PARTICIPATION AGREEMENT
By and Among
IDS LIFE INSURANCE COMPANY OF NEW YORK
And
STRONG OPPORTUNITY FUND II, INC.
And
STRONG INVESTOR SERVICES, INC.
And
STRONG INVESTMENTS, INC.
THIS AGREEMENT, made and entered into this 13th day of August, 2001 by and among
IDS Life Insurance Company of New York, organized under the laws of the State of
New York (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"), Strong
Opportunity Fund II, Inc., an open-end management investment company organized
under the laws of the State of Wisconsin (the "Fund"), Strong Investor Services,
Inc., the Fund's transfer agent organized under the laws of the State of
Wisconsin ("Strong") and Strong Investments, Inc., the distributor for the Fund
organized under the laws of the State of Wisconsin ("Distributors").
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 similar 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"). Reference herein to the "Fund"
includes reference to each Portfolio to the extent the context requires; and
WHEREAS, the Fund has received an order from the Securities & Exchange
Commission (the "SEC") granting Participating Insurance Companies and 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 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 that may be imposed on the Company,
the Fund, Distributors and/or Strong 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
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 New York, to set aside and invest
assets attributable to the Contracts; and
WHEREAS, the Company has or will prior to any issuance or sale of the Contracts
register the Account as a unit investment trust under the 1940 Act; 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;
and
WHEREAS, the Company, Strong and Distributors desire to facilitate the purchase
and redemption of shares of the Fund by the Company for the Account on behalf of
the purchasers of Contracts ("Owners") who are the beneficial owners of such
shares through one or more accounts where the Company is the record owner, which
number of such accounts shall be as mutually agreed upon by the parties, in the
Fund (each an "Omnibus Account"), to be maintained of record by the Company,
subject to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Distributors, the Fund and Strong agree as follows:
ARTICLE I. ACCOUNTS
1.1 Each Omnibus Account will be opened based upon the information
contained in Schedule 3 to this Agreement. In connection with each
Omnibus Account, Company represents and warrants that it is authorized
to act on behalf of each Owner effecting transactions in the Omnibus
Account and that the information specified on Exhibit C to this
Agreement is correct.
1.2 The Fund shall designate each Omnibus Account with an account number.
These account numbers will be the means of identification when the
parties are transacting in the Omnibus Accounts. The assets in the
Accounts are segregated from the Company's own assets. Strong agrees to
cause the Omnibus Accounts to be kept open on the Fund's books, as
applicable, regardless of a lack of activity or small position size
except to the extent the Company takes specific action to close an
Omnibus Account.
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1.3 The Company agrees to provide Strong such information as Strong or
Distributors may reasonably request concerning Owners as may be
necessary or advisable to enable Strong and Distributors to comply with
applicable laws, including state "Blue Sky" laws relating to the sales
of shares of the Funds to the Accounts.
ARTICLE 2. Sale of Fund Shares
2.1. Distributors agree on behalf of the Fund to sell to the Company for the
Account and indirectly for the appropriate subaccount thereof 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 Distributors or its designee
of the order for the shares of the Fund all in accordance with the
provisions of this Agreement, the then current prospectus of the Fund
and the Contracts. For purposes of this Section 2.1, the Company will
be the agent of Distributors for receipt of such orders from each
Account and receipt by such agent will constitute receipt by
Distributors. On each day that the Fund is open for business (a
"Business Day"), the Company shall aggregate and calculate the net
purchase and redemption orders for the Account from the Owners for
shares of the Fund that it received prior to the close of trading on
the New York Stock Exchange (the "NYSE") (i.e., 3:00 p.m., Central
time), unless the NYSE closes at an earlier time in which case such
earlier time shall apply, and communicate to Distributors, by
telephone or facsimile (or by such other means as the parties hereto
may agree to in writing), the net aggregate purchase or redemption
order (if any) for the Account for such Business Day (such Business
Day is sometimes referred to herein as the "Trade Date"). The Company
will communicate such orders to Distributors prior to 9:00 a.m.,
Central Time, on the next Business Day following the Trade Date. All
trades communicated to Distributors by the foregoing deadline shall be
treated by Distributors as if they were received by Distributors prior
to the close of trading on the Trade Date. Any trades communicated to
Distributors after the foregoing deadline may be canceled at
Distributors' sole discretion. Distributors will notify the Company
immediately if a trade is canceled.
2.2. Distributors will provide to the Company written instructions
("Purchase Instructions") for wire transfers to the custodian for the
Fund. The Company will wire, or arrange for the wire of, the purchase
price for each purchase order in accordance with the Purchase
Instructions. The Company will initiate this wire transfer by 12:00
(noon) Central Time on the next Business Day following the Trade Date.
The wire transfer will be completed by 3:00 p.m. Central Time on such
date. The Company agrees that if it fails to provide funds to the
Fund's custodian by the 3:00 p.m. deadline, then the transaction may
be canceled or the transaction may be processed at the next-determined
net asset value for the Fund after purchase order funds are received.
In such event, the Company shall indemnify and hold harmless
Distributors, Strong and the Fund from any liabilities, costs and
damages either may suffer as a result of such failure. Distributors
will notify the Company immediately if a transaction is canceled.
2.3. The Fund agrees to make shares of the Designated Portfolios available
indefinitely for purchase at the applicable net asset value per share
by Participating Insurance Companies and their separate accounts on
those days on which the Designated Portfolio's net asset value is
calculated pursuant to rules of the SEC; provided, however, that the
Board of
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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.
2.4. The Fund agrees that shares of the Designated Portfolios 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.
2.5. For redemption orders placed by Company in accordance with the time
frame set forth in Section 2.1, Strong will use its best efforts to
cause to be transmitted by wire to such custodial account as the
Company shall direct in writing, the proceeds of all such redemption
orders on the Business Day immediately following the Trade Date. For
purposes of this Section 2.5, the Company will be the agent of
Distributors for receipt of requests for redemption from each Account
and receipt by such agent will constitute receipt by Distributors. The
Fund reserves the right to delay payment of redemption proceeds, but
in no event may such payment be delayed more than six (6) calendar
days to enable the Company to pay redemption proceeds within the time
specified 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. If notification of redemption is received after 9:00 a.m.
Central Time, payment for redeemed shares will be made on the next
following Business Day.
2.6. The Company agrees to purchase and redeem the shares of the Fund in
accordance with the provisions of this Agreement, of the Contracts and
of the then current prospectuses for the Contracts and Fund. Except as
necessary to implement transactions initiated by Owners, or as
otherwise permitted by state and/or federal laws or regulations,
Company shall not redeem Fund shares attributable to the Contracts.
2.7. 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.
2.8. Strong or Distributors will furnish notice (by telephone, followed by
facsimile confirmation) to the Company of the declaration of any
income, dividends or capital gain distributions payable on each
Designated Portfolio's shares on the ex-date. Where possible, Strong
shall provide the Company with direct or indirect systems access to
Strong's systems for obtaining such information. 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
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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.
2.9. Distributors, on behalf of the Fund, will make the net asset value per
share for each Designated Portfolio available to the Company on each
Business Day 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., Central Time.
2.10. Any material errors in the calculation of net asset value will be
reported to Company as soon as practicable upon discovery by the Fund,
Strong or Distributors. An error will be deemed "material" based on
the Fund adviser's interpretation of the SEC's position and policy
with regard to materiality, as it may be modified from time to time
("Price Error"). If a Price Error causes an Account to receive less
than the amount to which it otherwise would have been entitled the
Account will be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct net asset value per
share. If a Price Error causes an Account to receive more than the
amount to which it otherwise would have been entitled, Company, when
requested by Strong, will use its best efforts to collect such excess
amounts from the applicable Owners. In the event of such request, the
parties shall negotiate in good faith to determine the extent of
Company's "best efforts" obligation. In the event that a Price Error
causes Company to incur any direct costs for re-processing Owner
Accounts, Company may, at Company's option, provide Strong with an
invoice or other statement documenting such costs in reasonable
detail. Strong shall reimburse Company for reasonable costs that are
mutually agreed upon by the parties.
ARTICLE III. Representations and Warranties
3.1. 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, prior to
any issuance or sale of the Contracts, 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 is and will remain registered and licensed in
all material respects under all applicable federal and state
securities and insurance laws and shall perform its obligations
hereunder in compliance in all material respects with any applicable
state and federal laws. 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
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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. To the extent required by applicable law the
arrangements provided for in this Agreement will be disclosed to the
Owners.
3.2. The Company represents that at the time of issuance the Contracts are,
and thereafter are intended to be, treated as annuity 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 Strong 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.
The Company represents that its officers, employees, investment
advisers, and other individuals/entities dealing with the money and/or
securities of the Fund are at all times covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund in an amount not
less than $5 million. The aforesaid includes coverage for larceny and
embezzlement and is issued by a reputable bonding company. The Company
agrees to make all reasonable efforts to see that this bond or another
bond containing these provisions is always in effect, and agrees to
notify the Fund and Strong in the event that such coverage no longer
applies.
Strong and Distributors, on the one hand, and the Company on the other,
each represent and warrant to the other that the execution, performance
and delivery of this Agreement will not result in a violation of any
applicable law or breach or impairment of any contractual obligation.
3.3. 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.
3.4. Strong 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 as an investment company or series thereof 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.
3.5. 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.
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3.6. Strong represents that the Fund's investment objectives, policies and
restrictions comply with applicable state investment laws as they may
apply to the Fund. Strong makes no representation as to whether any
aspect of the Fund's operations (including, but not limited to, fees
and expenses and investment policies, objections and restrictions)
complies with the insurance laws and regulations of any state. The Fund
and Strong 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.
3.7. The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Wisconsin and that it does and will
comply in all material respects with applicable provisions of the 1940
Act.
3.8. Strong and Distributors represent and warrant that they are and will
remain duly registered under all applicable federal and state
securities laws and that they will perform their obligations for the
Fund in accordance in all material respects with any applicable state
and federal securities laws.
3.9. The Fund, Distributors and Strong represent and warrant that all of
their directors, 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 IV. Prospectuses and Proxy Statements; Voting
4.1
(a) Strong or Distributors will provide the Company or its mailing
agent, at Strong's or Distributors' expense, with as many
copies of the current Fund prospectus (including amendments
and supplements) for the Designated Portfolios as the Company
may reasonably request for distribution to existing Owners and
prospective Owners and applicants. Strong or Distributors
shall reimburse the Company or its mailing agent for the costs
of distribution of such prospectuses to existing Owners. The
Company shall, at its expense, distribute such prospectuses to
prospective Owners and applicants.
(b) If requested by the Company in lieu thereof, Strong or
Distributors will provide the current Fund prospectus to
Company in camera-ready film (or other electronic media which
is mutually agreeable to the parties) format; provided that
Strong and Distributors have the capability of transmitting
the prospectus in such format, at least annually (or more
frequently if the Fund prospectus is amended more frequently).
In no event shall such cost exceed the cost Strong or
Distributors would have incurred had Strong or Distributors
provided the prospectus in printed format.
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4.2. Strong or Distributors will provide the Company, or its mailing agent,
at Strong's or Distributors' expense, with as many copies of the
statement of additional information (including amendments and
supplements) as the Company may reasonably request. The Company will
distribute the statement of additional information as requested or
required. Strong or Distributors shall reimburse the Company or its
mailing agent for the costs of distribution of such statements of
additional information to existing Owners. The Company shall, at its
expense, distribute such statements of additional information to
prospective Owners and applicants.
4.3. The Company, at its expense, shall provide the proxy vendor of the Fund
with such information regarding Owners to enable such vendor, at the
expense of Strong, the Fund or Distributors, to distribute Fund proxy
materials to Owners. Strong, Distributors or the Fund will bear the
cost of tabulation of Fund proxy votes. Strong or Distributors, as
applicable, at such party's expense, will provide the Company or its
mailing agent with copies of reports to shareholders, including annual
and semi-annual reports, and other special communications to
shareholders, if any, in amounts reasonably requested by the Company.
The Company will, at the expense of Strong, Distributors or the Fund,
distribute such reports or communications to existing Owners.
4.4. If and to the extent required by law the Company will:
(a) provide for the solicitation of voting instructions from Owners;
(b) vote the shares of the Designated Portfolios held in the Account
in accordance with instructions received from Owners; 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 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
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.
4.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders.
ARTICLE V. Sales Material and Information
5.1. The Company will furnish, or will cause to be furnished, to
Distributors or Strong, each piece of sales literature or other
promotional material in which the Fund, Distributors or
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Strong is named, at least five (5) business days prior to its use.
Such material shall be deemed accepted/approved for use if not
objected to within such five (5) business day period. Strong and
Distributors will review such materials for factual accuracy as it
relates to Strong, Distributors or the Fund, however, neither Strong
nor Distributors will review such materials for compliance with
applicable law. Notwithstanding anything to the contrary in this
Section 5.1, at the request of Distributors or Strong, the Company
shall cease to use such materials which refer to the Fund, Strong or
Distributors that Distributors or Strong determines in good faith to
be inaccurate, misleading or otherwise unacceptable.
5.2. The Company will not give any information or make any material
representations or statements on behalf of the Fund or concerning the
Fund, Distributors or Strong 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 reviewed for factual accuracy by the Fund or Strong for
distribution, or in sales literature or other material provided by the
Fund or by Strong, except with permission of the Fund or Strong. The
Fund and Strong agree to respond to any request for review of factual
accuracy on a prompt and timely basis. Nothing in this Section 5.2
will be construed as preventing the Company or its employees or agents
from giving advice on investment in the Fund.
5.3. Distributors or Strong 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 each Account is named, at
least five (5) business days prior to its use. Such material shall be
deemed accepted/approved for use if not objected to within such five
(5) business day period.
5.4. The Fund, Distributors and Strong will not give any information or
make any material 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.
5.5. Strong and/or Distributors will provide to the Company at least one
complete copy of all registration statements, prospectuses, statements
of additional information, reports, proxy statements, solicitations
for voting instructions, applications for exemptions, requests for
no-action letters and all amendments for any of the foregoing that
relate to the Designated Portfolios and the Contracts in final form as
filed with the SEC, NASD and other regulatory authorities upon
request.
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5.6. Upon request, the Company will provide to Distributors 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 foregoing that relate to the Fund, the
Contracts or each Account in final form as filed with SEC, the NASD
and other regulatory authorities.
5.7. For purposes of this Article V, 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.
5.8. The Distributors, Fund and Strong hereby consent to the Company's use
of any of the Designated Portfolios named on Schedule 2 hereto in
connection with the marketing of the Contracts, subject to the terms
of Sections 5.1 and 5.2 of this Agreement. Such consent will terminate
with the termination of this Agreement. The Company shall not use any
other names, logos, trademarks or servicemarks of Strong,
Distributors, the Fund or any affiliate thereof without the prior
written consent of the applicable entity.
ARTICLE VI. Fees and Expenses
6.1. 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 the Fund's prospectus in type; setting in type and printing
proxy materials and reports to Owners (including the costs of printing
a Fund prospectus that constitutes an annual report); and 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.
6.2. The Company shall bear the expenses for the costs of preparation and
filing of the Company's prospectus and registration statement with
respect to the Contracts required by any federal or state law;
expenses for the solicitations and sale of the Contracts, including
all costs of printing and distributing all copies of advertisements,
prospectuses, statements of additional information, proxy materials,
and reports to Owners or potential purchasers of the Contracts as
required by applicable state and federal law; payment of all
applicable fees, including, without limitation, all fees due under
Rule 24f-2 relating to the
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Contracts; all costs of drafting, filing and obtaining approvals of
the Contracts in the various states under applicable insurance laws;
filing of annual reports on Form N-SAR, and all other costs associated
with the ongoing compliance with all such laws and its obligations
hereunder.
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ARTICLE VII. Diversification
7.1. Strong will cause the Fund to at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be
treated as variable annuity contracts under the Internal Revenue Code
and the regulations issued thereunder. Without limiting the scope of
the foregoing, Strong will cause the Fund to 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 VII, Strong 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 VIII. Potential Conflicts
8.1. The Fund Board will monitor the Fund for any potential or existing
material irreconcilable conflict of interest between the interests of
the Owners of all separate accounts investing in the Fund, including
such conflict of interest with any other separate account of any
insurance company 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 contractowners of different 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. A majority of the Fund
Board will consist of persons who are not "interested" persons of the
Fund.
8.2. The Company and Strong will promptly report in writing any potential
or existing material irreconcilable conflicts of interest 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, under any applicable provisions of
the federal securities laws and/or any exemptive orders granted by the
SEC of which the Company is aware, by providing the Fund Board, in a
timely manner, 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
Owners' 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.
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8.3. 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, but not limited to: (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 Owners 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 Owners the option of
making such a change; and (b) establishing a new registered management
investment company or managed separate account.
8.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard 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 Strong, Distributors 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.
8.5. 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 within the period of time permitted by such decision
but in no event later than six (6) months after the Fund Board informs
the Company in writing that it has determined that such decision has
created an irreconcilable material conflict; 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. Until the
end of such six-month or shorter period Strong 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.
-13-
8.6. For purposes of Sections 8.3 through 8.6 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, Strong or Distributors be
required to establish a new funding medium for the Contracts. The
Company will not be required by Section 8.3 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote
of a majority of Owners affected by the irreconcilable material
conflict.
In the event that the Fund Board determines that any proposed action
does not adequately remedy any irreconcilable material conflict, then
the Company will withdraw the affected subaccount of the Account's
investment in the Fund and terminate this Agreement as quickly as may
be required to comply with applicable law, but in no event later than
six (6) months after the Fund Board informs the Company in writing of
the foregoing determination, provided, however, that such withdrawal
and termination shall be limited to the extent required by any such
material irreconcilable conflict.
8.7. 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.
8.8. 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 4.4, 4.5, 8.1, 8.2,
8.3, 8.4, and 8.5 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 IX. Indemnification
9.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Fund,
Distributors, Strong, and each person, if any, who controls or is
associated with the Fund, Distributors or Strong 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 9.1) 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,
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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 written
information furnished to the Company by or on behalf of
Strong 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 or Strong 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; or
-15-
(6) arise out of, or as a result of, adherence by Strong or
Distributors to instructions that it reasonably believes
were originated by authorized agents of Company;
except to the extent provided in Sections 9.1(b) and 9.4 hereof.
This indemnification will be in addition to any liability that
the Company otherwise may have.
(b) No party seeking indemnification will be entitled to
indemnification under Section 9.1(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.
(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.
9.2. Indemnification By Distributors
(a) Distributors 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 9.2) against
any and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written consent of
Strong) 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 Strong,
Distributors 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
-16-
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 Fund registration statements, prospectuses or
statements of additional information or sales literature or
other promotional material for the Contracts or of the Fund
not supplied by Strong, Distributors or the Fund or persons
under the control of Strong, Distributors or the Fund
respectively) or wrongful conduct of Strong, Distributors or
the Fund or persons under the control of Strong,
Distributors 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
written information furnished to the Company by or on behalf
of Strong, Distributors or the Fund or persons under the
control of Strong, Distributors or the Fund; or
(4) arise as a result of any failure by the Fund or Distributors
to perform its obligations 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 Distributors or
the Fund in this Agreement, or arise out of or result from
any other material breach of this Agreement by the
Distributors or the Fund;
except to the extent provided in Sections 9.2(b) and 9.4 hereof.
(b) No party seeking indemnification will be entitled to
indemnification under Section 9.2(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.
(c) The Indemnified Parties will promptly notify Strong 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.
-17-
9.3. Indemnification By Strong
(a) Strong 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, officer, partner, employee or agent of the
foregoing (collectively, the "Indemnified Parties" for purposes
of this Section 9.3) 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:
(1) arise as a result of any failure by the Fund, Strong or
persons under their respective control or subject to their
authorization to perform their obligations 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 7.1 of this Agreement; or
(2) arise out of or result from any material breach of any
representation and/or warranty made by Strong in this
Agreement or arise out of or result from any other material
breach of this Agreement by Strong or persons under its
control; except to the extent provided in Sections 9.3(b)
and 9.4 hereof.
(b) No party seeking indemnification will be entitled to
indemnification under Section 9.3(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.
(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.
9.4. Indemnification Procedure
Any person obligated to provide indemnification under this Article IX
("Indemnifying Party" for the purpose of this Section 9.4) will not be
liable under the indemnification provisions of this Article IX with
respect to any claim made against a party entitled to indemnification
under this Article IX ("Indemnified Party" for the purpose of this
Section 9.4) 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
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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 IX, 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 IX. The
indemnification provisions contained in this Article IX will survive
any termination of this Agreement.
9.5. 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.
9.6. 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 Strong 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 Milwaukee,
Wisconsin. The arbitrators will have no authority to award punitive
damages or any other damages not
-19-
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 X. Applicable Law
10.1. This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Wisconsin.
10.2. 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 XI. Termination
11.1. 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
ninety (90) 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 reasonable advance written
notice to 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 Strong, Distributors or the Fund, upon receipt
of 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
-20-
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, Distributors or Strong by
the NASD, the SEC, or any state securities or insurance
department or any other regulatory body, 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, Distributors' or Strong'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 VII 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 not less
than thirty (30) days' prior written notice to the other
parties, upon another party's material breach of any provision
of this Agreement not otherwise contemplated in this Article
XI, provided that such breaching party has not cured such
breach within thirty (30) days of receiving said notice; or
(i) at the option of the Company or Strong, Distributors or the
Fund upon a determination by a majority of the Fund's
Directors, 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 VIII of this Agreement; or
(j) at the option of Strong, Distributors or the Fund in the event
any of the Contracts are not issued or sold in accordance with
applicable federal and/or state law or such law precludes the
use of Fund shares as the underlying investment media of the
Contracts issued or to be issued by the Company. Termination
will be effective immediately upon such occurrence without
notice.
(k) at the option of Strong, Distributors or 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
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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
(l) at the option of the Company, if the Company determines in its
sole judgment exercised in good faith, that the Fund,
Distributors or Strong 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
(m) at the option of the Company 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 share.
11.2. 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.
11.3. Effect of Termination
Notwithstanding the termination of this Agreement, each party shall
continue, for so long as any Contracts with values allocated to the
Omnibus Account invested in a Designated Portfolio on the date of
termination remain outstanding (hereinafter referred to as "Existing
Contracts"), to perform such of its duties hereunder as are necessary
to ensure the continued tax deferred status of and the payment of
benefits under the Existing Contracts, except to the extent proscribed
by law, the SEC or other regulatory body. Specifically, without
limitation, the Owners of 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; provided, however, that Strong shall have no obligation to
open new Omnibus Accounts pursuant to Section 1.1. Notwithstanding the
foregoing, nothing in this
-22-
Section 11.3 obligates the Fund to continue in existence. In the event
that any Fund elects to terminate its operations, the Company shall,
as soon as practicable, obtain an exemptive order or order of
substitution from the SEC to remove all Owners from the applicable
Fund. Strong will provide, upon request of the Company, reasonable
assistance to the Company in obtaining Company's exemptive order or
order of substitution. In the event that Strong, Distributors or the
Fund initiates the closure of the Fund, Strong agrees to reimburse
Company the reasonable costs Company incurs that are associated with
the closing of the Fund. Company and Strong shall use their best
efforts to minimize such costs. Upon the request of Strong, Company
shall provide Strong with a current itemized estimate of the costs
Company will bear as a result of such closing. Actual costs shall be
supported by acceptable documentation.
11.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each party's
obligations under Article IX 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
will survive and not be affected by any termination of this Agreement
except Section 4.1(b) hereof.
ARTICLE XII. Notices
All notices hereunder shall be given in writing (and shall be deemed to have
been duly given upon receipt) by delivery in person, by facsimile, by registered
or certified mail or by overnight delivery to the respective parties 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 of New York
c/o American Express Financial Advisors Inc.
249 AXP Financial Center
Xxxxxxxxxxx, XX 00000
Attn: President
With a simultaneous copy to:
IDS Life Insurance Company of New York
c/o American Express Financial Advisors Inc.
50607 AXP Financial Center
Xxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx Xxxxxxx, Counsel
If to the Fund:
Strong Opportunity Fund II, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attn: General Counsel
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If to Strong:
Strong Investor Services, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attn: General Counsel
If to Distributors:
Strong Investments, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attn: General Counsel
ARTICLE XIII. Miscellaneous
13.1. 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, officers, partners, employees, agents or shareholders
assume any personal liability for obligations entered into on behalf of
the Fund.
13.2. Notwithstanding anything to the contrary contained in this Agreement,
in addition to and not in lieu of other provisions in this Agreement:
(a) "Confidential Information" includes but is not limited to all
proprietary and confidential information of the Company and its
subsidiaries, affiliates and licensees (collectively the
"Protected Parties" for purposes of this Section 13.2) provided
to Strong or Distributors by the Company in accordance with this
Agreement, or obtained by Strong or Distributors as a result of
this Agreement, including without limitation all information
regarding the customers of the Protected Parties; or the
accounts, account numbers, names, addresses, social security
numbers or any other personal identifier of such customers; or
any information derived therefrom.
(b) Neither the Fund nor Strong may use or disclose Confidential
Information for any purpose other than (1) to carry out the
purpose for which Confidential Information was provided to Fund
and/or Strong as set forth in the Agreement, or for shareholder
servicing and informational mailings relating to the Fund; or (2)
as otherwise permitted or required by applicable law; and the
Fund and Strong agree to cause all their employees, agents and
representatives, or any other party to whom the Fund and/or
Strong may provide access to or disclose Confidential Information
to limit the use and disclosure of Confidential Information to
those purposes. Notwithstanding the foregoing, this Section
13.2(b) shall not prohibit Strong or Distributors or any of their
affiliates from utilizing for any purpose the names, addresses or
other information concerning any of Company's customers if such
names, addresses or other information are legally obtained in any
manner other than from
-24-
Company pursuant to this Agreement. The provisions of this
Section 13.2 (b) shall survive the termination of this Agreement.
(c) The Fund and Strong acknowledge 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 is the valuable property of the Protected
Parties.
(d) The Fund and Strong agree 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 and Strong further agree to cause all
their agents, representatives or subcontractors of, or any other
party to whom the Fund and/or Strong may provide access to or
disclose Confidential Information to implement appropriate
measures designed to meet the objectives set forth in this
Section 13.2.
(e) The Fund and Strong acknowledge that any breach of the
agreements in this Section 13.2 may result in immediate and
irreparable harm to the Protected Parties for which there may
be no adequate remedy at law and agree that in the event of
such a breach, the Protected Parties may 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
contained in this Section 13.2 will survive any termination of
this Agreement.
13.3. 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.
13.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
13.5. 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.
13.6. This Agreement will not be assigned by any party hereto without the
prior written consent of all the parties.
13.7. 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.
-25-
13.8. 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.
13.9. 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.
13.10. In any dispute arising hereunder, each party waives its right to
demand a trial by jury and hereby consents to a bench trial of all
such disputes.
13.11. No modification of any provision of this Agreement will be binding
unless in writing and executed by the party to be bound thereby. No
waiver of any provision of this Agreement will be binding unless in
writing and executed by the party granting such waiver. Any valid
waiver of a provision set forth herein shall not constitute a waiver
of any other provision of this Agreement. In addition, any such waiver
shall constitute a present waiver of such provision and shall not
constitute a permanent future waiver of such provision.
13.12. Except for the limited purpose provided in Sections 2.1 and 2.5, it is
understood and agreed that the Company and each of its designees shall
be acting as an independent contractor and not as an employee or agent
of Strong, Distributors or the Fund, and none of the parties shall hold
itself out as an agent of any other party with the authority to bind
such party. Neither the execution nor performance of this Agreement
shall be deemed to create a partnership or joint venture by and among
any of the Company, any designees, the Fund, Strong, or Distributors.
13.13. Except as may otherwise be provided in this Agreement, all expenses
incident to the performance by each party of its respective duties
under this Agreement shall be paid by that party.
13.14. Each of the parties acknowledges and agrees that this Agreement and the
arrangements described herein are intended to be non-exclusive and that
each of the parties is free to enter into similar agreements and
arrangements with other entities.
13.15. In no way shall the provisions of this Agreement limit the authority of
the Fund, the Company or Distributors to take any action as they may
deem appropriate or advisable in connection with all matters relating
to the operation of the Fund, which includes, by way of example, but is
not limited to, the registration of the Fund, management of the Fund,
and the day-to-day operations of the Fund. In no way shall the
provisions of this Agreement limit the authority of the Company to take
such action as it may deem appropriate or advisable in connection with
all matters relating to the shares of funds other than the Funds
offered to the Account.
-26-
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.
IDS LIFE INSURANCE COMPANY OF NEW YORK
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
ATTEST
By: /s/ Xxxx Xxxxx Xxxxxxx
------------------------------------------
Name: Xxxx Xxxxx Xxxxxxx
Title: Assistant Secretary
STRONG OPPORTUNITY FUND II, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx, III
------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, III
Title: Assistant Secretary
STRONG INVESTOR SERVICES, INC.
By: /s/ Xxxxxxxxx X. Xxxx
------------------------------------------
Name: Xxxxxxxxx X. Xxxx
Title: Vice President and Assistant Secretary
STRONG INVESTMENTS, INC.
By: /s/ Xxxxxxxxx X. Xxxx
------------------------------------------
Name: Xxxxxxxxx X. Xxxx
Title: Assistant Secretary
-27-
Schedule 1
PARTICIPATION AGREEMENT
By and Among
IDS LIFE INSURANCE COMPANY OF NEW YORK
And
STRONG OPPORTUNITY FUND II, INC.
And
STRONG INVESTOR SERVICES, INC.
And
STRONG INVESTMENTS, INC.
The following separate accounts of IDS Life Insurance Company of New York are
permitted in accordance with the provisions of this Agreement to invest in
Designated Portfolios of the Fund shown in Schedule 2:
IDS Life of New York Variable Annuity Account (formerly IDS Life of New
York Flexible Portfolio Annuity Account ) established April 17, 1996.
August 13, 2001
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Schedule 2
PARTICIPATION AGREEMENT
By and Among
IDS LIFE INSURANCE COMPANY OF NEW YORK
And
STRONG OPPORTUNITY FUND II, INC.
And
STRONG INVESTOR SERVICES, INC.
And
STRONG INVESTMENTS, INC.
The Separate Account(s) shown on Schedule 1 may invest in the following
Designated Portfolios of Strong Opportunity Fund II, Inc.:
Strong Opportunity Fund II, Advisor Class.
August 13, 2001
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Schedule 3 - Account Information
PARTICIPATION AGREEMENT
(for Accounts to have Dividends and Capital Gains Reinvested automatically)
1. Entity in whose name each Account will be opened: IDS Life Insurance Co. of
New York
--------------------------
Mailing address: 222 AXP Financial Center
--------------------------
Xxxxxxxxxxx, XX 00000
--------------------------
2. Employer ID number (For internal usage only): 00-0000000
--------------------------
3. Authorized contact persons: The following persons are authorized on behalf
of the Company to effect transactions in each Account:
Name: See Attached List Phone:____________________________
----------------------------
Name:____________________________ Phone:____________________________
Name:____________________________ Phone:____________________________
Name:____________________________ Phone:____________________________
4. Will the Accounts have telephone exchange? ____ Yes _X__ No
(This option lets Company redeem shares by telephone and apply the proceeds
for purchase in another identically registered Account.)
5. Will the Accounts have telephone redemption? _X__ Yes ____ No
(This option lets Company sell shares by telephone. The proceeds will be
wired to the bank accountspecified below.)
6. All dividends and capital gains will be reinvested automatically.
7. Instructions for all outgoing wire transfers: Xxxxx Fargo & Company
----------------------------
000 Xxxxxx Xxxxxx Xxxxx
----------------------------
Xxxxxxxxxxx, XX 00000-0000
----------------------------
ABA Routing No. 0910-00019
----------------------------
Account No. 22-648
----------------------------
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8. Company certifies under penalty of perjury that:
(i) The number shown on this form is the correct Employer ID number (or
that Company is waiting to be issued an Employer ID number), and
(ii) Company is not subject to backup withholding because (a) Company
is exempt from backup withholding, or (b) Company has not been notified by the
Internal Revenue Service ("IRS") that it is subject to backup withholding as a
result of failure to report all interest or dividends, or (c) the IRS has
notified the Company that it is no longer subject to backup withholding.
(Cross out (ii) if Company has been notified by the IRS that it is subject to
backup withholding because of underreporting interest or dividends on its tax
return.)
The IRS does not require Company's consent to any provision of this
document other than the certifications required to avoid backup withholding.
-------------------------------------- --------------------------------
(Signature of Authorized Officer) (Date)
(Company shall inform Strong and Distributors of any changes to information
provided in this Account Information Form.)
Please Note: Distributors employs reasonable procedures to confirm that
instructions communicated by telephone are genuine and may not be liable for
losses due to unauthorized or fraudulent instructions. Please see the prospectus
for the applicable Fund for more information on the telephone exchange and
redemption privileges.
-31-
