Fund Participation Agreement
----------------------------
This Agreement is entered into as of the 1st day of September, 1999, by
and among American Enterprise Life Insurance Company ("Insurer"), a life
insurance company organized under the laws of the State of Indiana, American
Express Financial Advisors Inc. a Delaware corporation ("Contract Distributor"),
LAZARD ASSET MANAGEMENT ("XXX"), a division of Lazard Freres & Co. LLC, a New
York limited liability company ("LF & Co."), and LAZARD RETIREMENT SERIES, INC.
("Fund"), a Maryland corporation (collectively, the "Parties").
ARTICLE I.
DEGINITIONS
The following terms used in this Agreement shall have the meanings set
out below:
1.1. "Act" shall mean the Investment Company Act of 1940, as amended.
1.2. "Board" shall mean the Fund's Board of Directors having the
responsibility for management and control of Fund.
1.3. "Business Day" shall mean any day for which Fund calculates net asset
value per share as described in a Portfolio Prospectus.
1.4. "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.5. "Commission" shall mean the Securities and Exchange Commission.
1.6. "Contract" shall mean a variable annuity or variable life insurance
contract that uses a Portfolio of Fund as an underlying investment
medium and that is named on Schedule 1 hereto, as the Parties may amend
in writing from time to time by mutual agreement ("Schedule 1").
1.7. "Contract Prospectus" shall mean the prospectus and, if applicable,
statement of additional information, as currently in effect with the
Commission, with respect to the Contracts, including any supplements or
amendments thereto. All references to "Contract Prospectus" shall be
deemed to also include all offering documents and other materials
relating to any Contract that is not registered under the Securities
Act of 1933, as amended ("1933").
1.8. "Contractholder" shall mean any person that is a party to a Contract
with a Participating Company. Individuals who participate under a group
Contract are "Participants."
1.9. "Disinterested Board Members" shall mean those members of the Board
that are not deemed to be "interested persons" of Fund, as defined by
the Act.
1.10. "General Account" shall mean the general account of Insurer.
1.11. "Participating Company" shall mean any insurance company, including
Insurer, that offers variable annuity and/or variable life insurance
contracts to the public and that has entered into an agreement with
Fund for the purpose of making Fund shares available to serve as the
underlying investment medium for Contracts.
1.12. "Portfolio" shall mean each series of Fund named on Schedule 1.
1.13. "Portfolio Prospectus" shall mean the prospectus and statement of
additional information, as currently in effect with ' the Commission,
with respect to the Portfolios, including any supplements or amendments
thereto.
1.14. "Separate Account" shall mean a separate account duly established by
Insurer in accordance with the laws of the State of Indiana and named
on Schedule 1.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1. Insurer represents and warrants that:
(a) it is an insurance company duly organized and in good standing
under Indiana law;
(b) it has legally and validly established and shall maintain each
Separate Account pursuant to the insurance laws and
regulations of the State of Indiana;
(c) it has registered or shall register and shall maintain the
registration of each Separate Account as a unit investment
trust under the Act, to the extent required by the Act, to
serve as a segregated investment account for the Contracts;
(d) each Separate Account is and at all times shall be eligible to
invest in shares of Fund without such investment disqualifying
Fund as an investment medium for insurance company separate
accounts supporting variable annuity contracts and/or variable
life insurance contracts;
(e) each Separate Account is and at all times shall be a
"segregated asset account," and interests in each Separate
Account that are offered to the public shall be issued
exclusively through the purchase of a Contract that is and at
all times shall be a "variable contract" within the meaning of
such terms under Section 817 of the Code and the regulations
thereunder. Insurer agrees to notify Fund and XXX immediately
upon having a reasonable basis for believing that such
requirements have ceased to be met or that they might not be
met in the future;
(f) the Contracts are intended to be treated as life insurance
endowment or annuity contracts under applicable provisions of
the Code, and it shall make every effort to maintain such
treatment and shall notify Fund 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; and
(g) all of its employees and agents who deal with the money and/or
securities of Fund are and at all times shall be covered by a
blanket fidelity bond or similar coverage in an amount not
less than the coverage required to be maintained by Rule l7g-1
of 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.
2.2. Insurer and Distributor represent and warrant that (a) units of
interest in each Separate Account available hrough the purchase of
Contracts are or shall be registered under the 1933 Act, to the extent
required thereby; (b) the Contracts shall 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 applicable state insurance law requirements.
Insurer agrees to inform Fund promptly of any investment restrictions
imposed by state insurance law and applicable to Fund of which it
becomes aware.
2.3. Distributor represents and warrants that it is and at all times shall
be: (a) registered with the Commission as a broker-dealer, (b) a member
in good standing of the National Association of Securities Dealers,
Inc. ("NASD"); and (c) a Delaware corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware,
with full power, authority, and legal right to execute, deliver, and
perform its duties and comply with its obligations under this
Agreement.
2.4. Fund represents and warrants that:
(a) it is and shall remain registered with the Commission as an
open-end, management investment company under the Act to the
extent required thereby;
(b) its shares are registered under the 1933 Act to the extent
required thereby;
(c) it possesses, and shall maintain, all legal and regulatory
licenses, approvals, consents and/or exemptions required for
it to operate and offer its shares as an underlying investment
medium for the Contracts;
(d) each Portfolio is qualified as a regulated investment company
under Subchapter M of the Code, it shall make every effort to
maintain such qualification, and it shall notify Insurer
immediately upon having a reasonable basis for believing that
any Portfolio invested in by the Separate Account has ceased
to so qualify or that it might not so qualify in the future;
(e) each Portfolio's assets shall be managed and invested in a
manner that complies with the requirements of Section 817(h)
of the Code and the regulations thereunder, to the extent
applicable. In the event of a breach of this representation
and warranty by Fund, it will take all reasonable steps to (i)
notify Insurer of such breach; and (ii) adequately diversify
Fund so as to achieve compliance within the grace period
afforded by Treasury Regulation 1.817-5. and
(f) all of its directors, officers, employees, investment
advisers, and other individuals/entities who deal with the
money and/or securities of Fund are and shall continue to be
at all times covered by a blanket fidelity bond or similar
coverage for the benefit of Fund in an amount not less than
that required by Rule 179-1 under the Act. The aforesaid bond
shall include coverage for larceny and embezzlement and shall
be issued by a reputable bonding company and
(g) its investment objectives, policies and restrictions comply
with applicable state securities laws as they may apply to
Fund and it will register and qualify the shares of the
Portfolios for sale in accordance with the laws of the various
states to the extent deemed advisable by Fund. Fund makes no
representation as to whether any aspect of its operations
(including, but not limited to, fees and expenses and
investment policies, objectives and restrictions) complies
with the insurance laws and regulations of any state. Fund and
XXX agree that they will furnish the information reasonably
required by state insurance laws so that the Insurer can
obtain the authority needed to issue the Contracts in the
various states.
2.5 XXX represents and warrants that LF & Co., the principal underwriter of
each Portfolio's shares, that it is and at all times shall be: (a)
registered with the Commission as a broker-dealer, (b) a member in good
standing of the NASD; and (c) a New York limited liability company duly
organized, validly existing, and in good standing under the laws of the
State of New York, with full power, authority, and legal right to
execute, deliver, and perform its duties and comply with its
obligations under this Agreement. XXX further represents and warrants
that it shall sell the shares of the Portfolios to Insurer in
compliance in all material respects with all applicable federal and
state laws.
ARTICLE III.
FUND SHARES
3.1. Fund agrees to make the shares of each Portfolio available for purchase
by Insurer and each Separate Account at net asset value and without
sales charge, subject to the terms and conditions of this Agreement.
Fund may refuse to sell the shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of any Portfolio if
such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board, acting in good
faith and in light of its fiduciary duties under federal and any
applicable state laws, necessary and in the best interests of the
shareholders of such Portfolio.
3.2. Fund agrees that it shall sell shares of the Portfolios only to persons
eligible to invest in the Portfolios in accordance with Section 817(h)
of the Code and the regulations thereunder, to the extent such Section
and regulations are applicable.
3.3. Except as noted in this Article III, Fund and Insurer agree that orders
and related payments to purchase and redeem Portfolio shares shall be
processed in the manner set out in Schedule 2 hereto, as the Parties
may amend in writing from time to time by mutual agreement.
3.4. Fund shall confirm in writing each purchase or redemption order made by
Insurer. Transfer of Portfolio shares shall be by book entry only. No
share certificates shall be issued to Insurer. Shares ordered from Fund
shall be recorded in an appropriate title for Insurer, on behalf of
each Separate or General Account.
3.5. Fund shall promptly notify Insurer (on the same day by wire or
telephone, followed by written confirmation) of the amount of dividend
and capital gain, if any, per share of each Portfolio to which Insurer
is entitled. Insurer hereby elects to reinvest all dividends and
capital gains of any Portfolio in additional shares of that Portfolio
at the applicable net asset value, until Insurer otherwise notifies
Fund in writing. Insurer reserves the right to revoke this election and
to receive all such income dividends and capital gain distributions in
cash.
ARTICLE IV.
STATEMENTS AND REPORTS
4.1. Fund shall provide Insurer with monthly statements of account by the
fifteenth (15th) Business Day of the following month.
4.2. At least annually, Fund or its designee shall provide Insurer, free of
charge, with as many Portfolio Prospectuses as Insurer may reasonably
request for distribution by Insurer to existing Contractholders and
Participants that have invested in that Portfolio. Fund or its designee
shall provide Insurer, at Insurer's expense, with as many Portfolio
Prospectuses as Insurer may reasonably request for distribution by
Insurer to prospective purchasers of Contracts. If requested by Insurer
in lieu thereof, Fund or its designee shall provide such documentation
(including a "camera ready" copy of each Portfolio Prospectus as set in
type or, at the request of Insurer, as a diskette in the form sent to
the financial printer or other medium agreed to by the parties) and
other assistance as is reasonably necessary in order for the Parties
once a year (or more frequently if the Portfolio Prospectuses are
supplemented or amended) to have the Portfolio Prospectuses printed.
4.3. Fund shall provide Insurer with copies of each Portfolio's notices,
periodic reports and other printed materials (which the Portfolio
customarily provides to its shareholders) in quantities as Insurer may
reasonably request for distribution by Insurer to each Contractholder
and Participant that has invested in that Portfolio. Fund, at its
expense, either shall
(a) distribute its proxy materials directly to the appropriate
Contract owners, or
(b) provide Insurer or its mailing agent with copies of its proxy
materials in such quantity as Insurer will reasonably require
and Insurer will distribute the materials to existing Contract
owners and will xxxx Fund for the reasonable cost of such
distribution. Fund will bear the cost of tabulation of proxy
votes.
4.4. Fund shall provide to Insurer at least one complete copy of all
registration statements, Portfolio 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 Fund or its shares,
contemporaneously with the filing of such document with the Commission
or other regulatory authorities.
4.5. Insurer shall provide to Fund at least one copy of all registration
statements, Contract 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 a Separate Account,
contemporaneously with the filing of such document with the Commission
or the NASD.
ARTICLE V.
EXPENSES
5.1. Except as otherwise specifically provided herein, each Party will bear
all expenses incident to its performance under this Agreement.
ARTICLE VI.
EXEMPTIVE RELIEF
6.1. Insurer acknowledges that it has reviewed a copy of Fund's mixed and
shared funding exemptive order ("Order") and, in particular, has
reviewed the conditions to the relief set forth in the related notice
("Notice"). As required by the conditions set forth in the Notice,
Insurer shall report any potential or existing conflicts of which it is
aware promptly to the Board. In addition, Insurer shall be responsible
for assisting the Board in carrying out its responsibilities under the
Order by providing the Board with all information reasonably necessary
for the Board to consider any issues raised, including, without
limitation, information whenever Contract voting instructions are
disregarded. Insurer, at least annually, shall submit to the Board such
reports, materials, or data as the Board may reasonably request so that
the Board may carry out fully the obligations imposed upon it by the
Order. Insurer agrees to carry out such responsibilities with a view to
the interests of existing Contractholders.
6.2. If a majority of the Board, or a majority of Disinterested Board
Members, determines that a material irreconcilable conflict exists with
regard to Contractholder investments in Fund, the Board shall give
prompt notice to all Participating Companies. If the Board determines
that Insurer is a Participating Insurance Company for whom the conflict
is relevant, Insurer 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 some or all Separate
Accounts from Fund or any Portfolio and reinvesting such
assets in a different investment medium, or submitting the
question of whether such segregation should be implemented to
a vote of all affected Contractholders and, as appropriate,
segregating the assets of any appropriate group (i.e. variable
annuity or variable life insurance contract owners) that votes
in favor of such segregation; and/or
(b) Establishing a new registered management investment company or
managed separate account.
6.3. If a material irreconcilable conflict arises as a result of a
decision by Insurer to disregard Contractholder voting instructions
and that decision represents a minority position or would preclude a
majority vote by all Contractholders having an interest in Fund,
Insurer may be required, at the Board's election, to withdraw the
investments of its Separate Accounts in Fund provided, however, that
such withdrawal shall be limited to the extent required by the
foregoing irreconcilable material conflict as determined by a
majority of the disinterested directors of the Board. No charge or
penalty shall be imposed as a result of such withdrawal.
6.4. For the purpose of this Article, a majority of the Disinterested
Board Members shall determine whether any proposed action adequately
remedies any material irreconcilable conflict. In no event shall Fund
or XXX or any other investment adviser of Fund be required to bear
the expense of establishing a new funding medium for any Contract.
Insurer 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 and
adversely affected by the material irreconcilable conflict.
6.5. No action by Insurer taken or omitted, and no action by the Separate
Account or Fund taken or omitted as a result of any act or failure to
act by Insurer pursuant to this Article VI shall relieve Insurer of
its obligations under or otherwise affect the operation of Article V.
ARTICLE VII.
VOTING OF FUND SHARES
7.1. Insurer shall provide pass-through voting privileges to all
Contractholders or Participants as long as and to the extent that the
Commission continues to interpret the Act as requiring pass-through
voting privileges for Contractholders or Participants. Accordingly,
Insurer, where applicable, shall vote shares of a Portfolio held in
each Separate Account in a manner consistent with voting instructions
timely received from its Contractholders or Participants. Insurer shall
be responsible for assuring that the Separate Account calculates voting
privileges in a manner consistent with other Participating Companies.
Insurer shall vote shares for which it has not received timely voting
instructions, as well as shares it owns, in the same proportion as it
votes those shares for which it has received voting instructions.
7.2. If and to the extent Rule 6e-2 and Rule 6e-3(T) under the Act are
amended, or if Rule 6e-3 is adopted, to provide exemptive relief from
any provision of the Act or the rules thereunder with respect to mixed
and shared funding on terms and conditions materially different from
any exemptions granted in the Order, then Fund, and/or the
Participating Companies, as appropriate, shall take such steps as may
be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such Rules are applicable.
ARTICLE VIII.
MARKETING
8.1. Fund or LF & Co. shall periodically furnish Insurer with Portfolio
Prospectuses and sales literature or other promotional materials for
each Portfolio, in quantities as Insurer may reasonably request for
distribution to prospective purchasers of Contract. Expenses for the
printing and distribution of such documents shall be borne by Insurer.
8.2. Insurer shall designate certain persons or entities that shall have the
requisite licenses to solicit applications for the sale of Contracts.
Insurer shall make reasonable efforts to market the Contracts and shall
comply with all applicable federal and state laws in connection
therewith.
8.3. Insurer shall furnish, or shall cause to be furnished, to Fund, each
piece of sales literature or other promotional material in which Fund,
XXX, XX & Co., Fund's administrator is named, at least fifteen (15)
Business Days prior to its use. No such material shall be used unless
Fund or its designee approves such material. Such approval (if given)
or any disapproval must be in writing. Fund shall use all reasonable
efforts to respond within ten (10) days of receipt of such material.
8.4. Insurer shall not give any information or make any representations or
statements on behalf of Fund, XXX, XX & Co., or concerning Fund or any
Portfolio in connection with the sale of the Contracts other than the
information or representations contained in the registration statement
or a Portfolio Prospectus, as the same may be amended or supplemented
from time to time, or in reports or proxy statements for each
Portfolio, or in sales literature or other promotional material
approved by Fund. Nothing in this Section 8.4 shall be construed as
preventing Insurer 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 Insurer, each
piece of the Fund's sales literature or other promotional material in
which Insurer or a Separate Account is named, at least fifteen (15)
Business Days prior to its use. No such material shall be used unless
Insurer approves such material. Such approval (if given) or any
disapproval must be in writing. Insurer shall use all reasonable
efforts to respond within ten days of receipt of such material.
8.6. Fund shall not, in connection with the sale of Portfolio shares, give
any information or make any representations or statements on behalf of
Insurer or concerning Insurer, a Separate Account, or the Contracts
other than the information or representations contained in a
registration statement for the Contracts or the Contract Prospectus, as
the same may be amended or supplemented from time to time, or in
published reports for each Separate Account that are in the public
domain or approved by Insurer for distribution to Contractholders or
Participants, or in sales literature or other promotional material
approved by Insurer.
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, prospectuses, statements of additional information,
shareholder reports and proxy materials, and any other material
constituting sales literature or advertising under the rules of the
NASD, the Act or the 0000 Xxx.
8.8. Fund and XXX hereby consent to Insurer's use of the name Lazard or its
logo in connection with marketing the Contracts, subject to the terms
of Sections 8.3 and 8.4 of this Agreement. Such consent shall terminate
with the termination of this Agreement.
ARTICLE IX.
INDEMNEFICATION
9.1. Insurer and Distributor each agree to indemnify and hold harmless Fund,
XXX, any sub-investment adviser of a Portfolio, and their affiliates,
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 each
of their respective directors, trustees, general members, officers,
employees, agents and (collectively, the "Indemnified Parties" for
purposes of this Section), 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) (collectively, "Losses") for which the Indemnified Parties
may become subject, under the 1933 Act or otherwise, insofar as such
Losses (or actions in respect to thereof):
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact (collectively
"materially untrue statement") contained in any registration
statement, Contract Prospectus, Contract, or sales literature
or other promotional material relating to a Separate Account
or the Contracts (collectively, "Account documents"), 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
(collectively "material omission");
(b) arise out of or are based upon any materially untrue statement
or material omission made in any registration statement,
Portfolio Prospectus, or sales literature or other promotional
material relating to Fund or a Portfolio (collectively,
"Portfolio documents"), provided such statement or omission
was made in reliance upon and in conformity with information
provided in writing to Fund by or on behalf of Insurer
specifically for use therein;
(c) arise out of or as a result of statements or representations
(other than statements or representations contained in any
Portfolio document on which Insurer or Distributor have
reasonably relied) or wrongful conduct of Insurer,
Distributor, their respective agents, and persons under their
respective control, with respect to the sale and distribution
of Contracts or Portfolio shares;
(d) arise out of any material breach of any representation and/or
warranty made by Insurer or Distributor in this Agreement, or
arise out of or result from any other material breach of this
Agreement by Insurer or Distributor; or
(e) arise out of Insurer's incorrect calculation and/or untimely
reporting of net purchase or redemption orders.
Insurer and Distributor shall reimburse any Indemnified Party in
connection with investigating or defending any Loss (or actions in
respect to thereof); provided, however, that with respect to clause (a)
above neither Insurer nor Distributor shall be liable in any such case
to the extent that any Loss arises out of or is based upon any
materially untrue statement or material omission made in any Account
documents, which statement or omission was made in reliance upon and in
conformity with written information furnished to Insurer by or on
behalf of Fund specifically for use therein. This indemnity agreement
shall be in addition to any liability that Insurer or Distributor may
otherwise have. In no event shall Insurer or Distributor be liable for
any consequential, incidental, special or indirect damages resulting to
Fund or XXX hereunder.
9.2 Fund and XXX each agree to indemnify and hold harmless Insurer and
Distributor and each person, if any, who controls Insurer or
Distributor within the meaning of the 1933 Act and each of their
respective directors, trustees, officers, partners, employees, or
agents (collectively, "Indemnified Parties" for purposes of this
Section) and against any Losses to which they or any Indemnified Party
may become subject, under the 1933 Act or otherwise, insofar as such
Losses (or actions in respect thereof):
(a) arise out of or are based upon any materially untrue statement
or any material omission made in any Portfolio document;
(b) arise out of or are based upon any materially untrue statement
or any material omission made in any Account document,
provided such statement or omission was made in reliance upon
and in conformity with information provided in writing to
Insurer by or on behalf of Fund specifically for use therein;
(c) arise out of or as a result of statements or representations
(other than statements or representations contained in any
Account document on which Fund or XXX have reasonably relied)
or wrongful conduct of Fund, XXX, their respective agents, and
persons under their respective control, with respect to the
sale of Portfolio Shares; or
(d) arise out of any material breach of any representation and/or
warranty made by Fund or XXX in this Agreement, or arise out
of or result from any other material breach of this Agreement
by Fund or XXX.
Fund and XXX shall reimburse any legal or other expenses reasonably
incurred by any Indemnified Party in connection with investigating or
defending any such Loss; provided, however, that with respect to clause
(a) above neither Fund nor XXX shall be liable in any such case to the
extent that any such Loss arises out of or is based upon a materially
untrue statement or material omission made in any Portfolio document,
which statement or omission was made in reliance upon and in conformity
with written information furnished to Fund by or on behalf of Insurer
specifically for use therein. This indemnity agreement shall be in
addition to any liability that Fund or XXX may otherwise have. In no
event will either Fund or XXX be liable for any consequential, special
or indirect damages resulting to Insurer or Distributor.
9.3. Fund and XXX shall indemnify and hold Insurer harmless against any Loss
that Insurer may incur, suffer or be required to pay due to Fund's
incorrect calculation of the daily net asset value, dividend rate or
capital gain distribution rate of a Portfolio or incorrect or untimely
reporting of the same; provided, however, that Fund shall have no
obligation to indemnify and hold harmless Insurer if the incorrect
calculation or incorrect or untimely reporting was the result of
incorrect or untimely information furnished by or on behalf of Insurer
or otherwise as a result of or relating to Insurer's breach of this
Agreement. In no event shall Fund be liable for any consequential,
incidental, special or indirect damages resulting to Insurer hereunder.
9.4. Notwithstanding anything herein to the contrary, in no event shall Fund
or XXX be liable to any individual or entity, including without
limitation, Insurer, or any Participating Insurance Company or any
Contractholder, with respect to any Losses that arise out of or result
from:
(a) a breach of any representation, warranty, and/or covenant made
by Insurer hereunder or by any Participating Insurance Company
under an agreement containing substantially similar
representations, warranties and covenants;
(b) the failure by Insurer or any Participating Insurance Company
to maintain its separate account (which invests in any
Portfolio) as a legally and validly established segregated
asset account under applicable state law and as a duly
registered unit investment trust under the provisions of the
Act (unless exempt therefrom); or
(c) the failure by Insurer or any Participating Insurance Company
to maintain its variable annuity and/or variable life
insurance contracts (with respect to which any Portfolio
serves as an underlying funding vehicle) as life insurance,
endowment or annuity contracts under applicable provision of
the Code.
9.5 Further, neither Fund nor XXX shall have any liability for any
failure or alleged failure to comply with the diversification
requirements of Section 817(h) of the Code or the regulations
thereunder if Insurer fails to comply with any of the following
clauses, and such failure is shown to have materially contributed to
the liability:
(a) In the event the Internal Revenue Service ("IRS") asserts in
writing in connection with any governmental audit or review of
Insurer or, to Insurer's knowledge, of any Contractholder,
that any Portfolio has failed or allegedly failed to comply
with the diversification requirements of Section 817(h) of the
Code or the regulations thereunder or Insurer otherwise
becomes aware of any facts that could give rise to any claim
against Fund or its affiliates as a result of such a failure
or alleged failure,
(i) Insurer shall promptly notify Fund of such assertion or
potential claim subject to the confidentiality provisions of
Section 13.5 as to any Contract holder;
(ii) Insurer shall consult with Fund as to how to minimize any
liability that may arise as a result of such failure or
alleged failure;
(iii) Insurer shall use its best efforts to minimize any
liability of Fund or its affiliates resulting from such
failure, including, without limitation, demonstrating,
pursuant to Treasury Regulations Section 1.817-5(a)(2), to the
Commissioner of the IRS that such failure was inadvertent;
(iv) Insurer shall permit Fund, its affiliates and their legal
and accounting advisors to participate in any conferences,
settlement discussions or other administrative or judicial
proceeding or contests (including judicial appeals thereof)
with the IRS, any Contractholder or any other claimant
regarding any claims that could give rise to liability to Fund
or its affiliates as a result of such a failure or alleged
failure provided, however, that Insurer shall retain control
of the conduct of such conferences, discussions, proceedings,
contests or appeals;
(v) any written materials to be submitted by Insurer to the
IRS, any Contractholder or any other claimant in connection
with any of the foregoing proceedings or contests (including,
without limitation, any such materials to be submitted to the
IRS pursuant to Treasury Regulations Section 1.187-5(a)(2)),
shall be provided by Insurer to Fund (together with any
supporting information or analysis) subject to the
confidentiality provisions of Section 13.5 at least ten (10)
Business Days prior to the day on which such proposed
materials are to be submitted and shall not be submitted by
Insurer to any such person without the express written consent
of Fund which shall not be unreasonably withheld;
(vi) Insurer shall provide Fund or its affiliates and their
accounting and legal advisors with such cooperation as Fund
shall reasonably request (including, without limitation, by
permitting Fund and its accounting and legal advisors to
review the relevant books and records of Insurer) in order to
facilitate review by Fund or its advisors of any written
submissions provided to it pursuant to the preceding clause or
its assessment of the validity or amount of any claim against
its arising from such a failure or alleged failure; and
(vii) Insurer shall not with respect to any claim of the IRS
or any Contractholder that would give rise to a claim against
Fund or its affiliates compromise or settle any claim, accept
any adjustment on audit, or forego any allowable judicial
appeals, without the express written consent of Fund or its
affiliates, which shall not be unreasonably withheld, provided
that Insurer shall not be required to appeal any adverse
judicial decision unless Fund or its affiliates shall have
provided an opinion of independent counsel to the effect that
a reasonable basis exists for taking such appeal and provided
further that the costs of any such appeal shall be borne
equally by the parties thereto. Should Fund or its affiliates
refuse to give written consent to any compromise of settlement
of any claim or liability hereunder, Insurer may, in its
discretion, authorize Fund or its affiliates to act in the
name of Insurer in, and to control the conduct of, such
conferences, discussions, proceedings, contests or appeals
thereof, and in that event Fund or its affiliates shall bear
the fees and expenses associated with the conduct of the
proceedings that is authorized to control.
9.6 Promptly after receipt by an indemnified party under this
Article of notice of the commencement of any action, such
indemnified party shall, 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
failure to so notify the indemnifying party shall 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 shall be
entitled to participate therein, at its own expense, and, to
the extent that it may wish, assume the defense thereof, with
counsel 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 (a) the
indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (b) the
named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the
indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential
differing interests between them. The indemnifying party shall
not be liable for any settlement of any proceeding effected
without its written consent.
A successor by law of any Party to this Agreement shall be entitled to the
benefits of the indemnification contained in this Article IX, which shall
survive any termination of this Agreement.
9.7 Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, will be settled by arbitration administered by the
American Arbitration Association in accordance with its Commercial
Arbitration Rules and Title 9 of the U.S. Code. Judgment on the award
rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The number of arbitrators will be three, one of whom
will be appointed by Insurer or an affiliate; one of whom will be
appointed by the Fund and/or XXX or an affiliate and the third of whom
will be selected by mutual agreement, if possible, within 30 days of the
section of the second arbitrator and thereafter by the administering
authority. The place of arbitration will be Minneapolis, Minnesota. The
arbitrators will have no authority to award punitive damages, and may not,
in any event, make any ruling, finding or award that does not conform to
the terms and conditions of this Agreement. Any party may make an
application to the arbitrators seeking injunctive relief to maintain the
status quo until such time as the arbitration award is rendered or the
controversy is otherwise resolved. Any party may apply to any court having
jurisdiction hereof and seek injunctive relief in order to maintain the
status quo until such time as the arbitration award is rendered or the
controversy is otherwise resolved.
ARTICLE X.
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
Portfolios:
(a) At the option of Insurer, Distributor, Fund or XXX at any time
from the date hereof upon 90 days' notice, unless a shorter
time is agreed to by the Parties;
(b) At the option of Insurer if it determines that shares of any
Portfolio are not reasonably available to meet the
requirements of the Contracts. Insurer shall furnish prompt
notice of election to terminate and termination shall be
effective ten days after receipt of notice unless Fund makes
available a sufficient number of shares to meet the
requirements of the Contracts within such ten day period;
(c) At the option of the Insurer or Fund, upon the institution of
formal proceedings against the other or their respective
affiliates by the Commission, the NASD or any other regulatory
body, the expected or anticipated ruling, judgment or outcome
of which would, in the Insurer's or Fund's reasonable judgment
exercised in good faith, materially impair the other's ability
to meet and perform its obligations and duties hereunder.
Prompt notice of election to terminate shall be furnished by
Insurer or Fund, as the case may be, with termination to be
effective upon receipt of notice;
(d) At the option of Insurer or Fund, if either shall determine,
in its sole judgment reasonably exercised in good faith, that
the other 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 Insurer, Fund or XXX,
as the case may be. Insurer or Fund shall notify the other in
writing of any such determination and its intent to terminate
this Agreement, which termination shall be effective on the
sixtieth (60th) day following the giving of such notice,
provided the determination of Insurer or Fund, as the case may
be, continues to apply on that date.
(e) Upon termination of the Investment Management Agreement
between Fund, on behalf of its Portfolios, and XXX or its
successors unless Insurer specifically approves the section of
a new investment adviser for the Portfolios. Fund shall
promptly furnish notice of such termination to Insurer;
(f) In the event Portfolio shares are not registered, issued or
sold in accordance with applicable federal law, or such law
precludes the use of such shares as the underlying investment
medium of Contracts issued or to be issued by Insurer.
Termination shall be effective immediately upon such
occurrence without notice;
(g) At the option of Fund upon a determination by the Board in
good faith that it is no longer advisable and in the best
interests of shareholders for Fund to continue to operate
pursuant to this Agreement. Termination shall be effective
upon notice by Fund to Insurer of such termination;
(h) At the option of Fund if the Contracts cease to qualify as
annuity contracts or life insurance policies, as applicable,
under the Code, or if Fund reasonably believes that the
Contracts may fail to so qualify. Termination shall be
effective immediately upon such occurrence or reasonable
belief without notice;
(i) At the option of any Party, upon another's breach of any
material provision this Agreement, which breach has not been
cured to the satisfaction of the non-breaching Parties within
ten days after written notice of such breach is delivered to
the breaching Party;
(j) At the option of Fund, if the Contracts are not registered,
issued or sold in accordance with applicable federal and/or
state law. Termination shall be effective immediately upon
such occurrence without notice;
(k) Upon assignment of this Agreement, unless made with the
written consent of the non-assigning Parties.
Any such termination pursuant to this Article X shall not
affect the operation of Articles V or IX of this Agreement. The Parties agree
that any termination pursuant to Article VI shall be governed by that Article.
10.3 Notwithstanding any termination of this Agreement pursuant to Section
10.2 hereof, Fund and XXX shall continue to make available additional
Portfolio shares pursuant to the terms and conditions of this
Agreement as provided below, 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 insurer, whichever shall have
legal authority to do so, shall be permitted to reallocate
investments among the Portfolios, redeem investments in the
Portfolios and/or invest in the Portfolios upon the making of
additional purchase payments under the Existing Contracts. The
provisions of this Agreement shall remain in effect and thereafter
either Fund or Insurer may terminate the Agreement, as so continued
pursuant to this Section 10.3, upon prior written notice to the other
Parties, such notice to be for a period that is reasonable under the
circumstances but, if given by Fund, need not be for more than six
months.
10.4. In the event of any termination of this Agreement pursuant to Section
10.2 hereof, the Parties agree to cooperate and give reasonable
assistance to one another in taking all necessary and appropriate
steps for the purpose of ensuring that a Separate Account owns no
shares of a Portfolio beyond six months from the date of termination.
Such steps may include, without limitation, substituting other mutual
fund shares for those of the affected Portfolio.
ARTICLE XI.
AMENDMENTS
11.1. Any changes in the terms of this Agreement shall be made by agreement
in writing by the Parties hereto.
ARTICLE XII.
NOTICE
12.1. Each notice required by this Agreement shall be given be certified
mail, return receipt requested or other method agreed to by the
parties, to the appropriate Parties at the following addresses:
Insurer: American Enterprise Life Insurance Company
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
President
Distributor: American Express Financial Advisors, Inc.
IDS Tower 10
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Corporate Senior Vice President
With copies to: Law Department (Unit 52)
IDS Tower 10
Xxxxxxxxxxx, XX 00000
Fund: Lazard Retirement Series, Inc.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx
XXX: Lazard Asset Management
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx
with copies to: Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Notice shall be deemed to be given on the date of receipt by the
addresses as evidenced by the return receipt.
ARTICLE XIII
MISCELLANEOUS
13.1. This Agreement has been executed on behalf of the Parties by the
undersigned duly authorized officers in their capacities as officers
of Insurer, Distributor, XXX, and Fund.
13.2. If any provision of the Agreement is held or made invalid by a court
decision, statute, rule, or otherwise, the remainder of this
Agreement will not be affected thereby.
13.3. 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, that the Parties are entitled to
under federal and state laws.
13.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and
the same instrument.
13.5 Fund and XXX acknowledge that the identities of the customers of
Insurer or any of its affiliates (collectively the "Protected
Parties" for purposes of this Section 13.5), information maintained
regarding those customers, and 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 Insurer's
performance of its duties under this Agreement are the valuable
property of the Protected Parties, Fund and XXX agree that if they
come into possession of any list or compilation of the identities of
or other information about the Protected Parties' customers, or any
other information or property of the Protected Parties, other than
such information as may be independently developed or compiled by
Fund or XXX. Fund and XXX will hold such information or property in
confidence and refrain from using, disclosing or distributing any of
such information or other property except: (a) with Insurer's prior
written consent; or (b) as required by law or judicial process. Fund
and XXX acknowledge that any breach of the agreements in this Section
13.5 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 or temporary and permanent
injunctions, as well as such other relief as any court of competent
jurisdiction deems appropriate.
ARTICLE XIV.
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/ Xxxxx X. Xxxxx
------------------
Attest:/s/ Xxxx Xxxxx Xxxxxxx Xxxxx X. Xxxxx
----------------------
Xxxx Xxxxx Xxxxxxx
American Express Financial Advisors Inc.
By: /s/ Xxxxx X. Xxxxx
------------------
Attest:/s/ Xxxxxxx X. Statzmann Xxxxx X. Xxxxx
------------------------
Xxxxxxx X. Statzmann
Lazard Retirement Series, Inc.
By:/s/ Xxxxx Gralloja
------------------
Xxxxx Gralloja
Attest:/s/ Xxxxxx Xxxxx
----------------
Xxxxxx Xxxxx
Lazard Asset Management, LLC
a division of Lazard Freres & Co., LLC
By: (Signature not legible)
Attest:/s/ Xxxxxx Xxxxx
----------------
Xxxxxx Xxxxx
SCHEDULE 1
Portfolios
----------
Lazard Retirement Global Equity Portfolio
Lazard Retirement International Equity Portfolio
Separate Accounts and Contracts
-------------------------------
American Enterprise Variable Annuity Account
Contract Form #43431 and state variations thereof
Contract Form #240180 and state variations thereof
American Enterprise Variable Life Account
Contract Form #37022 and state variations thereof
SCHEDULE 2
PORTFOLIO SHARE ORDER PROCESSING
--------------------------------
Timely Pricing and Orders
-------------------------
1. Each Business Day, Fund shall use its best efforts to make each Portfolio's
closing net asset value per share ("NAV") on that Day available to Insurer
by 6:30 p.m. New York time, but in no event later than 7:00 p.m. New York
time. Fund shall notify Insurer as soon as possible if it is determined
that the net asset value per share will be available after 7:00 p.m. New
York time on any Business Day, and Fund and Insurer shall mutually agree
upon a final deadline for timely receipt of the NAV on such Business Day.
2. At the end of each Business Day, Insurer shall use the information
described above to calculate each Separate Account's unit values for that
Day. Using this unit value, Insurer shall process that Day's Contract and
Separate Account transactions to determine the net dollar amount of each
Portfolio's shares to be purchased or redeemed.
3. Insurer shall use its best efforts to transmit net purchase or redemption
orders to Fund or its designee by 9:30 a.m. New York time, but in no event
later than 10:00 a.m. New York time on the Business Day next following
Insurer's receipt of the information relating to such orders in accordance
with paragraph 1 above; provided, however, that Fund shall provide
additional time to Insurer in the event Fund is unable to meet the 6:30
p.m. deadline stated above. Such additional time shall be equal to the
additional time that Fund takes to make the net asset values available to
Insurer. In addition, to the extent practicable, Insurer shall use its best
efforts to notify Fund in advance of any unusually large purchase or
redemption orders.
Timely Payments
---------------
4. Insurer shall initiate the wire to pay for any net purchase order in
Federal Funds to Fund to its designated custodial account by 12:00 noon New
York time on the same Business Day its transmits the order to Fund pursuant
to paragraph 3 above.
5. Fund shall pay for any net redemption order by wiring the redemption
proceeds to Insurer, on the same Business Day as Fund receives notice of
the redemption order or, upon notice to Insurer, such longer period as
permitted by the Act or the rules, orders or regulations thereunder. In the
case of any net redemption order valued at or greater than $1 million, Fund
shall wire such amount to Insurer within five days of the order. In the
case of any net redemption order requesting the application of proceeds
from the redemption of one Portfolio's shares to the purchase of another
Portfolio's shares, Fund shall so apply such proceeds the same Business Day
that Insurer transmits such order to Fund.
Applicable Price
----------------
6. Fund shall execute purchase and redemption orders for a Portfolio's shares
that relate to Contract transactions at that Portfolio's NAV next
determined after Fund or its designated agent receives the orders. For this
purpose, Fund hereby appoints Insurer as its agent for the limited purpose
of receiving orders for the purchase and redemption of shares of each
Portfolio for each Separate Account; provided that Fund receives both the
notice of the order in accordance with paragraph 3 above and any related
purchase payments in accordance with paragraph 4 above.
7. Fund shall execute purchase and redemption orders for a Portfolio's shares
that relate to Insurer's General Account, or that do not relate to Contract
transactions, at that Portfolios' NAV next determined after Fund (not
Insurer) receives that order and any related purchase payments in
accordance with paragraph 4 above.
8. Fund shall execute purchase and redemption orders for a Portfolio's shares
that relate to Contracts funded by registered and unregistered Separate
Accounts in the same manner, but only to the extent that Insurer represents
and warrants that it is legally or contractually obligated to treat such
orders in the same manner. Each order for Portfolio shares placed by
Insurer that is attributable, in whole or in part, to Contracts funded by
an unregistered Separate Account, shall be deemed to constitute such
representation and warranty by Insurer unless the order specifically states
to the contrary. Otherwise, Fund shall treat orders attributable to
unregistered Separate Account Contracts in the same manner as orders for
Insurer's General Account. For these purposes, a registered Separate
Account is one that is registered under the Act; an unregistered Separate
Account is one that is not.
9. Fund shall execute purchase or redemption orders for a Portfolio's shares
that do not satisfy the conditions specified in paragraphs 3 and 4 above,
as applicable, at the Portfolio's NAV next determined after such conditions
have been satisfied and in accordance with paragraphs 6 or 7, whichever
applies.
10. If Fund does not receive payment in Federal Funds for any net purchase
order in accordance with paragraph 4 above, Insurer shall promptly, upon
Fund's request, reimburse fund for any charges, costs, fees, interest or
other expenses incurred by Fund in connection with any advances to, or
borrowings or overdrafts by, Fund, or any similar expenses incurred by
Fund, as a result of portfolio transactions effected by Fund based upon
such purchase request.
11. If Fund provides Insurer with materially incorrect net asset value per
share information through no fault of Insurer, Insurer, on behalf of the
Separate Account, shall be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the correct net asset value per
share in accordance with Fund's current policies for correcting pricing
errors. Any material error in the calculation of net asset value per share,
dividend or capital gain information shall be reported promptly upon
discovery to Insurer.
