AMENDED AND RESTATED
PARTICIPATION AGREEMENT
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT ("Agreement"), made
and entered into as of the 9th day of June, 2006 by and among the following
parties:
o AMERICAN ENTERPRISE LIFE INSURANCE COMPANY ("American Enterprise
Life"), organized under the laws of the State of Indiana on its
own behalf and on behalf of each of its separate accounts named in
Schedule 1 to this Agreement, as may be amended from time to time
(each account referred to as an "Account");
o IDS LIFE INSURANCE COMPANY ("IDS Life"), organized under the laws
of the State of Minnesota, on its own behalf and on behalf of each
of its separate accounts named in Schedule 1 to this Agreement, as
may be amended from (each account referred to as the "Account");
Each of American Enterprise Life and IDS Life hereinafter also referred to
as a "Company";
o GOLDMAN XXXXX VARIABLE INSURANCE TRUST ("Trust"), a statutory
trust formed under the laws of Delaware; and
o GOLDMAN, SACHS & CO., a New York limited partnership (the
"Distributor").
WHEREAS, the Trust engages in business as an open-end management
investment company of the series-type mutual fund offering shares of
beneficial interest (the "Trust shares") consisting of one or more separate
series ("Series") of shares, each such Series representing an interest in a
particular investment portfolio of securities and other assets (a "Fund"),
and which Series is subdivided into various classes ("Classes") with each
such Class supporting a distinct charge and expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for life insurance company separate accounts supporting
variable annuity contracts and variable life insurance policies to be
offered by insurance companies and may also be utilized by qualified
retirement plans; and
WHEREAS, an order of the Securities and Exchange Commission dated
February 2, 1998, (File No. 812-10794) grants certain separate accounts
supporting variable life insurance policies, their life insurance company
depositors, and their principal underwriters, exemptions from Sections 9(a),
13(a), 15(a) and 15(b) of the Investment Company Act of 1940, and from Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary for such
separate accounts to purchase and hold Trust shares at the same time that
such shares are sold to or held by separate accounts of affiliated and
unaffiliated insurance companies supporting either variable annuity
contracts or variable life insurance policies, or both, or by qualified
pension and retirement plans (the "SEC Order"); and
WHEREAS, the Distributor has the exclusive right to distribute Trust
shares to qualifying investors; and
WHEREAS, the Company desires that the Trust serve as an investment
vehicle for a certain separate account(s) of the Company and the Distributor
desires to sell shares of certain Series and/or Class(es) to such separate
account(s); and
WHEREAS, the Distributor, American Centurion Life, IDS Life of New
York, American Enterprise Life Insurance Company, IDS Life Insurance Company
and American Express Financial Advisors, Inc. have previously entered into
an Amended and Restated Master Agreement as of January 1, 2000 ("Master
Agreement") which will be terminated upon execution of this Agreement, and
as a result, the parties wish to amend and restate their related
participation agreements for that reason; and
WHEREAS, American Enterprise Life and IDS Life wish to amend and
restate their existing participation agreements with the Trust and the
Distributor in anticipation of the merger of American Enterprise Life with
and into IDS Life.
NOW, THEREFORE, in consideration of their mutual promises, the Trust,
the Distributor and the Company agree as follows:
ARTICLE I
ADDITIONAL DEFINITIONS
1.1. "Accounts"--the separate accounts of the Company described more
specifically in Schedule 1 to this Agreement as may be amended by the
parties from time to time. If more than one separate account is described on
Schedule 1, the term shall refer to each separate account so described.
1.2. "Business Day"--each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.3. "Code"--the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.4. "Contracts"--the class or classes of variable annuity contracts
and/or variable life insurance policies issued by the Company and described
more specifically on Schedule 1 to this Agreement as amended by the parties
from time to time.
1.5. "Contract Owners"--the owners of the Contracts, as distinguished
from all Product Owners.
1.6. "Participating Account"--a separate account investing all or a
portion of its assets in the Trust, including the Accounts.
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1.7. "Participating Insurance Company"--any insurance company with a
Participating Account, including the Company.
1.8. "Participating Plan"--any qualified retirement plan investing in
the Trust.
1.9. "Participating Investor"--any Participating Account, Participating
Insurance Company or Participating Plan, including the Accounts and the
Company.
1.10. "Products"--variable annuity contracts and variable life
insurance policies supported by Participating Accounts, including the
Contracts.
1.11. "Product Owners"--owners of Products, including Contract Owners.
1.12. "Trust Board"--the board of trustees of the Trust.
1.13. "Registration Statement"--with respect to the Trust shares or a
class of Contracts, the registration statement filed with the SEC to
register such securities under the 1933 Act, or the most recently filed
amendment thereto, in either case in the form in which it was declared or
became effective. The Contracts' Registration Statement for each class of
Contracts is described more specifically on Schedule 1B to this Agreement.
The Trust's Registration Statement is filed on Form N-1A (File No.
333-35883).
1.14. "1940 Act Registration Statement"--with respect to the Trust or
the Schedule 1 Accounts, the registration statement filed with the SEC to
register such person as an investment company under the 1940 Act, or the
most recently filed amendment thereto. The Schedule 1 Accounts' 1940 Act
Registration Statements are described more specifically on Schedule 1A to
this Agreement. The Trust's 1940 Act Registration Statement is filed on Form
N-1A (File No. 811-08361).
1.15. "Prospectus"--with respect to shares of a Series (or Class) of
the Trust or a class of Contracts, each version of the definitive prospectus
or supplement thereto filed with the SEC pursuant to Rule 497 under the 1933
Act. With respect to any provision of this Agreement requiring a party to
take action in accordance with a Prospectus, such reference thereto shall be
deemed to be to the version for the applicable Series, Class or Contracts
last so filed prior to the taking of such action. For purposes of Article
IX, the term "Prospectus" shall include any statement of additional
information incorporated therein.
1.16. "Schedule 1 Accounts"--Accounts registered under the 1940 Act as
unit investment trusts and listed on Schedule 1.
1.17. "Schedule 1 Contracts"--Contracts through which interests in
Schedule 1 Accounts are offered and issued, which interests are registered
as securities under the 1933 Act.
1.18. "Statement of Additional Information"--with respect to the shares
of the Trust or a class of Contracts, each version of the definitive
statement of additional information or supplement thereto filed with the SEC
pursuant to Rule 497 under the 1933 Act. With respect to
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any provision of this Agreement requiring a party to take action in
accordance with a Statement of Additional Information, such reference
thereto shall be deemed to be the last version so filed prior to the taking
of such action.
1.19. "SEC"--the Securities and Exchange Commission.
1.20. "NASD"--The National Association of Securities Dealers, Inc.
1.21. "1933 Act"--the Securities Exchange Act of 1933, as amended.
1.22. "1940 Act"--the Investment Company Act of 1940, as amended.
ARTICLE A
COMPANY REORGANIZATION
A.1. MERGER AND RENAMING. The Trust and the Distributor acknowledge the
planned merger of American Enterprise Life with and into IDS Life (the
"Merger") and the "intact transfer" (the "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 (the "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 shall mean and refer to RiverSource
Life Insurance Company. The Trust and the Distributor consent to the
transfer of the rights and obligations of American Enterprise Life under
this Agreement to IDS Life at the Effective Time of the Merger.
A.2 FORM OF AGREEMENT. This Agreement shall amend and supersede the
following agreements as of the date stated above among the Company named
therein, the Trust and the Distributor with respect to all investments by the
Company and its Accounts prior to the date of this Agreement, as though
identical separate agreements had been executed by the parties hereto on the
dates as indicated below:
o Participation Agreement, dated April 1, 1999, by and
among American Enterprise Life, the Trust and the
Distributor, as amended by the following documents: (a)
Amendment No. 1 to Participation Agreement dated
September 13, 2002; (b) Amendment No. 2 to Participation
Agreement dated January 1, 2003; and (c) Amendment No. 3
to Participation Agreement dated April 30, 2004.
o Participation Agreement, dated September 1, 1999, by and
among IDS Life, the Trust and the Distributor, as
amended by the following documents: (a) Amendment No. 1
to Participation Agreement dated May 1, 2001; (b)
Amendment No. 2 to Participation Agreement dated
September 13, 2002; (c) Amendment No. 3 to Participation
Agreement dated October
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30, 2002; and (d) Amendment No. 4 to Participation
Agreement dated September 30, 2003.
Although the parties have executed this Agreement in this form for
administrative convenience, this Agreement shall create separate
participation agreements between each Company and the Trust until the
Effective Time of the Merger.
ARTICLE II
SALE OF TRUST SHARES
2.1. AVAILABILITY OF SHARES.
(a) The Trust has granted to the Distributor exclusive authority to
distribute the Trust shares and to select which Series or Classes of
Trust shares shall be made available to Participating Investors.
Pursuant to such authority, and subject to Article X hereof, the
Distributor shall make available to the Company for purchase on behalf
of the Accounts, shares of the Series and Classes listed on Schedule 1
to this Agreement, as amended by the parties from time to time, such
purchases to be effected at net asset value and with no sales charge in
accordance with Section 2.3 of this Agreement. The Distributor shall
make such Series and Classes available to the Company in accordance
with the terms and provisions of this Agreement until: (i) this
Agreement is terminated pursuant to Article X, or (ii) the Distributor
suspends or terminates the offering of shares of such Series or Classes
in the circumstances described in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or
Classes of Trust shares in existence now or in the future will be made
available to the Company only as the Distributor may so provide,
subject to the Distributor's rights set forth in Article X to suspend
or terminate the offering of shares of any Series or Class or to
terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may
revoke the Distributor's authority pursuant to the terms and conditions
of its distribution agreement with the Distributor, and (ii) the Trust
reserves the right in its sole discretion, exercised in good faith, to
refuse to accept a request for the purchase of Trust shares.
2.2. REDEMPTIONS. The Trust shall redeem, at the Company's request, any
full or fractional Trust shares held by the Company on behalf of the
Account, such redemptions to be effected at net asset value in accordance
with Section 2.3 of this Agreement. Notwithstanding the foregoing: (a) the
Company shall not redeem Trust shares attributable to Contract Owners except
in the circumstances permitted in Article X of this Agreement, and (b) the
Trust may delay redemption of Trust shares of any Series or Class to the
extent permitted by the 1940 Act, any rules, regulations or orders
thereunder, or the Prospectus for such Series or Class.
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2.3. PURCHASE AND REDEMPTION PROCEDURES.
(a) The Trust hereby appoints the Company as an agent of the Trust
for the limited purpose of receiving purchase and redemption requests
on behalf of the Schedule 1 Accounts (but not on behalf of any Trust
shares that may be held in the Company's general account) for shares of
those Series or Classes made available hereunder, based on transactions
in Account Units of the Schedule 1 Accounts under the Schedule 1
Contracts. Receipt of any such requests (or effectuation of such
transaction or processing) on any Business Day by the Company as such
limited agent of the Trust prior to the Trust's close of business as
defined from time to time in the applicable Prospectus for such Series
or Class (which as of the date of execution of this Agreement is the
close of regular trading on the New York Stock Exchange (normally 4:00
p.m. New York Time)) shall constitute receipt by the Trust on that
Business Day, provided that the Trust receives actual and sufficient
notice of such request by 9:30 a.m. New York Time (8:30 a.m. Central
Time) on the next following Business Day. The Trust reserves discretion
to extend the time by which notice must be received in accordance with
the preceding sentence on a case by case basis if a Fund experiences a
delay in calculating its net asset value which extends past 7:00 p.m.
New York Time (6:00 p.m. Central Time) in accordance with Section 2.4
hereof. Such notice may be communicated by telephone to the office or
person designated for such notice by the Trust and shall be confirmed
by facsimile.
(b) The Company shall pay for shares of each Series or Class on the
same day that it provides actual notice to the Trust of a purchase
request for such shares. Payment for Series or Class shares shall be
made in federal funds transmitted to the Trust by wire. Such wire
transfer will be initiated by the Company's bank by 2:00 p. m. Eastern
Time (1:00 p.m. Central time) and received by the Trust by the close of
business of the federal funds wire system on the day the Trust receives
actual notice of the purchase request for Series or Class shares
(unless the Trust determines and so advises the Company that sufficient
proceeds are available from redemption of shares of other Series or
Classes effected pursuant to redemption requests tendered by the
Company on behalf of the Account). In no event may proceeds from the
redemption of shares requested pursuant to an order received by the
Company after the Trust's close of business on any Business Day be
applied to the payment for shares for which a purchase order was
received prior to the Trust's close of business on the same day. If the
issuance of Trust shares is canceled because federal funds are not
timely received, the Company shall indemnify the respective Fund and
Distributor with respect to all costs, expenses and losses relating
thereto. Upon the Trust's receipt of federal funds so wired, such funds
shall cease to be the responsibility of the Company and shall become
the responsibility of the Trust. If federal funds are not received on
time, such funds will be invested at the net asset value next computed
after receipt of such funds, and Trust shares purchased thereby will be
issued but in any event not on the same day that the purchase order was
received.
(c) Payment for Trust shares redeemed by the Accounts or the
Company shall be made in federal funds transmitted by wire to the
Company or any other person properly designated in writing by the
Company, such funds normally to be transmitted by
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6:00 p.m. New York Time (5:00 p.m. Central Time) on the next Business
Day after the Trust receives actual notice of the redemption order for
such shares (unless redemption proceeds are to be applied to the
purchase of Trust shares of other Series or Classes in accordance with
Section 2.3(b) of this Agreement), except that the Trust reserves the
right to redeem trust shares in assets other than cash and to delay
payment of redemption proceeds to the extent permitted by the 1940 Act,
any rules or regulations or orders thereunder, or the applicable
Prospectus. In any event, absent extraordinary circumstances specified
in Section 22(e) of the 1940 Act, the Trust shall make such payment
within five (5) calendar days after the date the redemption order is
placed in order to enable the Company to pay redemption proceeds within
the time specified in Section 22(e) of the 1940 Act or such shorter
period of time as may be required by law. The Trust shall not bear any
responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds by the Company or the Accounts; the Company alone
shall be responsible for such action.
(d) Any purchase or redemption request for Trust shares held or to
be held in the Company's general account, shall be effected at the net
asset value per share next determined after the Trust's actual receipt
of such request, provided that, in the case of a purchase request,
payment for Trust shares so requested is received by the Trust in
federal funds prior to close of business for determination of such
value, as defined from time to time in the Prospectus for such Series
or Class.
(e) Prior to the first purchase of any Trust shares hereunder, the
Company and the Trust shall provide each other with all information
necessary to effect wire transmissions of federal funds to the other
party and all other designated persons pursuant to such protocols and
security procedures as the parties may agree upon. Should such
information change thereafter, the Trust and the Company, as
applicable, shall notify the other in writing of such changes,
observing the same protocols and security procedures, at least three
Business Days in advance of when such change is to take effect. The
Company and the Trust shall observe customary procedures to protect the
confidentiality and security of such information, but neither party
shall be liable to the other party for any breach of security.
(f) The procedures set forth herein are subject to any additional
terms set forth in the applicable Prospectus for the Series or Class or
by the requirements of applicable law.
2.4. NET ASSET VALUE. The Trust shall use its best efforts to inform
the Company of the net asset value per share for each Series or Class
available to the Company as soon as reasonably practicable after the net
asset value per share for such Series or Class is calculated. The Trust
shall calculate such net asset values in accordance with the Prospectus for
such Series or Class.
2.5. DIVIDENDS AND DISTRIBUTIONS. The Trust shall furnish same-day
notice by wire or telephone (followed by written confirmation) on or prior
to the payment date to the Company of any income dividends or capital gain
distributions payable on any Series or Class shares. The
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Company, on its behalf and on behalf of the Accounts, hereby elects to
receive all such dividends and distributions as are payable on any Series or
Class shares in the form of additional shares of that Series or Class. The
Company reserves the right, on its behalf and on behalf of the Accounts, to
revoke this election and to receive all such dividends and capital gain
distributions in cash; to be effective, such revocation must be made in
writing and received by the Trust at least [ten] Business Days prior to a
dividend or distribution date. The Trust shall notify the Company promptly
of the number of Series or Class shares so issued as payment of such
dividends and distributions.
2.6. BOOK ENTRY. Issuance and transfer of Trust shares shall be by book
entry only. Stock certificates will not be issued to the Company or the
Accounts. Purchase and redemption orders for Trust shares shall be recorded
in an appropriate ledger for each Account.
2.7. PRICING ERRORS. Any material errors in the calculation of the net
asset value of a Fund, the net asset value per share of any Series or Class
of Trust shares, dividends or capital gain information shall be reported to
the Company immediately upon discovery. An error shall be deemed "material"
based on the Trust's interpretation of the SEC's position and policy with
regard to materiality, as it may be modified from time to time. If the
Company is provided with materially incorrect net asset value information,
the Company shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct net asset value per share.
Neither the Trust, any Fund, the Distributor, nor any of their affiliates
shall be liable for any information provided to the Company pursuant to this
Agreement, which information is based on incorrect information supplied by
or on behalf of the Company or any other Participating Company to the Trust
or the Distributor.
2.8. LIMITS ON PURCHASERS. The Distributor and the Trust shall sell
Trust shares only to insurance companies and their separate accounts and to
persons or plans ("Qualified Persons") that qualify to purchase shares of
the Trust under Section 817(h) of the Code and the regulations thereunder
without impairing the ability of the Accounts to consider the portfolio
investments of the Trust as constituting investments of the Accounts for the
purpose of satisfying the diversification requirements of Section 817(h).
The Company hereby represents and warrants that it and the Accounts are
Qualified Persons. The Distributor and the Trust shall not sell Trust shares
to any insurance company or separate account unless an agreement complying
with Article VIII of this Agreement is in effect to govern such sales. The
Distributor and the Trust shall not sell more than 10% of any Series of
Trust shares to any Participating Plan unless an agreement is in effect
between the Distributor, the Trust and the trustee (or other fiduciary) of
the Plan containing provisions substantially the same as those in Article
VIII of this Agreement. The Distributor and the Trust shall not sell Trust
shares to any Participating Plan unless a written acknowledgment of the
foregoing condition is received from the trustee (or other fiduciary) of the
Plan.
2.9. DISRUPTIVE TRADING.
(a) The Company acknowledges the Trust has adopted policies
designed to prevent frequent purchases and redemptions of any Series of
Trust shares in quantities great enough to: (i) disrupt orderly
management of the corresponding Fund's investment
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portfolio, or (ii) dilute the value of the outstanding Trust shares of
that Series ("Disruptive Trading Policies"). These policies are
disclosed in the Trust's prospectus. From time to time, the Trust and
the Distributor implement procedures reasonably designed to enforce the
Trust's Disruptive Trading Policies and shall provide a written
description of such procedures (and revisions thereto) to the Company.
As a procedure in furtherance of its Disruptive Trading Policies, the
Trust may assess fees, to be paid upon redemption one or more Series or
Classes of Trust shares within certain stated time periods after such
shares have been purchased.
(b) The Trust and Distributor 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 investing in Funds
available as investment options under the Contracts. These policies and
procedures are described in the current prospectuses of the Accounts
through which the Contracts are offered.
(c) The Trust may (but is not required to) consider the Company's
policies and procedures pertaining to frequent transfers of Contract
value among the subaccounts of the Accounts including those investing
in the Funds, when the Trust periodically reviews or amends the Trust's
Disruptive Trading Policies and procedures from time to time. The Trust
and the Distributor may invite comment from and confer with the Company
regarding any proposed policy and procedure of the Trust pertaining to
disruptive trading to determine prior to adopting such proposed policy
or procedure the Company's then-present ability to apply such proposed
policy or procedure to Contract Owners who allocate Contract value to
subaccounts investing in Funds available under the Contracts, including
without limitation whether 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 Trust's proposed policy or procedure.
(d) In furtherance of Section 2.9(a), the Trust and the Distributor
may, from time to time, investigate purchases and redemptions of any
Series or Class of Trust shares by the Company on behalf of the
Accounts that appears to violate, or has the potential to violate, the
Trust's Disruptive Trading Policies. In particular, in the event that
the Trust or the Distributor has identified a particular Contract Owner
as having engaged in transactions in Account units that directly or
indirectly violate the Trust's Disruptive Trading Policies, the Company
agrees, at the written request of the Trust or the Distributor, to
restrict or prohibit further transactions in Account units by that
Contract Owner which could result in additional purchases and
redemptions of a specified Series and/or Class of Trust shares in
violation of the Trust's Disruptive Trading Policies.
In addition, subject to applicable law and the terms of each
Contract, when requested by the Trust or the Distributor in writing,
the Company agrees to provide the following with respect to purchases
and redemptions of a specific Series and/or Class of Trust shares over
a designated period:
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o the taxpayer identification number of the Contract Owner
or Contract Owners whose transactions in Account units
underlies the Trust share purchases and redemptions
being investigated; and
o the amounts and dates of transactions in Account units
during the designated period representing an indirect
investment in the Series and/or Class of Trust shares
being investigated.
The Company agrees to provide the foregoing information that is on
its books and records promptly. If the requested information is not on
its books and records, it agrees to make reasonable efforts to:
o promptly obtain the requested information; or
o if requested by the Trust or the Distributor restrict or
prohibit further transactions in Account units by that
Contract Owner which could result in additional
purchases and redemptions of a specified Series and/or
Class of Trust shares.
The parties shall negotiate in good faith such additional terms and
conditions regarding implementation of the foregoing obligations of the
parties under Rule 22c-2 as any party may wish to address, including
without limitation, reimbursement of expenses Company incurs in order
to provide such information to the Trust and to execute any
instructions from the Trust or its designee to restrict or prohibit
purchases, redemptions, transfers or exchanges by any Contract Owner in
subaccounts available under a Contract which invest in shares of any
Fund.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. COMPANY. The Company represents and warrants that: (a) it is an
insurance company duly organized and in good standing under the laws of the
jurisdiction of its organization, (b) it has legally and validly established
each Account as a segregated asset account under applicable state law to
serve as segregated investment accounts for the Contracts, (c) each Schedule
1 Account is duly registered as a unit investment trust under the 1940 Act
and each such Account's 1940 Act Registration Statement has been filed with
the SEC in accordance with the 1940 Act, (d) it has registered, or will
register, all Schedule 1 Contracts offered and sold pursuant to this
Agreement under the 1933 Act and has effective Registration Statements for
that purpose, (e) it will offer and sell the Contracts in compliance in all
material respects with all applicable federal and state laws and
regulations, including, but not limited to, state insurance law and federal
securities law suitability requirements, (f) the Contracts have been filed,
qualified and/or approved for sale, as applicable, under the insurance laws
and regulations of the states in which the Contracts will be offered, (g)
its activities and those of its employees in promoting the sale and
distribution of the Contracts and effecting Contract Owner transactions in
Account units have not caused, and will not cause, the Company to be deemed
a broker-dealer, (h) orders it places for the purchase and redemption of
Trust shares pursuant to Article 2.3 of this
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Agreement are the net result of transactions in units issued by an Account,
instructions for which are received by the Company prior to the Trust's
close of business as defined from time to time in the applicable Prospectus
for such Series or Class (which as of the date of execution of this
Agreement is the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m. New York Time)), (i) as long as this Agreement remains
in effect, it shall remain in continuous compliance with Article 6.3,
Article 6.4 and Article 6.5 of this Agreement and (j) it will notify the
Distributor and the Trust promptly if for any reason it is unable to perform
its obligations under this Agreement.
3.2. TRUST. The Trust represents and warrants that: (a) it is a
statutory trust duly organized and validly existing under Delaware law, (b)
it is duly registered under the 1940 Act as an open-end management
investment company and has filed a 1940 Act Registration Statement with the
SEC in accordance with the provisions of the 1940 Act, (c) Trust shares
issued pursuant to this Agreement have been, or will be, duly authorized and
validly issued in accordance with applicable law, (d) it will offer and sell
Trust shares pursuant to this Agreement in compliance in all material
respects with all applicable federal and state laws and regulations, (e) it
has registered, or will register, all Trust shares offered and sold pursuant
to this Agreement under the 1933 Act and has an effective Registration
Statement for that purpose, (f) as long as this Agreement remains in effect,
it shall remain in continuous compliance with Article 6.1 and Article 6.2 of
this Agreement, and (g) the Trust's Board, a majority of whom are not
interested persons of the Trust, have formulated and approved the plan under
Rule 12b-1 ("Rule 12b-1 Plan") to finance distribution expenses.
3.3. DISTRIBUTOR. The Distributor represents and warrants that: (a) it
is a limited partnership duly organized and in good standing under New York
law, and (b) it is registered as a broker-dealer under federal and
applicable state securities laws and is a member of the NASD. The
Distributor will notify the Company promptly if for any reason it is unable
to perform its obligations under this Agreement.
3.4. LEGAL AUTHORITY. Each party represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
corporate, partnership or trust action, as applicable, by such party, and,
when so executed and delivered, this Agreement will be the valid and binding
obligation of such party enforceable in accordance with its terms.
3.5. BONDING REQUIREMENT. Each party represents and warrants that all
of its directors, officers, partners and employees dealing with the money
and/or securities of the Trust are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of
the Trust in an amount not less than the amount required by the applicable
rules of the NASD and the federal securities laws. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company. All parties shall make all reasonable efforts to
see that this bond or another bond containing these provisions is always in
effect, shall provide evidence thereof promptly to any other party upon
written request therefor, and shall notify the other parties promptly in the
event that such coverage no longer applies.
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ARTICLE IV
REGULATORY REQUIREMENTS
4.1. TRUST FILINGS. The Trust shall amend the Trust's Registration
Statement from time to time and maintain its effectiveness as required in
order to effect the continuous offering of Trust shares in compliance with
applicable law. Notwithstanding the foregoing, the Trust shall register and
qualify Trust shares for sale in accordance with the laws of various states
if, and to the extent, deemed advisable by the Trust or the Distributor. The
Trust shall amend its 1940 Act Registration Statement as required by the
1940 Act to maintain its registration under the 1940 Act for as long as
Trust shares are outstanding. The Trust shall file Form 24F-2 and pay 1933
Act registration fees for all Series and Classes of Trust shares as required
by Rule 24f-2 under the 1940 Act. The Trust shall comply in all material
respects with the 1940 Act.
4.2. ACCOUNT FILINGS. The Company shall amend the Registration
Statement for each Schedule 1 Contract from time to time and maintain its
effectiveness as required in order to effect the continuous offering of such
Contracts in compliance with applicable law for as long as purchase payments
are made under such Contracts. Notwithstanding the foregoing, the Company:
(a) may permit the effectiveness of a Schedule 1 Contract's Registration
Statement expire if the Company has supplied the Trust with an SEC
"no-action" letter or opinion of counsel satisfactory to the Trust's counsel
to the effect that maintaining such Registration Statement on a current
basis is no longer required, and (b) shall register and qualify the
Contracts for sale in accordance with the securities laws of the various
states only if, and to the extent, it considers such registration and
qualification necessary. The Company shall amend each Schedule 1 Account's
1940 Act Registration Statement as required by the 1940 Act to maintain the
Account's registration under the 1940 Act for as long as the Schedule 1
Contracts issued through that Account are in force. With regard to each
Schedule 1 Account, the Company shall comply in all material respects with
the 1940 Act.
The Company shall be responsible for filing all Contract forms,
applications, marketing materials and other documents relating to the
Contracts and/or the Accounts with state insurance commissions, as required
or customary, and shall use commercially reasonable efforts: (a) to obtain
any and all approvals thereof, under applicable state insurance law, of each
state or other jurisdiction in which Contracts are or may be offered for
sale, and (b) to keep such approvals in effect for so long as the Contracts
are outstanding, provided, however, Company shall have no obligation
hereunder to maintain or to continue to obtain approvals for applications,
marketing materials and other documents relating to the Contracts it is no
longer offering except to the extent that such materials are required for
use in connection with the administration and servicing of the Contracts in
accordance with Section 5.3 hereof.
4.3 DELIVERY OF PROSPECTUSES BY THE COMPANY. The Company shall deliver
(or arrange for delivery of) an appropriate Prospectus to each prospective
Contract Owner describing in all material respects the terms and features of
the Contract being offered. The Company also shall deliver (or arrange for
delivery of) a Prospectus for each Fund that a prospective Contract Owner
identifies on his or her application as an intended investment option under
a Contract or to which a Contract Owner allocates premium payments to or
transfers Contract value. The
12
Company shall deliver (or arrange for delivery of) such Prospectuses at the
times required by applicable provisions of the 1933 Act and rules or
regulations thereunder.
4.4. VOTING OF TRUST SHARES. The extent required by applicable law,
whenever the Trust shall have a meeting of holders of any Series or Class of
Trust shares, the Company shall:
o solicit voting instructions from Contract Owners;
o vote Trust shares held in each Account at such
shareholder meetings in accordance with instructions
received from Contract Owners; and
o vote Trust shares held in each Account for which it has
not received timely instructions in the same proportion
as it votes the applicable Series or Class of Trust
shares for which it has received timely instructions.
Except with respect to matters as to which the Company has the right in
connection with Schedule 1 Contracts under Rule 6e-2 or Rule 6e-3(T) under
the 1940 Act, to vote Trust shares without regard to voting instructions
from Contract Owners, neither the Company nor any of its affiliates will
recommend action in connection with, or oppose or interfere with, the
actions of the Trust Board to hold shareholder meetings for the purpose of
obtaining approval or disapproval from shareholders (and, indirectly, from
Contract Owners) of matters put before the shareholders.
As required by the conditions attaching to the SEC Order, the Company
shall remain responsible for ensuring that it calculates voting instructions
and votes Trust shares at shareholder meetings in a manner consistent with
other Participating Investors. The Trust will notify the Company of any
changes to the SEC Order, the conditions attaching thereto, or to any
interpretation of the Order or conditions.
4.5. STATE INSURANCE LAW RESTRICTIONS. The Company acknowledges and
agrees that it is the responsibility of the Company and other Participating
Insurance Companies to determine investment restrictions and any other
restrictions, limitations or requirements under state insurance law
applicable to any Fund or the Trust or the Distributor, and that neither the
Trust nor the Distributor shall bear any responsibility to the Company,
other Participating Insurance Companies or any Product Owners for any such
determination or the correctness of such determination. Schedule 4 sets
forth the investment restrictions that the Company and/or other
Participating Insurance Companies have determined are applicable to any Fund
and with which the Trust has agreed to comply as of the date of this
Agreement. The Company shall inform the Trust of any investment restrictions
imposed by state insurance law that the Company determines may become
applicable to the Trust or a Fund from time to time as a result of the
Accounts' investment therein, other than those set forth on Schedule 4 to
this Agreement. Upon receipt of any such information from the Company or any
other Participating Insurance Company, the Trust shall determine whether it
is in the best interests of shareholders to comply with any such
restrictions. If the Trust determines that it is not in the best interests
of shareholders (which, for this purpose, shall mean Product Owners) to
comply with a restriction determined to be applicable by the Company, the
Trust shall so inform the Company, and the Trust and the
13
Company shall discuss alternative accommodations in the circumstances. If
the Trust determines that it is in the best interests of shareholders to
comply with such restrictions, the Trust and the Company shall amend
Schedule 4 to this Agreement to reflect such restrictions, subject to
obtaining any required shareholder approval thereof.
4.6. INTERPRETATION OF LAW. Under no circumstances will the Trust, the
Distributor or any of their affiliates (excluding Participating Investors)
be held responsible or liable in any respect for any statements or
representations made by them or their legal advisers to the Company or any
Contract Owner concerning the applicability of any federal or state laws,
regulations or other authorities to the activities contemplated by this
Agreement.
4.7. DISCLOSURE. The Trust's prospectus shall state that the statement
of additional information for the Trust is available from either the
Distributor or the Trust. The Trust hereby notifies the Company that it is
appropriate to include in Contract Prospectuses, disclosure of the potential
risks of mixed and shared funding.
4.8. DRAFTS OF FILINGS. The Trust and the Company shall provide to each
other copies of draft versions of any Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or
Contract Owner reports, proxy statements, solicitations for voting
instructions, applications for exemptions, requests for no-action letters,
and all amendments or supplements to any of the above, prepared by or on
behalf of either of them and that mentions the other party by name. Such
drafts shall be provided to the other party sufficiently in advance of
filing such materials with regulatory authorities in order to allow such
other party a reasonable opportunity to review the materials.
4.9. COPIES OF FILINGS. The Trust and the Company shall provide to each
other at least one complete copy of all Registration Statements,
Prospectuses, Statements of Additional Information, periodic and other
shareholder or Contract Owner reports, proxy statements, solicitations of
voting instructions, applications for exemptions, requests for "no-action"
letters, and all amendments or supplements to any of the above, that relate
to the Trust, the Contracts or the Accounts, as the case may be, promptly
after the filing by or on behalf of each such party of such document with
the SEC or other regulatory authorities (it being understood that this
provision is not intended to require the Trust to provide to the Company
copies of any such documents prepared, filed or used by Participating
Investors other than the Company and the Accounts).
4.10. REGULATORY RESPONSES. Each party shall promptly provide to all
other parties copies of responses to no-action requests, notices, orders and
other rulings received by such party with respect to any filing covered by
Section 4.9 of this Agreement.
14
4.11. COMPLAINTS AND PROCEEDINGS
(a) The Trust and/or the Distributor shall immediately notify the
Company of: (i) the issuance by any court or regulatory body of any
stop order, cease and desist order, or other similar order (but not
including an order of a regulatory body exempting or approving a
proposed transaction or arrangement) with respect to the Trust's
Registration Statement or the Prospectus of any Series or Class, (ii)
any request by the SEC for any amendment to the Trust's Registration
Statement or the Prospectus of any Series or Class, (iii) the
initiation of any proceedings for that purpose or for any other
purposes relating to the registration or offering of the Trust shares,
or (iv) any other action or circumstances that may prevent the lawful
offer or sale of Trust shares or any Class or Series in any state or
jurisdiction, including, without limitation, any circumstance in which
(A) such shares are not registered and, in all material respects,
issued and sold in accordance with applicable state and federal law or
(B) such law precludes the use of such shares as an underlying
investment medium for the Contracts. The Trust will make every
reasonable effort to prevent the issuance of any such stop order, cease
and desist order or similar order and, if any such order is issued, to
obtain the lifting thereof at the earliest possible time.
(b) The Company shall immediately notify the Trust and the
Distributor of: (i) the issuance by any court or regulatory body of any
stop order, cease and desist order, or other similar order (but not
including an order of a regulatory body exempting or approving a
proposed transaction or arrangement) with respect to the Contracts'
Registration Statement or the Contracts' Prospectus, (ii) any request
by the SEC for any amendment to the Contracts' Registration Statement
or Prospectus, (iii) the initiation of any proceedings for that purpose
or for any other purposes relating to the registration or offering of
the Contracts, or (iv) any other action or circumstances that may
prevent the lawful offer or sale of the Contracts or any class of
Contracts in any state or jurisdiction, including, without limitation,
any circumstance in which such Contracts are not registered, qualified
and approved, and, in all material respects, issued and sold in
accordance with applicable state and federal laws. The Company will
make every reasonable effort to prevent the issuance of any such stop
order, cease and desist order or similar order and, if any such order
is issued, to obtain the lifting thereof at the earliest possible time.
(c) Each party shall immediately notify the other parties when it
receives notice, or otherwise becomes aware of, the commencement of any
litigation or proceeding against such party or a person affiliated
therewith in connection with the issuance or sale of Trust shares or
the Contracts.
(d) The Company shall provide to the Trust and the Distributor any
complaints it has received from Contract Owners pertaining to the Trust
or a Fund, and the Trust and Distributor shall each provide to the
Company any complaints it has received from Contract Owners relating to
the Contracts.
15
4.12. COOPERATION. Each party hereto shall cooperate with the other
parties and all appropriate government authorities (including without
limitation the SEC, the NASD and state securities and insurance regulators)
and shall permit such authorities reasonable access to its books and records
in connection with any investigation or inquiry by any such authority
relating to this Agreement or the transactions contemplated hereby. However,
such access shall not extend to attorney-client privileged information.
ARTICLE V
SALE, ADMINISTRATION AND SERVICING OF THE CONTRACTS
5.1. SALE OF THE CONTRACTS. The Company shall be responsible for the
sale and marketing of the Contracts.
The Company shall provide Contracts, the Contracts' and Trust's
Prospectuses, Contracts' and Trust's Statements of Additional Information,
and all amendments or supplements to any of the foregoing to Contract Owners
and prospective Contract Owners, all in accordance with federal and state
laws. Without limiting the generality of the foregoing, the Company shall:
(1) enter into and enforce agreements with affiliated and unaffiliated
parties to, and (2) adopt and implement written compliance policies and
procedures reasonably designed to, ensure that:
o all persons offering or selling the Contracts are duly
licensed and registered under applicable insurance and
securities laws;
o all individuals offering or selling the Contracts are
duly appointed agents of the Company and are registered
representatives of a NASD member broker-dealer; and
o each sale of a Contract satisfies applicable suitability
requirements under insurance and securities laws and
regulations, including without limitation the rules of
the NASD.
5.2. ANTI-MONEY LAUNDERING. The parties to this Agreement shall comply
with all applicable laws and regulations designed to prevent money
laundering including without limitation the International Money Laundering
Abatement and Anti-Terrorist Financial Act of 2001 (Title III of the USA
PATRIOT ACT), and if required by such laws or regulations, will share
information with each other about individuals, entities, organizations and
countries suspected of possible terrorist or money "laundering" activities
in accordance with Section 314(b) of the USA PATRIOT ACT.
5.3. ADMINISTRATION AND SERVICING OF THE CONTRACTS. The Company shall
be fully responsible for the underwriting, issuance, service and
administration of the Contracts and for the administration of the Account,
including, without limitation, the calculation of performance information
for the Contracts, the timely payment of Contract Owner redemption requests
and processing of Contract transactions, and the maintenance of a service
center, such functions to be performed in all respects at a level
commensurate with those standards prevailing in the variable
16
insurance industry. The Company shall provide to Contract Owners all Trust
reports, solicitations for voting instructions including any related Trust
proxy solicitation materials, and updated Trust Prospectuses as required
under the federal securities laws.
5.4. CUSTOMER COMPLAINTS. The Company shall promptly address all
complaints from Contract Owners and resolve such complaints consistent with
high ethical standards and principles of ethical conduct.
5.5. TRUST PROSPECTUSES AND REPORTS. In order to enable the Company to
fulfill its obligations under this Agreement and the federal securities
laws, the Trust shall provide the Company with a copy, in camera-ready form
or form otherwise suitable for printing or duplication of: (a) the Trust's
Prospectus for the Series and Classes listed on Schedules 1B, 2B, and 3B and
any supplement thereto; (b) any Trust proxy soliciting material for such
Series or Classes; and (c) any Trust periodic shareholder reports. The Trust
and the Company may agree upon alternate arrangements, but in all cases, the
Trust reserves the right to approve the printing of any such material. The
Trust shall make available to the Company on the Trust's website each
Statement of Additional Information and supplement thereto. The Trust shall
provide the Company at least 10 days advance written notice when any such
material shall become available, provided, however, that in the case of a
supplement, the Trust shall provide the Company notice reasonable in the
circumstances, it being understood that circumstances surrounding such
supplement may not allow for advance notice. The Company may not alter any
material so provided by the Trust or the Distributor (including, without
limitation, presenting or delivering such material in a different medium
such as electronic mail or attachments thereto) without the prior written
consent of the Distributor. The Trust will provide written instruction to
the Company each time the Trust amends or supplements the Trust's Prospectus
directing the Company) as to whether the supplement is to be provided (i)
immediately to Contract Owners who have Contract value allocated to a Fund
or (ii) is to be held and combined with another Trust or Contract related
mailing as permitted by applicable federal securities laws.
5.6. PERFORMANCE INFORMATION. The Distributor shall be responsible for
calculating the performance information for the Funds. The Company shall be
responsible for calculating the performance information for the Contracts.
The Distributor shall be liable to the Company for any material mistakes it
makes in calculating the performance information for the Funds which cause
losses to the Company. The Company shall be liable to the Distributor for
any material mistakes it makes in calculating the performance information
for the Contracts which cause losses to the Distributor. Each party shall be
liable for any material mistakes it makes in reproducing the performance
information for Contracts or the Funds, as appropriate. The Trust and the
Distributor agree to provide the Company with performance information for
the Funds on a timely basis to enable the Company to calculate performance
information for the Contracts in accordance with applicable state and
federal law.
5.7. TRUST ADVERTISING MATERIAL. Neither the Company or any person
directly or indirectly authorized by the Company (including, without
limitation, underwriters, distributors, and sellers of the Contracts) shall
use any piece of advertising, sales literature or other promotional material
in which the Trust, the Distributor, or an affiliate of either is named,
except with the prior written consent of the Trust or the Distributor. The
Company shall furnish to the
17
Trust or the Distributor each such piece of advertising, sales literature or
other promotional material at least ten (10) days prior to its use. The
Trust or the Distributor shall respond to any request for written consent on
a prompt and timely basis, but failure to respond shall not relieve the
Company of the obligation to obtain the prior written consent of the Trust
or the Distributor. After receiving the Trust's or Distributor's consent to
the use of any such material, no further changes may be made without
obtaining the Trust's or Distributor's consent to such changes. The Trust or
Distributor may at any time in its sole discretion revoke such written
consent, and upon notification of such revocation, the Company shall no
longer use the material subject to such revocation. The Company shall not be
responsible for filing any such materials with the NASD as applicable.
5.8. CONTRACTS ADVERTISING MATERIAL. The Trust and the Distributor
shall not use any piece of advertising or sales literature or other
promotional material in which the Company, an Account or a Contract is
named, except with the prior written consent of the Company. The Trust or
the Distributor shall furnish to the Company each such piece of advertising,
sales literature or other promotional material at least ten (10) days prior
to its use. The Company shall respond to any request for written consent on
a prompt and timely basis, but failure to respond shall not relieve the
Trust or the Distributor of the obligation to obtain the prior written
consent of the Company. After receiving the Company's consent to the use of
any such material, no further changes may be made by the Trust or
Distributor without obtaining the Company's consent to such changes. The
Company may at any time in its sole discretion revoke any written consent,
and upon notification of such revocation, neither the Trust nor the
Distributor shall use the material subject to such revocation. The Trust and
the Distributor shall not be responsible for filing any such materials with
the NASD as applicable.
5.9. TRADE NAMES. No party shall use any other party's names, logos,
trademarks or service marks, whether registered or unregistered, without the
prior written consent of such other party, or after written consent therefor
has been revoked. The Company shall not use in advertising, publicity or
otherwise the name of the Trust, Distributor, or any of their affiliates nor
any trade name, trademark, trade device, service xxxx, symbol or any
abbreviation, contraction or simulation thereof of the Trust, Distributor,
or their affiliates without the prior written consent of the Trust or the
Distributor in each instance. The Trust, Distributor, or any of their
affiliates shall not use in advertising, publicity or otherwise the name of
the Company, or any of its affiliates nor any trade name, trademark, trade
device, service xxxx, symbol or any abbreviation, contraction or simulation
thereof of the Company or its affiliates without the prior written consent
of the Company in each instance.
5.10. REPRESENTATIONS BY COMPANY. Except with the prior written consent
of the Trust, the Company shall not give any information or make any
representations or statements about the Trust or the Funds nor shall it
authorize or allow any other person to do so except information or
representations contained in the Trust's Registration Statement or the
Trust's Prospectuses or in reports or proxy statements for the Trust, or in
advertisements, sales literature or other promotional material approved in
writing by the Trust or its designee in accordance with this Article V, or
in published reports or statements of the Trust in the public domain.
18
The Company agrees to ensure that advertisements, sales literature or
other promotional material for the Contracts prepared by the Company or its
affiliates will be consistent with every law, rule, and regulation of any
regulatory agency or self-regulatory agency that applies to the Contracts or
to the sale of the Contracts, including, but not limited to, NASD Conduct
Rule 2210 and XX-0000-0, XX-0000-0 and IM-2210-3 thereunder.
The Company has adopted and implemented, or shall adopt and implement,
written compliance procedures reasonably designed to ensure that information
concerning the Trust, the Distributor, or any of their affiliates which is
intended for use by brokers or agents selling the Contracts (i.e.,
information that is not intended for distribution to Contract Owners or
prospective Contract Owners) is so used. Neither the Trust, the Distributor,
nor any of their affiliates shall be liable for any losses, damages, or
expenses relating to the improper use of such "broker only" materials by
agents of the Company or its affiliates who are unaffiliated with the Trust
or the Distributor. The parties agree that this Section 5.10 is not intended
to designate nor otherwise imply that the Company is an underwriter or
distributor of the Trust's shares.
5.11. REPRESENTATIONS BY TRUST. Except with the prior written consent
of the Company, the Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Accounts or the Contracts other than the information or representations
contained in the appropriate Contract Registration Statement or Contract
Prospectus or in published reports of the Company or the Accounts which are
in the public domain or in advertisements, sales literature or other
promotional material approved in writing by the Company in accordance with
this Article V.
The Trust agrees to ensure that advertisements, sales literature or
other promotional material for the Trust prepared by the Distributor or its
affiliates in connection with the sale of the Contracts will be consistent
with every law, rule, and Regulation of any regulatory agency or self
regulatory agency that applies to the Trust or to the sale of Trust shares,
including, but not limited to, NASD Conduct Rule 2210 and XX-0000-0,
XX-0000-0 and IM-2210-3 thereunder.
The Trust or the Distributor shall xxxx information produced by or on
behalf of the Trust which is intended for use by brokers or agents selling
the Contracts (i.e., information that is not intended for distribution to
Contract Owners or prospective Contract Owners) "FOR BROKER USE ONLY," and
neither the Company nor any of its affiliates shall be liable for any
losses, damages, or expenses arising on account of the use by brokers of
such information with third parties in the event that it is not so marked.
5.12. ADVERTISING. For purposes of this Article V, the phrase
"advertising, sales literature or other promotional material" includes, but
is not limited to, any material constituting sales literature or advertising
under the NASD Conduct rules, the 1940 Act or the 1933 Act. Such material
includes, without limitation, the following materials for prospective
Contract Owners, existing Contract Owners, wholesalers and other
broker-dealers, rating or ranking agencies, or the press:
o advertisements (such as material published, or designed
for use in, a newspaper, magazine, or other periodical,
radio, television, telephone or tape
19
recording, videotape display, signs or billboards, motion
pictures, websites, or other public media);
o 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, electronic mail, or published article);
o educational or training materials or other
communications distributed or made generally available
to some or all agents or employees; and
o registration statements, prospectuses, statements of
additional information, shareholder reports, and proxy
materials.
ARTICLE VI
COMPLIANCE WITH CODE
6.1. SECTION 817(h). The Trust will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be treated
as variable contracts the Code and regulations thereunder. Without limiting
the scope of the foregoing, the Trust shall ensure that each Fund will
comply with Section 817(h) of the Code and Treasury Regulation 1.817-5
thereunder, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts, and any amendments or other
modifications to such Section and Regulation or successors thereto. The
Trust shall notify the Company immediately upon having a reasonable basis
for believing that a Fund has failed to so comply or that it might not
comply in the future.
6.2. SUBCHAPTER M. The Trust shall maintain the qualification of each
Fund as a regulated investment company (under Subchapter M or any successor
or similar provision), and the Trust shall notify the Company immediately
upon having a reasonable basis for believing that a Fund has ceased to so
qualify or that it might not so qualify in the future.
6.3. CONTRACTS. The Company shall ensure that at the time each Contract
is issued it is treated as a life insurance, endowment, or annuity contract
under applicable provisions of the Code, and that as long as the Accounts
hold shares of the Trust the Company shall maintain such treatment for each
outstanding Contract. The Company shall notify the Trust and the Distributor
immediately upon having any basis for believing that the Contracts will not
be treated as life insurance, endowment, or annuity contracts under
applicable provisions of the Code.
6.4 REGULATION 1.817-5(f). The Company shall ensure that no Fund fails
to remain eligible for "look-through" treatment under Treasury Regulation
1.817-5(f) by reason of a current or future failure of the Company, the
Accounts or the Contracts to comply with any applicable requirements of the
Code or Treasury Regulations. The Company shall notify the Trust and the
Distributor immediately upon having any basis for believing that the failure
of the Company, the Accounts or the Contracts to comply with any applicable
requirements of the Code or Treasury Regulations could render a Fund
ineligible, or jeopardize a Fund's eligibility,
20
for "look-through" treatment under Treasury Regulation 1.817-5(f). In the
event of such a failure, the Company shall take all necessary steps to cure
any such failure, including, if necessary, obtaining a waiver or closing
agreement with respect to such failure from the U.S. Internal Revenue
Service at the Company's expense.
6.5 MODIFIED ENDOWMENT CONTRACTS. The Company shall ensure that any
Prospectus offering a variable life insurance Contract in circumstances
where it is reasonably probable that such Contract would be a "modified
endowment contract," as that term is defined in Section 7702A of the
Internal Revenue Code, will identify such Contract as a modified endowment
contract.
ARTICLE VII
EXPENSES
7.1. EXPENSES. All expenses incident to each party's performance under
this Agreement (including expenses expressly assumed by such party pursuant
to this Agreement) shall be paid by such party to the extent permitted by
law.
7.2. TRUST EXPENSES. Expenses incident to the Trust's performance of
its duties and obligations under this Agreement include, but are not limited
to, the costs of:
(a) registration and qualification of the Trust shares under the
federal securities laws;
(b) preparation and filing with the SEC of the Trust's
Prospectuses, Trust's Statement of Additional Information, Trust's
Registration Statement, Trust proxy materials and shareholder reports,
and preparation of a "camera-ready" copy of the foregoing;
(c) preparation of all statements and notices required by any
federal or state securities law;
(d) reimbursement of the Company for its expenses, as applicable,
of typesetting and printing of annual Fund Prospectuses, including
supplements thereto, periodic shareholder reports to existing Contract
Owners; provided, however, that such reimbursement shall be limited to
the lesser of actual costs or $100,000 in any one calendar year.
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating to the Trust,
including, without limitation, all fees due under Rule 24f-2 in
connection with sales of Trust shares to qualified retirement plans,
custodial, auditing, transfer agent and advisory fees, fees for
insurance coverage and Trustees' fees;
21
(g) any expenses permitted to be paid or assumed by the Trust
pursuant to a Rule 12b-1 under the 1940 Act; and
(h) any expenses the Company incurs which are directly related to
(i) a reorganization of the Trust as defined by Section 2 of the 1940
Act, or (ii) a change in the name of the Trust or of any Fund. Company
agrees to use its best efforts to minimize all such expenses and shall
provide the Trust or its Distributor with acceptable documentation of
such expenses. In the event the Trust determines it will not reimburse
the Company for such expenses, then the Distributor shall do so.
7.3. COMPANY EXPENSES. Expenses incident to the Company's performance
of its duties and obligations under this Agreement include, but are not
limited to, the costs of:
(a) registration and qualification of the Schedule 1 Contracts
under the federal securities laws;
(b) preparation Contract Prospectuses, and filing with the SEC of
the Prospectuses and Registration Statements for Schedule 1 Contracts;
(c) the sale, marketing and distribution of the Contracts,
including printing and dissemination of Contract Prospectuses to
current and prospective Contract owners as well as compensation for
Contract sales;
(d) administration of the Contracts;
(e) payment of all applicable fees relating to Accounts and the
Contracts;
(f) preparation, printing and dissemination of all statements and
notices to Contract Owners required by any federal or state insurance
law other than those paid for by the Trust; and
(g) preparation, printing and dissemination of all marketing
materials for the Contracts and Trust except where other arrangements
are made in advance.
7.4. OTHER EXPENSES AND PAYMENTS. The Trust and the Distributor shall
pay no fee or other compensation to the Company under this Agreement. Each
party, however, shall, in accordance with the allocation of expenses
specified in this Agreement, reimburse other parties for expenses paid by
such other parties, but allocated to it. In addition, nothing herein shall
prevent the parties from otherwise agreeing to perform, and arranging for
appropriate compensation for, other services relating to the Trust, the
Distributor, the Company or the Accounts. Notwithstanding the foregoing,
pursuant to the distribution plan adopted by the Trust under Rule 12b-1
under the 1940 Act, and as contemplated by Article 3.2(g) of this Agreement,
the Trust or any Series or Class thereof may pay the Distributor, and the
Distributor may pay the principal underwriter or distributor of one or more
classes of Contracts, for activities primarily intended to result in the
sale of Trust shares to the Accounts through which such Contracts are
issued. Likewise, if the Trust or any Series or Class adopts and implements
a shareholder service
22
plan pursuant to Rule 12b-1 under the 1940 Act, or otherwise, then the Trust
or the appropriate Series or Class may pay the Distributor and the
Distributor may pay the principal underwriter or distributor of one or more
classes of Contracts, or the Company, for activities related to personal
service and/or maintenance of Contract Owner accounts, as permitted by such
plan.
ARTICLE VIII
POTENTIAL CONFLICTS
8.1. SEC ORDER. The parties to this Agreement acknowledge that the
Trust has obtained the SEC Order granting exemptions from various provisions
of the 1940 Act and the rules thereunder to Participant Accounts supporting
variable life insurance policies to the extent necessary to permit them to
hold Trust shares when Trust share also are sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and other Qualified Persons
(as defined in Section 2.8 hereof). The SEC Order is conditioned upon the
Trust and each Participating Insurance Company complying with conditions and
undertakings substantially as provided in this Article VIII. The Trust will
not enter into a participation agreement with any other Participating
Insurance Company unless it imposes the same conditions and undertakings on
that company as are imposed on the Company pursuant to this Article VIII.
8.2. COMPANY MONITORING REQUIREMENTS. The Company will monitor its
operations and those of the Trust for the purpose of identifying any
material irreconcilable conflicts or potential material irreconcilable
conflicts between or among the interests of Participating Plans, Product
Owners of variable life insurance policies and Product Owners of variable
annuity contracts, it being understood that the Company is assuming the
obligation to monitor the operations of the Trust as set forth in this
Section 8.2 solely to comply with the explicit terms of the SEC Order and
further, that such monitoring is for the sole purpose of identifying any
conflicts that would affect its Contract Owners and is limited to monitoring
the operations of the Trust based on information the Trust provides to the
Company for such purposes.
8.3. COMPANY REPORTING REQUIREMENTS. The Company shall report any
conflicts or potential conflicts to the Trust Board and will provide the
Trust Board, at least annually, with all information reasonably necessary
for the Trust Board to consider any issues raised by such existing or
potential conflicts or by the conditions and undertakings required by the
SEC Order. The Company also shall assist the Trust Board in carrying out its
obligations including, but not limited to: (a) informing the Trust Board
whenever it disregards Contract Owner voting instructions with respect to
variable life insurance policies, and (b) providing such other information
and reports as the Trust Board may reasonably request. The Company will
carry out these obligations with a view only to the interests of Contract
Owners.
8.4. TRUST BOARD MONITORING AND DETERMINATION. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans, Product Owners of
variable life insurance policies and Product Owners of variable annuity
contracts and determine what action, if any, should be taken in response to
those conflicts. A majority vote of Trustees who are not interested persons
of the Trust as defined in the 1940 Act (the "disinterested trustees") shall
represent a conclusive determination as to the
23
existence of a material irreconcilable conflict between or among the
interests of Product Owners and Participating Plans and as to whether any
proposed action adequately remedies any material irreconcilable conflict.
The Trust Board shall give prompt written notice to the Company and
Participating Plan of any such determination. Minutes of the meetings of the
Trust Board, or other appropriate records of the Trust, shall record all
reports received by the Board regarding such conflicts and all actions taken
by the Board in response.
8.5. UNDERTAKING TO RESOLVE CONFLICT. In the event that a material
irreconcilable conflict of interest arises between Product Owners of
variable life insurance policies or Product Owners of variable annuity
contracts and Participating Plans, the Company will, at its own expense,
take whatever action is necessary to remedy such conflict as it adversely
affects Contract Owners up to and including: (1) establishing a new
registered management investment company, and (2) withdrawing assets from
the Trust attributable to reserves for the Contracts subject to the conflict
and reinvesting such assets in a different investment medium (including
another Fund) or submitting the question of whether such withdrawal should
be implemented to a vote of all affected Contract Owners, and, as
appropriate, segregating the assets supporting the Contracts of any group of
such owners that votes in favor of such withdrawal, or offering to such
owners the option of making such a change. The Company will carry out the
responsibility to take the foregoing action with a view only to the
interests of Contract Owners.
8.6. WITHDRAWAL. If a material irreconcilable conflict arises because
of the Company's decision to disregard the voting instructions of Contract
Owners of variable life insurance policies and that decision represents a
minority position or would preclude a majority vote at any Fund shareholder
meeting, then, if Trust Board so requests, the Company will redeem the
shares of the Trust to which the disregarded voting instructions relate. No
charge or penalty, however, will be imposed in connection with such a
redemption.
8.7. EXPENSES ASSOCIATED WITH REMEDIAL ACTION. In no event shall the
Trust be required to bear the expense of establishing a new funding medium
for any Contract. The Company shall not be required by this Article VIII to
establish a new funding medium for any Contract if an offer to do so has
been declined by vote of a majority of the Contract Owners materially
adversely affected by the irreconcilable material conflict.
8.8. SUCCESSOR RULES. If and to the extent that Rule 6e-2 and Rule
6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief
from any provisions of the 1940 Act or the rules promulgated thereunder with
respect to mixed and shared funding on terms and conditions materially
different from those contained in the SEC Order, then: (a) the Trust and/or
the Company, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, or Rule 6e-3, as adopted, as
applicable, to the extent such rules are applicable, and (b) Sections 8.2
through 8.7 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.
24
ARTICLE IX
INDEMNIFICATION
9.1. INDEMNIFICATION BY THE COMPANY. The Company hereby agrees to, and
shall, indemnify and hold harmless the Trust, the Distributor and each
person who controls or is affiliated with the Trust or the Distributor
within the meaning of such terms under the 1933 Act or 1940 Act (but not any
Participating Insurance Companies or Qualified Persons) and any officer,
trustee, partner, director, employee or agent of the foregoing, against any
and all losses, claims, damages or liabilities, joint or several (including
any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar
as such losses, claims, damages, expenses or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact or alleged untrue statement of material fact contained in
the Contracts Registration Statement, Contracts Prospectus, sales
literature or other promotional material for the Contracts or the
Contracts themselves (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission was made in
reliance upon and in conformity with information furnished in writing
to the Company by the Trust or the Distributor for use in the Contracts
Registration Statement, Contracts Prospectus or in the Contracts or
sales literature or promotional material for the Contracts (or any
amendment or supplement to any of the foregoing) or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
(b) arise out of any untrue statement or alleged untrue statement
of a material fact contained in the Trust Registration Statement, any
Prospectus for Series or Classes or sales literature or other
promotional material of the Trust (or any amendment or supplement to
any of the foregoing), or the omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were
made, if such statement or omission was made in reliance upon and in
conformity with information furnished to the Trust or Distributor in
writing by or on behalf of the Company; or
(c) arise out of or are based upon any wrongful conduct of, or
violation of federal or state law by, the Company or persons under its
control or subject to its authorization, including without limitation,
any broker-dealers or agents authorized to sell the Contracts, with
respect to the sale, marketing or distribution of the Contracts or
Trust shares, including, without limitation, any impermissible use of
broker-only material, unsuitable or improper sales of the Contracts or
unauthorized representations about the Contracts or the Trust; or
25
(d) arise as a result of any failure by the Company or persons
under its control (or subject to its authorization) to provide
services, furnish materials or make payments as required under this
Agreement; or
(e) arise out of any material breach by the Company or persons
under its control (or subject to its authorization) of this Agreement;
or
(f) any breach of any warranties contained in Article III hereof,
any failure to transmit a request for redemption or purchase of Trust
shares or payment therefor on a timely basis in accordance with the
procedures set forth in Article II, or any unauthorized use of the
names or trade names of the Trust or the Distributor.
This indemnification is in addition to any liability that the Company may
otherwise have, provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage, expense or liability is caused
by the wilful misfeasance, bad faith, gross negligence or reckless disregard
of duty by the party seeking indemnification.
9.2. INDEMNIFICATION BY THE TRUST. The Trust hereby agrees to, and
shall, indemnify and hold harmless the Company and each person who controls
or is affiliated with the Company within the meaning of such terms under the
1933 Act or 1940 Act and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities, joint
or several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any
action, suit or proceeding or any claim asserted), to which they or any of
them may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, expenses or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact or alleged untrue statement of material fact contained in
the Trust Registration Statement, any Prospectus for Series or Classes
or sales literature or other promotional material of the Trust (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing by the Company to the Trust or the
Distributor for use in the Trust Registration Statement, Trust
Prospectus or sales literature or promotional material for the Trust
(or any amendment or supplement to any of the foregoing) or otherwise
for use in connection with the sale of the Contracts or Trust shares;
or
(b) arise out of any untrue statement of a material fact or alleged
untrue statement of material fact contained in the Contracts
Registration Statement, Contracts Prospectus or sales literature or
other promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in
which they were made, if such statement or
26
omission was made in reliance upon information furnished in writing by
the Trust to the Company; or
(c) arise out of or are based upon wrongful conduct of the Trust or
its Trustees or officers with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Trust to provide
services, furnish materials or make payments as required under the
terms of this Agreement; or
(e) arise out of any material breach by the Trust of this Agreement
(including any breach of Section 6.1 of this Agreement and any
warranties contained in Article III hereof);
it being understood that in no way shall the Trust be liable to the Company
with respect to any violation of insurance law, compliance with which is a
responsibility of the Company under this Agreement or otherwise or as to
which the Company failed to inform the Trust in accordance with Section 4.5
hereof. This indemnification is in addition to any liability that the Trust
may otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the
wilful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
9.3. INDEMNIFICATION BY THE DISTRIBUTOR. The Distributor hereby agrees
to, and shall, indemnify and hold harmless the Company and each person who
controls or is affiliated with the Company within the meaning of such terms
under the 1933 Act or 1940 Act and any officer, director, employee or agent
of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to
which they or any of them may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses, claims,
damages, expenses or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact or alleged untrue statement of material fact contained in
the Trust Registration Statement, any Prospectus for Series or Classes
or sales literature or other promotional material of the Trust (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing by the Company to the Trust or
Distributor for use in the Trust Registration Statement, Trust
Prospectus or sales literature or promotional material for the Trust
(or any amendment or supplement to any of the foregoing) or otherwise
for use in connection with the sale of the Contracts or Trust shares;
or
(b) arise out of any untrue statement of a material fact or alleged
untrue statement of material fact contained in the Contracts
Registration Statement, Contracts
27
Prospectus or sales literature or other promotional material for the
Contracts (or any amendment or supplement to any of the foregoing), or
the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made, if such statement
or omission was made in reliance upon information furnished in writing
by the Distributor or on its behalf to the Company; or
(c) arise out of or are based upon wrongful conduct of the
Distributor or persons under its control with respect to the sale of
Trust shares; or
(d) arise as a result of any failure by the Distributor or persons
under its control to provide services, furnish materials or make
payments as required under the terms of this Agreement; or
(e) arise out of any material breach by the Distributor or persons
under its control of this Agreement (including any breach of Section
6.1 of this Agreement and any warranties contained in Article III
hereof);
it being understood that in no way shall the Distributor be liable to the
Company with respect to any violation of insurance law, compliance with
which is a responsibility of the Company under this Agreement or otherwise
or as to which the Company failed to inform the Distributor in accordance
with Section 4.5 hereof. This indemnification is in addition to any
liability that the Distributor may otherwise have; provided, however, that
no party shall be entitled to indemnification if such loss, claim, damage or
liability is caused by the wilful misfeasance, bad faith, gross negligence
or reckless disregard of duty by the party seeking indemnification.
9.4. RULE OF CONSTRUCTION. It is the parties' intention that, in the
event of an occurrence for which the Trust has agreed to indemnify the
Company, the Company shall seek indemnification from the Trust only in
circumstances in which the Trust is entitled to seek indemnification from a
third party with respect to the same event or cause thereof.
9.5. INDEMNIFICATION PROCEDURES. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by
the indemnified party against any person obligated to provide
indemnification under this Article IX ("indemnifying party"), such
indemnified party will notify the indemnifying party in writing of the
commencement thereof as soon as practicable thereafter, provided that the
omission to so notify the indemnifying party will not relieve it from any
liability under this Article IX, except to the extent that the omission
results in a failure of actual notice to the indemnifying party and such
indemnifying party is damaged solely as a result of the failure to give such
notice. The indemnifying party, upon the request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
28
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
RELATIONSHIP OF THE PARTIES; TERMINATION
10.1. Relationship of Parties. The Company is to be an independent
contractor vis-a-vis the Trust, the Distributor, or any of their affiliates
for all purposes hereunder and will have no authority to act for or
represent any of them (except to the limited extent the Company acts as
agent of the Trust pursuant to Section 2.3(a) of this Agreement). In
addition, no officer or employee of the Company will be deemed to be an
employee or agent of the Trust, Distributor, or any of their affiliates. The
Company will not act as an "underwriter" or "distributor" of the Trust, as
those terms variously are used in the 1940 Act, the 1933 Act, and rules and
regulations promulgated thereunder. Likewise, the Company is not a "transfer
agent" of the Trust as that term is used in the 1934 Act and rules and
regulations thereunder. The Company agrees to cooperate with the Trust in
the Trust's efforts to comply with Rule 38a-1, including, but not limited
to:
o adopting and implementing written compliance policies
and procedures reasonably designed to prevent the
Company violating the federal securities laws (as
defined in the Rule) in its provision of services to the
Trust pursuant to this Agreement; and
o providing the Chief Compliance Officer of the Trust with
access to the Chief Compliance Officer of each Account
who will confer with the Chief Compliance Officer of the
Trust as needed regarding the written compliance
policies and procedures of the Account.
10.2. NON-EXCLUSIVITY AND NON-INTERFERENCE. The parties hereto
acknowledge that the arrangement contemplated by this Agreement is not
exclusive; the Trust shares may be sold to other insurance companies and
investors (subject to Section 2.8 hereof) and the cash value of the
Contracts may be invested in other investment companies, provided, however,
that until this Agreement is terminated pursuant to this Article X:
(a) the Company shall not, without prior notice to the Distributor
(unless otherwise required by applicable law), take any action to
operate the Account as a management investment company under the 1940
Act;
29
(b) the Company shall not, without the prior written consent of the
Distributor (unless otherwise required by applicable law), solicit,
induce or encourage Contract Owners to change or modify the Trust to
change the Trust's distributor or investment adviser, to transfer or
withdraw Contract Values allocated to a Fund (but nothing herein shall
preclude the Company or its affiliates from offering asset allocation
programs in conjunction with the Contracts), or to exchange their
Contracts for contracts not allowing for investment in the Trust;
(c) the Company shall not substitute another investment company for
one or more Funds without providing written notice to the Distributor
at least 60 days in advance of effecting any such substitution; and
(d) the Company shall not withdraw the Account's investment in the
Trust or a Fund of the Trust except as necessary to facilitate Contract
Owner requests and routine Contract processing.
10.3. TERMINATION OF AGREEMENT. This Agreement shall not terminate
until: (a) the Trust is dissolved, liquidated, or merged into another
entity, or (b) as to any Fund that has been made available hereunder, the
Account no longer invests in that Fund and the Company has confirmed in
writing to the Distributor, if so requested by the Distributor, that it no
longer intends to invest in such Fund. However, certain obligations of, or
restrictions on, the parties to this Agreement may terminate as provided in
Sections 10.4 through 10.6 and the Company may be required to redeem Trust
shares pursuant to Section 10.7 or in the circumstances contemplated by
Article VIII. Article IX and Sections 5.7 and 10.8 shall survive any
termination of this Agreement.
10.4. TERMINATION OF OFFERING OF TRUST SHARES. The obligation of the
Trust and the Distributor to make Trust shares available to the Company for
purchase pursuant to Article II of this Agreement shall terminate at the
option of the Distributor upon written notice to the Company as provided
below:
(a) upon institution of formal proceedings against the Company, or
the Distributor's reasonable determination that institution of such
proceedings is being considered by the NASD, the SEC, the insurance
commission of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of the
Contracts, the operation of the Account, the administration of the
Contracts or the purchase of Trust shares, or an expected or
anticipated ruling, judgment or outcome which would, in the
Distributor's reasonable judgment exercised in good faith, materially
impair the Company's or Trust's ability to meet and perform the
Company's or Trust's obligations and duties hereunder, such termination
effective upon 15 days prior written notice;
(b) in the event any of the Contracts are not registered, issued or
sold in accordance with applicable federal and/or state law, such
termination effective immediately upon receipt of written notice;
30
(c) if the Distributor shall determine, in its sole judgment
exercised in good faith, that either (1) the Company shall have
suffered a material adverse change in its business or financial
condition or (2) the Company shall have been the subject of material
adverse publicity which is likely to have a material adverse impact
upon the business and operations of either the Trust or the
Distributor, such termination effective upon 30 days prior written
notice;
(d) if the Distributor suspends or terminates the offering of Trust
shares of any Series or Class to all Participating Investors or only
designated Participating Investors, if such action is required by law
or by regulatory authorities having jurisdiction or if, in the sole
discretion of the Distributor acting in good faith, suspension or
termination is necessary in the best interests of the shareholders of
any Series or Class (it being understood that "shareholders" for this
purpose shall mean Product Owners), such notice effective immediately
upon receipt of written notice, it being understood that a lack of
Participating Investor interest in a Series or Class may be grounds for
a suspension or termination as to such Series or Class and that a
suspension or termination shall apply only to the specified Series or
Class;
(e) upon the Company's assignment of this Agreement (including,
without limitation, any transfer of the Contracts or the Account to
another insurance company pursuant to an assumption reinsurance
agreement) unless the Trust consents thereto, such termination
effective upon 30 days prior written notice;
(f) if the Company is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction of the
Trust within 10 days after written notice of such breach has been
delivered to the Company, such termination effective upon expiration of
such 10-day period; or
(g) upon the determination of the Trust's Board to dissolve,
liquidate or merge the Trust as contemplated by Section 10.3(a), upon
termination of the Agreement pursuant to Section 10.3(b), or upon
notice from the Company pursuant to Section 10.5 or 10.6, such
termination pursuant hereto to be effective upon 15 days prior written
notice.
Except in the case of an option exercised under clause (b), (d) or (g), the
obligations shall terminate only as to new Contracts and the Distributor
shall continue to make Trust shares available to the extent necessary to
permit owners of Contracts in effect on the effective date of such
termination (hereinafter referred to as "Existing Contracts") to reallocate
investments in the Trust, redeem investments in the Trust and/or invest in
the Trust upon the making of additional purchase payments under the Existing
Contracts.
10.5. TERMINATION OF INVESTMENT IN A FUND. The Company may elect to
cease investing in a Fund, promoting a Fund as an investment option under
the Contracts, or withdraw its investment or the Account's investment in a
Fund, subject to compliance with applicable law, upon written notice to the
Trust within 15 days of the occurrence of any of the following events
(unless provided otherwise below):
31
(a) if the Trust informs the Company pursuant to Section 4.4 that
it will not cause such Fund to comply with investment restrictions as
requested by the Company and the Trust and the Company are unable to
agree upon any reasonable alternative accommodations;
(b) if shares in such Fund are not reasonably available to meet the
requirements of the Contracts as determined by the Company (including
any non-availability as a result of notice given by the Distributor
pursuant to Section 10.4(d)), and the Distributor, after receiving
written notice from the Company of such non-availability, fails to make
available, within 10 days after receipt of such notice, a sufficient
number of shares in such Fund or an alternate Fund to meet the
requirements of the Contracts; or
(c) if such Fund fails to meet the diversification requirements
specified in Section 817(h) of the Code and any regulations thereunder
and the Trust, upon written request, fails to provide reasonable
assurance that it will take action to cure or correct such failure.
Such termination shall apply only as to the affected Fund and shall not apply to
any other Fund in which the Company or the Account invests.
10.6. TERMINATION OF INVESTMENT BY THE COMPANY. The Company may elect
to cease investing in all Series or Classes of the Trust made available
hereunder, promoting the Trust as an investment option under the Contracts,
or withdraw its investment or the Accounts' investment in the Trust, subject
to compliance with applicable law, upon written notice to the Trust within
15 days of the occurrence of any of the following events (unless provided
otherwise below):
(a) upon institution of formal proceedings against the Trust or the
Distributor (but only with regard to the Trust) by the NASD, the SEC or
any state securities or insurance commission or any other regulatory
body;
(b) if, with respect to the Trust or a Fund, the Trust or the Fund
ceases to qualify as a regulated investment company under Subchapter M
of the Code, as defined therein, or any successor or similar provision,
or if the Company reasonably believes that the Trust may fail to so
qualify, and the Trust, upon written request, fails to provide
reasonable assurance that it will take action to cure or correct such
failure within 30 days; or
(c) if the Trust or Distributor is in material breach of a
provision of this Agreement, which breach has not been cured to the
satisfaction of the Company within 10 days after written notice of such
breach has been delivered to the Trust or the Distributor, as the case
may be.
10.7. COMPANY REQUIRED TO REDEEM. The parties understand and
acknowledge that it is essential for compliance with Section 817(h) of the
Code that the Contracts qualify as annuity
32
contracts or life insurance policies, as applicable, under the Code.
Accordingly, if any of the Contracts cease to qualify as annuity contracts
or life insurance policies, as applicable, under the Code, or if the Trust
reasonably believes that any such Contracts may fail to so qualify, the
Trust shall have the right to require the Company to redeem Trust shares
attributable to such Contracts upon notice to the Company and the Company
shall so redeem such Trust shares in order to ensure that the Trust complies
with the provisions of Section 817(h) of the Code applicable to ownership of
Trust shares. Notice to the Company shall specify the period of time the
Company has to redeem the Trust shares or to make other arrangements
satisfactory to the Trust and its counsel, such period of time to be
determined with reference to the requirements of Section 817(h) of the Code.
In addition, the Company may be required to redeem Trust shares pursuant to
action taken or request made by the Trust Board in accordance with the
Exemptive Order described in Article VIII or any conditions or undertakings
set forth or referenced therein, or other SEC rule, regulation or order that
may be adopted after the date hereof. The Company agrees to redeem shares in
the circumstances described herein and to comply with applicable terms and
provisions. Also, in the event that the Distributor suspends or terminates
the offering of a Series or Class pursuant to Section 10.4(d) of this
Agreement, the Company, upon request by the Distributor, will cooperate in
taking appropriate action to withdraw the Account's investment in the
respective Fund.
10.8. CONFIDENTIALITY. The Company will keep confidential any
information acquired as a result of this Agreement regarding the business
and affairs of the Trust, the Distributor, and their affiliates.
ARTICLE XI
APPLICABILITY TO NEW ACCOUNTS AND NEW CONTRACTS
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Contracts, any Series or Class, additions of new classes of Contracts to be
issued by the Company and Accounts therefor investing in the Trust. Such
amendments may be made effective by executing the form of amendment included
on each schedule attached hereto. The provisions of this Agreement shall be
equally applicable to each such class of Contracts, Series, Class or
separate account, as applicable, effective as of the date of amendment of
such Schedule, unless the context otherwise requires. The parties to this
Agreement may amend this Agreement from time to time by written agreement
signed by all of the parties.
ARTICLE XII
NOTICE, REQUEST OR CONSENT
Any notice, request or consent to be provided pursuant to this
Agreement is to be made in writing and shall be given:
If to the Trust:
President
Xxxxxxx Xxxxx Variable Insurance Trust
33
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Distributor:
Vice President
Xxxxxxx Sachs & Co.
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Company:
American Enterprise Life Insurance Company
IDS Life Insurance Company
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx III, Vice President
or at such other address as such party may from time to time specify in
writing to the other party. Each such notice, request or consent to a party
shall be sent by registered or certified United States mail with return
receipt requested or by overnight delivery with a nationally recognized
courier, and shall be effective upon receipt. Notices pursuant to the
provisions of Article II may be sent by facsimile to the person designated
in writing for such notices.
ARTICLE XIII
MISCELLANEOUS
13.1. INTERPRETATION. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the state
of Delaware, without giving effect to the principles of conflicts of laws,
subject to the following rules:
(a) This Agreement shall be subject to the provisions of the 1933
Act, 1940 Act and Securities Exchange Act of 1934, as amended, and the
rules, regulations and rulings thereunder, including such exemptions
from those statutes, rules, and regulations as the SEC may grant, and
the terms hereof shall be limited, interpreted and construed in
accordance therewith.
(b) The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
(c) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of the Agreement shall not be affected thereby.
34
(d) The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights,
remedies and obligations, at law or in equity, which the parties hereto
are entitled to under state and federal laws.
13.2. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which together shall constitute one and
the same instrument.
13.3. NO ASSIGNMENT. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Company, the Distributor or the
Trust without the prior written consent of the other parties.
13.4. DECLARATION OF TRUST. A copy of the Declaration of Trust of the
Trust is on file with the Secretary of State of the state of Delaware, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as trustees, and is not binding upon any of the
Trustees, officers or shareholders of the Trust individually, but binding
only upon the assets and property of the Trust. No Series of the Trust shall
be liable for the obligations of any other Series of the Trust.
[The remainder of this page left blank intentionally]
35
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized
officer on the date specified below.
XXXXXXX XXXXX VARIABLE INSURANCE TRUST
(Trust)
Date: 12/6/06 By: /s/Xxxxx XxXxxxxx
-----------------------
Name: Xxxxx XxXxxxxx
Title: Managing Director
XXXXXXX, SACHS & CO.
(Distributor)
Date: 12/6/06 By: /s/Xxxxx XxXxxxxx
-----------------------
Name: Xxxxx XxXxxxxx
Title: Managing Director
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
IDS LIFE INSURANCE COMPANY
Date: November 29, 2006 By: /s/Xxxxxxx X. Xxxxx III
-----------------------
Name: Xxxxxxx X. Xxxxx III
Title: Vice President of each Company
Attest:
Date: November 29, 2006 By: /s/Xxxxx Xxxxxx
-----------------------
Name: Xxxxx Xxxxxx
Title: Assistant Secretary of each Company
36
SCHEDULE 1
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
AMERICAN ENTERPRISE VARIABLE ANNUITY ACCOUNT, ESTABLISHED JULY 15, 1987
(effective January 1, 2007: RiverSource Variable Annuity Account).
SEC 1940 Act Registration No. 811-7195
COMBINATION FIXED AND VARIABLE ANNUITY CONTRACTS:
-------------------------------------------------
CONTRACT NAME SEC REGISTRATION NUMBER
RiverSource Endeavor Select Variable Annuity..........................................333-92297
RiverSource FlexChoice(SM) Select Variable Annuity......................................333-73958
RiverSource Innovations(R) Classic Select Variable Annuity............................333-92297
RiverSource Innovations(R) Select Variable Annuity....................................333-92297
RiverSource Signature One Select Variable Annuity.....................................333-85567
RiverSource Signature Select Variable Annuity.........................................333-74865
Evergreen New Solutions Select Variable Annuity.......................................333-92297
Evergreen Pathways(SM) Select Variable Annuity..........................................333-73958
Xxxxx Fargo Advantage(R) Builder Select Variable Annuity..............................333-85567
Xxxxx Fargo Advantage(R) Choice Select Variable Annuity...............................333-73958
Xxxxx Fargo Advantage(R) Select Variable Annuity......................................333-92297
RiverSource Access Choice Select Variable Annuity.....................................333-73958
Investing in shares of:
o Goldman Sachs VIT Mid Cap Value Fund
CONTRACT NAME SEC REGISTRATION NUMBER
RiverSource Signature Variable Annuity................................................333-74865
RiverSource Signature One Variable Annuity............................................333-85567
Investing in shares of:
o Goldman Xxxxx VIT Capital Growth Fund
o Goldman Sachs VIT Structured U.S. Equity Fund
o Goldman Xxxxx VIT International Equity Fund
37
CONTRACT NAME SEC REGISTRATION NUMBER
Xxxxx Fargo Advantage(SM) Variable Annuity..............................................333-85567
Xxxxx Fargo Advantage(SM) Builder Variable Annuity......................................333-85567
Xxxxx Fargo Advantage(SM) Choice Variable Annuity.......................................333-73958
Investing in shares of:
o Goldman Xxxxx VIT Structured U.S. Equity Fund
o Goldman Sachs VIT Mid Cap Value Fund
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
AMERICAN ENTERPRISE VARIABLE LIFE ACCOUNT, ESTABLISHED JULY 15, 1987
(effective January 1, 2007: RiverSource Variable Life Account).
SEC 1940 Act Registration No. 811-09515
COMBINATION FIXED AND VARIABLE UNIVERSAL LIFE INSURANCE POLICIES:
-----------------------------------------------------------------
CONTRACT NAME SEC REGISTRATION NUMBER
RiverSource Signature Variable Universal Life.........................................333-84121
Investing in shares of:
o Goldman Xxxxx VIT Capital Growth Fund
o Goldman Sachs VIT Structured U.S. Equity Fund
o Goldman Xxxxx VIT International Equity Fund
IDS LIFE INSURANCE COMPANY
IDS LIFE VARIABLE ACCOUNT 10, ESTABLISHED AUGUST 23, 1995 (effective January
1, 2007: RiverSource Variable Account 10).
SEC 1940 Act Registration Act No. 811-07355
COMBINATION FIXED AND VARIABLE ANNUITY CONTRACTS:
-------------------------------------------------
CONTRACT NAME SEC REGISTRATION NUMBER
RiverSource Retirement Advisor 4 Advantage Variable Annuity...........................333-79311
RiverSource Retirement Advisor 4 Select Variable Annuity..............................333-79311
RiverSource Retirement Advisor 4 Access Variable Annuity..............................333-79311
Investing in shares of:
38
o Goldman Sachs VIT Structured U.S. Equity Fund
CONTRACT NAME SEC REGISTRATION NUMBER
RiverSource Retirement Advisor Advantage Plus(SM) Variable Annuity....................333-79311
RiverSource Retirement Advisor Advantage Plus(SM) -- Band 3
Variable Annuity......................................................................333-79311
RiverSource Retirement Advisor Select Plus(SM) Variable Annuity.......................333-79311
RiverSource Retirement Advisor Select Plus(SM) -- Band 3
Variable Annuity......................................................................333-79311
RiverSource Retirement Advisor Advantage(SM) Variable Annuity.........................333-79311
RiverSource Retirement Advisor Advantage(SM) -- Band 3
Variable Annuity......................................................................333-79311
RiverSource Retirement Advisor Select(SM) Variable Annuity............................333-79311
RiverSource Retirement Advisor Select(SM) -- Band 3
Variable Annuity......................................................................333-79311
Investing in shares of:
o Goldman Xxxxx VIT Structured U.S. Equity Fund
o Goldman Sachs VIT Mid Cap Value Fund
CONTRACT NAME SEC REGISTRATION NUMBER
RiverSource Retirement Advisor Variable Annuity.......................................333-79311
RiverSource Retirement Advisor Variable Annuity -- Band 3.............................333-79311
Investing in shares of:
o Goldman Xxxxx VIT Structured Small Cap Equity Fund
o Goldman Sachs VIT Structured U.S. Equity Fund
o Goldman Xxxxx VIT Mid Cap Value Fund
39
IDS LIFE INSURANCE COMPANY
IDS LIFE VARIABLE LIFE SEPARATE ACCOUNT, ESTABLISHED OCTOBER 16, 1985 (effective
January 1, 2007: RiverSource Variable Life Separate Account).
SEC 1940 Act Registration Act No. 811-4298
COMBINATION FIXED AND VARIABLE LIFE INSURANCE POLICIES:
-------------------------------------------------------
CONTRACT NAME SEC REGISTRATION NUMBER
RiverSource Variable Second-to-Die Life Insurance......................................33-62457
RiverSource Variable Universal Life III...............................................333-69777
RiverSource Variable Universal Life Insurance..........................................33-11165
RiverSource Succession Select Variable Life Insurance..................................33-62457
Investing in shares of:
o Goldman Sachs VIT Structured Small Cap Equity Fund
o Goldman Xxxxx VIT Structured U.S. Equity Fund
o Goldman Sachs VIT Mid Cap Value Fund
CONTRACT NAME SEC REGISTRATION NUMBER
RiverSource Variable Universal Life IV................................................333-69777
RiverSource Variable Universal Life IV - Estate Series................................333-69777
RiverSource Single Premium Variable Life Insurance....................................333-83456
Investing in shares of:
o Goldman Xxxxx VIT Structured U.S. Equity Fund
o Goldman Sachs VIT Mid Cap Value Fund
40
