet the requirements of the Contracts; provided, however, that said
termination shall become effective ten (10) days after receipt of notice
unless the Fund makes available a sufficient number of shares of the Portfolio
to reasonably meet the requirements of the Contracts within said ten (10) day
period; or
(c) termination by the Company by written notice to the Fund and
the Adviser with respect to any Portfolio in the event that any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued or to be
issued by the Company; or
(d) termination by the Company by written notice to the Fund and
the Adviser with respect to any Portfolio in the event that such Portfolio
ceases to qualify as a Regulated Investment Company under Subchapter M of the
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
21
(e) termination by the Company by written notice to the Fund and
the Adviser with respect to any Portfolio in the event that such Portfolio
fails to meet the diversification requirements specified in Article VI hereof,
or if the Company reasonably and in good faith believes that the Fund may fail
to so qualify; or
(f) termination by the Fund or the Adviser by written notice to
the Company if the Fund or the Adviser, as applicable, shall determine, in its
sole judgment exercised in good faith, that the Company and/or its affiliated
companies has suffered a material adverse change in its business, operations
or financial condition since the date of this Agreement or is the subject of
material adverse publicity; or
(g) termination by the Company by written notice to the Fund and
the Adviser, if the Company shall determine, in its sole judgment exercised in
good faith, that the Fund, the Underwriter or the Adviser has suffered a
material adverse change in its business, operations or financial condition
since the date of this Agreement or is the subject of material adverse
publicity; or
(h) termination by the Fund or the Adviser by written notice to
the Company, if the Company gives the Fund and the Adviser the written notice
specified in Section 1.5 hereof and at the time such notice was given there
was no notice of termination outstanding under any other provision of this
Agreement; provided, however, any termination under this Section 10.1(h) shall
be effective forty-five (45) days after the notice specified in Section 1.5
was given; or
(i) termination by any party to this Agreement upon another
party's material breach of any provision of this Agreement; or
(j) termination by the Fund or the Adviser upon institution of
formal proceedings against the Company by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale or administration
of the Contracts, the operation of the Account(s), or the purchase of Fund
shares, provided that the Fund or the Adviser, as applicable, determines in
its sole judgment exercised in good faith, that any such proceedings would
have a material adverse effect on the Company's ability to perform its
obligations under this Agreement; or
(k) termination by the Company 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
duties of the Fund or the Adviser under this Agreement or related to the sale
of Fund shares or the administration of the Fund, provided that the Company
determines in its sole judgment exercised in good faith, that any such
proceedings would have a material adverse effect on the ability of the Fund or
the Adviser, as applicable, to perform its obligations under this Agreement.
10.2. Notwithstanding any termination of this Agreement with respect to
a Portfolio, the Fund shall at the option of the Company continue to make
available additional shares of the Portfolio, pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on
22
the effective date of termination of this Agreement (the "Existing
Contracts"), unless such further sale of Portfolio shares is proscribed by
law, regulation or applicable regulatory authority, or unless the Board
determines that liquidation of the Portfolio following termination of this
Agreement is in the best interests of the Portfolio. Specifically, subject to
the foregoing, the owners of the Existing Contracts shall be permitted to
direct reallocation of investments in the Portfolio, redemption of investments
in the Portfolio and/or investment in the Portfolio upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 10.2 shall not apply to any terminations under Article VII
and the effect of such Article VII terminations shall be governed by Article
VII of this Agreement.
10.3. The provisions of Article VIII and Sections 12.2 and 12.3 will
survive the termination of this Agreement and, as long as shares of the
Portfolios are held under Existing Contracts in accordance with Section 10.2,
the provisions of this Agreement (to the extent applicable) will survive the
termination of this Agreement with respect to those Existing Contracts.
10.4. In the event that the Fund intends to liquidate the assets of a
Portfolio and terminate its existence or otherwise reorganize or merge a
Portfolio, the Adviser agrees to reimburse the Company for the Company's costs
associated with substituting shares of another registered investment company
(including a cash management vehicle) for shares of the Portfolio or costs
associated with eliminating the Portfolio as an investment option under the
Contracts, as appropriate, provided that such costs are required, or are
otherwise the result of actions that are required, under applicable law, rules
or regulations. The Adviser's obligation to reimburse the Company's costs
under this Section shall be limited to: (i) reasonable legal expenses in
preparing and filing an application for a substitution order with the SEC
(where such order is required to be obtained under applicable law, rules or
regulations), (ii) expenses for printing and distributing disclosure of the
substitution of shares or the elimination of the Portfolio as an investment
option under the Contracts, and (iii) reasonable expenses associated with
operational (i.e., systems and technology) issues to facilitate the
substitution of shares or the elimination of the Portfolio as an investment
option under the Contracts. The Company agrees to use its best efforts to
minimize any costs incurred under this Section and shall provide the Adviser
with acceptable documentation of any such costs incurred.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in
writing to the other party.
23
If to the Fund:
Xxx Xxxxxx Life Investment Trust
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: President
If to the Adviser:
Xxx Xxxxxx Asset Management
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: President
If to the Underwriter:
Xxx Xxxxxx Funds Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: President
If to the Company:
American Enterprise Life Insurance Company
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Vice President
with a copy to:
American Enterprise Life Insurance Company
50607 Ameriprise Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel's Office
IDS Life Insurance Company
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Vice President
24
with a copy to:
IDS Life Insurance Company
50607 Ameriprise Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel's Office
ARTICLE XII. MISCELLANEOUS
12.1. 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
Board, officers, agents or shareholders of the Fund assume any personal
liability for obligations entered into on behalf of the Fund. Each of the
Company, the Underwriter and the Adviser acknowledges and agrees that, as
provided by the Fund's Agreement and Declaration of Trust, the shareholders,
trustees, officers, employees and other agents of the Fund and the Portfolios
shall not personally be bound by or be liable for matters set forth hereunder,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim hereunder. A Certificate of Trust referring to the Fund's
Agreement and Declaration of Trust is on file with the Secretary of State of
Delaware.
12.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential any "non-public
personal information" about any "consumer" of another party (as such terms are
defined in SEC Regulation S-P) and any other information reasonably identified
as confidential in writing by another party ("Confidential Information"). Each
party agrees not to disclose, disseminate or utilize another party's
Confidential Information except: (i) as permitted by this Agreement, (ii) upon
the written consent of the other party, (iii) where the Confidential
Information comes into the public domain through no fault of the party
receiving the information, or (iv) where the Confidential Information is
already known to the receiving party through lawful means prior to disclosure,
or (v) as otherwise required or permitted under applicable law. Each party
agrees to ensure the security and confidentiality of Confidential Information,
to protect such information against any threats or hazards to the security or
integrity of such information, and to protect against unauthorized access to,
or use of, Confidential Information. Each party agrees to cause those
employees, or any other party, to whom it may provide access to or disclose
Confidential Information to limit the use and disclosure of such information
in accordance with the terms of this Agreement.
Each party acknowledges that any breach of the agreements in this
Section 12.2 could result in immediate and irreparable harm for which there
would be no adequate remedy at law and agree that, in the event of such a
breach, the party so aggrieved will be entitled to equitable relief by way of
temporary and permanent injunctions, as well as such other relief as any court
of competent jurisdiction deems appropriate.
12.3. The Fund and the Adviser acknowledge that all computer programs
and procedures or other information developed by the Company or its affiliates
or any of their employees or agents in connection with the Company's
performance of its duties under this Agreement are the valuable property of
the Company and its affiliates.
25
12.4. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.5. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.6. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.7. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the National Association of Securities Dealers and state insurance regulators)
and shall permit such authorities reasonable access to its books and records
in connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby. Notwithstanding the generality of the
foregoing, each party hereto further agrees to furnish state insurance
authorities with any information or reports in connection with services
provided under this Agreement which such authorities may request in order to
ascertain whether the insurance operations of the Company are being conducted
in a manner consistent with applicable law and regulations.
12.8. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations at law or in equity, which the parties hereto are entitled to
under state and federal laws.
12.9. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Adviser may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Adviser, if such assignee is duly licensed and registered to
perform the obligations of the Adviser under this Agreement and the Company is
provided notice of such assignment.
12.10. If requested by the Fund or the Adviser, the Company shall
furnish, or shall cause to be furnished, to the requesting party or its
designee copies of the following documents:
(a) the Company's annual report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon as practical and in any event
within ninety (90) days after the end of each fiscal year;
(b) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon as practical
after the delivery thereof to stockholders;
26
(c) any registration statement (without exhibits) and financial
reports of the Company filed with the SEC or any state insurance regulator, as
soon as practical after the filing thereof; and
(d) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Company, as soon as practical after the receipt
thereof.
12.11. Unless otherwise specifically provided in this Agreement, no
provision of this Agreement may be amended or modified in any manner except by
a written agreement executed by all parties.
12.12. 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.
27
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified above.
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
IDS LIFE INSURANCE COMPANY
BY: /S/ XXX. X. XXXXX III
------------------------------------------
NAME: XXX X. XXXXX III
TITLE: VICE PRESIDENT OF EACH COMPANY
ATTESTED BY:
/S/ XXXXX XXXXXX
------------------------------------------
NAME: XXXXX XXXXXX
TITLE: ASSISTANT SECRETARY OF EACH COMPANY
XXX XXXXXX LIFE INVESTMENT TRUST
BY: /S/ XXXXX XXXXXXX
------------------------------------------
NAME: XXXXX XXXXXXX
TITLE: CFO
XXX XXXXXX ASSET MANAGEMENT
BY: /S/ XXXXXX XXXX
------------------------------------------
NAME: XXXXXX XXXX
TITLE: MANAGING DIRECTOR
XXX XXXXXX FUNDS INC.
BY: /S/ XXXXXX XXXXXXX
------------------------------------------
NAME: XXXXXX XXXXXXX
TITLE: MANAGING DIRECTOR
28
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
------------------------------------------
OF AMERICAN ENTERPRISE LIFE
---------------------------
NAME OF SEPARATE ACCOUNT AND NAME OF CONTRACT AND FORM NUMBER
DATE ESTABLISHED BY BOARD OF DIRECTORS FUNDED BY SEPARATE ACCOUNT
-------------------------------------- --------------------------
American Enterprise Variable Annuity Account RiverSource(SM) AccessChoice Select(SM)
(established July 15, 1987) 273399 and 273401 and state variations thereof
RiverSource(SM) Endeavor Select(SM)
273400 and 273402 and state variations thereof
RiverSource(SM) FlexChoice(SM) Select Variable Annuity
272876 and state variations thereof
RiverSource(SM) Innovations(R) Classic Select
Variable Annuity
272646 and 272877 and state variations thereof
RiverSource(SM) Innovations(R) Select Variable Annuity
272646 and 272877 and state variations thereof
RiverSource(SM) Signature One Select Variable Annuity
272876 and state variations thereof
RiverSource(SM) Signature Select Variable Annuity(R)
272876 and state variations thereof
Evergreen New Solutions Select Variable Annuity
272646 and 272877 and state variations thereof
Evergreen New Solutions Variable Annuity
Schedule A page 1 of 2
240343 and state variations thereof
Evergreen Pathways(SM) Select Variable Annuity
272876 and state variations thereof
Evergreen Pathways(SM) Variable Annuity
271491 and 271496 and state variations thereof
Evergreen Privilege(SM) Variable Annuity
271498 and state variations thereof
Evergreen Essential(SM) Variable Annuity
271552 and state variations thereof
Xxxxx Fargo Advantage Select Variable Annuity
272646 and 272877 and state variations thereof
Xxxxx Fargo Advantage Builder Select Variable Annuity
272876 and state variations thereof
Xxxxx Fargo Advantage Choice Select Variable Annuity
272876 and state variations thereof
Schedule A page 2 of 2
SCHEDULE A-1
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
------------------------------------------
OF IDS LIFE
-----------
NAME OF SEPARATE ACCOUNT AND NAME OF CONTRACT AND FORM NUMBER
DATE ESTABLISHED BY BOARD OF DIRECTORS FUNDED BY SEPARATE ACCOUNT
-------------------------------------- --------------------------
IDS Life Variable Account 10 (established RiverSource(SM) Retirement Advisor 4
August 23, 1995) Advantage; Contract Form Number 131101-US
and state variations thereof
RiverSource(SM) Retirement Advisor 4 Select;
Contract Form Number 131102-US and state
variations thereof
RiverSource(SM) Retirement Advisor 4 Access;
Contract Form Number 131103-US and state
variations thereof
RiverSource(SM) Retirement Advisor Select
Plus(R) Variable Annuity; Contract Form
Number 131041A and state variations thereof
RiverSource(SM) Retirement Advisor Select(SM)
Variable Annuity; Contract Form Numbers
131041, 131042 and 131043 and state variations
thereof
RiverSource(SM) Retirement Advisor Advantage
Plus(R) Variable Annuity; Contract Form
Number 31041A and state variations thereof
RiverSource(SM) Retirement Advisor Advantage(SM)
Variable Annuity and RiverSource(SM) Retirement
Advisor Advantage(SM) Variable Annuity - Band 3;
Contract Form Numbers 31043, 31044, 31045-XXX, 31046,
31047, 31048-XXX and state variations thereof
Schedule A-1 page 1 of 2
RiverSource(SM) Retirement Advisor Variable
Annuity(R) and RiverSource(SM) Retirement Advisor
Variable Annuity(R) - Band 3; Contract Form Numbers
31043, 31044, 31045-XXX, 31046, 31047, 31048-XXX
and state variations thereof
Schedule A-1 page 2 of 2
SCHEDULE B
PORTFOLIOS OF XXX XXXXXX LIFE INVESTMENT TRUST
AVAILABLE UNDER THIS AGREEMENT
------------------------------
FOR AMERICAN ENTERPRISE LIFE
----------------------------
Class II Shares
---------------
Xxxxxxxx Portfolio - Class II Shares
Growth & Income Portfolio - Class II Shares
SCHEDULE B-1
PORTFOLIOS OF XXX XXXXXX LIFE INVESTMENT TRUST
AVAILABLE UNDER THIS AGREEMENT
------------------------------
FOR IDS LIFE
------------
Class II Shares
---------------
Xxxxxxxx Portfolio - Class II shares
SCHEDULE C
PROXY VOTING PROCEDURES
-----------------------
The following is a list of procedures and corresponding responsibilities for
the handling of proxies and voting instructions relating to the Fund. The
defined terms herein shall have the meanings assigned in the Participation
Agreement except that the term "Company" shall also include the department or
third party assigned by the Company to perform the steps delineated below.
o The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of
voting instructions from Contract owners and to facilitate the
establishment of tabulation procedures. At this time the Fund will
inform the Company of the Record, Mailing and Meeting dates. This will
be done verbally approximately two months before the shareholder
meeting.
o Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each Contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call
in the number of Customers to the Fund, as soon as possible, but no
later than two weeks after the Record Date.
o The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting
instruction solicitation material. The Fund will provide the last Annual
Report to the Company pursuant to the terms of Section 3.4 of the
Participation Agreement to which this Schedule relates.
o The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense,
shall produce and personalize the Voting Instruction Cards. The Fund or
its affiliate must approve the Card before it is printed. Allow
approximately 2-4 Business Days for printing information on the Cards.
Information commonly found on the Cards includes:
- name (legal name as found on account registration)
- address
- fund or account number
- coding to state number of units
- individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
o During this time, the Fund will develop, produce and pay for the Notice
of Proxy and the Proxy Statement (one document). Printed and folded
notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by
the Company). Contents of envelope sent to Customers by the Company will
include:
- Voting Instruction Card(s)
- One proxy notice and statement (one document)
- return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
- "urge buckslip" - optional, but recommended (this is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important; one copy will be
supplied by the Fund.)
- cover letter - optional; supplied by Company and reviewed and
approved in advance by the Fund
o The above contents should be received by the Company approximately 3-5
Business Days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to the Fund.
o Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
---
including,) the shareholder meeting, counting backwards.
o Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used.
An often used procedure is to sort Cards on arrival by proposal into
vote categories of all yes, no, or mixed replies, and to begin data
entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by the Fund in the past.
o Signatures on Card checked against legal name on account registration
that was printed on the Card.
Note: For Example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card
and is the signature needed on the Card.
o If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter and a new Card and return envelope. The mutilated or illegible
Card is disregarded and considered to be not received for purposes of
------------
vote tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to
why they did not complete the system. Any questions on those Cards are
usually remedied individually.
o There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
o The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) The Fund must
------
review and approve tabulation format.
o Final tabulation in shares is verbally given by the Company to the Fund
on the morning of the shareholder meeting not later than 10:00 a.m.
Eastern time. The Fund may request an earlier deadline if reasonable and
if required to calculate the vote in time for the shareholder meeting.
o A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Fund will provide a standard form for each Certification.
o The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will
be permitted reasonable access to such Cards.
o All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
