PARTICIPATION AGREEMENT
By and Among
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
And
TEMPLETON VARIABLE PRODUCTS SERIES FUND
And
FRANKLIN XXXXXXXXX VARIABLE INSURANCE PRODUCTS TRUST
And
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
THIS AGREEMENT, made and entered into this day of , 1999 by and among American
Enterprise Life Insurance Company organized under the laws of the State of
Indiana (the "Company"), on its own behalf and on behalf of each separate
account of the Company named in Schedule 1 to this Agreement, as may be amended
from time to time (each account referred to as the "Account"), Templeton
Variable Products Series Fund and Franklin Xxxxxxxxx Variable Insurance Products
Trust, open-end management investment companies and business trusts organized
under the laws of the State of Massachusetts [Please revise as appropriate]
(each referred to as the "Fund") and Franklin Xxxxxxxxx Distributors, Inc. a
corporation organized under the laws of the State of California (the
"Underwriter"), the Fund's principal underwriter.
WHEREAS, the Fund engages in business as an open-end management investment
company and was established for the purpose of serving as the investment vehicle
for separate accounts established for variable life insurance contracts and
variable annuity contracts to be offered by insurance companies that have
entered into participation agreements substantially identical to this Agreement
(the "Participating Insurance Companies"); and
WHEREAS, beneficial interests in the Fund are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (the "Portfolios"); and
WHEREAS, the Fund has received an order from the Securities & Exchange
Commission (the "SEC") granting Participating Insurance Companies and their
variable annuity separate accounts and variable life insurance separate accounts
relief from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the
Investment Company Act of 1940, as amended, (the "1940 Act") and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Fund to be sold to and held by variable annuity separate accounts
and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and certain qualified pension and
retirement plans outside of the separate account context (the "Mixed and Shared
Funding Exemptive Order"). The parties to this Agreement agree that the
conditions or undertakings specified in the Mixed and Shared Funding Exemptive
Order and that may be imposed on the Company, the Fund and/or the Underwriter by
virtue of the receipt of such order by the SEC will be incorporated herein by
reference, and such parties agree to comply with such conditions and
undertakings to the extent applicable to each such party; and
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Company has registered or will register certain variable annuity
and variable life insurance contracts (the "Contracts") under the 1933 Act; and
WHEREAS, the Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of the Company
under the insurance laws of the State of Indiana, to set aside and invest assets
attributable to the Contracts; and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Portfolios named in Schedule 2, as
such schedule may be amended from time to time (the "Designated Portfolios") on
behalf of the Account to fund the Contracts, and the Fund is authorized to sell
such shares to unit investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund
and the Underwriter agree as follows:
ARTICLE I. Sale and Redemption of Fund Shares
1.1. The Fund agrees to sell to the Company those shares of the Designated
Portfolios that each Account orders, executing such orders on a daily basis
at the net asset value next computed after receipt and acceptance by the
Fund or its designee of the order for the shares of the Fund, as
established in accordance with the provisions of the then-current
prospectus of the Fund describing purchase procedures on those days on
which the Fund calculates its net asset value pursuant to rules of the SEC,
and the Fund shall use reasonable efforts to calculate such net asset value
on each day on which the New York Stock Exchange is open for trading. For
purposes of this Section 1.1, the Company will be the designee of the Fund
for receipt of such orders from each Account and receipt by such designee
will constitute receipt by the Fund; provided that the Fund receives notice
of such order by 10:00 a.m. Eastern Time on the next following business
day. "Business Day" will mean any day on which the New York Stock Exchange
is open for trading and on which the Fund calculates its net asset value
pursuant to the rules of the SEC.
1.2. The Company will pay for Fund shares on the next Business Day after an
order to purchase Fund shares is made in accordance with Section 1.1 above.
Payment will be in federal funds transmitted by wire to the Fund.
1.3. The Fund agrees to make shares of the Designated Portfolios available for
purchase at the applicable net asset value per share by Participating
Insurance Companies and their separate accounts on those days on which the
Fund calculates its Designated Portfolio net asset value pursuant to rules
of the SEC; provided, however, that the Board of Trustees of the Fund (the
"Fund Board") may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio if such action
is required by law or by regulatory authorities having jurisdiction or is,
in the sole discretion of the Fund Board, acting in good faith and in light
of its fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Portfolio.
1.4. The Fund agrees that shares of the Fund will be sold only to Participating
Insurance Companies and their separate accounts, qualified pension and
retirement plans or such other persons as are permitted under applicable
provisions of the Internal Revenue Code of 1986, as amended, (the "Internal
Revenue Code"), and regulations promulgated thereunder, the sale to which
will not impair the tax treatment currently afforded the Contracts. No
shares of any Portfolio will be sold to the general public. The Company
agrees that it will use Fund shares only for the purpose of funding the
Contracts through the Accounts listed on Schedule 1, as amended from time
to time.
1.5. The Fund will not sell Fund shares to any insurance company or separate
account unless an agreement containing provisions substantially the same as
Articles I, III, and VII of this Agreement are in effect to govern such
sales. The Fund will make available upon written request from the Company a
list of all other Participating Insurance Companies.
1.6. The Fund agrees to redeem for cash, upon the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests
on a daily basis at the net asset value next computed after receipt and
acceptance by the Fund or its agent of the request for redemption. For
purposes of this Section 1.6, the Company will be the designee of the Fund
for receipt of requests for redemption from each Account and receipt by
such designee will constitute receipt by the Fund; provided the Fund
receives notice of request for redemption by 10:00 a.m. Eastern Time on the
next following Business Day. Payment will be in federal funds transmitted
by wire to the Company's account as designated by the Company in writing
from time to time, on the same Business Day the Fund receives notice of the
redemption order from the Company; provided the Fund receives notice of
redemption by 10:00 a.m. Eastern Time. If the Fund receives notice of the
redemption after 10:00 a.m. Eastern Time, payment for the redeemed shares
will be made on the next following Business Day. The Fund reserves the
right to delay payment of redemption proceeds, but in no event may such
payment be delayed longer than the period permitted under Section 22(e) of
the 0000 Xxx. The Fund will not bear any responsibility whatsoever for the
proper disbursement or crediting of redemption proceeds; the Company alone
will be responsible for such action.
1.7. The Company agrees to purchase and redeem the shares of the Designated
Portfolios offered by the then current prospectus of the Fund in accordance
with the provisions of such prospectus.
1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate subaccount of each
Account.
1.9. The Fund will furnish same day notice (by wire or telephone, followed by
written confirmation) to the Company of the declaration of any income,
dividends or capital gain distributions payable on each Designated
Portfolio's shares. The Company hereby elects to receive all such dividends
and distributions as are payable on the Designated Portfolio shares in the
form of additional shares of that Designated Portfolio. The Company
reserves the right to revoke this election and to receive all such
dividends and distributions in cash. The Fund will notify the Company of
the number of shares so issued as payment of such dividends and
distributions.
1.10.The Fund will make the net asset value per share for each Designated
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and will use
its best efforts to make such net asset value per share available by 6:00
p.m. Eastern Time each business day.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act and that the Contracts will be issued and
sold in compliance with all applicable federal and state laws, including
state insurance suitability requirements. The Company further represents
and warrants that it is an insurance company duly organized and in good
standing under applicable law and that it has legally and validly
established each Account as a separate account under applicable state law
and has registered the Account as a unit investment trust in accordance
with the provisions of the 1940 Act to serve as a segregated investment
account for the Contracts, and that it will maintain such registration for
so long as any Contracts are outstanding. The Company will amend the
registration statement under the 1933 Act for the Contracts and the
registration statement under the 1940 Act for the Account from time to time
as required in order to effect the continuous offering of the Contracts or
as may otherwise be required by applicable law. The Company will register
and qualify the Contracts for sale in accordance with the securities laws
of the various states only if and to the extent deemed necessary by the
Company.
2.2. The Company represents that the Contracts are currently and at the time of
issuance will be treated as annuity or life insurance contracts under
applicable provisions of the Internal Revenue Code, and that it will make
every effort to maintain such treatment and that it will notify the Fund
and the Underwriter 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.
2.3. The Company represents and warrants that it will not purchase shares of the
Designated Portfolios with assets derived from tax-qualified retirement
plans except, indirectly, through Contracts purchased in connection with
such plans.
2.4. The Fund represents and warrants that Fund shares of the Designated
Portfolios sold pursuant to this Agreement will be registered under the
1933 Act and duly authorized for issuance in accordance with applicable law
and that the Fund is and will remain registered under the 1940 Act for as
long as such shares of the Designated Portfolios are sold. The Fund will
amend the registration statement for its shares under the 1933 Act and the
1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Fund will register and qualify the shares of
the Designated Portfolios for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Fund.
2.5. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code, and
that it will make every effort to maintain such qualification (under
Subchapter M or any successor or similar provision) and that it will notify
the Company immediately upon having a reasonable basis for believing that
it has ceased to so qualify or that it might not so qualify in the future.
2.6. The Fund represents that its investment objectives, policies and
restrictions comply with applicable state investment laws as they may apply
to the Fund. The 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. The Fund and the Underwriter
agree that they will furnish the information required by state insurance
laws so that the Company can obtain the authority needed to issue the
Contracts in the various states.
2.7. The Fund and the Underwriter shall pay no fee or other compensation to the
Company under this Agreement except as provided on Schedule 3.
Nevertheless, the Underwriter or an affiliate may make payments (other than
pursuant to a Rule 12b-1 Plan) to the Company or it affiliates or to the
Contracts' underwriter in amounts agreed to by the Underwriter in writing
and such payments may be made out of fees otherwise payable to the
Underwriter or its affiliates, profits of the Underwriter or its
affiliates, or other resources available to the Underwriter or its
affiliates.
2.8. The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Massachusetts and that it does and will
comply in all material respects with applicable provisions of the 0000 Xxx.
2.9 The Underwriter represents and warrants that it will distribute the Fund
shares of the Designated Portfolios in accordance with all applicable
federal and state securities laws including, without limitation, the 1933
Act, the 1934 Act and the 1940 Act.
2.10.The Underwriter represents and warrants that the adviser for the Fund is
and will remain duly registered under all applicable federal and state
securities laws and that it will perform its obligations for the Fund in
accordance in all material respects with any applicable state and federal
securities laws.
2.11.The Fund 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-(1) 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.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Fund or the Underwriter will provide the Company, at the Company's
expense, with as many copies of the current Fund prospectus for the
Designated Portfolios, annual report, semi-annual report and other
shareholder communications, including any amendments and supplements to any
of the foregoing, as the Company may reasonably request for distribution,
at the Company's expense, to prospective contractowners and applicants. The
Fund or the Underwriter will provide the Company, at the Fund's expense,
with as many copies of said documents as necessary for distribution, at the
Company's expense, to existing contractowners. The Fund will provide the
copies of said documents to the Company or to its mailing agent. The
Company will distribute such documents to existing contractowners. If
requested by the Company in lieu thereof, the Fund will provide such
documentation, including a final copy of such documents set in type or a
computer diskette (or other medium agreed to by the parties) at the Fund's
expense, and other assistance as is reasonably necessary in order for the
Company at least annually (or more frequently if the Fund prospectus is
amended more frequently) to have the Fund's prospectus and the prospectuses
of other mutual funds printed together, in which case the Fund will pay its
share of reasonable expenses directly related to the required disclosure of
information concerning the Fund.
3.2. The Fund's prospectus will state that the statement of additional
information for the Fund is available from the Company. The Fund will
provide the Company, at the Company's expense, with as many copies of the
statement of additional information as the Company may reasonably request
for distribution, at the Company's expense, to prospective contractowners
and applicants. The Fund will provide, at the Fund's expense, as many
copies of said statement of additional information as necessary for
distribution, at the Fund's expense, to any existing contractowner who
requests such statement or whenever state or federal law otherwise requires
that such statement be provided. The Fund will provide the copies of said
statement of additional information to the Company or to its mailing agent.
The Company will distribute the statement of additional information as
requested or required and will xxxx the Fund for the reasonable cost of
such distribution.
3.3. The Fund, at its expense, will provide the Company or its mailing agent
with copies of its proxy material in such quantity as the Company will
reasonably require for distribution to contractowners. The Company will
distribute this proxy material to contractowners at its expense.
3.4. The Company assumes responsibility for ensuring that current prospectuses,
annual and semi-annual reports, shareholder communications and proxy
material are delivered to contractowners in accordance with applicable
securities laws provided the Company receives the required information
and/or documentation from the Fund within a reasonable time to allow for
compliance with such laws.
3.5. If and to the extent required by law the Company will:
(a) solicit voting instructions from contractowners;
(b) vote the shares of the Designated Portfolios held in
the Account in accordance with instructions received
from contractowners; and
(c) vote shares of the Designated Portfolios held in the
Account for which no timely instructions have been
received, in the same proportion as shares of such
Designated Portfolio for which instructions have been
received from the Company's contractowners;
so long as and to the extent that the SEC continues to interpret the
1940 Act to require pass-through voting privileges for variable
contractowners. The Company reserves the right to vote Fund shares held
in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies will be responsible
for assuring that each of their separate accounts participating in the
Fund calculates voting privileges in a manner consistent with all legal
requirements, including the Mixed and Shared Funding Exemptive Order.
3.6. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular, the Fund 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, as the Fund currently
intends, to comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act)
as well as with Sections 16(a) and, if and when applicable, 16(b).
Further, the Fund 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.
ARTICLE IV. Sales Material and Information
4.1. The Company will furnish, or will cause to be furnished, to the Fund or
the Underwriter, each piece of sales literature or other promotional
material in which the Fund, the Underwriter or the adviser of the Fund
is named, at least ten (10) business days prior to its use. No such
material will be used if the Fund or the Underwriter reasonably objects
to such use within five (5) business days after receipt of such
material.
4.2. The Company and its agents will not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund,
the Underwriter or the adviser for the Fund, in connection with the sale of
the Contracts other than the information or representations contained in
and accurately derived from the registration statement, prospectus or
statement of additional information for Fund shares, as such registration
statement, prospectus and statement of additional information may be
amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in published reports for the Fund which are in
the public domain or approved by the Fund or the Underwriter for
distribution, or in sales literature or other material provided by the Fund
or by the Underwriter, except with permission of the Fund or the
Underwriter. The Fund and the Underwriter agree to respond to any request
for approval on a prompt and timely basis. Nothing in this Section 4.2 will
be construed as preventing the Company or its employees or agents from
giving advice on investment in the Fund, subject to compliance with
applicable state and federal law.
4.3. The Fund or the Underwriter will furnish, or will cause to be furnished, to
the Company or its designee, each piece of sales literature or other
promotional material in which the Company or its Account is named, at least
ten (10) business days prior to its use. No such material will be used if
the Company reasonably objects to such use within five (5) business days
after receipt of such material.
4.4. The Fund and the Underwriter will not give any information or make any
representations or statements on behalf of the Company or concerning
the Company, each Account, or the Contracts other than the information
or representations contained in and accurately derived from a
registration statement, prospectus or statement of additional
information for the Contracts, as such registration statement,
prospectus and statement of additional information may be amended or
supplemented from time to time, or in published reports for each
Account or the Contracts which are in the public domain or approved by
the Company for distribution to contractowners, or in sales literature
or other material provided by the Company, except with permission of
the Company. The Company agrees to respond to any request for approval
on a prompt and timely basis.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate
to the Fund or its shares, contemporaneously with the filing of such
document with the SEC or the NASD.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for
exemptions, requests for no action letters, and all amendments to any
of the above, that relate to the Contracts or each Account,
contemporaneously with the filing of such document with the SEC or the
NASD.
4.7. For purposes of this Article IV, 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.
4.8. The Company agrees and acknowledges that the Underwriter (or its
affiliates) is the sole owner of the name and xxxx "Xxxxxxxx Xxxxxxxxx" and
that all use of any designation comprised in whole or part of such name or
xxxx under this Agreement shall inure to the benefit of the Underwriter.
Except as provided in Section 4.1, the Company shall not use any such name
or xxxx on its own behalf or on behalf of the Accounts or Contracts in any
registration statement, advertisement, sales literature or other materials
relating to the Accounts or Contracts without the prior written consent of
the Underwriter. Upon termination of this Agreement for any reason, the
Company shall cease all use of any such name or xxxx as soon as reasonably
practicable.
ARTICLE V. Fees and Expenses
5.1. The Fund will pay no fee or other compensation to the Company under this
Agreement, except: (a) if the Fund or any Designated Portfolio adopts and
implements a plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses, then, subject to obtaining any required exemptive
orders or other regulatory approvals, the Fund may make payments to the
Company if and in such amounts agreed to by the Fund in writing; and (b)
the Fund may pay fees to the Company for services provided to
contractowners that are not primarily intended to result in the sale of
shares of the Designated Portfolio or of underlying contracts.
5.2. All expenses incident to performance by the Fund of this Agreement will be
paid by the Fund to the extent permitted by law. All shares of the
Designated Portfolios will be duly authorized for issuance and registered
in accordance with applicable federal law and, to the extent deemed
advisable by the Fund, in accordance with applicable state law, prior to
sale. The Fund will bear the expenses for the cost of registration and
qualification of the Fund's shares; preparation and filing of the Fund's
prospectus, statement of additional information and registration statement,
proxy materials and reports; setting in type and printing the Fund's
prospectus; setting in type and printing proxy materials and reports to
contractowners (including the costs of printing a Fund prospectus that
constitutes an annual report); the preparation of all statements and
notices required by any federal or state law; all taxes on the issuance or
transfer of the Fund's shares; any expenses permitted to be paid or assumed
by the Fund pursuant to a plan, if any, under Rule 12b-1 under the 1940
Act; and all other typesetting, printing and distribution expenses set
forth in Article III of this Agreement.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable
annuity or life insurance contracts under the Internal Revenue Code and
the regulations issued thereunder. Without limiting the scope of the
foregoing, the Fund will comply with Section 817(h) of the Internal
Revenue Code and Treasury Regulation 1.817-5, as amended from time to
time, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any amendments or
other modifications to such Section or Regulation. In the event of a
breach of this Article VI by the Fund, it will take all reasonable
steps: (a) to notify the Company of such breach; and (b) to adequately
diversify the Fund so as to achieve compliance within the grace period
afforded by Treasury Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Fund Board will monitor the Fund for the existence of any
irreconcilable material conflict among the interests of the contractowners
of all separate accounts investing in the Fund. An irreconcilable material
conflict may arise for a variety of reasons, including: (a) an action by
any state insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or regulations, or a
public ruling, private letter ruling, no-action or interpretative letter,
or any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of any Portfolio are
being managed; (e) a difference in voting instructions given by
Participating Insurance Companies or by variable annuity and variable life
insurance contractowners; or (f) a decision by an insurer to disregard the
voting instructions of contractowners. The Fund Board will promptly inform
the Company if it determines that an irreconcilable material conflict
exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which it is
aware to the Fund Board. The Company agrees to assist the Fund Board in
carrying out its responsibilities, as delineated in the Mixed and Shared
Funding Exemptive Order, by providing the Fund Board with all information
reasonably necessary for the Fund Board to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform the
Fund Board whenever contractowner voting instructions are to be
disregarded. The Fund Board will record in its minutes, or other
appropriate records, all reports received by it and all action with regard
to a conflict.
7.3. If it is determined by a majority of the Fund Board, or a majority of its
disinterested directors, that an irreconcilable material conflict exists,
the Company and other Participating Insurance Companies will, at their
expense and to the extent reasonably practicable (as determined by a
majority of the disinterested directors), take whatever steps are necessary
to remedy or eliminate the irreconcilable material conflict, up to and
including: (a) withdrawing the assets allocable to some or all of the
Accounts from the Fund or any Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to) another
Portfolio of the Fund, or submitting the question whether such segregation
should be implemented to a vote of all affected contractowners and, as
appropriate, segregating the assets of any appropriate group (i.e.,
variable ---- annuity contractowners or variable life insurance
contractowners of one or more Participating Insurance Companies) that votes
in favor of such segregation, or offering to the affected contractowners
the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by the
Company to disregard contractowner voting instructions, and such disregard
of voting instructions could conflict with the majority of contractowner
voting instructions, and the Company's judgment represents a minority
position or would preclude a majority vote, the Company may be required, at
the Fund's election, to withdraw the affected subaccount of the Account's
investment in the Fund and terminate this Agreement with respect to such
subaccount; provided, however, that such withdrawal and termination will be
limited to the extent required by the foregoing irreconcilable material
conflict as determined by a majority of the disinterested directors of the
Fund Board. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination must take place within six
(6) months after the Fund gives written notice to the Company that this
provision is being implemented. Until the end of such six-month period the
Underwriter and Fund will, to the extent permitted by law and any exemptive
relief previously granted to the Fund, continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the
Fund.
7.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state insurance regulators, then the Company will
withdraw the affected subaccount of the Account's investment in the Fund
and terminate this Agreement with respect to such subaccount; provided,
however, that such withdrawal and termination will be limited to the extent
required by the foregoing irreconcilable material conflict as determined by
a majority of the disinterested directors of the Fund Board. No charge or
penalty will be imposed as a result of such withdrawal. Any such withdrawal
and termination must take place within six (6) months after the Fund gives
written notice to the Company that this provision is being implemented.
Until the end of such six-month period the Advisor and Fund will, to the
extent permitted by law and any exemptive relief previously granted to the
Fund, continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Fund Board will determine whether any
proposed action adequately remedies any irreconcilable material conflict,
but in no event will the Fund be required to establish a new funding medium
for the Contracts. The Company will not be required by Section 7.3 to
establish a new funding medium for the Contracts if an offer to do so has
been declined by vote of a majority of contractowners affected by the
irreconcilable material conflict.
7.7. The Company will at least annually submit to the Fund Board such reports,
materials or data as the Fund Board may reasonably request so that the Fund
Board may fully carry out the duties imposed upon it as delineated in the
Mixed and Shared Funding Exemptive Order, and said reports, materials and
data will be submitted more frequently if deemed appropriate by the Fund
Board.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of
the 1940 Act or the rules promulgated thereunder with respect to mixed
or shared funding (as defined in the Mixed and Shared Funding Exemptive
Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order, then: (a)
the Fund and/or the Participating Insurance Companies, as appropriate,
will take such steps as may be necessary to comply with Rules 6e-2 and
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.5, 3.6, 7.1, 7.2, 7.3, 7.4,
and 7.5 of this Agreement will continue in effect only to the extent
that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Fund, the
Underwriter, and each person, if any, who controls or is associated with
the Fund or the Underwriter within the meaning of such terms under the
federal securities laws and any director, trustee, officer, partner,
employee or agent of the foregoing (collectively, the "Indemnified Parties"
for purposes of this Section 8.1) against any and all losses, claims,
expenses, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including reasonable
legal and other expenses), to which the Indemnified Parties may become
subject under any statute, regulation, at common law or otherwise, insofar
as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
(1) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact
contained in the registration statement, prospectus
or statement of additional information for the
Contracts or contained in the Contracts or sales
literature or other promotional material 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 or necessary to
make such statements not misleading in light of the
circumstances in which they were made; provided that
this agreement to indemnify will not apply as to any
Indemnified Party if such statement or omission or
such alleged statement or omission was made in
reliance upon and in conformity with information
furnished to the Company by or on behalf of the
Underwriter or the Fund for use in the registration
statement, prospectus or statement of additional
information for the Contracts or in the Contracts or
sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(2) arise out of or as a result of statements or
representations by or on behalf of the Company (other
than statements or representations contained in the
Fund registration statement, prospectus, statement of
additional information or sales literature or other
promotional material of the Fund (or any amendment or
supplement) not supplied by the Company or persons
under its control) or wrongful conduct of the Company
or persons under its control, with respect to the
sale or distribution of the Contracts or Fund shares;
or
(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund
registration statement, prospectus, statement of
additional information or sales literature or other
promotional material of the Fund (or amendment or
supplement) or the omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make such statements not
misleading in light of the circumstances in which
they were made, if such a statement or omission was
made in reliance upon and in conformity with
information furnished to the Fund by or on behalf of
the Company or persons under its control; or
(4) arise as a result of any failure by the Company to
provide the services and furnish the materials under
the terms of this Agreement; or
(5) arise out of any material breach of any
representation and/or warranty made by the Company in
this Agreement or arise out of or result from any
other material breach by the Company of this
Agreement;
except to the extent provided in Sections 8.1(b) and 8.4
hereof. This indemnification will be in addition to any
liability that the Company otherwise may have.
(b) No party will be entitled to indemnification under Section
8.1(a) if such loss, claim, damage, liability or litigation is
due to the willful misfeasance, bad faith, or gross negligence
in the performance of such party's duties under this
Agreement, or by reason of such party's reckless disregard of
its obligations or duties under this Agreement by the party
seeking indemnification.
(c) The Indemnified Parties promptly will notify the Company of
the commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Fund shares or the Contracts
or the operation of the Fund.
8.2. Indemnification By The Underwriter
(a) The Underwriter agrees to indemnify and hold harmless the
Company and each person, if any, who controls or is associated
with the Company within the meaning of such terms under the
federal securities laws and any director, trustee, officer,
partner, employee or agent of the foregoing (collectively, the
"Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with the
written consent of the Underwriter) or litigation (including
reasonable legal and other expenses) to which the Indemnified
Parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(1) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the registration statement, prospectus
or statement of additional information for the Fund
or sales literature or other promotional material of
the Fund (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated or necessary to
make such statements not misleading in light of the
circumstances in which they were made; provided that
this agreement to indemnify will not apply as to any
Indemnified Party if such statement or omission or
such alleged statement or omission was made in
reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf
of the Company for use in the registration statement,
prospectus or statement of additional information for
the Fund or in sales literature of the Fund (or any
amendment or supplement thereto) or otherwise for use
in connection with the sale of the Contracts or Fund
shares; or
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts or in the
Contract or Fund registration statements,
prospectuses or statements of additional information
or sales literature or other promotional material for
the Contracts or of the Fund (or any amendment or
supplement) not supplied by the Underwriter or the
Fund or persons under the control of the Underwriter
or the Fund respectively) or wrongful conduct of the
Underwriter or the Fund or persons under the control
of the Underwriter or the Fund respectively, with
respect to the sale or distribution of the Contracts
or Fund shares; or
(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, statement of
additional information or sales literature or other
promotional material covering the Contracts (or any
amendment or supplement thereto), or the omission or
alleged omission to state therein a material fact
required to be stated or necessary to make such
statement or statements not misleading in light of
the circumstances in which they were made, if such
statement or omission was made in reliance upon and
in conformity with information furnished to the
Company by or on behalf of the Underwriter or the
Fund or persons under the control of the Underwriter
or the Fund; or
(4) arise as a result of any failure by the Fund or the
Underwriter to provide the services and furnish the
materials under the terms of this Agreement
(including a failure, whether unintentional or in
good faith or otherwise, to comply with the
diversification requirements and procedures related
thereto specified in Article VI of this Agreement);
or
(5) arise out of or result from any material breach of
any representation and/or warranty made by the
Underwriter or the Fund in this Agreement, or arise
out of or result from any other material breach of
this Agreement by the Underwriter or the Fund;
except to the extent provided in Sections 8.2(b) and 8.4
hereof.
(b) No party will be entitled to indemnification under Section
8.2(a) if such loss, claim, damage, liability or litigation is
due to the willful misfeasance, bad faith, or gross negligence
in the performance of such party's duties under this
Agreement, or by reason of such party's reckless disregard of
its obligations or duties under this Agreement by the party
seeking indemnification.
(c) The Indemnified Parties will promptly notify the Underwriter
and the Fund of the commencement of any litigation,
proceedings, complaints or actions by regulatory authorities
against them in connection with the issuance or sale of the
Contracts or the operation of the Account.
8.3. Indemnification By the Fund
(a) The Fund agrees to indemnify and hold harmless the Company and each person,
if any, who controls or is associated with the Company within the meaning
of such terms under the federal securities laws and any director, trustee,
officer, partner, employee or agent of the foregoing (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements, are related to the operations
of the Fund and:
(1) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification and other
qualification requirements specified in Article VI);
or
(2) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund;
or
(3) arise out of or result from the incorrect or untimely
calculation or reporting of the daily net asset value
per share or dividend or capital gain distribution
rate;
except to the extent provided in Sections 8.3(b) and 8.4
hereof.
(b) No party will be entitled to indemnification under Section
8.3(a) if such loss, claim, damage, liability or litigation is
due to the willful misfeasance, bad faith, or gross negligence
in the performance of such party's duties under this
Agreement, or by reason of such party's reckless disregard of
its obligations and duties under this Agreement by the party
seeking indemnification.
(c) The Indemnified Parties will promptly notify the Fund of the
commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Contracts or the operation of
the Account.
(d) It is understood and expressly stipulated that neither the
holders of shares of the Fund nor any Fund Board member,
officer, agent or employee of the Fund shall be personally
liable hereunder, nor shall any resort be had to other private
property for the satisfaction of any claim or obligation
hereunder, but the Fund only shall be liable.
8.4. Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.4) will not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification
under this Article VIII ("Indemnified Party" for the purpose of this
Section 8.4) unless such Indemnified Party will have notified the
Indemnifying Party in writing within a reasonable time after the
summons or other first legal process giving information of the nature
of the claim will have been served upon such Indemnified Party (or
after such party will have received notice of such service on any
designated agent), but failure to notify the Indemnifying Party of any
such claim will not relieve the Indemnifying Party from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of the indemnification provision of
this Article VIII, except to the extent that the failure to notify
results in the failure of actual notice to the Indemnifying Party and
such Indemnifying Party is damaged solely as a result of failure to
give such notice. In case any such action is brought against the
Indemnified Party, the Indemnifying Party will be entitled to
participate, at its own expense, in the defense thereof. The
Indemnifying Party also will be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After
notice from the Indemnifying Party to the Indemnified Party of the
Indemnifying Party's election to assume the defense thereof, the
Indemnified Party will bear the fees and expenses of any additional
counsel retained by it, and the Indemnifying Party will not be liable
to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation,
unless: (a) the Indemnifying Party and the Indemnified Party will 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 will not be liable for any settlement of
any proceeding effected without its written consent but if settled with
such consent or if there is a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and
against any loss or liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement will be entitled to
the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII will survive
any termination of this Agreement.
ARTICLE IX. Applicable Law
9.1. This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Minnesota.
9.2. This Agreement will be subject to the provisions of the 1933 Act, the
1934 Act and the 1940 Act, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the SEC may grant (including, but not limited to, the
Mixed and Shared Funding Exemptive Order) and the terms hereof will be
interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement will terminate:
(a) at the option of any party, with or without cause, with
respect to some or all of the Designated Portfolios, upon
sixty (60) days advance written notice to the other parties
or, if later, upon receipt of any required exemptive relief or
orders from the SEC, unless otherwise agreed in a separate
written agreement among the parties; or
(b) at the option of the Company, upon receipt of the Company's
written notice by the other parties, with respect to any
Designated Portfolio if shares of the Designated Portfolio are
not reasonably available to meet the requirements of the
Contracts as determined in good faith by the Company; or
(c) at the option of the Company, upon receipt of the Company's
written notice by the other parties, with respect to any
Designated Portfolio in the event any of the Designated
Portfolio's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
Company; or
(d) at the option of the Fund, upon receipt of the Fund's written
notice by the other parties, upon institution of formal
proceedings against the Company by the NASD, the SEC, the
insurance commission of any state or any other regulatory body
regarding the Company's duties under this Agreement or related
to the sale of the Contracts, the administration of the
Contracts, the operation of the Account, or the purchase of
the Fund shares, provided that the Fund determines in its sole
judgment, exercised in good faith, that any such proceeding
would have a material adverse effect on the Company's ability
to perform its obligations under this Agreement; or
(e) at the option of the Company, upon receipt of the Company's
written notice by the other parties, upon institution of
formal proceedings against the Fund or the Underwriter by the
NASD, the SEC, or any state securities or insurance department
or any other regulatory body, regarding the Fund's or the
Underwriter's duties under this Agreement or related to the
sale of Fund shares or the administration of the Fund,
provided that the Company determines in its sole judgment,
exercised in good faith, that any such proceeding would have a
material adverse effect on the Fund's or the Underwriter's
ability to perform its obligations under this Agreement; or
(f) at the option of the Company, upon receipt of the Company's
written notice by the other parties, if the Fund ceases to
qualify as a Regulated Investment Company under Subchapter M
of the Internal Revenue Code, or under any successor or
similar provision, or if the Company reasonably and in good
faith believes that the Fund may fail to so qualify; or
(g) at the option of the Company, upon receipt of the Company's
written notice by the other parties, with respect to any
Designated Portfolio if the Fund fails to meet the
diversification requirements specified in Article VI hereof or
if the Company reasonably and in good faith believes the Fund
may fail to meet such requirements; or
(h) at the option of any party to this Agreement, upon written
notice to the other parties, upon another party's material
breach of any provision of this Agreement; or
(i) at the option of the Company, if the Company determines in its
sole judgment exercised in good faith, that either the Fund or
the Underwriter has suffered a material adverse change in its
business, operations or financial condition since the date of
this Agreement or is the subject of material adverse publicity
which is likely to have a material adverse impact upon the
business and operations of the Company, such termination to be
effective sixty (60) days' after receipt by the other parties
of written notice of the election to terminate; or
(j) at the option of the Fund or the Underwriter, if the Fund or
Underwriter respectively, determines in its sole judgment
exercised in good faith, that the Company has suffered a
material adverse change in its business, operations or
financial condition since the date of this Agreement or is the
subject of material adverse publicity which is likely to have
a material adverse impact upon the business and operations of
the Fund or the Underwriter, such termination to be effective
sixty (60) days' after receipt by the other parties of written
notice of the election to terminate; or
(k) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the
contractowners having an interest in the Account (or any
subaccount) to substitute the shares of another investment
company for the corresponding Designated Portfolio shares of
the Fund in accordance with the terms of the Contracts for
which those Designated Portfolio shares had been selected to
serve as the underlying investment media. The Company will
give sixty (60) days' prior written notice to the Fund of the
date of any proposed vote or other action taken to replace the
Fund's shares; or
(l) at the option of the Company or the Fund upon a determination
by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable
material conflict exists among the interests of: (1) all
contractowners of variable insurance products of all separate
accounts; or (2) the interests of the Participating Insurance
Companies investing in the Fund as set forth in Article VII of
this Agreement; or
(m) at the option of the Fund in the event any of the Contracts
are not issued or sold in accordance with applicable federal
and/or state law. Termination will be effective immediately
upon such occurrence without notice.
10.2. Notice Requirement
(a) No termination of this Agreement will be effective unless and
until the party terminating this Agreement gives prior written
notice to all other parties of its intent to terminate, which
notice will set forth the basis for the termination.
(b) In the event that any termination of this Agreement is based
upon the provisions of Article VII, such prior written notice
will be given in advance of the effective date of termination
as required by such provisions.
10.3. Effect of Termination
Notwithstanding any termination of this Agreement, the Fund and the
Underwriter will, at the option of the Company, 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 Portfolios (as in effect on such date), redeem
investments in the Portfolios and/or invest in the Portfolios upon the
making of additional purchase payments under the Existing Contracts.
The parties agree that this Section 10.3 will not apply to any
terminations under Article VII and the effect of such Article VII
terminations will be governed by Article VII of this Agreement.
10.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII to indemnify other parties will survive
and not be affected by any termination of this Agreement. In addition,
with respect to Existing Contracts, all provisions of this Agreement
also will survive and not be affected by any termination of this
Agreement.
ARTICLE XI. Notices
11.1 Any notice will be deemed duly given when sent by registered or
certified mail to the other party at the address of such party set
forth below or at such other address as such party may from time to
time specify in writing to the other parties.
If to the Company:
American Enterprise Life Insurance Company
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
President
With a simultaneous copy to:
Law Department (Unit 52)
American Enterprise Life Insurance Company
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000
If to the Fund or the Underwriter:
Templeton Variable Products Series Fund,
Franklin Xxxxxxxxx Variable Insurance Products Trust
or Franklin Xxxxxxxxx Distributors, Inc.
000 Xxxxxxx Xxxxxx
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Secretary
ARTICLE XII. Miscellaneous
12.1. All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither
the directors, trustees, officers, partners, employees, agents or
shareholders assume any personal liability for obligations entered into
on behalf of the Fund.
12.2.The Fund and the Underwriter acknowledge that the identities of the
customers of the Company or any of its affiliates (collectively the
"Protected Parties" for purposes of this Section 12.2), 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 the Company's
performance of its duties under this Agreement are the valuable property of
the Protected Parties. The Fund and the Underwriter 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 the Fund or
the Underwriter from information supplied to them by the Protected Parties'
customers who also maintain accounts directly with the Fund or the
Underwriter, the Fund and the Underwriter 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 the Company's
prior written consent; or (b) as required by law or judicial process. The
Fund and the Underwriter acknowledge that any breach of the agreements in
this Section 12.2 would result in immediate and irreparable harm to the
Protected Parties for which there would be no adequate remedy at law and
agree that in the event of such a breach, the Protected Parties will be
entitled to equitable relief by way of temporary and permanent injunctions,
as well as such other relief as any court of competent jurisdiction deems
appropriate.
12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
12.5. If any provision of this Agreement will be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement will not be affected thereby.
12.6.This Agreement will not be assigned by any party hereto without the prior
written consent of all the parties.
12.7. Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including without limitation
the SEC, the NASD and state insurance regulators) and will permit each
other and such authorities reasonable access to its books and records
in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby. The Fund agrees that
the Company will have the right to inspect, audit and copy all records
pertaining to the performance of services under this Agreement pursuant
to the requirements of any state insurance department.
12.8 Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or board action, as
applicable, by such party and when so executed and delivered this
Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms.
12.9. The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts,
the Accounts or the Designated Portfolios of the Fund or other
applicable terms of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed hereto as of the date specified below.
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
SEAL By:
Name:
Title:
ATTEST
By:
Name:
Title:
TEMPLETON VARIABLE PRODUCTS
SERIES FUND
SEAL By:
Name:
Title:
FRANKLIN XXXXXXXXX VARIABLE INSURANCE PRODUCTS TRUST
SEAL By:
Name:
Title:
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
SEAL By:
Name:
Title:
Schedule 1
PARTICIPATION AGREEMENT
By and Among
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
And
TEMPLETON VARIABLE PRODUCTS SERIES FUND
And
FRANKLIN XXXXXXXXX VARIABLE INSURANCE PRODUCTS TRUST
And
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
The following separate accounts of American Enterprise Life Insurance Company
are permitted in accordance with the provisions of this Agreement to invest in
Designated Portfolios of the Fund shown in Schedule 2:
American Enterprise Variable Annuity Account, established July 15, 1987
American Enterprise Variable Life Account, established July 15, 1987
, 1999
Schedule 2
PARTICIPATION AGREEMENT
By and Among
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
And
TEMPLETON VARIABLE PRODUCTS SERIES FUND
And
FRANKLIN XXXXXXXXX VARIABLE INSURANCE PRODUCTS TRUST
And
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
The Separate Account(s) shown on Schedule 1 may invest in the following
Designated Portfolios of the Templeton Variable Products Series Fund:
Xxxxxxxxx International Fund - Class 2
The Separate Account(s) shown on Schedule 1 may invest in the following
Designated Portfolios of the Franklin Xxxxxxxxx Variable Insurance Products
Trust:
Income Securities Fund - Class 2
Xxxxxxxxx International Smaller Companies Fund - Class 2 Mutual Shares
Securities Fund - Class 2 Real Estate Securities Fund - Class 2 Small
Cap Fund - Class 2 Value Securities Fund - Class 2
, 1999
Schedule 3
PARTICIPATION AGREEMENT
By and Among
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
And
TEMPLETON VARIABLE PRODUCTS SERIES FUND
And
FRANKLIN XXXXXXXXX VARIABLE INSURANCE PRODUCTS TRUST
And
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
RULE 12b-1 PLANS
Compensation Schedule
Each portfolio named below shall pay the following amounts pursuant to the terms
and conditions referenced below under it Class 2 12b-1 Distribution Plan, stated
as a percentage per year of Class 2's average daily net assets represented by
shares of Class 2.
Portfolio Name Maximum Annual Payment Rate
TVP Xxxxxxxxx International Fund 0.25%
FTVIP Income Securities Fund 0.25%
FTVIP Xxxxxxxxx International Smaller Companies Fund
0.25%
FTVIP Mutual Shares Securities Fund 0.25%
FTVIP Real Estate Securities Fund 0.25%
FTVIP Small Cap Fund 0.25%
FTVIP Value Securities Fund 0.25%
Agreement Provisions
If the Company, on behalf of any Account, purchases Fund Portfolio shares
("Eligible Shares") which are subject to a Rule 12b-1 Plan adopted under the
1940 Act (the "Plan"), the Company may participate in the Plan.
To the extent the Company or its affiliates, agents or designees (collectively
"you") provide administrative and other services which assist in the promotion
and distribution of Eligible Shares or Variable Contracts offering Eligible
Shares, the Underwriter, the Fund or their affiliates (collectively, "we") may
pay you a Rule 12b1 fee. "Administrative and other services" may include, but
are not limited to, furnishing personal services to owners of Contracts which
may invest in Eligible Shares ("Contract Owners"), answering routine inquiries
regarding a Portfolio, coordinating responses to Contract Owner inquiries
regarding the Portfolios, maintaining such accounts or providing such other
enhanced services as a Fund Portfolio or Contract may require, maintaining
customer accounts and records, or providing other services eligible for service
fees as defined under NASD rules. Your acceptance of such compensation is your
acknowledgment that eligible services have been rendered. All Rule 12b-1 fees
shall be based on the value of Eligible Shares owned by the Company on behalf of
its Accounts, and shall be calculated on the basis and at the rates set forth in
the compensation Schedule stated above. The aggregate annual fees paid pursuant
to each Plan shall not exceed the amounts stated as the "annual maximums" in the
Portfolio's prospectus, unless an increase is approved by shareholders as
provided in the Plan. These maximums shall be a specified percent of the value
of a Portfolio's net assets attributable to Eligible Shares owned by the Company
on behalf of its Accounts (determined in the same manner as the Portfolio uses
to compute its net assets as set forth in its effective Prospectus).
You shall furnish us with such information as shall reasonably be requested by
the Fund's Boards of Trustees ("Trustees") with respect to the Rule 12b-1 fees
paid to you pursuant to the Plans. We shall furnish to the Trustees, for their
review on a quarterly basis, a written report of the amounts expended under the
Plans and the purposes for which such expenditures were made.
The Plans and provisions of any agreement relating to such Plans must be
approved annually by a vote of the Trustees, including the Trustees who are not
interested persons of the Fund and who have no financial interest in the Plans
or any related agreement ("Disinterested Trustees"). Each Plan may be terminated
at any time by the vote of a majority of the disinterested Trustees, or by a
vote of a majority of the outstanding shares as provided in the Plan on sixty
(60) days' written notice, without payment of any penalty. The Plans may also be
terminated by any act that terminates the administration agreement between
Franklin advisers, Inc. or Xxxxxxxxx Investment Counsel, Inc. or their
affiliates and the Fund. Continuation of the Plans is also conditioned on
Disinterested Trustees being ultimately responsible for selecting and nominating
any new Disinterested Trustees. Under Rule 12b-1, the Trustees have a duty to
request and evaluate, and persons who are party to any agreement related to a
Plan have a duty to furnish, such information as may reasonably be necessary to
an informed determination of whether the Plan or any agreement should be
implemented or continued. Under Rule 12b-1, the Fund in permitted to implement
or continue Plans or the provisions of any agreement relating to such Plans from
year-to-year only if, based on certain legal considerations, the Trustees are
able to conclude that the Plans will benefit each affected Fund Portfolio and
class. Absent such yearly determination, the Plans must be terminated as set
forth above. In the event of the termination of the Plans for any reason, the
provisions of this Schedule 3 relating to the Plans will also terminate.
Any obligation assumed by the Fund pursuant to this Agreement shall be limited
in all cases to the assets of the Fund and no person shall seek satisfaction
thereof from shareholders of the Fund. You agree to waive payment of any amounts
payable to you by Underwriter under a Plan until such time as the Underwriter
has received such fee from the Fund.
The provisions of the plans shall control over the provisions of the
Participation Agreement, including this Schedule 3, in the event of any
inconsistency.
You agree to provide complete disclosure as required by all applicable statues,
rules and regulations of all 12b-1 fees received from us in the prospectus of
the contracts.
, 1999
