PARTICIPATION AGREEMENT
By and Among
AIM VARIABLE INSURANCE FUNDS, INC.,
AIM DISTRIBUTORS, INC.,
And
IDS LIFE INSURANCE COMPANY, ON BEHALF OF ITSELF
AND ITS SEPARATE ACCOUNTS
TABLE OF CONTENTS
Description Page
Section 1. Available Funds.........................................2
1.1 Availability...........................................2
1.2 Addition, Deletion or Modification of Funds ...........2
1.3 No Sales to the General Public 2
Section 2. Processing Transaction...................................3
2.1 Timely Pricing and Orders...............................3
2.2 Timely Payments.........................................3
2.3 Applicable Price........................................3
2.4 Dividends and Distributions.............................4
2.5 Book Entry..............................................4
Section 3. Costs and Expenses.......................................4
3.1 General.................................................4
3.2 Registration............................................4
3.3 Other (Non-Sales-Related)...............................5
3.4 Other (Sales-Related)...................................5
3.5 Parties To Cooperate....................................5
Section 4. Legal Compliance.........................................6
4.1 Tax Laws................................................6
4.2 Insurance and Certain Other Laws........................8
4.3 Securities Laws.........................................8
4.4 Notice of Certain Proceedings and Other Circumstances...9
4.5 IDS Life To Provide Documents; Information About AVIF..10
4.6 AVIF To Provide Documents; Information About IDS Life..11
Section 5. Mixed and Shared Funding................................12
5.1 General................................................12
5.2 Disinterested Directors................................13
5.3 Monitoring for Material Irreconcilable Conflicts.......13
5.4 Conflict Remedies......................................14
5.5 Notice to IDS Life.....................................15
5.6 Information Requested by board of Directors............15
5.7 Compliance with SEC Rules..............................15
5.8 Other Requirements.....................................16
Description Page
Section 6. Termination.............................................16
6.1 Events of Termination .................................16
6.2 Notice Requirement for Termination.....................17
6.3 Funds To Remain Available..............................17
6.4 Survival of Warranties and Indemnifications............18
6.5 Continuance of Agreement for Certain Purposes..........18
Section 7. Parties To Cooperate Respecting Termination.............18
Section 8. Assignment..............................................18
Section 9. Notices.................................................18
Section 00.Xxxxxx Procedures.......................................19
Section 11.Foreign Tax Credits.....................................20
Section 12.Indemnification.........................................20
12.1 Of AVIF and AIM by IDS Life...........................20
12.2 Of IDS Life by AVIF and AIM...........................22
12.3 Effect of Notice......................................25
12.4 Successors............................................25
Section 13.Applicable Law..........................................25
Section 14.Execution in Counterparts...............................25
Section 15.Severability............................................25
Section 16.Rights Cumulative.......................................26
Section 17.Headings................................................26
Section 18.Confidentiality.........................................26
Section 19.Trademarks and Fund Names...............................27
Section 20.Parties to Cooperate....................................28
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 7th day of Oct., 1996
("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); A I M Distributors, Inc., a Delaware corporation ("AIM");
and IDS Life Insurance Company, a Minnesota life insurance company and the
principal underwriter of the Contracts referred to below ("IDS Life% on behalf
of itself and each of its segregated asset accounts listed in Schedule A hereto,
as the parties hereto may amend from time to time (each, an "Account," and
collectively, the "Accounts") (collectively, the "Parties"). This Agreement
supersedes and replaces the Participation Agreement among the Parties dated
March 4, 1996.
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission ("SEC")
as an open-end management investment company under the Investment Company Act of
1940, as amended (the " 1940 Act"); and
WHEREAS, AVIF currently consists of nine separate series ("Series"), shares
("Shares") of each of which are registered under the Securities Act of 1933, as
amended (the " 1933 Act") and are currently sold to one or more separate
accounts of life insurance companies to fund benefits under variable annuity
contracts and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto as the
Parties hereto may amend from time to time (each a "Fund"; reference herein to
"AVIF" includes reference to each Fund, to the extent the context requires)
available for purchase by the Accounts; and
WHEREAS, IDS Life will be the issuer of certain variable annuity contracts and
variable life insurance contracts ("Contracts") as set forth on Schedule A
hereto, as the Parties hereto may amend from time to time, which Contracts
(hereinafter collectively, the "Contracts"), if required by applicable law, will
be registered under the 1933 Act; and
WHEREAS, IDS Life will fund the Contracts through the Accounts, each of which
may be divided into two or more subaccounts ("Subaccounts"; reference herein to
an "Account" includes reference to each Subaccount thereof to the extent the
context requires); and
WHEREAS, IDS Life will serve as the depositor of the Accounts, each of which is
registered as a unit investment trust investment company under the 1940 Act (or
exempt therefrom), and the security interests deemed to be issued by the
Accounts under the Contracts will be registered as securities under the 1933 Act
(or exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
IDS Life intends to purchase Shares in one or more of the Funds on behalf of the
Accounts to fund the Contracts; and
WHEREAS, IDS Life is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 (" 1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises contained
herein, the Parties hereto agree as follows:
Section 1. Available Funds
1.1 Availability.
AVIF will make Shares of each Fund available to IDS Life for purchase and
redemption at net asset value and with no sales charges, subject to the terms
and conditions of this Agreement. The Board of Directors of AVIF may refuse to
sell Shares of any Fund to any person, or suspend or terminate the offering of
Shares of any Fund if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Directors
acting in good faith and in fight of their fiduciary duties under federal and
any applicable state laws, such action is deemed in the best interests of the
shareholders of such Fund.
1.2 Addition, Deletion or Modification of Fun
The Parties hereto may agree, from time to time, to add other Funds to provide
additional funding media for the Contracts, or to delete, combine, or modify
existing Funds, by amending Schedule A hereto. Upon such amendment to Schedule
A, any applicable reference to a Fund, AVIF, or its Shares herein shall include
a reference to any such additional Fund. Schedule A, as amended from time to
time, is incorporated herein. by reference and is a part hereof.
1.3 No Sales to the General Public.
AVIF represents and warrants that no Shares of any Fund have been or will be
sold to the general public.
Section 2. Processing Transactions
2.1 Timely Pricing and Orders.
(a) AVI[F or its designated agent will use its best efforts to provide IDS Life
with the net asset value per Share for each Fund by 5:30 p.m. Central Time on
each Business Day. As used herein, "Business Day" shall mean any day on which
(i) the New York Stock Exchange is open for regular trading, (ii) AVIF
calculates the Fund's net asset value, and (iii) IDS Life is open for business.
(b) IDS Life will use the data provided by AVIF each Business Day pursuant to
paragraph (a) immediately above to calculate Account unit values and to process
transactions that receive that same Business Days Account unit values. IDS Life
will perform such Account processing the same Business Day, and will place
corresponding orders to purchase or redeem Shares with AVIF by 9:00 a.m. Central
Time the following Business Day; provided, however, that AVIF shall provide
additional time to IDS Life in the event that AVIIF is unable to meet the 5:30
p.m. time stated in paragraph (a) immediately above. Such additional time shall
be equal to the additional time that AVIF takes to make the net asset values
available to IDS Life.
(c) With respect to payment of the purchase price by IDS Life and of redemption
proceeds by AVIF, IDS Life and AVIF shall net purchase and redemption orders
with respect to each Fund and shall transmit one net payment per Fund in
accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value information (as
determined under SEC guidelines), IDS Life shall be entitled to an adustment to
the number of Shares purchased or redeemed to reflect the correct net asset
value per Share. Any material error in the calculation or reporting of net asset
value per Share, dividend or capital gain information shall be reported promptly
upon discovery to IDS Life.
2.2 Timely Payments.
IDS Life will wire payment for net purchases to a custodial account designated
by AVIF by 1:00 p.m. Central Time on the same day as the order for Shares is
placed, to the extent practicable. AVIF will wire payment for net redemptions to
an account designated by IDS Life by 1:00 p.m. Central Time on the same day as
the Order is placed, to the extent practicable, but in any event within five (5)
calendar days after the date the order is placed in order to enable IDS Life to
pay redemption proceeds within the time specified in Section 22(e) of the 1940
Act or such shorter period of time as may be required by law.
2.3 Applicable Price.
(a) Share purchase payments and redemption orders that result from purchase
payments, premium payments, surrenders and other transactions under Contracts
(collectively, "Contract transactions") and that IDS Life receives prior to the
close of regular trading on the New York Stock
Exchange on a Business Day will be executed at the net asset values of the
appropriate Funds next computed after receipt by AVIF or its designated agent of
the orders. For purposes of this Section 2.3(a), IDS Life shall be the
designated agent of AVIF for receipt of orders relating to Contract transactions
on each Business Day and receipt by such designated agent shall constitute
receipt by AVIF; provided that AVIF receives notice of such orders by 9:00 a.m.
Central Time on the next following Business Day or such later time as computed
in accordance with Section 2. 1 (b) hereof
(b) All other Share purchases and redemptions by IDS Life will be effected at
the net asset values of the appropriate Funds next computed after receipt by
AVIF or its designated agent of the order therefor, and such orders will be
irrevocable.
2.4 Dividends and Distributions.
AVIF will furnish notice by wire or telephone (followed by written confirmation)
on or prior to the payment date to IDS Life of any income dividends or capital
gain distributions payable on the Shares of any Fund. IDS Life hereby elects to
reinvest all dividends and capital gains distributions in additional Shares of
the corresponding Fund at the ex-dividend date net asset values until IDS Life
otherwise notifies AVIF in writing, it being agreed by the Parties that the
ex-dividend date and the payment date with respect to any dividend or
distribution will be the same Business Day. IDS Life reserves the right to
revoke this election and to receive all such income dividends and capital gain
distributions in cash.
2.5 Book Entry.
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to IDS Life. Shares ordered from AVIF will be
recorded in an appropriate title for IDS Life, on behalf of its Account.
Section 3. Costs and Expenses
3.1 General.
Except as otherwise specifically provided herein, each Party win bear a expenses
incident to its performance under this Agreement.
3.2 Registration.
(a) AVIF will bear the cost of its registering as a management investment
company under the 1940 Act and registering its Shares under the 1933 Act, and
keeping such registrations current and effective; including, without limitation,
the preparation of and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices
with respect to AVIF and its Shares and payment of all applicable registration
or filing fees with respect to any of the foregoing.
(b) IDS Life will bear the cost of registering, to the extent required, each
Account as a unit investment trust under the 1940 Act and registering units of
interest under the Contracts under the 1933 Act and keeping such registrations
current and effective; including, without limitation, the preparation and filing
with the SEC of Forms N-SAR and Rule 24f-2 Notices with respect to each Account
and its units of interest and payment of all applicable registration or filing
fees with respect to any of the foregoing.
3.3 Other (Non-Sales-Related).
(a) AVIF will bear, or arrange for others to bear, the costs of preparing,
filing with the SEC and setting for printing AVIFs prospectus, statement of
additional information and any amendments or supplements thereto (collectively,
the "AVIF Prospectus"), periodic reports to shareholders, AVIF proxy material
and other shareholder communications.
(b) IDS Life will bear the costs of preparing, filing with the SEC and setting
for printing each Account's prospectus, statement of additional information and
any amendments or supplements thereto (collectively, the "Account Prospectus"),
any periodic reports to Contract owners, annuitants, insureds or participants
(as appropriate) under the Contracts (collectively, "Participants"), voting
instruction solicitation material, and other Participant communications.
(c) IDS Life will print in quantity and deliver to existing Participants the
documents described in Section 3.3(b) above and the prospectus provided by AVIF
in camera ready or computer diskette form. AVIF will print the AVIF statement of
additional information, proxy materials relating to AVIF and periodic reports of
AVIF.
3.4 Other (Sales-Related).
IDS Life will bear the expenses of distribution. These expenses would include by
way of illustration, but are not limited to, the costs of distributing to
Participants the following documents, whether they relate to the Account or
AVIF: prospectuses, statements of additional information, proxy materials and
periodic reports. These costs would also include the costs of preparing,
printing, and distributing sales literature and advertising relating to the
Funds, as well as filing such materials with, and obtaining approval from the
SEC, NASD, any state insurance regulatory authority, and any other appropriate
regulatory authority, to the extent required.
3.5 Parties To Cooperate.
Each Party agrees to cooperate with the others, as applicable, in arranging to
print, mail and/or deliver, in a timely manner, combined or coordinated
prospectuses or other materials of AVIF
and the Accounts.
Section 4. Legal Compliance
4.1 Tax Laws.
(a) AVIF represents and warrants that each Fund is currently qualified as a
regulated investment company ("RIC") under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), and represents that it will use its best
efforts to qualify and to maintain qualification of each Fund as a RIC. AVEF
will notify IDS Life immediately upon having a reasonable basis for believing
that a Fund has ceased to so qualify or that it might not so qualify in the
future.
(b) AVIF represents that it will use its best efforts to comply and to maintain
each Fund's compliance with the diversification requirements set forth in
Section 817(h) of the Code and Section 1.817-5(b) of the regulations under the
Code. AVIF will notify IDS Life immediately upon having a reasonable basis for
believing that a Fund has ceased to so comply or that a Fund might not so comply
in the future. In the event of a breach of this Section 4.1(b) by AVIF, it will
take all reasonable steps to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Section 1.817-5 of the
regulations under the Code.
(c) IDS Life agrees that if the Internal Revenue Service ("IRS") asserts in
writing in connection with any governmental audit or review of IDS Life or, to
IDS Life's knowledge, of any Participant, that any Fund has failed to comply
with the diversification requirements of Section 817(h) of the Code or IDS Life
otherwise becomes aware of any facts that could give rise to any claim against
AVIF or its affiliates as a result of such a failure or alleged failure:
(i) IDS Life shall promptly notify AVIF of such assertion or
potential claim (subject to the Confidentiality provisions of
Section 18 as to any Participant);
(ii) IDS Life shall consult with AVIF as to how to minimize any
liability that may arise as a result of such failure or alleged
failure;
(iii)IDS Life shall use its best efforts to minimize any liability of
AVIF 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) IDS Life shall permit AVIF, 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
Participant or any other claimant regarding any claims that could
give rise to liability to AVIF or its affiliates as a result of
such a failure or alleged failure; provided, however, that IDS
Life will retain control of the conduct of such conferences
discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by IDS Life to the IRS, any
Participant 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 1.817-5(a)(2)), (a) shall be
provided by IDS Life to AVIF (together with any supporting
information or analysis); subject to the confidentiality
provisions of Section 18, at least ten (10) business days or such
shorter period to which the Parties hereto agree prior to the day
on which such proposed materials are to be submitted, and (b)
shall not be submitted by IDS Life to any such person without the
express written consent of AVIF which shall not be unreasonably
withheld;
(vi)IDS Life shall provide AVIF or its affiliates and their accounting
and legal advisors with such cooperation as AVEF shall reasonably
request (including, without limitation, by permitting AVIF and
its accounting and legal advisors to review the relevant books
and records of IDS Life) in order to facilitate review by AVIIF
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;
(vii)IDS Life shall not with respect to any claim of the IRS or any
Participant that would give rise to a claim against AVIF or its
affiliates (a) compromise or settle any claim, (b) accept any
adjustment on audit, or (c) forego any allowable administrative
or judicial appeals, without the express written consent of AVEF
or its affiliates, which shall not be unreasonably withheld,
provided that IDS Life shall not be required, after exhausting
all administrative penalties, to appeal any adverse judicial
decision unless AVIF 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 hereto; and
(viii) AVIF and its affiliates shall have no liability as a result of
such failure or alleged failure if IDS Life fails to comply with
any of the foregoing clauses (i) through (vii), and such failure
could be shown to have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to any
compromise or settlement of any claim or liability hereunder, IDS Life may, in
its discretion, authorize AVIF or its affiliates to act in the name of IDS Life
in, and to control the conduct of, such conferences, discussions, proceedings,
contests or appeals and all administrative or judicial appeals thereof, and in
that event AVEF or its affiliates shall bear the fees and expenses associated
with the conduct of the proceedings that it is so authorized to control;
provided, that in no event shall IDS Life have any liability resulting from
AVIF's refusal to accept the proposed settlement or compromise with respect
to any failure caused by AVER As used in this Agreement, the term "affiliates"
shall have the same meaning as "affiliated person" as defined in Section 2(a)(3)
of the 1940 Act.
(d) IDS Life represents and warrants that the Contracts currently are and will
be treated as annuity contracts or life insurance contracts under applicable
provisions of the Code and that it will use its best efforts to maintain such
treatment; IDS Life will notify AVEF immediately upon having a reasonable basis
for believing that any of the Contracts have ceased to be so treated or that
they might not be so treated in the future.
(e) IDS Life represents and warrants that each Account is a "segregated asset
account" and that interests in each Account are offered exclusively through the
purchase of or transfer into a "variable contract," within the meaning of such
terms under Section 817 of the Code and the regulations thereunder. IDS Life
will use its best efforts to continue to meet such definitional requirements,
and it will notify AVIF 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.
4.2 Insurance and Certain Other Laws.
(a) AVEF will use its best efforts to comply with any applicable state insurance
laws or regulations, to the extent specifically requested in writing by IDS
Life, including, the furnishing of information not otherwise available to IDS
Life which is required by state insurance law to enable IDS Life to obtain the
authority needed to issue the Contracts in the various states.
(b) IDS Life represents and warrants that (i) it is an insurance company duly
organized, validly existing and in good standing under the laws of the State of
Minnesota and has full corporate power, authority and legal right to execute,
deliver and perform its duties and comply with its obligations under this
Agreement, (ii) it has legally and validly established and maintains each
Account as a segregated asset account under 6 IA. 14 of the Minnesota Insurance
Code and the regulations thereunder, and (iii) the Contracts comply in all
material respects with all other applicable federal and state laws and
regulations.
(c) AVEF represents and wan-ants that it is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Maryland
and has full power, authority, and legal right to execute, deliver, and perform
its duties and comply with its obligations under this Agreement.
4.3 Securities Laws.
(a) IDS Life represents and warrants that (i) interests in each Account pursuant
to the Contracts will be registered under the 1933 Act to the extent required by
the 1933 Act, (ii) the Contracts will be duly authorized for issuance and sold
in compliance with all applicable federal and state laws, including, without
limitation, the 1933 Act, the 1934 Act, the 1940 Act and Minnesota law, (iii)
each Account is and will remain registered under the 1940 Act, to the extent
required by the 1940 Act, (iv) each Account does and will comply in an material
respects with the requirements of
the 1940 Act and the rules thereunder, to the extent required, (v) each
Account's 1933 Act registration statement relating to the Contracts, together
with any amendments thereto, will at all times comply in all material respects
with the requirements of the 1933 Act and the rules thereunder, (vi) IDS Life
will amend the registration statement for its Contracts under the 1933 Act and
for its Accounts under the 1940 Act from time to time as required in order to
effect the continuous offering of its Contracts or as may otherwise be required
by applicable law, and (vii) each Account Prospectus will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder.
(b) AVEF represents and warrants that (i) Shares sold pursuant to this Agreement
will be registered under the 1933 Act to the extent required by the 1933 Act and
duly authorized for issuance and sold in compliance with Maryland law, (ii) AVIF
is and will remain registered under the 1940 Act to the extent required by the
1940 Act, (iii) AVEF will amend the registration statement for its Shares under
the 1933 Act and itself under the 1940 Act from time to time as required in
order to effect the continuous offering of its Shares, (iv) AVEF does and will
comply in all material respects with the requirements of the 1940 Act and the
rules thereunder, (v) AVIF's 1933 Act registration statement, together with any
amendments thereto, will at all times comply in all material respects with the
requirements of the 1933 Act and rules thereunder, and (vi) AVIF's Prospectus
will at all times comply in all material respects with the requirements of the
1933 Act and the rules thereunder.
(c) AVIF will at its expense register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and to the extent
reasonably deemed advisable by AVIF
(d) AVIIF currently does not intend to make any payments to finance distribution
expenses pursuant to Rule 12b- I under the 1940 Act or otherwise, although it
reserves the right to make such payments in the future. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b- 1, AVIF
undertakes to have its Board of Directors, a majority of whom are not
"interested" persons of the Fund, formulate and approve any plan under Rule 12b-
I to finance distribution expenses.
(e) AVEF represents and warrants that all of its trustees, officers, employees,
investment advisers, and other individuals/entities having access to the funds
and/or securities of the Fund are and continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Fund in an
amount not less than the minimal coverage as required currently by Rule 17g-(I)
of the 1940 Act or related provisions as may be promulgated from time to time.
The aforesaid bond includes coverage for larceny and embezzlement and is issued
by a reputable bonding company.
4.4 Notice of Certain Proceedings and Other Circumstances.
(a) AVEF will immediately notify IDS Life of (i) the issuance by any court or
regulatory body of any stop order, cease and desist order, or other similar
order with respect to AVIF's registration statement under the 1933 Act or AVEF
Prospectus, (ii) any request by the SEC for any amendment to such registration
statement or AVIF Prospectus that may affect the offering of Shares
of AVEF, (iii) the initiation of any proceedings for that purpose or for any
other purpose relating to the registration or offering of AVIIF's Shares, or
(iv) any other action or circumstances that may prevent the lawful offer or sale
of Shares of any Fund in any state or jurisdiction, including, without
limitation, any circumstances in which (a) such Shares are not registered and,
in all material respects, issued and sold in accordance with applicable state
and federal law, or (b) such law precludes the use of such Shares as an
underlying investment medium of the Contracts issued or to be issued by IDS
Life. AVIF will make every reasonable effort to prevent the issuance, with
respect to any Fund, of any such stop order, cease and desist order or similar
order and, if any such order is issued, to obtain the lifting thereof at the
earliest possible time.
(b) IDS Life will immediately notify AVIF of (i) the issuance by any court or
regulatory body of any stop order, cease and desist order, or other similar
order with respect to each Account's registration statement under the 1933 Act
relating to the Contracts or each Account Prospectus, (ii) any request by the
SEC for any amendment to such registration statement or Account Prospectus that
may affect the offering of Shares of AVIF, (iii) the initiation of any
proceedings for that purpose or for any other purpose relating to the
registration or offering of each Account's interests pursuant to the Contracts,
or (iv) any other action or circumstances that may prevent the lawful offer or
sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. IDS Life will make every reasonable effort to prevent the issuance
of any such stop order, cease and desist order or similar order and, if any such
order is issued, to obtain the lifting thereof at the earliest possible time.
4.5 IDS Life To Provide Documents; Information About AVIF.
(a) IDS Life will provide to AVIF or its designated agent at least one (1)
complete copy of all SEC registration statements, Account Prospectuses, reports,
any preliminary and final voting instruction solicitation material, applications
for exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to each Account or the Contracts, contemporaneously with the
filing of such document with the SEC or other regulatory authorities.
(b) IDS Life will provide to AVIF or its designated agent at least one (1)
complete copy of each piece of sales literature or other promotional material in
which AVIIF or any of its affiliates is named, at least five (5) Business Days
prior to its use or such shorter period as the Parties hereto may, from time to
time, agree upon. No such material shall be used if AVIF or its designated agent
objects to such use within five (5) Business Days after receipt of such material
or such shorter period as the Parties hereto may, from time to time, agree upon.
AVIF hereby designates A I M as the entity to receive such sales literature,
until such time as AVIF appoints another designated agent by giving notice to
IDS Life in the manner required by Section 9 hereof
(c) Neither IDS Life nor any of its affiliates, will give any information or
make any representations or statements on behalf of or concerning AVIF or its
affiliates in connection with the sale of the Contracts other than (i) the
information or representations contained in the registration
statement, including the AVIF Prospectus contained therein, relating to Shares,
as such registration statement and AVIF Prospectus may be amended from time to
time; or (H) in reports or proxy materials for AVIF; or (iii) in published
reports for AVIF that are in the public domain and approved by AVIF for
distribution; or (iv) in sales literature or other promotional material approved
by AVIF, except with the express written permission of AVIIF.
(d) IDS Life shall adopt and implement procedures reasonably designed to ensure
that information concerning AVIF and its affiliates that is intended for use
only by brokers or agents selling the Contracts (i.e., information that is not
intended for distribution to Participants) ("broker only materials") is so used,
and neither AVIF nor any of its affiliates shall be liable for any losses,
damages or expenses relating to the improper use of such broker only materials.
(e) For the purposes of this Section 4.5, the phrase "sales literature or other
promotional material" includes, but is not limited to, 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
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising under the
NASD rules, the 1933 Act or the 0000 Xxx.
4.6 AVIF To Provide Documents; Information About IDS Life.
(a) AVIF will provide to IDS Life at least one (1) complete copy of all SEC
registration statements, AVIF Prospectuses, reports, any preliminary and final
proxy material, applications for exemptions, requests for no-action letters, and
all amendments to any of the above, that relate to AVIF or the Shares of a Fund,
contemporaneously with the filing-of such document with the SEC or other
regulatory authorities.
(b) AVIF will provide to IDS Life camera ready or computer diskette copies of
all AVIF prospectuses and printed copies, in an amount specified by IDS Life, of
AVIIF statements of additional information, proxy materials, periodic reports to
shareholders and other materials required by law to be sent to Participants who
have allocated any Contract value to a Fund. AVIF will provide such copies to
IDS Life in a timely manner so as to enable IDS Life, as the case may be, to
print and distribute such materials within the time required by law to be
furnished to Participants.
(c) AVIF will provide to IDS Life or its designated agent at least one (1)
complete copy of each piece of sales literature or other promotional material in
which IDS Life, or any of its respective affiliates is named, or that refers to
the Contracts, at least five (5) Business Days prior to
its use or such shorter period as the Parties hereto may, from time to time,
agree upon. No such material shall be used if IDS Life or its designated agent
objects to such use within five (5) Business Days after receipt of such material
or such shorter period as the Parties hereto may, from time to time, agree upon.
IDS Life shall receive all such sales literature until such time as it appoints
a designated agent by giving notice to AVIF in the manner required by Section 9
hereof.
(d) Neither AVIF nor any of its affiliates will give any information or make any
representations or statements on behalf of or concerning IDS Life, each Account,
or the Contracts other than (i) the information or representations contained in
the registration statement, including each Account Prospectus contained therein,
relating to the Contracts, as such registration statement and Account Prospectus
may be amended from time to time; or (ii) in published reports for the Account
or the Contracts that are in the public domain and approved by IDS Life for
distribution; or (iii) in sales literature or other promotional material
approved by IDS Life or its affiliates, except with the express written
permission of IDS Life.
(e) AVIF shall cause its principal underwriter to adopt and implement procedures
reasonably designed to ensure that information concerning IDS Life, and its
respective affiliates that is intended for use only by brokers or agents selling
the Contracts (i.e., information that is not intended for distribution to
Participants) ("broker only materials") is so used, and neither IDS Life, nor
any of its respective affiliates shall be liable for any losses, damages or
expenses relating to the improper use of such broker only materials.
(f) For purposes of this Section 4.6, the phrase "sales literature or other
promotional material" includes, but is not limited to, 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
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made -generally available to
some or all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising under the
NASD rules, the 1933 Act or the 1940 Act.
Section 5. Mixed and Shared Funding
5.1 General.
The SEC has granted an order to AVIF exempting it from certain provisions of the
1940 Act and rules thereunder so that AVIF may be available for investment by
certain other entities, including, without limitation, separate accounts funding
variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies unaffiliated with IDS Life,
and trustees of qualified pension and retirement plans (collectively, "Mixed and
Shared Funding"). The Parties recognize that the SEC has imposed terms and
conditions for such orders that are substantially identical to many of the
provisions of this Section 5. Sections 5.2 through 5.8 below shall apply
pursuant to such an exemptive order granted to AVIIF. AVIF hereby notifies IDS
Life that, in the event that AVIF implements Mixed and Shared Funding, it may be
appropriate to include in the prospectus pursuant to which a Contract is offered
disclosure regarding the potential risks of Mixed and Shared Funding.
5.2 Disinterested Directors.
AVIF agrees that its Board of Directors shall at all times consist of directors
a majority of whom (the "Disinterested Directors") are not interested persons of
AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the Rules
thereunder and as modified by any applicable orders of the SEC, except that if
this condition is not met by reason of the death, disqualification, or bona fide
resignation of any director, then the operation of this condition shall be
suspended (a) for a period of forty-five (45) days if the vacancy or vacancies
may be filled by the Board; (b) for a period of sixty (60) days if a vote of
shareholders is required to fill the vacancy or vacancies; or (c) for such
longer period as the SEC may prescribe by order upon application.
5.3 Monitoring for Material Irreconcilable Conflicts
AVIF agrees that its Board of Directors will monitor for the existence of any
material irreconcilable conflict between the interests of the Participants in
all separate accounts of life insurance companies utilizing AVIF ("Participating
Insurance Companies"), including each Account, and participants in all qualified
retirement and pension plans investing in AVIF ("Participating Plans"). IDS Life
agrees to inform the Board of Directors of AVIF of the existence of or any
potential for any such material irreconcilable conflict of which it is aware.
The concept of a "material irreconcilable conflict" is not defined by the 1940
Act or the rules thereunder, but the Parties recognize that such a conflict may
arise for a variety of reasons, including, without limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax or securities
regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Fund are being managed;
(e) a difference in voting instructions given by variable annuity contract and
variable life insurance contract Participants or by Participants of different
Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the voting
instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting instructions of
Plan participants.
Consistent with the SEC's requirements in connection with exemptive orders of
the type referred to in Section 5.1 hereof, IDS Life will assist the Board of
Directors in carrying out its responsibilities by providing the Board of
Directors with all information reasonably necessary for the Board of Directors
to consider any issue raised, including information as to a decision by IDS Life
to disregard voting instructions of Participants.
5.4 Conflict Remedies.
(a) It is agreed that if it is determined by a majority of the members of the
Board of Directors or a majority of the Disinterested Directors that a material
irreconcilable conflict exists, IDS Life will, if it is a Participating
Insurance Company for which a material irreconcilable conflict is relevant, at
its own expense and to the extent reasonably practicable (as determined by a
majority of the Disinterested Directors), take whatever steps are necessary to
remedy or eliminate the material irreconcilable conflict, which steps may
include, but are not limited to:
(i)withdrawing the assets allocable to some or all of the Accounts
from AVIF or any Fund and reinvesting such assets in a different
investment medium, including another Fund of AVIF, or submitting
the question whether such segregation should be implemented to a
vote of all affected Participants and, as appropriate,
segregating the assets of any particular group (e.g., annuity
Participants, life insurance Participants or all Participants)
that votes in favor of such segregation, or offering to the
affected Participants the option of making such a change; and
(ii)establishing a new registered investment company of the type
defined as a "management company" in Section 4(3) of the 1940 Act
or a new separate account that is operated as a management company.
(b) If the material irreconcilable conflict arises because of IDS Life's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, IDS Life may
be required, at AVIF's election, to withdraw each Account's investment in AVIF
or any Fund. No charge or penalty will be impose d as a result of such
withdrawal. Any such withdrawal must take place within six (6) months after AVIF
gives notice to IDS Life that this provision is being implemented, and until
such withdrawal AVIF shall continue to accept and implement orders by IDS Life
for the purchase and redemption of Shares of AVIF.
(c) If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to IDS Life conflicts with the
majority of other state regulators, then
IDS Life will withdraw each Account's investment in AVIF within six (6) months
after AVIF's Board of Directors informs IDS Life that it has determined that
such decision has created a material irreconcilable conflict, and until such
withdrawal AVIF shall continue to accept and implement orders by IDS Life for
the purchase and redemption of Shares of AVIF. No charge or penalty will be
imposed as a result of such withdrawal.
(d) IDS Life agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense and with a
view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will AVIF or any of its
affiliates be required to establish a new funding medium for any Contracts. IDS
Life will not be required by the terms hereof to establish a new funding medium
for any Contracts if an offer to do so has been declined by vote of a majority
of Participants materially adversely affected by the material irreconcilable
conflict.
5.5 Notice to IDS Life .
AVIF will promptly make known in writing to IDS Life the Board of Directors'
determination of the existence of a material irreconcilable conflict, a
description of the facts that give rise to such conflict and the implications of
such conflict.
5.6 Information Requested by Board of Directors.
IDS Life and AVIF (or its investment adviser) will at least annually submit to
the Board of Directors of AVIF such reports, materials or data as the Board of
Directors may reasonably request so that the Board of Directors may fully carry
out the obligations imposed upon it by the provisions hereof or any exemptive
order granted by the SEC to permit Mixed and Shared Funding, and said reports,
materials and data will be submitted at any reasonable time deemed appropriate
by the Board of Directors. All reports received by the Board of Directors of
potential or existing conflicts, and all Board of Directors actions with regard
to determining the existence of a conflict, notifying Participating Insurance
Companies and Participating Plans of a conflict, and determining whether any
proposed action adequately remedies a conflict, will be properly recorded in the
minutes of the Board of Directors or other appropriate records, and such minutes
or other records will be made available to the SEC upon request.
5.7 Compliance with SEC Rules.
If, at any time during which AVIF is serving as an investment medium for
variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding, AVIIF agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed
modified if and only to the extent required in order also to comply with the
terms and conditions of such exemptive relief that is afforded by any of said
rules that are applicable.
5.8 Other Requirements.
AVIF will require that each Participating Insurance Company and Participating
Plan enter into an agreement with AVIF that contains in substance the same
provisions as are set forth in Sections 4. 1 (b), 4. 1 (d), 4.3(a), 4.4(b),
4.5(a), 5, and 10 of this Agreement.
Section 6. Termination
6.1 Events of Termination.
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of any party, with or without cause with respect to the Fund,
upon six (6) months advance written notice to the other parties, or, if later,
upon receipt of any required exemptive relief from the SEC, unless otherwise
agreed to in writing by the parties; or
(b) at the option of AVIF upon institution of formal proceedings against IDS
Life or its affiliates by the NASD, the SEC, any state insurance regulator or
any other regulatory body regarding IDS Life's obligations under this Agreement
or related to the sale of the Contracts, the operation of each Account, or the
purchase of Shares, if, in each case, AVIF reasonably determines that such
proceedings, or the facts on which such proceedings would be based, have a
material likelihood of imposing material adverse consequences on the Fund with
respect to which the Agreement is to be terminated; or
(c) at the option of IDS Life upon institution of formal proceedings against
AVIIF, its principal underwriter, or its investment adviser by the NASD, the
SEC, or any state insurance regulator or any other regulatory body regarding
AVIFs obligations under this Agreement or related to the operation or management
of AVIF or the purchase of AVIF Shares, if, in each case, IDS Life reasonably
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on IDS Life, or the Subaccount corresponding to the Fund with respect to which
the Agreement is to be terminated; or
(d) at the option of any Party in the event that (i) the Funds Shares are not
registered and, in all material respects, issued and sold in accordance with any
applicable federal or state law, or (ii) such law precludes the use of such
Shares as an underlying investment medium of the Contracts issued or to be
issued by IDS Life; or
(e) upon termination of the corresponding Subaccount's investment in the Fund
pursuant to Section 5 hereof; or
(f) at the option of IDS Life if the Fund ceases to qualify as a RIC under
Subchapter M of the Code or under successor or similar provisions, or if IDS
Life reasonably believes that the Fund may fail to so qualify; or
(g) at the option of IDS Life if the Fund fails to comply with Section 817(h) of
the Code or with successor or similar provisions, or if IDS Life reasonably
believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by IDS Life cease to qualify
as annuity contracts or life insurance contracts under the Code (other than by
reason of the Fund's noncompliance with Section 817(h) or Subchapter M of the
Code) or if interests in an Account under the Contracts are not registered,
where required, and, in all material respects, are not issued or sold in
accordance with any applicable federal or state law; or
(i) upon another Party's material breach of any provision of this Agreement.
6.2 Notice Requirement for Termination.
No termination of this Agreement will be effective unless and until the Party
terminating this Agreement gives prior written notice to the other Party to this
Agreement of its intent to terminate, and such notice shall set forth the basis
for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of Sections
6. 1 (a) or 6. 1 (e) hereof, such prior written notice shall be given at least
six (6) months in advance of the effective date of termination unless a shorter
time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of Sections
6. 1 (b) or 6. 1 (c) hereof, such prior written notice shall be given at least
ninety (90) days in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto; and
(c) in the event that any termination is based upon the provisions of Sections
6. 1 (d), 6. 1 (f), 6. 1 (g), 6. 1 (h) or 6. 1 (i) hereof, such prior written
notice shall be given as soon as possible within twenty-four (24) hours after
the terminating Party learns of the event causing termination to be required.
6.3 Funds To Remain Available.
Notwithstanding any termination of this Agreement, AVIF will, at the option of
IDS Life, continue to make available additional shares of the Fund 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 will be permitted to reallocate investments in the Fund (as
in effect on such date), redeem investments in the Fund and/or invest in the
Fund upon the making of additional purchase
payments under the Existing Contracts. The parties agree that this Section 6.3
will not apply to any terminations under Section 5 and the effect of such
terminations will be governed by Section 5 of this Agreement.
6.4 Survival of Warranties and Indemnifications.
All warranties and indemnifications will survive the termination of this
Agreement.
6.5 Continuance of Agreement for Certain Purposes.
If any Party terminates this Agreement with respect to any Fund pursuant to
Sections 6. 1 (b), 6. 1 (c), 6. 1 (d), 6. 1 (f), 6. 1 (g), 6. 1 (h) or 6. 1 (i)
hereof, this Agreement shall nevertheless continue in effect as to any Shares of
that Fund that are outstanding as of the date of such termination (the "Initial
Termination Date"). This continuation shall extend to the earlier of the date as
of which an Account owns no Shares of the affected Fund or a date (the "Final
Termination Date") six (6) months following the Initial Termination Date, except
that IDS Life may, by written notice shorten said six (6) month period in the
case of a termination pursuant to Sections 6. 1 (d), 6. 1 (f), 6. 1 (g), 6. 1
(h) or 6. 1 (i).
Section 7. Parties To Cooperate Respecting Termination
The Parties hereto agree to cooperate and give reasonable assistance to one
another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6. 1 (a), the termination date specified in the notice of termination. Such
steps may include combining the affected Account with another Account,
substituting other mutual fund shares for those of the affected Fund, or
otherwise terminating participation by the Contracts in such Fund.
Section 8. Assignment
This Agreement may not be assigned by any Party, except with the written consent
of each other Party.
Section 9. Notices
Notices and communications required or permitted by Section 9 hereof will be
given by means mutually acceptable to the Parties concerned. Each other notice
or communication required or permitted by this Agreement will be given to the
following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
IDS Life Insurance Company
IDS Tower 10
Xxxxxxxxxxx, XX 00000-0000
Facsimile: 000-000-0000
Attn: Xx. Xxxxxxx Xxxxxxxxx
American Express Financial Advisors Inc.
IDS Life Insurance Company
IDS Tower 10
Xxxxxxxxxxx, XX 00000-0000
Facsimile: 000-000-0000
Attn: Xxxx Xxxxx Xxxxxxx, Esq.
Counsel
AIM Variable Insurance Funds, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
A I M Distributors, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
Attn: Xx. Xxxx Xxxxxxxxxx
Section 10. Voting Procedures
Subject to the cost allocation procedures set forth mi Section 3 hereof, IDS
Life will distribute all proxy material furnished by AVIF to Participants to
whom pass-through voting privileges are required to be extended and will solicit
voting instructions from Participants. IDS Life will vote Shares in accordance
with timely instructions received from Participants. IDS Life will vote Shares
that are (a) not attributable to Participants to whom pass-through voting
privileges are extended, or (b) attributable to Participants, but for which no
timely instructions have been received, in the same
proportion as Shares for which said instructions have been received from
Participants, so long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass through voting privileges for Participants. Neither
IDS Life nor any of its affiliates will in any way recommend action in
connection with or oppose or interfere with the solicitation of proxies for the
Shares held for such Participants. IDS Life reserves the right to vote shares
held in any Account in its own right, to the extent permitted by law. IDS Life
shall be responsible for assuring that each of its Accounts holding Shares
calculates voting privileges in a manner consistent with that of other
Participating Insurance Companies or in the manner required by the Mixed and
Shared Funding exemptive order obtained by AVIF. AVIF will notify IDS Life of
any changes of interpretations or amendments to Mixed and Shared Funding
exemptive order it has obtained. AVIF will comply with all provisions of the
1940 Act. requiring voting by shareholders, and in particular, AVIF either will
provide for annual meetings (except insofar as the SEC may interpret Section 16
of the 1940 Act not to require such meetings) or will comply with Section 16(c)
of the 1940 Act (although AVIF 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, AVIIF will act in accordance with the SEC's interpretation of
the requirements of Section 16(a) with respect to periodic elections of
directors and with whatever rules the SEC may promulgate with respect thereto.
Section 11, Foreign Tax Credits
AVIF agrees to consult in advance with IDS Life concerning any decision to elect
or not to elect pursuant to Section 853 of the Code to pass through the benefit
of any foreign tax credits to its shareholders.
Section 12. Indemnification
12.1 Of AVIF and AIM by IDS Life.
(a) Except to the extent provided in Sections 12. 1 (b) and 12. 1 (c), below,
IDS Life agrees to indemnify and hold harmless AVIF, AIM, their affiliates, and
each person, if any, who controls AVIF, AIM, or their affiliates within the
meaning of Section 15 of the 1933 Act and any of their directors and officers,
(collectively, the "Indemnified Parties" for purposes of this Section 12.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of IDS Life) or actions in respect
thereof (including, to the extent reasonable, legal and other expenses), to
which the Indemnified Parties may become subject under any statute, regulation,
at common law or otherwise; provided, the Account owns shares of the Fund and
insofar as such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any
Account's 1933 Act registration statement, any Account
Prospectus, the Contracts, or sales
literature or advertising for the Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with information
furnished to IDS Life by or on behalf of AVIF for use in any Account's 1933
Act registration statement, any Account Prospectus, the Contracts, or sales
literature or advertising or otherwise for use in connection with the sale
of Contracts or Shares (or any amendment or supplement to any of the
foregoing); or
(ii) arise out of or as a result of any other statements or representations
(other than statements or representations contained in AVIF's 1933 Act
registration statement, AVIF Prospectus, sales literature or advertising of
AVIF, or any amendment or supplement to any of the foregoing, not supplied
for use therein by or on behalf of IDS Life and on which such persons have
reasonably relied) or the negligent, illegal or fraudulent conduct of IDS
Life or its affiliates or persons under their control (including, without
limitation, their employees and "Associated Persons," as that term is
defined in paragraph (m) of Article I of the NASD's By-Laws), in connection
with the sale or distribution of the Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in AVIF's 1933 Act registration
statement, AVIF Prospectus, sales literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such a statement
or omission was made in reliance upon and in conformity with information
furnished to AVIF by- or on behalf of IDS Life or its affiliates for use in
AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature
or advertising of AVIF, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by IDS Life to perform. the
obligations, provide the services and furnish the materials required of
them under the terms of this Agreement, or any material breach of any
representation and/or warranty made by IDS Life in this Agreement or arise
out of or result from any other material breach of this Agreement by IDS
Life; or
(v) arise as a result of failure by the Contracts issued by IDS Life to
qualify as annuity contracts or life insurance contracts under the Code,
otherwise than
by reason of any Fund's failure to comply with Subchapter M or Section
817(h) of the Code.
(b) IDS Life shall not be liable under this Section 12.1 with respect to any
losses, claims, damages, liabilities or actions to which an Indemnified Party
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance by that Indemnified Party of its duties or by
reason of that Indemnified Party's reckless disregard of obligations or duties
(a) under this Agreement, or (if) to AVIF.
(c) ]IDS Life shall not be liable under this Section 12.1 with respect to any
action against an Indemnified Party unless AVIF or AIM shall have notified IDS
Life in writing within a reasonable time after the summons or other first legal
process giving information of the nature of the action shall have been served
upon such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify IDS Life
of any such action shall not relieve IDS Life from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this Section 12. 1. Except as otherwise provided herein, in case
any such action is brought against an Indemnified Party, IDS Life shall be
entitled to participate, at its own expense, in the defense of such action and
also shall be entitled to assume the defense thereof, with counsel approved by
the Indemnified Party named in the action, which approval shall not be
unreasonably withheld. After notice from IDS Life to such Indemnified Party of
its election to assume the defense thereof, the Indemnified Party will cooperate
fully with IDS Life and shall bear the fees and expenses of any additional
counsel retained by it, and IDS Life will not be liable to such Indemnified
Party under this Agreement for any legal or other expenses subsequently incurred
by such Indemnified Party independently in connection with the defense thereof,
other than reasonable costs of investigation.
12.2 Of IDS Life by AVIF and AIM
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e),
below, AVIIF and AIM agree to indemnify and hold harmless IDS Life its
affiliates, and each person, if any, who controls IDS Life, or its affiliates
within the meaning of Section 15 of the 1933 Act and any of its directors and
officers, (collectively, the "Indemnified Parties" for purposes of this Section
12.2) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of AVIF and AIM ) or actions
in respect thereof (including, to the extent reasonable, legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law, or otherwise; provided, the Account owns
shares of the Fund and insofar as such losses, claims, damages, liabilities or
actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus or sales
literature or advertising of AVIF (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, that this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information furnished
to AVIF or its affiliates by or on behalf of IDS Life or its affiliates for use
in AVIF's 1933 Act registration statement, AVIF Prospectus, or in sales
literature or advertising or otherwise for use in connection with the sale of
Contracts or Shares (or any amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or representations
(other than statements or representations contained in any Account's 1933
Act registration statement, any Account Prospectus, sales literature or
advertising for the Contracts, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of AVIF, AIM or
their affiliates and on which such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of AVIIF, AIM, their affiliates or
persons under their control (including, without limitation, their employees
and "Associated Persons" as that Term is defined in Section (n) of Article
I of the NASD By-Laws), in connection with the sale or distribution of AVIF
Shares; or
(iii)arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Account's 1933 Act
registration statement, any Account Prospectus, sales literature or
advertising covering the Contracts, or any amendment or supplement to any
of the foregoing, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if such statement or omission was made
in reliance upon and in conformity with information famished to IDS Life or
its affiliates by or on behalf of AVIF or AIM for use in any Account's 1933
Act registration statement, any Account Prospectus, sales literature or
advertising covering the Contracts, or any amendment or supplement to any
of the foregoing; or
(iv) arise as a result of any failure by AVIF or AIM to perform the obligations,
provide the services and furnish the materials required of them under the
terms of this Agreement, or any material breach of any representation
and/or warranty made by AVIF or AIM in this Agreement or arise out of or
result from any other material breach of this Agreement by AVIF or AIM.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e)
hereof, AVIF and AIM agree to indemnify and hold harmless the Indemnified
Parties from and against any and all losses, claims, damages, liabilities
(including amounts paid in settlement thereof with, the written consent of AVIF
or AM) or actions in respect thereof (including, to the extent reasonable, legal
and
other expenses) to which the indemnified Parties may become subject directly or
indirectly under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or actions directly or indirectly result
from or arise out of the failure of any Fund to operate as a regulated
investment company in compliance with (i) Subchapter M of the Code and
regulations thereunder, or (ii) Section 817(h) of the Code and regulations
thereunder, including, without limitation, any income taxes and related
penalties, rescission charges, liability under state law to Participants
asserting liability against IDS Life pursuant to the Contracts, the costs of any
ruling and closing agreement or other settlement with the IRS, and the cost of
any substitution by IDS Life of Shares of another investment company or
portfolio for those of any adversely affected Fund as a funding medium for each
Account that IDS Life reasonably deems necessary or appropriate as a result of
the noncompliance.
(c) Neither AVEF nor AIM shall be liable under this Section 12.2 with respect to
any losses, claims, damages, liabilities or actions to which an Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance by that Indemnified Party of its duties or
by reason of such Indemnified Party's reckless disregard of its obligations and
duties (i) under this Agreement, or (ii) to IDS Life, each Account or
Participants.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2 with respect to
any action against an Indemnified Party unless the Indemnified Party shall have
notified AVIF and AIM in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the action shall
have been served upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated agent), but failure
to notify AVIF and AIM of any such action shall not relieve AVIF and AIM from
any liability which they may have to the Indemnified Party against whom such
action is brought otherwise than on account of this Section 12.2. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, AVIF and AIM will be entitled to participate, at their own
expense, in the defense of such action and also shall be entitled to assume the
defense thereof (which shall include, without limitation, the conduct of any
ruling request and closing agreement or other settlement proceeding with the
IRS), with counsel approved by the Indemnified Party named in the action, which
approval shall not be unreasonably withheld. After notice from AVIF or AIM to
such Indemnified Party of AVIF's or AIM's election to assume the defense
thereof, the Indemnified Party will cooperate My with AVIF and AIM and shall
bear the fees and expenses of any additional counsel retained by it, and neither
AVIF nor AIM will be liable to such Indemnified Party under this Agreement for
any legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof, other than reasonable
costs of investigation.
(e) In no event shall AVIIF or AIM be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including,
without limitation, IDS Life, or any other Participating Insurance Company or
any Participant, with respect to any losses, claims, damages, liabilities or
expenses that arise out of or result from (i) a breach of any representation,
warranty, and/or covenant made by IDS Life hereunder or by any Participating
Insurance Company under an agreement containing substantially similar
representations, warranties and covenants; (ii) the
failure by IDS Life or any Participating Insurance Company to maintain its
segregated asset account (which invests in any Fund) 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 1940 Act (unless
exempt therefrom); or (iii) the failure by IDS Life or any Participating
Insurance Company to maintain its variable annuity or life insurance contracts
(with respect to which any Fund serves as an underlying funding vehicle) as
annuity contracts or life insurance contracts under applicable provisions of the
Code.
12.3 Effect of Notice.
Any notice given by the indemnifying Party to an Indemnified Party referred to
in Section 12. 1 (c) or 12.2(d) above of participation in or control of any
action by the indemnifying Party will in no event be deemed to be an admission
by the indemnifying Party of liability, culpability or responsibility, and the
indemnifying Party will remain free to contest liability with respect to the
claim among the Parties or otherwise.
12.4 Successors.
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
Section 13. Applicable Law
This Agreement will be construed and the provisions hereof interpreted under and
in accordance with Maryland law, without regard for that state's principles of
conflict of laws.
Section 14. Execution in Counterparts
This Agreement may be executed simultaneously in two or more counterparts, each
of which taken together will constitute one and the same instrument.
Section 15. Severability
If any provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby.
Section 16. Rights Cumulative
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.
Section 17, Headings
The Table of Contents and headings used in this Agreement are for purposes of
reference only and shall not limit or define the meaning of the provisions of
this Agreement.
Section 18. Confidentiality
AVIF acknowledges that the identities of the customers of IDS Life or any of its
affiliates (collectively, the "IDS Life Protected Parties" for purposes of this
Section 18), information maintained regarding those customers, and all computer
programs and procedures or other information developed by the IDS Life Protected
Parties or any of their employees or agents in connection with IDS Life's
performance of its duties under this Agreement are the valuable property of the
IDS Life Protected Parties. AVIF agrees that if it comes into possession of any
list or compilation of the identities of or other information about the IDS Life
Protected Parties' customers, or any other information or property of the IDS
Life Protected Parties, other than such information as may be independently
developed or compiled by AVIF from information supplied to it by the IDS Life
Protected Parties' customers who also maintain accounts directly with AVIF, AVIF
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 IDS Life's prior written consent; or (b) as required by law or judicial
process. IDS Life acknowledges that the identities of the customers of AVIF or
any of its affiliates (collectively the "AVIF Protected Parties" for purposes of
this Section 18), information maintained regarding those customers, and all
computer programs and procedures or other information developed by the AVIF
Protected Parties or any of their employees or agents in connection with AVIF's
performance of its duties under this Agreement are the valuable property of the
AVIF Protected Parties. IDS Life agrees that if it comes into possession of any
list or compilation of the identities of or other information about the AVIF
Protected Parties' customers or any other information or property of the AVIF
Protected Parties, other than such information as may be independently developed
or compiled by IDS Life from information supplied to it by the AVIF Protected
Parties' customers who also maintain accounts directly with IDS Life, IDS Life
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 AVIF's prior written consent; or (b) as required by law or judicial
process. Each party acknowledges that any breach of the agreements in this
Section 18 would result in immediate and irreparable harm to the other parties
for which there would be no adequate remedy at law and agree that in the event
of such a breach, the other 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.
Section 19. Trademarks and Fund Names
(a) AIM, or its affiliates, owns all right, title and interest in and to the
name, trademark and service xxxx "AM' and such other tradenames, trademarks and
service marks as may be set forth on Schedule B, as amended from time to time by
written notice from AIM to IDS Life (the "AIM licensed marks" or the "licensor's
licensed marks") and is authorized to use and to license other persons to use
such marks. AIM hereby grants to IDS Life and its affiliates a non-exclusive
license to use the AIM licensed marks in connection with IDS Life's performance
of the services contemplated under this Agreement, subject to the terms and
conditions set forth in this Section 19.
(b) The grant of license by AIM (a "licensor) to IDS Life and its affiliates (
the "licensee") shall terminate automatically upon termination of this
Agreement. Upon automatic termination, the licensee shall cease to use the
licensor's licensed marks, except that IDS Life shall have the right to continue
to service any outstanding Contracts bearing any of the AIM licensed marks. Upon
AIM's elective termination of this license, IDS Life and its affiliates shall
immediately cease to issue any new annuity or life insurance contracts bearing
any of the AIM licensed marks and shall likewise cease any activity which
suggests that it has any right under any of the AIM licensed marks or that it
has any association with AIM, except that IDS Life shall have the right to
continue to service outstanding Contracts bearing any of the AIM licensed marks.
(c) The licensee shall obtain the prior written approval of the licensor for the
public release by such licensee of any materials bearing the licensor's licensed
marks. The licensor's approvals shall not be unreasonably withheld.
(d) During the term of this grant of license, a licensor may request that a
licensee submit samples of any materials bearing any of the licensor's licensed
marks which were previously approved by the licensor but, due to changed
circumstances, the licensor may wish to reconsider. If, on reconsideration, or
on initial review, respectively, any such samples fail to meet with the written
approval of the licensor, then the licensee shall immediately cease distributing
such disapproved materials. The licensor's approval shall not be unreasonably
withheld, and the licensor, when requesting reconsideration of a prior approval,
shall assume the reasonable expenses of withdrawing and replacing such
disapproved materials. The licensee shall obtain the prior written approval of
the licensor for the use of any new materials developed to replace the
disapproved materials, in the manner set forth above.
(e) The licensee hereunder: (i) acknowledges and stipulates that, to the best of
the knowledge of the licensee, the licensor's licensed marks are valid and
enforceable trademarks and/or service marks and that such licensee does not own
the licensor's licensed marks and claims no rights therein other than as a
licensee under this Agreement; (ii) agrees never to contend otherwise in legal
proceedings or in other circumstances; and (iii) acknowledges and agrees that
the use of the licensor's licensed marks pursuant to this grant of license shall
inure to the benefit of the licensor.
Section 20. Parties to Cooperate
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 (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
Xxxxx X. Xxxxxx Xxxxxx X. Xxxxxx
Assistant Secretary Title: President
AIM DISTRIBUTORS, INC.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ W. Xxxx Xxxxxxxxxx
Xxxxx X. Xxxxxx W. Xxxx Xxxxxxxxxx
Assistant General Counsel Title: Sr. Vice President
& Assistant Secretary
IDS LIFE INSURANCE COMPANY,
on behalf of itself and its
separate accounts
Attest: /s/ Xxxx X. Sand By: /s/ Xxxxxxx X. Xxxxx
Xxxx X. Sand Xxxxxxx X. Xxxxx
Assistant Secretary Title: President
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
IDS Life Variable Account 10
IDS Life Variable Life Separate Account
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Flexible Premium Deferred Variable Annuity Contract Form Nos. 31030, 31031 and
31032-XXX and state variations thereof
Flexible Premium Variable Life Insurance Policy Form No. 30060 and state
variations thereof
Flexible Premium Survivorship Variable Life Insurance Policy Form No. 30090 and
state variations thereof
SCHEDULE B
A I M VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund
AIM and Design
