PARTICIPATION AGREEMENT
By and Among
XXXXXXX VARIABLE SERIES, INC.
And
XXXXXXX ASSET MANAGEMENT CO.
And
XXXXXXX DISTRIBUTORS INC.
And
IDS LIFE INSURANCE COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of this 14th day of
April, 2000, by and among XXXXXXX VARIABLE SERIES, INC., an open-end management
investment company organized under the laws of Maryland (the "Fund"), XXXXXXX
ASSET MANAGEMENT CO., a corporation organized under the laws of Delaware (the
"Adviser"), XXXXXXX DISTRIBUTORS INC., a corporation organized under the laws of
Delaware (the "Distributor) (the Adviser and the Distributor collectively
referred to as "Xxxxxxx') and IDS LIFE INSURANCE COMPANY OF NEW YORK, a New York
life insurance company (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").
WHEREAS, the Fund was established for the purpose of serving as the investment
vehicle for insurance company separate accounts supporting variable annuity
contracts and variable life insurance policies to be offered by insurance
companies that have entered into participation agreements with the Fund and
Xxxxxxx (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; and
WHEREAS, the Fund has received an order from the Securities & Exchange
Commission (the "SEC") granting Participating Insurance Companies and their
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 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 "Exemptive Order"); and
WHEREAS, the Company has registered or will register certain variable annuity
contracts and/or variable life insurance polices (the "Contracts") under the
Securities Act of 1933 (the "1933 Act"); and
WHEREAS, the Distributor 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 with 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 to
this Agreement, as may be amended from time to time, (the "Portfolios") on
behalf of the Account to fund the Contracts; and
WHEREAS, under the terms and conditions set forth in this Agreement, Xxxxxxx
desires to make shares of the Fund available as investment options under the
Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the parties agree as
follows:
ARTICLE I. Sale and Redemption of Fund Shares
1.1. The Fund will sell to the Company those shares of the 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
agent). Shares of a particular Portfolio of the Fund will be ordered in
such quantities and at such times as determined by the Company to be
necessary to meet the requirements of the Contracts. The Board of Directors
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.
1.2. The Fund will redeem any full or fractional shares of any Portfolio when
requested by the Company on behalf of an Account at the net asset value
next computed after receipt by the Fund (or its agent) of the
request for redemption, as established in accordance with the provisions of
the then current prospectus of the Fund.
1.3. For purposes of Sections 1.1 and 1.2, the Fund hereby appoints the Company
as its agent for the limited purpose of receiving and accepting purchase
and redemption orders resulting from investment in and payments under the
Contracts. Receipt by the Company will constitute receipt by the Fund
provided that: (a) such orders are received by the Company in good order
prior to the time the net asset value of each Portfolio is priced in
accordance with its prospectus; and (b) the Fund receives notice of such
orders by 10:00 a.m. Central 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.
1.4. The Company will pay for a purchase order on the same Business Day as the
Fund receives notice of the purchase order in accordance with Section 1.3.
The Fund will pay for a redemption order on the same Business Day as the
Fund receives notice of the redemption order in accordance with Section 1.3
and in the manner established from time to time by the Fund, except that
the Fund reserves the right to suspend payment consistent with Section
22(e) of the 1940 Act and any rules thereunder. In any event, absent
extraordinary circumstances specified in Section 22(e) of the 1940 Act, the
Fund will make such payment within five (5) calendar days after the date
the redemption order is placed in order to enable the Company to pay
redemption proceeds within the time specified in Section 22(e) of the 1940
Act or such shorter period of time as may be required by law. All payments
will be made in federal funds transmitted by wire or other method agreed to
by the parties.
1.5. 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.
1.6. 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 Portfolio's shares.
The Company hereby elects to receive all such dividends and distributions
as are payable on the Portfolio shares in the form of additional shares of
that 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.
1.7. The Fund will make the net asset value per share for each 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 5:30 p.m.
Central Time, but in no event later than 6:00 p.m. Central Time each
Business Day. The Fund will notify the Company as soon as possible if it is
determined that the net asset value per share will be available after 6:00
p.m. Central Time on any Business Day, and the Fund and the Company will
mutually agree upon a final deadline for timely receipt of the net asset
value on such Business Day.
1.8. Any material errors in the calculation of net asset value, dividends or
capital gain information will be reported immediately upon discovery to the
Company. An error will be deemed "material" based on the Fund's
interpretation of the SEC's position and policy with regard to materiality,
as it may be modified from time to time. If the Company is provided with
materially incorrect net asset value information, the Company will be
entitled to an adjustment to the number of shares purchased or redeemed to
reflect the correct net asset value per share. Neither the Fund, Xxxxxxx
nor any of their affiliates will be liable for any information provided to
the Company pursuant to this Agreement which information is based on
incorrect information supplied by or on behalf of the Company to the Fund
or Xxxxxxx.
1.9. The Fund agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified
pension and retirement plans to the extent permitted by the Exemptive
Order. No shares of any Portfolio will be sold directly to the general
public. The Company agrees that Fund shares will be used only for the
purposes of funding the Contracts and Accounts listed in Schedule 1, as
amended from time to time.
1.10.The Fund agrees that all Participating Insurance Companies will have the
obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 3.4 and
Article IV of this Agreement.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that:
(a) it is an insurance company duly organized and in good standing under
applicable law;
(b) it has legally and validly established or will legally and validly
establish each Account as a separate account under applicable state
law;
(c) it has registered or will register to the extent necessary each
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;
(d) it has filed or will file to the extent necessary the Contracts'
registration statements under 1933 Act and these registration
statements will be declared effective by the SEC prior to the sale of
any Contracts;
(e) the Contracts will be filed and qualified and/or approved for sale, as
applicable, under the insurance laws and regulations of the states in
which the Contracts will be offered prior to the sale of Contracts in
such states; and
(f) it 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, but in any event it will maintain a current
effective Contracts' and Account's registration statement for so long
as the Contracts are outstanding unless the Company has supplied the
Fund with an SEC no-action letter, opinion of counsel or other
evidence satisfactory to the Fund's counsel to the effect that
maintaining such registration statement on a current basis is no
longer required.
2.2. The Company represents and warrants that the Contracts are intended to be
treated as annuity or life insurance contracts under applicable provisions
of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"), and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Adviser immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.3. The Fund represents and warrants that:
(a) it is duly organized and validly existing under applicable state law;
(b) it has registered with the SEC as an open-end management investment
company under the 1940 Act;
(c) Fund shares of the Portfolios offered and sold pursuant to this
Agreement will be registered under the 1933 Act and duly authorized
for issuance in accordance with applicable law;
(d) it is and will remain registered under the 1940 Act for as long as
such shares of the Portfolios are sold;
(e) it 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;
(f) it is currently qualified as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code, it will make every effort
to maintain such qualification (under Subchapter M or any successor or
similar provision) and 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; and
(g) its investment objectives, policies and restrictions comply with
applicable state securities laws as they may apply to the Fund and it
will register and qualify the shares of the Portfolios for sale in
accordance with the laws of the various states to the extent deemed
advisable by 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 Adviser 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.
2.4. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it reserves the right to make such payments in the
future. To the extent that the Fund decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have its Fund
Board, a majority of whom are not "interested" persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.5. The Fund and Xxxxxxx represent and warrant that they will invest money from
the Contracts in such a manner as to ensure that the Contracts will be
treated as variable annuity contracts and variable life insurance policies
under the Internal Revenue Code and the regulations issued thereunder.
Without limiting the scope of the foregoing, the Fund and the Adviser
further represent and warrant that they 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 representation and warranty by the Fund and/or the Adviser, they 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.
2.6. The Adviser represents and warrants that:
(a) it is and will remain duly registered under all applicable federal and
state securities laws; and
(b) it will perform its obligations for the Fund in accordance with
applicable state and federal securities laws and that it will notify
the Company promptly if for any reason it is unable to perform its
obligations under this Agreement.
2.7. Each party represents and warrants that, as applicable, all of its
directors, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of the
Fund are and will continue to be at all times covered by a blanket fidelity
bond or similar coverage 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. Obligations of the Parties
3.1. The Fund will prepare and be responsible for filing with the SEC and any
state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction
solicitation materials), prospectuses and statements of additional
information of the Fund. The Fund will bear the costs of registration and
qualification of its shares, preparation and filing of documents listed in
this Section 3.1 and all taxes to which an issuer is subject on the
issuance and transfer of its shares.
3.2. At the option of the Company, the Fund will either: (a) provide the Company
with as many copies of the Fund's current prospectus, statement of
additional information, annual report, semi-annual report and other
shareholder communications, including any amendments or supplements to any
of the foregoing, as the Company will reasonably request; or (b) provide
the Company with a camera-ready copy, computer disk or other medium agreed
to by the parties of such documents in a form suitable for printing. The
Fund or the Distributor will bear the cost of typesetting and printing such
documents and of distributing such documents to existing Contract owners.
The Company will bear the cost of distributing such documents to
prospective Contract owners and applicants as required.
3.3. The Fund, at its expense, either will:
(a) distribute its proxy materials directly to the appropriate Contract
owners; or
(b) provide the Company or its mailing agent with copies of its proxy
materials in such quantity as the Company will reasonably require and
the Company will distribute the materials to existing Contract owners
and will xxxx the Fund for the reasonable cost of such distribution.
The Fund will bear the cost of tabulation of proxy votes.
3.4. If and to the extent required by law the Company will:
(a) provide for the solicitation of voting instructions from Contract
owners;
(b) vote the shares of the Portfolios held in the Account in accordance
with instructions received from Contract owners; and
(c) vote shares of the Portfolios held in the Account for which no timely
instructions have been received, in the same proportion as shares of
such Portfolio for which instructions have been received from the
Company's Contract owners;
so long as and to the extent that the SEC continues to interpret the
1940 Act to require pass-through voting privileges for variable
contract owners. 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.
3.5. 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.
3.6. The Company will prepare and be responsible for filing with the SEC and any
state regulators requiring such filing all shareholder reports, notices,
prospectuses and statements of additional information of the Contracts. The
Company will bear the cost of registration and qualification of the
Contracts and preparation and filing of documents listed in this Section
3.6. The Company also will bear the cost of typesetting, printing and
distributing the documents listed in this Section 3.6 to existing and
prospective Contract owners.
3.7. The Company will furnish, or will cause to be furnished, to the Fund or the
Adviser, each piece of sales literature or other promotional material in
which the Fund or the Adviser is named, at least ten (10) Business Days
prior to its use. No such material will be used if the Fund or Xxxxxxx
reasonably objects to such use within five (5) Business Days after receipt
of such material.
3.8. The Company will not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in 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 Adviser for distribution, or in sales
literature or other material provided by the Fund or by the Adviser, except
with permission of the Fund or the Adviser. The Fund and
the Adviser agree to respond to any request for approval on a prompt
and timely basis. Nothing in this Section 3.8 will be construed as
preventing the Company or its employees or agents from giving advice
on investment in the Fund.
3.9. Xxxxxxx will provide within ten (10) Business Days following the end
of each calendar quarter, the Portfolio information, (including, but not
limited to, Portfolio composition), that is necessary for the Company to
update its sales literature or other promotional materials. Xxxxxxx will
provide such information via Excel spreadsheet diskette format or in
electronic transmission to the Company,
3.10. The Fund or Xxxxxxx 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 separate 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.
3.11. The Fund and Xxxxxxx 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 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 Contract owners, 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.
3.12. 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 that relate to the Fund or its shares at the request
of the Company. The Fund will provide to the Company all amendments to
any of the above contemporaneously with the filing of such document
with the SEC or the NASD.
3.13. 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.
3.14. For purposes of this Article III, 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.
3.15. The Fund and the Adviser hereby consent to the Company's use of the
name [insert appropriate trademarked or service marked name or names]
in connection with marketing the Contracts, subject to the terms of
Sections 3.7 and 3.8 of this Agreement. Such consent will terminate
with the termination of this Agreement.
3.16. The Adviser will be responsible for calculating the performance
information for the Fund. The Company will be responsible for calculating
the performance information for the Contracts. The Adviser will be liable
to the Company for any material mistakes it makes in calculating the
performance information for the Fund which cause losses to the Company.
The Company will be liable to the Adviser for any material mistakes it
makes in calculating the performance information for the Contracts which
cause losses to the Adviser. Each party will be liable for any material
mistakes it makes in reproducing the performance information for Contracts
or the Fund, as appropriate. The Fund and the Adviser agree to provide the
Company with performance information for the Fund on a timely basis to
enable the Company to calculate performance information for the Contracts
in accordance with applicable state and federal law.
ARTICLE IV. Potential Conflicts
4.1. The Fund Board will monitor the Fund for the existence of any
irreconcilable material conflict among the interests of the contract owners
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 contract owners; or (f) a decision by an insurer to disregard the
voting instructions of contract owners. The Fund Board will promptly inform
the Company if it determines that an irreconcilable material conflict
exists and the implications thereof. A majority of the Fund Board will
consist of persons who are not "interested" persons of the Fund.
4.2. 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 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 Contract
owner 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.
4.3. 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 contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e.,
variable annuity contract owners or variable life insurance contract
owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected contract owners the
option of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
4.4. If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions, and such disregard
of voting instructions could conflict with the majority of contract owner
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
Adviser 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.
4.5. 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 Adviser 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.
4.6. For purposes of Sections 4.3 through 4.6 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
this Article IV to establish a new funding medium for the Contracts if an
offer to do so has been declined by vote of a majority of Contract owners
affected by the irreconcilable material conflict.
4.7. 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
Exemptive Order, and said reports, materials and data will be submitted
more frequently if deemed appropriate by the Fund Board.
4.8. 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 Exemptive Order) on terms and conditions
materially different from those contained in the 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 3.4, 3.5, 4.1, 4.2, 4.3, 4.4, and 4.5 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 V. Indemnification
5.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Fund, Xxxxxxx,
and each person, if any, who controls or is associated with the Fund
or Xxxxxxx within the meaning of such terms under the federal
securities laws (but not any Participating Insurance Companies) and
any director, trustee, officer, partner, employee or agent of the
foregoing (collectively, the "Indemnified Parties" for purposes of
this Section 5.1) 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 on any untrue statement or alleged
untrue statement 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 Xxxxxxx
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 are based on 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 any amendment or supplement to any of the
foregoing), or the omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which
they were made, if such statement or omission was made in
reliance upon and in conformity with information furnished to the
Fund or Xxxxxxx in writing by or on behalf of the Company or
persons under its control; or
(3) arise out of or are based on any wrongful conduct of, or
violation of applicable federal or state law by, the Company or
persons under its control or subject to its authorization, with
respect to the purchase of Fund shares or the sale, marketing or
distribution of the Contracts; 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 of this Agreement
by the Company or persons under its control or subject to its
authorization;
except to the extent provided in Sections 5.1(b) and 5.3 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 5.1(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.
5.2. Indemnification By Xxxxxxx
(a) Xxxxxxx 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 5.2) against any and all losses, claims, expenses,
damages, liabilities (including amounts paid in settlement with the
written consent of Xxxxxxx) 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 on 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 on the omission or
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 Xxxxxxx or the 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) or otherwise for use in connection with the sale of
the Contracts or Fund shares; or
(2) arise out of or are based on any untrue statement or alleged
untrue statement of a material fact contained in the Contract
registration statement, prospectus or statement of additional
information or sales literature or other promotional material for
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 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 in writing by or on behalf
of Xxxxxxx or persons under its control; or
(3) arise out of or are based on any wrongful conduct of, or
violation of applicable federal and state law by, Xxxxxxx or the
Fund or persons under their respective control or subject to
their authorization with respect to the sale of Fund shares; or
(4) arise as a result of any failure by the Fund, Xxxxxxx or persons
under their respective control or subject to their authorization
to provide the services and furnish the materials under the terms
of this Agreement including, but not limited to, a failure,
whether unintentional or in good faith or otherwise, to comply
with the diversification requirements and procedures related
thereto specified in Section 2.5 of this Agreement or any
material errors in or untimely calculation or reporting of the
daily net asset value per share or dividend or capital gain
distribution rate (referred to in this Section 5.2(a)(4) as an
"error"); provided, that the foregoing will not apply where such
error is the result of incorrect information supplied by or on
behalf of the Company to the Fund or Xxxxxxx, and will be limited
to (i) reasonable administrative costs necessary to correct such
error, and (ii) amounts which the Company has
paid out of its own resources to make Contract owners whole as a
result of such error; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by Xxxxxxx or the Fund in
this Agreement, or arise out of or result from any other material
breach of this Agreement by Xxxxxxx or the Fund or persons under
their respective control or subject to their authorization;
except to the extent provided in Sections 5.2(b) and 5.3 hereof.
(b) No party will be entitled to indemnification under Section 5.2(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 Xxxxxxx 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.
5.3. Indemnification Procedure
Any person obligated to provide indemnification under this Article V
("Indemnifying Party" for the purpose of this Section 5.3) will not be
liable under the indemnification provisions of this Article V with respect
to any claim made against a party entitled to indemnification under this
Article V ("Indemnified Party" for the purpose of this Section 5.3) 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 V, 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
V. The indemnification provisions contained in this Article V will survive
any termination of this Agreement.
5.4. Limitation of Liability
Except as expressly stated herein, as between the parties, in no event will
any party to this Agreement be responsible to any other party for any
incidental, indirect, consequential, punitive or exemplary damages of any
kind arising from this Agreement, including without limitation, lost
revenues, loss of profits or loss of business.
5.5. Arbitration
Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, will be settled by arbitration administered by the
American Arbitration Association in accordance with its Commercial
Arbitration Rules and Title 9 of the U.S. Code. Judgment on the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. The number of arbitrators will be three, one of whom will be
appointed by the Company or an affiliate; one of whom will be appointed by
the Fund and/or Xxxxxxx or an affiliate; and the third of whom will be
selected by mutual agreement, if possible, within 30 days of the selection
of the second arbitrator and thereafter by the administering
authority. The place of arbitration will be Minneapolis, Minnesota. The
arbitrators will have no authority to award punitive damages or any other
damages not measured by the prevailing party's actual damages, and may not,
in any event, make any ruling, finding or award that does not conform to
the terms and conditions of this Agreement. Any party may make an
application to the arbitrators seeking injunctive relief to maintain the
status quo until such time as the arbitration award is rendered or the
controversy is otherwise resolved. Any party may apply to any court having
jurisdiction hereof and seek injunctive relief in order to maintain the
status quo until such time as the arbitration award is rendered or the
controversy is otherwise resolved.
ARTICLE VI. Applicable Law
6.1. This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Minnesota.
6.2. 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 Exemptive Order) and the
terms hereof will be interpreted and construed in accordance therewith.
ARTICLE VII. Termination
7.1. This Agreement will terminate:
(a) at the option of any party, with or without cause, with respect to
some or all of the 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;
(b) at the option of the Company, upon receipt of the Company's written
notice by the other parties, with respect to any Portfolio if shares
of the 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 Portfolio in the
event any of the 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 Xxxxxxx by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body,
regarding the Fund's or Xxxxxxx'x 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 Xxxxxxx'x 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 Portfolio if the Fund
fails to meet the diversification requirements specified in Article II
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 the Fund or Xxxxxxx 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, if the Fund 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, 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 Contract owners having an
interest in the Account (or any subaccount) to substitute the shares
of another investment company for the corresponding Portfolio shares
of the Fund in accordance with the terms of the Contracts for which
those Portfolio shares had been selected to serve as the underlying
investment media. 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: (i) all contract owners of variable insurance
products of all separate accounts; or (ii) the interests of the
Participating Insurance Companies investing in the Fund as set forth
in Article IV of this Agreement; or
(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.
7.2. Notwithstanding any termination of this Agreement, the Fund and Xxxxxxx
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 7.2 will not apply
to any terminations under Article IV and the effect of such Article IV
terminations will be governed by Article IV of this Agreement.
7.3. The provisions of Article V will survive the termination of this Agreement
and as long as shares of the Fund are held under Existing Contracts in
accordance with Section 7.2, the provisions of this Agreement will survive
the termination of this Agreement with respect to those Existing Contracts.
ARTICLE VIII. Notices
Any notice will be deemed duly given when sent by registered or certified
mail (or other method agreed to by the parties) to each 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:
IDS Life Insurance Company
1765 AXP Financial Center
Xxxxxxxxxxx, XX 00000
Attention: Vice President, Annuities
With a copy to:
Law Department (Unit 52)
IDS Life Insurance Company
50607 AXP Financial Center
Xxxxxxxxxxx, XX 00000
If to the Fund or Xxxxxxx:
Xxxxxxx Group Ltd.
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
ATTN: Xxxxxxxxx Xxxxx
ARTICLE IX. Miscellaneous
9.1. 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.
9.2. Notwithstanding anything to the contrary contained in this Agreement, in
addition to and not in lieu of other provisions in this Agreement:
(a) "Confidential Information" includes but is not limited to all
proprietary and confidential information of the Company and its
subsidiaries, affiliates and licensees (collectively the "Protected
Parties" for purposes of this Section 9.2), including without
limitation all information regarding the customers of the Protected
Parties; or the accounts, account numbers, names, addresses, social
security numbers or any other personal identifier of such customers;
or any information derived therefrom.
(b) The Fund, the Adviser and the Distributor may not use or disclose
Confidential Information for any purpose other than to carry out the
purpose for which Confidential Information was provided to the Fund,
the Adviser and/or the Distributor as set forth in the Agreement; and
the Fund, the Adviser and the Distributor each agree to cause all its
employees, agents and representatives, or any other party to whom the
Fund, the Adviser and/or the Distributor may provide access to or
disclose Confidential Information to limit the use and disclosure of
Confidential Information to that purpose.
(c) The Fund, the Adviser and the Distributor each acknowledges that all
computer programs and procedures or other information developed or
used by the Protected Parties or any of their employees or agents in
connection with the Company's performance of its duties under this
Agreement are the valuable property of the Protected Parties.
(d) The Fund, the Adviser and the Distributor each agrees to implement
appropriate measures designed to ensure the security and
confidentiality of Confidential Information, to protect such
information against any anticipated threats or hazards to the security
or integrity of such information, and to protect against unauthorized
access to, or use of, Confidential Information that could result in
substantial harm or inconvenience to any customer
of the Protected Parties; the Fund, the Adviser and the Distributor
each further agrees to cause all its agents, representatives or
subcontractors of, or any other party to whom the Fund, the Adviser
and/or the Distributor may provide access to or disclose Confidential
Information to implement appropriate measures designed to meet the
objectives set forth in this Section 9.2.
(e) The Fund, the Adviser and the Distributor acknowledge that any breach
of the agreements in this Section 9.2 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. The provisions
of this Section 9.2 shall survive termination of this Agreement.
9.3. 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.
9.4. This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
9.5. 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.
9.6. This Agreement will not be assigned by any party hereto without the prior
written consent of all the parties.
9.7. 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.
9.8. 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.
9.9. 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 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 as of the
date specified above.
XXXXXXX VARIABLE SERIES, INC. XXXXXXX ASSET MANAGEMENT CO.
By: /s/ Xxxxxxx X. Tantikepp By: /s/ Xxxxxxx X. Tantikepp
------------------------- ------------------------
Name: Xxxxxxx X. Tantikepp Name: Xxxxxxx X. Tantikepp
Title: Vice President Title: Senior Vice President
Date: March 4, 2002
XXXXXXX DISTRIBUTORS INC.
By: /s/ Xxxxxxx X. Tantikepp
-------------------------
Name: Xxxxxxx X. Tantikepp
Title: Senior Vice President
Date: Xxxxx 0, 0000
XXX LIFE INSURANCE COMPANY OF NEW ATTEST:
YORK
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxx Xxxxx Xxxxxxx
------------------------- ------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxx Xxxxx Xxxxxxx
Title: Vice President, Annuities Title: Assistant Secretary
Date: January 11, 2002
Schedule 1
PARTICIPATION AGREEMENT
By and Among
XXXXXXX VARIABLE SERIES, INC.
And
XXXXXXX ASSET MANAGEMENT CO.
And
XXXXXXX DISTRIBUTORS INC.
And
IDS LIFE INSURANCE COMPANY
The following Accounts of IDS Life Insurance Company are permitted in accordance
with the provisions of this Agreement to invest in Portfolios of the Fund shown
in Schedule 2:
IDS Life of New York Variable Annuity Account
IDS Life of New York Account 8
Schedule 2
PARTICIPATION AGREEMENT
By and Among
XXXXXXX VARIABLE SERIES, INC.
And
XXXXXXX ASSET MANAGEMENT CO.
And
XXXXXXX DISTRIBUTORS INC.
And
IDS LIFE INSURANCE COMPANY
The Accounts shown on Schedule 1 may invest in the following Portfolios:
Xxxxxxx Variable Series, Inc.: Social Balanced Portfolio
