FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the 24th day of April, 2003, between
American Enterprise Life Insurance Company ("Insurance Company"), a life
insurance company organized under the laws of the State of Indiana, and ▇.▇.
▇▇▇▇▇▇ Series Trust II ("Fund"), a business trust organized under the laws of
Delaware, with respect to the Fund's portfolio or portfolios set forth on
Schedule 1 hereto, as such Schedule may be revised from time to time (the
"Series"; if there are more than one Series to which this Agreement applies, the
provisions herein shall apply severally to each such Series).
ARTICLE I 1.
DEFINITIONS
1.1. "Act" shall mean the Investment Company Act of 1940, as amended.
1.2. "Board" shall mean the Board of Trustees of the Fund having the
responsibility for management and control of the Fund.
1.3. "Business Day" shall mean any day on which the New York Stock Exchange
is open for trading and on which the Fund calculates net asset value
per share pursuant to the rules of the Commission.
1.4. "Commission" shall mean the Securities and Exchange Commission.
1.5. "Contract" shall mean a variable annuity or variable life insurance
contract that uses the Fund as an underlying investment medium.
Individuals who participate under a group Contract are "Participants".
1.6. "Contractholder" shall mean any entity that is a party to a Contract
with a Participating Company.
1.7. "Disinterested Board Members" shall mean those members of the Board
that are not deemed to be "interested persons" of the Fund, as defined
by the Act.
1.8. "Participating Companies" shall mean any insurance company (including
Insurance Company), which offers variable annuity and/or variable life
insurance contracts to the public and which has entered into an
agreement with the Fund for the purpose of making Fund shares
available to serve as the underlying investment medium for the
aforesaid Contracts.
1.9. "Plans" shall mean qualified pension and retirement benefit plans.
1.10. "Prospectus" shall mean the Fund's current prospectus and statement of
additional information, as most recently filed with the Commission,
with respect to the Series.
1.11. "Separate Account" shall mean the American Express Variable Life
Account and/or American Express Variable Annuity Account, separate
accounts established by Insurance Company in accordance with the laws
of the State of Indiana. The provisions herein shall apply severally
to each such Separate Account.
1.12. "Software Program" shall mean the software program used by the Fund
for providing Fund and account balance information including net asset
value per share.
1.13. "Insurance Company's General Account(s)" shall mean the general
account(s) of Insurance Company and its affiliates which invest in the
Fund.
ARTICLE II 2.
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an insurance
company duly organized and in good standing under applicable law; (b)
it has legally and validly established the Separate Account pursuant to
the Indiana Insurance Code for the purpose of offering to the public
certain individual variable annuity contracts; (c) it has registered or
shall register the Separate Account as a unit investment trust under
the Act, to the extent required by the Act, to serve as the segregated
investment account for the Contracts; (d) each Separate Account is
eligible to invest in shares of the Fund without such investment
disqualifying the Fund as an investment medium for insurance company
separate accounts supporting variable annuity contracts or variable
life insurance contracts; and (e) each Separate Account shall comply
with all applicable legal requirements.
2.2 Insurance Company represents and warrants that (a) the Contracts will
be described in a registration statement filed, to the extent
necessary, under the Securities Act of 1933, as amended ("1933 Act");
(b) the Contracts will be issued and sold in compliance in all material
respects with all applicable federal and state laws; and (c) the sale
of the Contracts shall comply in all material respects with state
insurance law requirements. Insurance Company agrees to inform the Fund
promptly of any investment restrictions imposed by state insurance law
and applicable to the Fund .
2.3 Insurance Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to the Separate
Account are, in accordance with the applicable Contracts, to be
credited to or charged against such Separate Account without regard to
other income, gains or losses from assets allocated to any other
accounts of Insurance Company. Insurance Company represents and
warrants that the assets of the Separate Account are and will be kept
separate from Insurance Company's General Account and any other
separate accounts Insurance Company may have, and will not be charged
with liabilities from any business that Insurance Company may conduct
or the liabilities of any companies affiliated with Insurance Company.
2.4 Fund represents that the Fund is registered with the Commission under
the Act as an open-end management investment company and possesses, and
shall maintain, all legal and regulatory licenses, approvals, consents
and/or exemptions required for the Fund to operate and offer its shares
as an underlying investment medium for Participating Companies. The
Fund will maintain its registration with the Commission under the Act
with respect to each of its Series as long as a Series continues to
operate. The Fund has established five portfolios and may in the future
establish other portfolios.
2.5 Fund represents that it is duly organized and validly existing under
applicable state law and is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), and that it will make every effort to
maintain such qualification (under Subchapter M or any successor or
similar provision) and that it will notify Insurance Company
immediately upon having a reasonable basis for believing that it has
ceased to so qualify or that it might not so qualify in the future.
2.6 Insurance Company represents and agrees that the Contracts are intended
to be treated as life insurance policies or annuity contracts,
whichever is appropriate, under applicable provisions of the Code, and
that it will make every effort to maintain such treatment and that it
will notify the Fund and its investment adviser immediately upon having
a reasonable basis for believing that the Contracts have ceased to be
so treated or that they might not be so treated in the future.
Insurance Company agrees that any prospectus offering a Contract that
is a "modified endowment contract," as that term is defined in Section
7702A of the Code, will identify such Contract as a modified endowment
contract (or policy).
2.7 Fund agrees that the Fund's assets shall be managed and invested in a
manner that complies with the requirements of Section 817(h) of the
Code and Treasury Regulation 1.817-5, as amended from time to time. In
the event of a breach of this representation and warranty by the Fund,
it and/or its investment adviser will take all reasonable steps to
notify the Insurance Company of such breach and to adequately diversify
the Fund so as to achieve compliance within the grace period afforded
by Treasury Regulation 1.817-5.
2.8 Insurance Company agrees that the Fund shall be permitted (subject to
the other terms of this Agreement) to make Series' shares available to
other Participating Companies and contractholders and to Plans.
2.9 Fund represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities who deal
with the money and/or securities of the Fund are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage
for the benefit of the Fund in an amount not less than that required by
Rule 17g-1 under the Act or related provisions as may be promulgated
from time to time. The aforesaid Bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding
company.
2.10 Insurance Company represents and warrants that all of its employees and
agents who deal with the money and/or securities of the Fund are and
shall continue to be at all times covered by a blanket fidelity bond or
similar coverage in an amount not less than the coverage required to be
maintained by the Fund as stated in Section 2.9. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued
by a reputable bonding company.
2.11 Insurance Company agrees that the Fund's investment adviser shall be
deemed a third party beneficiary under this Agreement and may enforce
any and all rights conferred by virtue of this Agreement.
2.12 Fund represents and warrants that its investment objective, policies
and restrictions comply with applicable state securities laws as they
may apply to the Fund...
ARTICLE III 3.
FUND SHARES
3.1 The Contracts funded through the Separate Account will provide for the
investment of certain amounts in the Series' shares.
3.2 Fund agrees to make the shares of its Series available for purchase at
the then applicable net asset value per share by Insurance Company and
the Separate Account on each Business Day pursuant to rules of the
Commission. Notwithstanding the foregoing, the Fund may refuse to sell
the shares of any Series to any person, or suspend or terminate the
offering of the shares of any Series if such action is required by law
or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Board, acting in good faith and in light of its
fiduciary duties under federal and any applicable state laws, necessary
and in the best interests of the shareholders of such Series. Shares of
a particular Series will be ordered in such quantities and at such
times as determined by Insurance Company to be necessary to meet the
requirements of the Contracts.
3.3 Fund agrees that shares of the Fund will be sold only to Participating
Companies and their separate accounts and to the general accounts of
those Participating Companies and their affiliates and to Plans. No
shares of any Series will be sold to the general public.
3.4 Fund shall use its best efforts to provide closing net asset value,
dividend and capital gain information for each Series available on a
per-share and Series basis to Insurance Company by 7:00 p.m. Eastern
Time on each Business Day. Fund will notify Insurance Company as soon
as possible if it is determined that the net asset value per share will
not be available until after 7:00 p.m. Eastern Time on any Business
Day, and Fund and Insurance Company will mutually agree upon a final
deadline for timely receipt of the net asset value on such Business
Day. Any material errors in the calculation of net asset value,
dividend and capital gain information shall be reported immediately
upon discovery to Insurance Company. If Insurance Company is provided
with materially incorrect net asset value information, Insurance
Company will be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct net asset value per share.
Non-material errors will be corrected in the next Business Day's net
asset value per share for the Series in question.
3.5 At the end of each Business Day, Insurance Company will use the
information described in Sections 3.2 and 3.4 to calculate the Separate
Account unit values for the day. Using this unit value, Insurance
Company will process the day's Separate Account transactions received
by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. Eastern time) to determine the net dollar
amount of Series shares which will be purchased or redeemed at that
day's closing net asset value per share for such Series. The net
purchase or redemption orders will be transmitted to the Fund by
Insurance Company by 10:00 a.m. Eastern Time on the Business Day next
following Insurance Company's receipt of that information. Subject to
Sections 3.6 and 3.8, all purchase and redemption orders for Insurance
Company's General Accounts shall be effected at the net asset value per
share of the relevant Series next calculated after receipt of the order
by the Fund or its Transfer Agent.
3.6 Fund appoints Insurance Company as its agent for the limited purpose of
accepting orders for the purchase and redemption of shares of each
Series for the Separate Account. Receipt of an order by Insurance
Company will constitute receipt of such order by Fund. Fund will
execute orders for any Series at the applicable net asset value per
share determined as of the close of trading on the day of receipt of
such orders by Insurance Company acting as agent ("effective trade
date"), provided that the Fund receives notice of such orders by 10:00
a.m. Eastern Time on the next following Business Day and, if such
orders request the purchase of Series shares, the conditions specified
in Section 3.8, as applicable, are satisfied. A redemption or purchase
request for any Series that does not satisfy the conditions specified
above and in Section 3.8, as applicable, will be effected at the net
asset value computed for such Series on the Business Day immediately
preceding the next following Business Day upon which such conditions
have been satisfied.
3.7 Insurance Company will make its best efforts to notify Fund in advance
of any unusually large purchase or redemption orders.
3.8 If Insurance Company's order requests the purchase of Series shares,
Insurance Company will pay for such purchases by wiring Federal Funds
to Fund or its designated custodial account before the close of the
Federal Reserve wire system on the Business Day the Fund receives the
notice of the order pursuant to Section 3.5. Fund will execute such
orders at the applicable net asset value per share determined as of the
close of trading on the effective trade date if Fund receives payment
before the close of the Federal Reserve wire system on the Business Day
the Fund receives the notice of the order pursuant to Section 3.5. If
payment in Federal Funds for any purchase is not received on such
Business Day, Insurance Company shall promptly upon the Fund's request,
reimburse the Fund for any charges, costs, fees, interest or other
expenses incurred by the Fund in connection with any advances to, or
borrowings or overdrafts by, the Fund, or any similar expenses incurred
by the Fund, as a result of portfolio transactions effected by the Fund
based upon such purchase request.
3.9 Fund has the obligation to ensure that Series shares are registered
with applicable federal agencies at all times and are duly authorized
for issuance in accordance with applicable law.
3.10 Fund will confirm in writing each purchase or redemption order made by
Insurance Company. Issuance and transfer of Series shares will be by
book entry only. No share certificates will be issued to Insurance
Company or any Separate Account Insurance Company will record shares
ordered and redeemed from Fund in an appropriate title for the
corresponding account.
3.11 Fund shall credit Insurance Company with the appropriate number of
shares.
3.12 No later than each ex-dividend date of the Fund or, if an ex-dividend
date is not a Business Day, on the first Business Day thereafter, Fund
shall communicate to Insurance Company the amount of dividend and
capital gain, if any, per share of each Series. All dividends and
capital gains of any Series shall be automatically reinvested in
additional shares of the relevant Series at the applicable net asset
value per share of such Series on the payable date; provided, however,
Insurance Company reserves the right to change this election and
receive all such dividends and distributions in cash. Fund shall, on
the day after the payable date or, if not a Business Day, on the first
Business Day thereafter, notify Insurance Company of the number of
shares so issued.
ARTICLE IV 4.
STATEMENTS AND REPORTS
4.1 Fund shall provide monthly statements of account as of the end of each
month for all of Insurance Company's accounts by the fifteenth (15th)
Business Day of the following month.
4.2 At the option of Insurance Company, Fund shall either (i) provide to
Insurance Company copies of the Fund's Prospectuses, proxy materials,
notices, periodic reports and other printed materials (which the Fund
customarily provides to its shareholders) ("Fund Materials") in
quantities as Insurance Company may reasonably request for distribution
to each Contractholder and Participant; or (ii) provide Insurance
Company with a camera-ready copy, computer disk or other medium agreed
to by the parties of Fund Materials in a form suitable for printing.
The Fund will bear the cost of typesetting and printing such Fund
Materials.
4.3 Fund will provide to Insurance Company at least one complete copy of
all registration statements, Prospectuses, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Commission or other
regulatory authorities.
4.4 Insurance Company will provide to the Fund at least one copy of all
registration statements, Prospectuses, reports, proxy statements, sales
literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Contracts or the Separate Account,
contemporaneously with the filing of such document with the Commission.
ARTICLE V 5.
EXPENSES
5.1 The charge to the Fund for all expenses and costs of the Series,
including but not limited to management fees, administrative expenses
and legal and regulatory costs, will be made in the determination of
the relevant Series' daily net asset value per share so as to
accumulate to an annual charge at the rate set forth in the Fund's
Prospectus. Excluded from the expense limitation described herein shall
be brokerage commissions and transaction fees and extraordinary
expenses.
5.2 Except as provided in this Article V and, in particular in the next
sentence, Insurance Company shall not be required to pay directly any
expenses of the Fund or expenses relating to the distribution of its
shares. Insurance Company shall pay distribution expenses of any Fund
Materials for prospective Insurance Company Contractholders and
Participants or marketing materials that the Insurance Company wishes
or is required to distribute to prospective Insurance Company
Contractholders and Participants.
Except as provided herein, all other Fund expenses shall not be borne
by Insurance Company.
ARTICLE VI 6.
EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of the order dated December 1996
of the Securities and Exchange Commission under Section 6(c) of the Act
and, in particular, has reviewed the conditions to the relief set forth
in the related Notice. As set forth therein, Insurance Company agrees
to report any potential or existing conflicts of which it becomes aware
promptly to the Board, and in particular whenever contract voting
instructions are disregarded, and recognizes that it will be
responsible for assisting the Board in carrying out its
responsibilities as delineated in such Notice. Insurance Company agrees
to carry out such responsibilities with a view to the interests of
existing Contractholders.
6.2 The Board will monitor Fund for existence of any irreconcilable
material conflict among the interests of the Contractholders of all
Separate Accounts investing in the Fund. The Board will record in its
minutes, or other appropriate records, all reports received by it and
all action taken with regard to a conflict. If a majority of the Board,
or a majority of Disinterested Board Members, determines that a
material irreconcilable conflict exists , the Board shall give prompt
notice to all Participating Companies. If the Board determines that
Insurance Company is responsible for causing or creating said conflict,
Insurance Company shall at its sole cost and expense, and to the extent
reasonably practicable (as determined by a majority of the
Disinterested Board Members), take such action as is necessary to
remedy or eliminate the irreconcilable material conflict. Such
necessary action may include, but shall not be limited to:
a. Withdrawing the assets allocable to the affected subaccount of
the Separate Account from the Series, terminating this Agreement
with regard to such subaccount and reinvesting such assets in a
different investment medium, or submitting the question of
whether such segregation should be implemented to a vote or all
affected Contractholders; and/or
b. Establishing a new registered management investment company.
6.3 If a material irreconcilable conflict arises as a result of a decision
by Insurance Company to disregard Contractholder voting instructions
and such disregard of voting instructions could conflict with the
majority of Contractholder voting instructions, and said decision
represents a minority position or would preclude a majority vote by all
Contractholders having an interest in the Fund, Insurance Company may
be required, at the Board's election, to withdraw the affected
subaccount of the Separate Account's investment in the Fund and
terminate this Agreement with regard to such subaccount; provided,
however, that such withdrawal and termination will be limited to the
extent required by the foregoing irreconcilable material conflict as
determined by a majority of the Disinterested Board Members. No charge
or penalty will be imposed as a result of such withdrawal. Any such
withdrawal and termination must take place within six (6) months after
Fund gives written notice to Insurance Company that this provision is
being implemented. Until the end of such six-month period the
investment adviser of Fund and Fund will, to the extent permitted by
law and any exemptive relief previously granted to Fund, continue to
accept and implement orders by Insurance Company for the purchase (and
redemption) of shares of Fund.
6.4 For the purpose of this Article, a majority of the Disinterested Board
Members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will the
Fund be required to bear the expense of establishing a new funding
medium for any Contract. Insurance Company shall not be required by
this Article to establish a new funding medium for any Contract if an
offer to do so has been declined by vote of a majority of the
Contractholders materially adversely affected by the irreconcilable
material conflict.
6.5 No action by Insurance Company taken or omitted, and no action by the
Separate Account or the Fund taken or omitted as a result of any act or
failure to act by Insurance Company pursuant to this Article VI shall
relieve Insurance Company of its obligations under, or otherwise affect
the operation of, Article V.
6.6 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to Insurance Company
conflicts with the majority of other state insurance regulators, then
Insurance Company will withdraw the affected subaccount of the Separate
Account's investment in Fund and terminate this Agreement with respect
to such subaccount; provided, however, that such withdrawal and
termination will be limited to the extent required by the foregoing
irreconcilable material conflict as determined by a majority of the
Disinterested Board Members. No charge or penalty will be imposed as a
result of such withdrawal. Any such withdrawal and termination must
take place within six (6) months after Fund gives written
notice to Insurance Company that this provision is being implemented.
Until the end of such six-month period the investment adviser of Fund
and Fund will, to the extent permitted by law and any exemptive relief
previously granted to Fund, continue to accept and implement orders by
Insurance Company for the purchase (and redemption) of shares of Fund.
ARTICLE VII 7.
VOTING OF FUND SHARES
7.1 Fund shall provide Insurance Company with copies at no cost to
Insurance Company, of the Fund's proxy material, reports to
shareholders and other communications to shareholders in such quantity
as Insurance Company shall reasonably require for distributing to
Contractholders or Participants.
If and to the extent required by law, Insurance Company shall:
(a) assist Fund's proxy vendor with soliciting voting instructions
from Contractholders or Participants on a timely basis and in
accordance with applicable law;
(b) vote the Series shares in accordance with instructions received
from Contractholders or Participants; and
(c) vote Series shares for which no instructions have been received
in the same proportion as Series shares for which instructions
have been received;
so long as and to the extent that the Commission continues to interpret
the 1940 Act to require pass-through voting privileges for variable
contract owners.
Insurance Company agrees at all times to vote its General Account
shares in the same proportion as Series shares for which instructions
have been received from Contractholders or Participants. Insurance
Company further agrees to be responsible for assuring that voting
Series shares for the Separate Account is conducted in a manner
consistent with other Participating Companies.
7.2 Fund will comply with all provisions of the Act requiring voting by
shareholders, and in particular, Fund either will provide for annual
meetings (except insofar as the Commission may interpret Section 16 of
the Act not to require such meetings) or, as Fund currently intends, to
comply with Section 16(c) of the Act (although Fund is not one of the
trusts described in Section 16(c) of that Act) as well as with Sections
16(a) and, if and when applicable, 16(b). Further, Fund will act in
accordance with the Commission's interpretation of the requirements of
Section 16(a) with respect to periodic elections of directors and with
whatever rules the Commission may promulgate with respect thereto.
7.3 Insurance Company agrees that it shall not, without the prior written
consent of the Fund and its investment adviser, solicit, induce or
encourage Contractholders to change or supplement the Fund's current
investment adviser.
ARTICLE VIII 8.
MARKETING AND REPRESENTATIONS
8.1 The Fund or its underwriter shall periodically furnish Insurance
Company with the following documents, in quantities as Insurance
Company may reasonably request:
a. Current Prospectus and any supplements thereto;
b. other marketing materials.
Expenses for the production of such documents shall be borne in
accordance with Section 5.2 of this Agreement.
8.2 Insurance Company shall designate certain persons or entities which
shall have the requisite licenses to solicit applications for the sale
of Contracts. No representation is made as to the number or amount of
Contracts that are to be sold by Insurance Company. Insurance Company
shall make reasonable efforts to market the Contracts and shall comply
with all applicable federal and state laws in connection therewith.
8.3 Insurance Company shall furnish, or shall cause to be furnished, to the
Fund, each piece of sales literature or other promotional material in
which the Fund, its investment adviser or the administrator is named,
at least ten Business Days prior to its use. No
such material shall be used if the Fund reasonably objects to such
material. Such objection (if given) must be in writing within five
Business Days after receipt of such material. The Fund shall use all
reasonable efforts to respond within five days of receipt.
8.4 Insurance Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the
Fund or any Series in connection with the sale of the Contracts other
than the information or representations contained in the registration
statement or Prospectus, as may be amended or supplemented from time to
time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund. Nothing
in this Section 8.4 will be construed as preventing Insurance Company
or its employees or agents from giving advice on investment in the
Fund.
8.5 Fund shall furnish, or shall cause to be furnished, to Insurance
Company, each piece of the Fund's sales literature or other promotional
material in which Insurance Company or the Separate Account is named,
at least ten Business Days prior to its use. No such material shall be
used if Insurance Company reasonably objects to such material. Such
objection (if given) must be in writing within five Business Days after
receipt of such material. Insurance Company shall use all reasonable
efforts to respond within five days of receipt.
8.6 Fund shall not, in connection with the sale of Series shares, give any
information or make any representations or statements on behalf of
Insurance Company or concerning Insurance Company, the Separate
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts,
as may be amended or supplemented from time to time, or in published
reports for the Separate Account which are in the public domain or
approved by Insurance Company for distribution to Contractholders or
Participants, or in sales literature or other promotional material
approved by Insurance Company.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for
use, in a newspaper, magazine or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards,
motion pictures or other public media, e.g., on-line networks such as
the Internet or other electronic messages), sales literature (such as
any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, or reprints or
excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications
distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, statements of
additional information, shareholder reports and proxy materials, and
any other material constituting sales literature or advertising under
National Association of Securities Dealers, Inc. rules, the Act or the
1933 Act.
ARTICLE IX 9.
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless the Fund, its
investment adviser, any sub-investment adviser of a Series, and their
affiliates, and each of their respective directors, trustees, officers,
employees, agents and each person, if any, who controls or is
associated with any of the foregoing entities or persons within the
meaning of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of Section 9.1), 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 (with the written consent of Insurance Company) of,
any action, suit or proceeding or any claim asserted) to which the
Indemnified Parties may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect to thereof) (1) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in information furnished by Insurance Company for use in the
registration statement or Prospectus or sales literature or
advertisements of the Fund; or with respect to the Separate Account or
the Contracts; or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, if
such statement or omission was made in reliance on and in conformity
with information furnished to Fund in writing by Insurance Company; or
(2) arise out of or as a result of conduct, statements or
representations (other than statements or representations contained in
the Prospectus and sales literature or advertisements of the Fund) of
Insurance Company or its agents, with respect to the sale and
distribution of Contracts for which Series shares are an underlying
investment; or (iii) arise out of the wrongful conduct of or violation
of applicable federal and state law by Insurance Company or persons
under its control or subject to its authorization with respect to the
sale or distribution of the Contracts or Series shares; or (iv) arise
out of Insurance Company's incorrect calculation and/or untimely
reporting of net purchase or redemption orders; or (v) arise out of or
result from any material breach of any representation and/or warranty
made by the Insurance Company in this Agreement, or arise out of or
result from any other material breach by Insurance Company or persons
under its control or subject to its authorization of a material term of
this Agreement; or (vi) arise as a result of any failure by Insurance
Company or persons under its control or subject to its authorization to
provide the services and furnish the materials or to make any payments
provided for in this Agreement. Insurance Company will reimburse any
Indemnified Party in connection with reasonable costs directly related
to investigating or defending any such loss, claim, damage, liability
or action; provided, however, that with respect to clauses (i) and (ii)
above Insurance Company will not be liable in any such case to the
extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue
statement or omission or alleged omission made in such registration
statement, prospectus, sales literature, or advertisement in
conformity with written information furnished to Insurance Company by
the Fund specifically for use therein; and provided, further, that
Insurance Company shall not be liable for special, consequential,
indirect, punitive, exemplary or incidental damages. This indemnity
agreement will be in addition to any liability which Insurance Company
may otherwise have.
9.2 The Fund agrees to indemnify and hold harmless Insurance Company and
each of its directors, trustees, officers, partners, employees, agents
and each person, if any, who controls or is associated with Insurance
Company within the meaning of the 1933 Act against any losses, claims,
damages or liabilities to which Insurance Company or any such director,
trustee, officer, partner, employee, agent or controlling person may
become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
(1) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or Prospectus or sales literature or advertisements of the
Fund or any amendment or supplement to the foregoing; or (2) arise out
of or are based upon the omission to state in the registration
statement or Prospectus or sales literature or advertisements of the
Fund, or any amendment or supplement to the foregoing, any 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; or (3) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or Prospectus or sales literature or
advertisements with respect to the Separate Account or the Contracts
and such statements were based on information provided to Insurance
Company by the Fund; (4) arise out of or are based on any wrongful
conduct of, or violation of applicable federal and state law by, the
investment adviser of Fund or Fund or persons under their respective
control or subject to their authorization with respect to the sale of
Fund shares; or (5) arise as a result of any failure by Fund, the
investment adviser of Fund or persons under their respective control or
subject to their authorization to provide the services and furnish the
materials under the terms of this Agreement including, but not limited
to, a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification requirements and procedures related
thereto specified in Section 2.7 of this Agreement; or (6) arise out of
or result from any material breach of any representation and/or
warranty made by the Fund in this Agreement, or arise out of or result
from any other material breach of a material term of this Agreement by
the Fund or persons under its control or subject to its authorization;
and the Fund will reimburse reasonable costs directly related to any
legal or other expenses reasonably incurred by Insurance Company or any
such director, trustee, officer, partner, employee, agent or
controlling or associated person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Fund will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or omission or alleged omission made
in such Registration Statement, Prospectus, sales literature or
advertisements in conformity with written information furnished to the
Fund by Insurance Company specifically for use therein; and provided,
further, that the Fund shall not be liable for special, consequential,
indirect, punitive, exemplary or incidental damages. This indemnity
agreement will be in addition to any liability which the Fund may
otherwise have.
9.3 The Fund shall indemnify and hold Insurance Company harmless against
any and all liability, loss, damages, costs or expenses which Insurance
Company may incur, suffer or be required to pay due to the Fund's, its
investment adviser's or persons or entities under their respective
control or subject to their authorization, (1) incorrect calculation of
the daily net asset value, dividend rate or capital gain distribution
rate of a Series; (2) incorrect reporting of the daily net asset value,
dividend rate or capital gain distribution rate; and (3) untimely
reporting of the net asset value, dividend rate or capital gain
distribution rate; provided that the Fund shall have no obligation to
indemnify and hold harmless Insurance Company if the incorrect
calculation or incorrect or untimely reporting was the result of
incorrect information furnished by Insurance Company or information
furnished untimely by Insurance Company or otherwise as a result of or
relating to a breach of this Agreement by Insurance Company; and
provided, further, that the Fund shall not be liable for special,
consequential, indirect, punitive, exemplary or incidental damages.
9.4 Promptly after receipt by an indemnified party under this Article of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Article, notify the indemnifying party of the
commencement thereof. The omission to so notify the indemnifying party
will not relieve the indemnifying party from any liability under this
Article IX, except to the extent that the omission results in a failure
of actual notice to the indemnifying party and such indemnifying party
is damaged solely as a result of the failure to give such notice. In
case any such action is brought against any indemnified party, and it
notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein at its own
expense and, to the extent that it may wish, assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party, and to the extent that the indemnifying party has given notice
to such effect to the indemnified party and is performing its
obligations under this Article, the indemnifying party shall not be
liable for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, other than
reasonable costs of investigation. Notwithstanding the foregoing, 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 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.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX.
9.5 No party will be entitled to indemnification under Article IX if such
liability, loss, damage, cost or expense is due to the willful
misfeasance, bad faith, or gross negligence in the performance of such
party's duties under this Agreement, or by reason of such party's
reckless disregard of its obligations or duties under this Agreement by
the indemnified party.
ARTICLE X 10.
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions
herein.
10.2 This Agreement shall terminate without penalty as to one or more Series
at the option of the terminating party:
a. At the option of Insurance Company or the Fund at any time from
the date hereof upon 60 days' advance notice, or later, upon
receipt of any required exemptive relief or upon order from the
Commission, unless otherwise agreed to in writing by the parties;
b. At the option of Insurance Company, if shares of any Series are
not reasonably available to meet the requirements of the
Contracts as determined by Insurance Company. Prompt notice of
election to terminate shall be furnished by Insurance Company,
said termination to be effective upon receipt of notice;
c. At the option of Insurance Company, upon the institution of
formal proceedings against the Fund or its investment adviser by
the Commission, National Association of Securities Dealers or any
other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in Insurance Company's
reasonable judgment, exercised in good faith, materially impair
the Fund's ability to meet and perform the Fund's obligations and
duties hereunder. Prompt notice of election to terminate shall be
furnished by Insurance Company with said termination to be
effective upon receipt of notice;
d. At the option of the Fund, upon the institution of formal
proceedings against Insurance Company by the Commission, National
Association of Securities Dealers or any other regulatory body,
the expected or anticipated ruling, judgment or outcome of which
would, in the Fund's reasonable judgment, exercised in good
faith, materially impair Insurance Company's ability to meet and
perform Insurance Company's obligations and duties hereunder.
Prompt notice of election to terminate shall be furnished by the
Fund with said termination to be effective upon receipt of
notice;
e. At the option of the Fund, if the Fund shall determine, in its
sole judgment reasonably exercised in good faith, that Insurance
Company has suffered a material adverse change in its business or
financial condition or is the subject of material adverse
publicity and such material adverse change or material adverse
publicity is likely to have a material adverse impact upon the
business and operation of the Fund or its investment adviser, the
Fund shall notify Insurance Company in writing of such
determination and its intent to terminate this Agreement, and
after considering the actions taken by Insurance Company and any
other changes in circumstances since the giving of such notice,
such determination of the Fund shall continue to apply on the
thirtieth (30th) day following the giving of such notice, which
thirtieth (30) day shall be the effective date of termination;
f. At the option of Insurance Company, if Insurance Company shall
determine, in its sole judgment reasonably exercised in good
faith, that the Fund has suffered a material adverse change in
its business or financial condition or is the subject of material
adverse publicity and such material adverse change or material
adverse publicity is likely to have a material adverse impact
upon the business and operation of Insurance Company, Insurance
Company shall notify the Fund in writing of such determination
and its intent to terminate this Agreement, and after considering
the actions taken by the Fund and any other changes in
circumstances since the giving of such notice, such determination
of Insurance Company shall continue to apply on the thirtieth
(30th) day following the giving of such notice, which thirtieth
(30) day shall be the effective date of termination;
g. Upon termination of the Investment Advisory Agreement between the
Fund and its investment adviser or its successors unless
Insurance Company specifically approves the selection of a new
Fund investment adviser. The Fund shall promptly furnish notice
of such termination to Insurance Company;
h. In the event the Fund's shares are not registered, issued or sold
in accordance with applicable federal and/or state law, or such
law precludes the use of such shares as the underlying investment
medium of Contracts issued or to be issued by Insurance Company.
Termination shall be effective immediately upon such occurrence
without notice;
i. At the option of the Fund upon a determination by the Board in
good faith that it is no longer advisable and in the best
interests of shareholders for the Fund to continue to operate
pursuant to this Agreement. Termination pursuant to this
Subsection (h) shall be effective upon notice by the Fund to
Insurance Company of such termination;
j. At the option of the Fund if the Contracts cease to qualify as
annuity contracts or life insurance policies, as applicable,
under the Code, or if the Fund reasonably believes that the
Contracts may fail to so qualify;
k. At the option of either party to this Agreement, upon another
party's material breach of any material provision of this
Agreement;
l. At the option of the Fund, if the Contracts are not registered,
issued or sold in accordance with applicable federal and/or state
law;
m. Upon assignment of this Agreement, unless made with the written
consent of the non-assigning party;
n. At the option of Insurance Company, upon receipt of Insurance
Company's written notice by Fund, if Fund ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code, or
under any successor or similar provision, or if Insurance Company
reasonably and in good faith believes that Fund may fail to so
qualify;
o. At the option of Insurance Company, upon receipt of Insurance
Company's written notice by Fund, with respect to any Series if
Fund fails to meet the diversification requirements specified in
this Agreement or if Insurance Company reasonably and in good
faith believes Fund may fail to meet such requirements;
p. At the option of Insurance Company or the Fund upon receipt of
any necessary regulatory approvals and/or the vote of the
Contract owners having an interest in the Account (or any
subaccount) to substitute the shares of another investment
company for the corresponding Portfolio shares of the Fund in
accordance with the terms of the Contracts for which those
Portfolio shares had been selected to serve as the underlying
investment media. Insurance Company will give sixty (60) days'
prior written notice to the Fund of the date of any proposed vote
or other action taken to replace the Fund's shares; or
q. At the option of Insurance Company or the Fund upon a
determination by a majority of the Fund Board, or a majority of
the disinterested Fund Board members, that an irreconcilable
material conflict exists among the interests of: (i) all contract
owners of variable insurance products of all separate accounts;
or (ii) the interests of the Participating Insurance Companies
investing in the Fund as set forth in Article IV of this
Agreement; or
Any such termination pursuant to Section 10.2a, 10.2d, 10.2e, 10.2f,
10.2g or 10.2l herein shall not affect the operation of Article V of
this Agreement. Any termination of this Agreement shall not affect the
operation of Article IX of this Agreement.
10.3 Notwithstanding any termination of this Agreement pursuant to Section
10.2 hereof, the Fund and its investment adviser shall, at the option
of Insurance Company, continue to make available additional Series
shares pursuant to the terms and conditions of this Agreement , for all
Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation the owners of the Existing Contracts
or Insurance Company, whichever shall have legal authority to do so,
shall be permitted to reallocate investments in the Series, redeem
investments in the Fund and/or invest in the Fund upon the making of
additional purchase payments under the Existing Contracts. If Series
shares continue to be available after a termination of this Agreement
pursuant to Section 10.2, the provisions of this Agreement shall remain
in effect and thereafter either the Fund or Insurance Company may
terminate the Agreement, as so continued pursuant to this Section 10.3,
upon prior written notice to the other party, such notice to be for a
period that is reasonable under the circumstances but, if given by the
Fund, shall not be longer than the period needed by the Insurance
Company, making a good faith effort, to obtain any necessary
approval(s) from the Commission or any state regulatory authority.
ARTICLE XI 11.
AMENDMENTS
11.1 Any other changes in the terms of this Agreement shall be made by
agreement in writing between Insurance Company and Fund.
ARTICLE XII 12.
NOTICE
12.1 Each notice required by this Agreement shall be given by certified
mail, return receipt requested, to the appropriate parties at the
following addresses, or such other address which may be provided to the
other party upon written notice:
Insurance Company:
American Enterprise Life Insurance Company
1765 AXP Financial Center
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Executive Vice President, Annuities
with a copy to:
American Enterprise Life Insurance Company
50607 AXP Financial Center
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel's Office
Fund:
▇.▇. ▇▇▇▇▇▇ Series Trust II
c/o JPMorgan Chase Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Mutual Funds - Legal
Notice shall be deemed to be given on the date of receipt by the
addresses as evidenced by the return receipt.
ARTICLE XIII 13.
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the
Fund. The obligations of this Agreement shall only be binding upon the
assets and property of the Fund and shall not be binding upon any
Trustee, officer or shareholder of the Fund individually.
13.2 Notwithstanding anything to the contrary contained in this Agreement,
in addition to and not in lieu of other provisions in this Agreement:
(a) "Confidential Information" includes but is not limited to all
proprietary and confidential information of either party and
its subsidiaries, affiliates and licensees (collectively the
"Protected Parties" for purposes of this Section 13.2),
including without limitation all information regarding the
customers of the Protected Parties; or the accounts, account
numbers, names, addresses, social security numbers or any
other personal identifier of such customers; or any
information derived therefrom.
(b) Neither party shall use or disclose Confidential Information
for any purpose other than to carry out the purpose for which
Confidential Information was provided to it as set forth in
the Agreement; and each party agrees to cause all its
employees, agents and representatives, or any other party to
whom such party may provide access to or disclose Confidential
Information to limit the use and disclosure of Confidential
Information to that purpose.
(c) Each party acknowledges that all computer programs and
procedures or other information developed or used by the
Protected Parties or any of their employees or agents in
connection with the parties' performance of their duties under
this Agreement are the valuable property of the Protected
Parties.
(d) Each party agrees to implement appropriate measures designed
to ensure the security and confidentiality of Confidential
Information, to protect such information against any
anticipated threats or hazards to the security or integrity
of such information, and to protect against unauthorized
access to, or use of, Confidential Information that could
result in substantial harm or inconvenience to any customer
of the Protected Parties; Each party further agrees to cause
all its agents, representatives or subcontractors of, or any
other party to whom such party may provide access to or
disclose Confidential Information to implement appropriate
measures designed to meet the objectives set forth in this
Section 13.2.
(e) Each party acknowledges that any breach of the agreements in
this Section 13.2 would result in immediate and irreparable
harm to the Protected Parties for which there would be no
adequate remedy at law and agree that in the event of such a
breach, the Protected Parties will be entitled to equitable
relief by way of temporary and permanent injunctions, as well
as such other relief as any court of competent jurisdiction
deems appropriate.
(f) This Section 13.2 shall survive the termination of this
Agreement.
13.3 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
13.4 If any provision of this Agreement will be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement will not be affected thereby.
13.5 This Agreement will not be assigned by any party hereto without the
prior written consent of all the parties.
13.6 Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including without limitation
the SEC, the NASD and state insurance regulators) and will permit each
other and such authorities reasonable access to its books and records
in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
13.7 Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or board action, as
applicable, by such party and when so executed and delivered this
Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms.
ARTICLE XIV 14.
LAW
14.1 This Agreement shall be construed in accordance with the internal laws
of the State of New York, without giving effect to principles of
conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested as of the date first above written.
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Executive Vice President, Annuities
Attest: /s/ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Assistant Secretary
▇.▇.▇▇▇▇▇▇ SERIES TRUST II
By:
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Its:
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SCHEDULE 1
Name of Series
▇. ▇. ▇▇▇▇▇▇ U.S. Large Cap Core Equity Portfolio