PARTICIPATION AGREEMENT
AMONG
IDS LIFE INSURANCE COMPANY OF NEW YORK
AMERICAN EXPRESS FINANCIAL ADVISORS INC.,
ALLIANCE CAPITAL MANAGEMENT L.P.
AND
ALLIANCE FUND DISTRIBUTORS, INC.
DATED AS OF
March 1, 2000
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of March, 2000
("Agreement"), by and among IDS Life Insurance Company of New York, a New York
life insurance company ("Insurer") (on behalf of itself and its "Separate
Account," defined below); American Express Financial Advisors Inc., a Delaware
corporation ("Contracts Distributor"), the principal underwriter with respect to
the Contracts referred to below; Alliance Capital Management L.P., a Delaware
limited partnership ("Adviser"), the investment adviser of the Fund referred to
below; and Alliance Fund Distributors, Inc., a Delaware corporation
("Distributor"), the Fund's principal underwriter (collectively, the "Parties"),
WITNESSETH THAT:
WHEREAS Insurer, the Distributor, and Alliance Variable Products Series
Fund, Inc. (the "Fund") desire that Class B shares of the Fund as further
described in Exhibit A, attached hereto and incorporated by reference (the
"Portfolios"; reference herein to the "Fund" includes reference to each
Portfolio to the extent the context requires) be made available by Distributor
to serve as underlying investment media for those combination fixed and variable
annuity contracts of Insurer that are the subject of Insurer's Form N-4
registration statement filed with the Securities and Exchange Commission (the
"SEC"), and those combination fixed and variable universal life insurance
policies of Insurer that are the subject of Insurer's Forms S-6 and N-8B-2
registration statement filed with the SEC , or such other forms as prescribed
under applicable securities laws, as further described in Exhibit A
(collectively the "Contracts"), to be offered through Contracts Distributor and
other registered broker-dealer firms as agreed to by Insurer and Contracts
Distributor; and
WHEREAS the Contracts provide for the allocation of net amounts
received by Insurer to separate series (the "Divisions"; reference herein to the
"Separate Account" includes reference to each Division to the extent the context
requires) of the Separate Account for investment in Class B shares of
corresponding Portfolios of the Fund that are made available through the
Separate Account to act as underlying investment media,
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Fund and Distributor will make Class B shares of the
Portfolios available to Insurer for this purpose at net asset value and with no
sales charges, all subject to the following provisions:
Section 1. Additional Portfolios
The Fund has and may, from time to time, add additional Portfolios,
which will become subject to this Agreement, if, upon the written consent of
each of the Parties hereto, they are made available as investment media for the
Contracts.
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Section 2. Processing Transactions
2.1 Timely Pricing and Orders.
The Adviser or its designated agent will provide closing net asset
value, dividend and capital gain information for each Portfolio to Insurer at
the close of trading on each day (a "Business Day") on which (a) the New York
Stock Exchange is open for regular trading, (b) the Fund calculates the
Portfolio's net asset value and (c) Insurer is open for business. The Fund or
its designated agent will use its best efforts to provide this information by
6:00 p.m., Eastern time, but in no event later than 7:00 p.m. Eastern time. The
Fund will notify the Insurer as soon as possible if it is determined that this
information will be available after 7:00 p.m. Eastern time, and the Fund and the
Insurer will mutually agree upon a final deadline for timely receipt of this
information on that Business Day. Insurer will use these data to calculate unit
values, which in turn will be used to process transactions that receive that
same Business Day's Separate Account Division's unit values. Such Separate
Account processing will be done the same evening, and corresponding orders with
respect to Fund shares will be placed the morning of the following Business Day.
Insurer will use its best efforts to place such orders with the Fund by 10:00
a.m., Eastern time.
2.2 Timely Payments.
Insurer will transmit orders for purchases and redemptions of Fund
shares to Distributor, and will wire payment for net purchases to a custodial
account designated by the Fund on the day the order for Fund shares is placed,
to the extent practicable. Payment for net redemptions will be wired by the Fund
to an account designated by Insurer on the same day as the order is placed, to
the extent practicable, and in any event be made within five calendar days after
the date the order is placed in order to enable Insurer to pay redemption
proceeds within the time specified in Section 22(e) of the Investment Company
Act of 1940, as amended (the "1940 Act").
2.3 Applicable Price.
The Parties agree that Portfolio share purchase and redemption orders
resulting from Contract owner purchase payments, surrenders, partial
withdrawals, routine withdrawals of charges, or other transactions under
Contracts will be executed at the net asset values as determined as of the close
of regular trading on the New York Stock Exchange on the Business Day that
Insurer receives such orders and processes such transactions, which, Insurer
agrees shall occur not earlier than the Business Day prior to Distributor's
receipt of the corresponding orders for purchases and redemptions of Portfolio
shares. For the purposes of this section, Insurer shall be deemed to be the
agent of the Fund for receipt of such orders from holders or applicants of
contracts, and receipt by Insurer shall constitute receipt by the Fund. All
other purchases and redemptions of Portfolio shares by Insurer, will be effected
at the net asset values next computed after receipt by Distributor of the order
therefor, and such orders will be irrevocable. Insurer hereby elects to reinvest
all dividends and capital gains distributions in additional shares of the
corresponding Portfolio at the record-date net asset values until Insurer
otherwise notifies the Fund in writing, it being agreed by the Parties that the
record date and the payment date with respect to any dividend or distribution
will be the same Business Day.
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Section 3. Costs and Expenses
3.1 General.
Except as otherwise specifically provided herein, each Party will bear
all their own expenses incident to its performance under this Agreement.
3.2 Registration.
The Fund will bear the cost of its registering as a management
investment company under the 1940 Act and registering its shares under the
Securities Act of 1933, as amended (the "1933 Act"), and keeping such
registrations current and effective; including, without limitation, the
preparation of and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices
respecting the Fund and its shares and payment of all applicable registration or
filing fees with respect to any of the foregoing. Insurer will bear the cost of
registering the Separate Account as a unit investment trust under the 1940 Act
and registering units of interest under the Contracts under the 1933 Act and
keeping such registrations current and effective; including, without limitation,
the preparation and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices
respecting the Separate Account and its units of interest and payment of all
applicable registration or filing fees with respect to any of the foregoing.
3.3 Other (Non-Sales-Related) Expenses.
The Fund will bear the costs of preparing, filing with the SEC and
setting for printing the Fund's prospectus, statement of additional information
and any amendments or supplements thereto (collectively, the "Fund Prospectus"),
periodic reports to shareholders, Fund proxy material and other shareholder
communications and any related requests for voting instructions from
Participants (as defined below). The Fund or the Distributor will bear the cost
of mailing to existing Participants (as defined below) any Fund Prospectus,
periodic report to shareholders, Fund proxy material and other shareholder
communication and any related request for voting instructions. Insurer will bear
the costs of preparing, filing with the SEC and setting for printing, the
Separate Account's prospectus, statement of additional information and any
amendments or supplements thereto (collectively, the "Separate Account
Prospectus"), any periodic reports to owners, annuitants or participants under
the Contracts (collectively, "Participants"), and other Participant
communications. The Fund and Insurer each will bear the costs of printing in
quantity and delivering to existing Participants the documents as to which it
bears the cost of preparation as set forth above in this Section 3.3, it being
understood that reasonable cost allocations will be made in cases where any such
Fund and/or Insurer documents are printed or mailed on a combined or coordinated
basis. If requested by Insurer, the Fund will provide annual Prospectus , annual
reports, semi-annual reports and other shareholder communications text to
Insurer on diskette or other medium agreed to by the Parties. The Fund or the
Distributor will bear the cost of tabulation of proxy votes.
3.4 Other Sales-Related Expenses.
Expenses of distributing the Portfolio's shares and the Contracts will
be paid by Contracts Distributor and other parties, as they shall determine by
separate agreement.
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3.5 Parties to Cooperate.
The Adviser, Insurer, Contracts Distributor, and Distributor each
agrees to cooperate with the others, as applicable, in arranging to print, mail
and/or deliver combined or coordinated prospectuses or other materials of the
Fund and Separate Account.
3.6 Use of Fund or Adviser Name by Insurer.
(a) The Insurer 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 the Adviser
reasonably objects to such use within five (5) Business Days after receipt of
such material.
(b) The Insurer 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 Contracts other than the information or
representations contained in a 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 published reports for the Fund which are
in the public domain or approved by the Fund or the Adviser for distribution, or
in the sales literature or other material provided by the Fund, except with the
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 will be construed as preventing the Insurer or its employees or agents
from giving advice on investment in the Fund.
(c) The Fund and the Adviser hereby consent to the Insurer's use
of the name Alliance Capital Management L.P. and Alliance Variable Products
Series Fund, Inc. and appropriate variations thereof in connection with the
marketing the Contracts, subject to the terms of this Section. Such consent will
terminate with the termination of this Agreement.
3.7 Use of Insurer Name by Fund or Adviser.
(a) The Fund or Adviser will furnish, or will cause to be furnished, to
the Insurer or its designee, each piece of sales literature or other promotional
material in which the Insurer or its separate account is named, at least ten
(10) Business Days prior to its use. No such material will be used if the
Insurer reasonably objects to such use within five (5) Business Days after
receipt of such material.
(b) The Fund and the Adviser will not give any information or make any
representations or statements on behalf of the Insurer or concerning the
Insurer, 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 Insurer for
distribution to Contract owners, or in the sales literature or other material
provided by the Insurer, except with the permission of the Insurer. The Insurer
agrees to respond to any request for approval on a prompt and timely basis.
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3.8 Sales Literature and Other Promotional Materials.
For purposes of this Section 3, the phrase "sales literature and 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, statements of
additional information, shareholder reports, and proxy materials and any other
material constituting sales literature or advertising under the rules of the
National Association of Securities Dealers, Inc. ("NASD"), the 1933 Act or the
1940 Act.
3.9 Calculation of Performance Information.
The Adviser will be responsible for calculating the performance
information for the Fund. The Insurer will be responsible for calculating the
performance information for the Contracts. The Adviser will be liable to the
Insurer for any material mistakes it makes in calculating the performance
information for the Fund which cause losses to the Insurer. The Insurer 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 the Contracts or the Fund, as appropriate. The Fund
and the Adviser agree to provide the Insurer with performance information for
the Fund on a timely basis to enable the Insurer to calculate performance
information for the Contracts in accordance with applicable state and federal
law.
Section 4. Legal Compliance
4.1 Tax Laws.
(a) The Adviser will use its best efforts to qualify and to maintain
qualification of each Portfolio as a regulated investment company ("RIC") under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and
the Adviser or Distributor will notify Insurer immediately upon having a
reasonable basis for believing that a Portfolio has ceased to so qualify or that
it might not so qualify in the future.
(b) Insurer represents that it believes, in good faith, that the
Contracts will be treated as annuity or life insurance contracts under
applicable provisions of the Code and that it will make every effort to maintain
such treatment. Insurer will notify the Fund and Distributor immediately upon
having a reasonable basis for believing that any of the Contracts have ceased to
be so treated or that they might not be so treated in the future.
(c) The Fund will use its best efforts to comply and to maintain each
Portfolio's compliance with the diversification requirements set forth in
Section 817(h) of the Code and Section 1.817-5(b) of the regulations under the
Code, and the Fund, Adviser or Distributor will notify
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Insurer immediately upon having a reasonable basis for believing that a
Portfolio has ceased to so comply or that a Portfolio might not so comply in the
future.
(d) Insurer represents that it believes, in good faith, that the
Separate Account is a "segregated asset account" and that interests in the
Separate Account are offered exclusively through the purchase of or transfer
into a "variable contract," within the meaning of such terms under Section
817(h) of the Code and the regulations thereunder. Insurer will make every
effort to continue to meet such definitional requirements, and it will notify
the Fund and Distributor immediately upon having a reasonable basis for
believing that such requirements have ceased to be met or that they might not be
met in the future.
(e) The Adviser will manage the Fund as a RIC in compliance with
Subchapter M of the Code and will use its best efforts to manage to be in
compliance with Section 817(h) of the Code and regulations thereunder. The Fund
has adopted and will maintain procedures for ensuring that the Fund is managed
in compliance with Subchapter M and Section 817(h) and regulations thereunder.
(f) Should the Distributor or Adviser become aware of a failure of
Fund, or any of its Portfolios, to be in compliance with Subchapter M of the
Code or Section 817(h) of the Code and regulations thereunder, they represent
and agree that they will immediately notify Insurer of such in writing.
4.2 Insurance and Certain Other Laws.
(a) The Adviser will use its best efforts to cause the Fund to comply
with any applicable state insurance laws or regulations, to the extent
specifically requested in writing by Insurer. If it cannot comply, it will so
notify Insurer in writing. The Adviser agrees that it will or will cause the
Fund to furnish the information required by state insurance laws so that the
Insurer can obtain the authority needed to issue the Contracts in the various
states.
(b) Insurer represents and warrants that (i) it is an insurance company
duly organized, validly existing and in good standing under the laws of the
State of New York and has full corporate power, authority and legal right to
execute, deliver and perform its duties and comply with its obligations under
this Agreement, (ii) it has legally and validly established and maintains the
Separate Account as a segregated asset account under the laws of the State of
New York, and (iii) the Contracts comply in all material respects with all other
applicable federal and state laws and regulations.
(c) Contracts Distributor represents and warrants that Contracts
Distributor is a business corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware and has full corporate
power, authority and legal right to execute, deliver, and perform its duties and
comply with its obligations under this Agreement.
(d) Distributor represents and warrants that it is a business
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has full corporate power, authority and legal
right to execute, deliver, and perform its duties and comply with its
obligations under this Agreement.
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(e) Distributor represents and warrants that the Fund is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Maryland and has full power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under this
Agreement.
(f) Adviser represents and warrants that it is a limited partnership,
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under this
Agreement.
4.3 Securities Laws.
(a) Insurer represents and warrants that (i) interests in the Separate
Account pursuant to the Contracts will be registered under the 1933 Act to the
extent required by the 1933 Act and the Contracts will be duly authorized for
issuance and sold in compliance with New York law, (ii) the Separate Account is
or will be registered and will remain registered under the 1940 Act to the
extent required by the 1940 Act, (iii) the Separate Account does and will comply
in all material respects with the requirements of the 1940 Act and the rules
thereunder, (iv) the Separate Account's 1933 Act registration statement relating
to the Contracts, together with any amendments thereto, will, at all times
comply in all material respects with the requirements of the 1933 Act and the
rules thereunder, and (v) the Separate Account Prospectus will at all times
comply in all material respects with the requirements of the 1933 Act and the
rules thereunder.
(b) The Adviser and Distributor represent and warrant that (i) Fund
shares sold pursuant to this Agreement will be registered under the 1933 Act to
the extent required by the 1933 Act and duly authorized for issuance and sold in
compliance with Maryland law, (ii) the Fund is and will remain registered under
the 1940 Act to the extent required by the 1940 Act, (iii) the Fund will amend
the registration statement for its shares under the 1933 Act and itself under
the 1940 Act from time to time as required in order to effect the continuous
offering of its shares, (iv) the Fund does and will comply in all material
respects with the requirements of the 1940 Act and the rules thereunder, (v) the
Fund's 1933 Act registration statement, together with any amendments thereto,
will at all times comply in all material respects with the requirements of the
1933 Act and rules thereunder, and (vi) the Fund Prospectus will at all times
comply in all material respects with the requirements of the 1933 Act and the
rules thereunder.
(c) The Fund will register and qualify its shares for sale in
accordance with the laws of any state or other jurisdiction only if and to the
extent reasonably deemed advisable by the Fund, Insurer or any other life
insurance company utilizing the Fund.
(d) Distributor and Contracts Distributor each represents and warrants
that it is and will remain registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934, as amended, and is and will remain a member in
good standing of the National Association of Securities Dealers Inc. (the
"NASD").
4.4 Notice of Certain Proceedings and Other Circumstances.
(a) Distributor or the Fund shall immediately notify Insurer of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect
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to the Fund's registration statement under the 1933 Act or the Fund Prospectus,
(ii) any request by the SEC for any amendment to such registration statement or
Fund Prospectus, (iii) the initiation of any proceedings for that purpose or for
any other purpose relating to the registration or offering of the Fund's shares,
or (iv) any other action or circumstances that may prevent the lawful offer or
sale of Fund shares in any state or jurisdiction, including, without limitation,
any circumstances in which (x) the Fund's shares are not registered and, in all
material respects, issued and sold in accordance with applicable state and
federal law or (y) such law precludes the use of such shares as an underlying
investment medium of the Contracts issued or to be issued by Insurer.
Distributor and the Fund will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
time.
(b) Insurer and Contracts Distributor shall immediately notify the Fund
of (i) the issuance by any court or regulatory body of any stop order, cease and
desist order or similar order with respect to the Separate Account's
registration statement under the 1933 Act relating to the Contracts or the
Separate Account Prospectus, (ii) any request by the SEC for any amendment to
such registration statement or Separate Account Prospectus, (iii) the initiation
of any proceedings for that purpose or for any other purpose relating to the
registration or offering of the Separate Account interests pursuant to the
Contracts, or (iv) any other action or circumstances that may prevent the lawful
offer or sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. Insurer and Contracts Distributor will make every reasonable effort
to prevent the issuance of any such stop order, cease and desist order or
similar order and, if any such order is issued, to obtain the lifting thereof at
the earliest possible time.
4.5 Insurer to Provide Documents.
Upon request, Insurer will provide the Fund and the Distributor one
complete copy of SEC registration statements, Separate Account Prospectuses,
reports, any preliminary and final voting instruction solicitation material,
applications for exemptions, requests for no-action letters, and amendments to
any of the above, that materially relate to the Separate Account or the
Contracts, contemporaneously with the filing of such document with the SEC or
other regulatory authorities.
4.6 Fund to Provide Documents.
Upon request, the Fund will provide to Insurer one complete copy of SEC
registration statements, Fund Prospectuses, reports, any preliminary and final
proxy material, applications for exemptions, requests for no-action letters, and
all amendments to any of the above, that materially relate to the Fund or its
shares, contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
Section 5. Mixed and Shared Funding
5.1 General.
The Fund has obtained an order exempting it from certain provisions of
the 1940 Act and rules thereunder so that the Fund is available for investment
by certain other entities, including, without limitation, separate accounts
funding variable life insurance policies and separate accounts of
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insurance companies unaffiliated with Insurer ("Mixed and Shared Funding
Order"). The Parties recognize that the SEC has imposed terms and conditions for
such orders that are substantially identical to many of the provisions of this
Section 5.
5.2 Disinterested Directors.
The Fund agrees that the Fund's board of Directors (the "Board of
Directors") shall at all times consist of directors a majority of whom (the
"Disinterested Directors") are not interested persons of Adviser or Distributor
within the meaning of Section 2(a)(19) of the 1940 Act.
5.3 Monitoring for Material Irreconcilable Conflicts.
The Fund agrees that its Board of Directors will monitor for the
existence of any material irreconcilable conflict between the interests of the
participants in all separate accounts of life insurance companies utilizing the
Fund, including the Separate Account. Insurer agrees to inform the Board of
Directors of the Fund of the existence of or any potential for any such material
irreconcilable conflict of which it is aware. The concept of a "material
irreconcilable conflict" is not defined by the 1940 Act or the rules thereunder,
but the Parties recognize that such a conflict may arise for a variety of
reasons, including, without limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax or
securities regulatory authorities;
(c) an administrative or judicial decision in any relevant
proceeding;
(d) the manner in which the investments of any Portfolio are being
managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract participants or by participants of
different life insurance companies utilizing the Fund; or
(f) a decision by a life insurance company utilizing the Fund to
disregard the voting instructions of participants.
Insurer will assist the Board of Directors in carrying out its
responsibilities by providing the Board of Directors with all information
reasonably necessary for the Board of Directors to consider any issue raised,
including information as to a decision by Insurer to disregard voting
instructions of Participants. The Board of Directors will record in its minutes,
or other appropriate records, all reports received by it and all action with
regard to a material irreconcilable conflict.
5.4 Conflict Remedies.
(a) It is agreed that if it is determined by a majority of the members
of the Board of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, Insurer and the other life insurance
companies utilizing the Fund will, at their own expense and to the extent
reasonably practicable (as determined by a majority of the Disinterested
Directors), take
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whatever steps are necessary to remedy or eliminate the material irreconcilable
conflict, which steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the separate
accounts (or the subaccounts of the separate accounts) from the
Fund or any Portfolio and reinvesting such assets in a different
investment medium, including another Portfolio of the Fund, or
submitting the question whether such segregation should be
implemented to a vote of all affected participants and, as
appropriate, segregating the assets of any particular group
(e.g., annuity contract owners or participants, life insurance
contract owners or all contract owners and participants of one or
more life insurance companies utilizing the Fund) that votes in
favor of such segregation, or offering to the affected contract
owners or participants the option of making such a change; and
(ii) establishing a new registered investment company of the type
defined as a "Management Company" in Section 4(3) of the 1940
Act or a new separate account that is operated as a Management
Company.
(b) If the material irreconcilable conflict arises because of Insurer's
decision to disregard Participant voting instructions and that decision could
conflict with the majority of Participant voting instructions and represents a
minority position or would preclude a majority vote, Insurer may be required, at
the Fund's election, to withdraw the Separate Account's (or sub-account's)
investment in the Fund 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 Board
of Directors. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal must take place within six months after the Fund
gives notice to Insurer that this provision is being implemented, and until the
end of such six-month period, Distributor and the Fund shall continue to accept
and implement orders by Insurer for the purchase and redemption of shares of the
Fund.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to Insurer conflicts with the
majority of other state regulators, then Insurer will withdraw the Separate
Account's (or sub-account's) investment in the Fund within six months after the
Fund's Board of Directors informs Insurer that it has determined that such
decision has created a material irreconcilable conflict, provided that such
withdrawal will be limited to the extent required by the 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 period, Distributor and Fund shall continue to
accept and implement orders by Insurer for the purchase and redemption of shares
of the Fund.
(d) Insurer agrees that any remedial action taken by it in resolving
any material irreconcilable conflict will be carried out at its expense and with
a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event,
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however, will the Fund or Distributor be required to establish a new funding
medium for any Contracts. Insurer will not be required by the terms hereof to
establish a new funding medium for any Contracts if an offer to do so has been
declined by vote of a majority of Participants materially adversely affected by
the material irreconcilable conflict.
5.5 Notice to Insurer.
The Fund will promptly make known in writing to Insurer the Board of
Directors' determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
5.6 Information Requested by Board of Directors.
Insurer and the Fund will at least annually submit to the Board of
Directors of the Fund such reports, materials or data as the Board of Directors
may reasonably request so that the Board of Directors may fully carry out the
obligations imposed upon it by the provisions hereof, and said reports,
materials and data will be submitted at any reasonable time deemed appropriate
by the Board of Directors. All reports received by the Board of Directors of
potential or existing conflicts, and all Board of Directors actions with regard
to determining the existence of a conflict, notifying life insurance companies
utilizing the Fund of a conflict, and determining whether any proposed action
adequately remedies a conflict, will be properly recorded in the minutes of the
Board of Directors or other appropriate records, and such minutes or other
records will be made available to the SEC upon request.
5.7 Compliance with SEC Rules.
If, at any time during which the Fund is serving as an investment
medium for variable life insurance policies, 1940 Act Rules 6e-3(T) or, if
applicable, 6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief
with respect to mixed and shared funding, the Parties agree that they will
comply with the terms and conditions thereof and that the terms of this Section
5 shall be deemed modified if and only to the extent required in order also to
comply with the terms and conditions of such exemptive relief that is afforded
by any of said rules that are applicable.
Section 6. Termination
6.1 Events of Termination.
Subject to Section 6.4 below, this Agreement will terminate as to a
Portfolio:
(a) at the option of Insurer or Distributor upon at least sixty days'
advance written notice to the other Parties, or if later, upon the 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 Fund upon (i) at least sixty days' advance
written notice to the other Parties, and (ii) approval by (x) a majority of the
disinterested Directors upon a finding that a continuation of this Contract is
contrary to the best interests of the Fund, or (y) a majority vote of the shares
of the affected Portfolio in the corresponding Division of the Separate Account
(pursuant to the procedures set forth in Section 11 of this Agreement for voting
Trust shares in accordance with Participant instructions); or
-11-
(c) at the option of the Fund, upon receipt of the written notice to
the other Parties by the Fund, upon institution of formal proceedings against
Insurer or Contracts Distributor by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding Insurer's obligations under
this Agreement or related to the sale of the Contracts, the operation of the
Separate Account, or the purchase of the Fund shares, if, in each case, the Fund
reasonably determines in good faith that such proceedings, or the facts on which
such proceedings would be based, have a material likelihood of imposing material
adverse consequences on the Portfolio to be terminated; or
(d) at the option of Insurer, upon receipt of the written notice to the
other Parties by the Insurer, upon institution of formal proceedings against the
Fund, Adviser, or Distributor by the NASD, the SEC, or any state insurance
regulator or any other regulatory body regarding the Fund's, Adviser's or
Distributor's obligations under this Agreement or related to the operation or
management of the Fund or the purchase of Fund shares, if, in each case, Insurer
reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing material
adverse consequences on Insurer, Contracts Distributor or the Division
corresponding to the Portfolio to be terminated; or
(e) at the option of any Party, upon receipt of the written notice to
the other Parties, in the event that (i) the Portfolio's shares are not
registered and, in all material respects, issued and sold in accordance with any
applicable state and federal law or (ii) such law precludes the use of such
shares as an underlying investment medium of the Contracts issued or to be
issued by Insurer; or
(f) upon termination of the corresponding Division's investment in
the Portfolio pursuant to Section 5 hereof; or
(g) at the option of Insurer, upon receipt of the written notice to the
other Parties by the Insurer, if the Portfolio ceases to qualify as a RIC under
Subchapter M of the Code or under successor or similar provisions; or
(h) at the option of Insurer, upon receipt of the written notice to the
other Parties by the Insurer, if the Portfolio fails to comply with Section
817(h) of the Code or with successor or similar provisions; or
(i) at the option of Insurer, upon receipt of the written notice to the
other Parties by the Insurer, if Insurer reasonably believes that any change in
a Fund's investment adviser or investment practices will materially increase the
risks incurred by Insurer.
6.2 Funds to Remain Available.
Except (i) as necessary to implement Participant-initiated
transactions, (ii) as required by state insurance laws or regulations, (iii) as
required pursuant to Section 5 of this Agreement, or (iv) with respect to any
Portfolio as to which this Agreement has terminated, Insurer shall not (x)
redeem Fund shares attributable to the Contracts, or (y) prevent Participants
from allocating payments to or transferring amounts from a Portfolio that was
otherwise available under the Contracts, until, in either case, 60 calendar days
after Insurer shall have notified the Fund or Distributor of its intention to do
so.
-12-
6.3 Survival of Warranties and Indemnifications.
All warranties and indemnifications will survive the termination of
this Agreement.
6.4 Continuance of Agreement for Certain Purposes.
Notwithstanding any termination of this Agreement, the Distributor
shall continue to make available shares of the Portfolios pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (the "Existing Contracts"), except as
otherwise provided under Section 5 of this Agreement. Specifically, and without
limitation, the Distributor shall facilitate the sale and purchase of shares of
the Portfolios as necessary in order to process premium payments, surrenders and
other withdrawals, and transfers or reallocations of values under Existing
Contracts.
Section 7. Parties to Cooperate Respecting Termination
The other Parties hereto agree to cooperate with and give reasonable
assistance to Insurer in taking all necessary and appropriate steps for the
purpose of ensuring that the Separate Account owns no shares of a Portfolio
after the Final Termination Date with respect thereto.
Section 8. Assignment
This Agreement may not be assigned by any Party, except with the
written consent of each other Party.
Section 9. Class B Distribution Payments
From time to time during the term of this Agreement the Distributor may
make payments to the Insurer pursuant to a distribution plan adopted by the Fund
with respect to the Class B shares of the Portfolios pursuant to Rule 12b-1
under the 1940 Act (the "Rule 12b-1 Plan) in consideration of the Insurer's
furnishing distribution services relating to the Class B shares of the
Portfolios and providing administrative, accounting and other services,
including personal service and/or the maintenance of Participant accounts, with
respect to such shares. The Distributor has no obligation to make any such
payments, and the Insurer waives any such payment, until the Distributor
receives monies therefor from the Fund. Any such payments made pursuant to this
Section 9 shall be subject to the following terms and conditions:
(a) Any such payments shall be in such amounts as the Distributor may
from time to time advise the Insurer in writing but in any event not in excess
of the amounts permitted by the Rule 12b-1 Plan. Such payments may include a
service fee in the amount of .25 of 1% per annum of the average daily net assets
of the Fund attributable to the Class B shares of a Portfolio held by clients of
the Insurer. Any such service fee shall be paid solely for personal service
and/or the maintenance of Participant accounts.
-13-
(b) The provisions of this Section 9 relate to a plan adopted by the
Fund pursuant to Rule 12b-1. In accordance with Rule 12b-1, any person
authorized to direct the disposition of monies paid or payable by the Fund
pursuant to this Section 9 shall provide the Fund's Board of Directors, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
(c) The provisions of this Section 9 shall remain in effect for not
more than a year and thereafter for successive annual periods only so long as
such continuance is specifically approved at least annually in conformity with
Rule 12b-1 and the 1940 Act. The provisions of this Section 9 shall
automatically terminate in the event of the assignment (as defined by the 0000
Xxx) of this Agreement, in the event the Rule 12b-1 Plan terminates or is not
continued. In addition, the provisions of this Section 9 may be terminated at
any time, without penalty, by either the Distributor or the Insurer with respect
to any Portfolio on not more than 60 days' nor less than 30 days' written notice
delivered or mailed by registered mail, postage prepaid, to the other Party.
Notwithstanding termination of this Section 9 or termination of this Agreement,
provided that the Rule 12b-1 Plan or any such similar plan remain in effect, the
provisions of this Section 9 shall remain in effect with regard to Existing
Contracts and the Insurer shall continue to receive payments therefore.
Section 10. Notices
Notices and communications required or permitted by Section 2 hereof
will be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given to
the following persons at the following addresses by registered, certified or
overnight mail and facsimile numbers, or such other persons, addresses or
facsimile numbers as the Party receiving such notices or communications may
subsequently direct in writing:
Insurer
IDS Life Insurance Company of New York
1765 AXP Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Vice President, Annuities
FAX: (000) 000-0000
Contracts Distributor
American Express Financial Advisors Inc.
1765 AXP Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Vice President, Annuities
FAX: (000) 000-0000
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If to Insurer or
Contracts Distributor, a copy to:
American Express Financial Advisors Inc.
50607 AXP Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Counsel
FAX: (000) 000-0000
Alliance Fund Distributors, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx XX 00000
Attn.: Xxxxxx X. Xxxxxx
FAX: (000) 000-0000
Alliance Capital Management L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx XX 00000
Attn: Xxxxxx X. Xxxxxx
FAX: (000) 000-0000
Section 11. Voting Procedures
Subject to the cost allocation procedures set forth in Section 3
hereof, Insurer will provide such information regarding Participants so that
Distributor can distribute all proxy material furnished by the Fund to
Participant. Insurer will vote Fund shares in accordance with instructions
received from Participants. Insurer will vote Fund shares that are (a) not
attributable to Participants or (b) attributable to Participants, but for which
no instructions have been received, in the same proportion as Fund shares for
which said instructions have been received from Participants. Insurer agrees
that it will disregard Participant voting instructions only to the extent it
would be permitted to do so pursuant to Rule 6e-3 (T)(b)(15)(iii) under the 1940
Act if the Contracts were variable life insurance policies subject to that rule.
Other participating life insurance companies utilizing the Fund will be
responsible for calculating voting privileges in a manner consistent with that
of Insurer, as prescribed by this Section 11.
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 is 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.
-15-
Section 12. Foreign Tax Credits
The Adviser agrees to consult in advance with Insurer concerning any
decision to elect or not to elect pursuant to Section 853 of the Code to pass
through the benefit of any foreign tax credits to the Fund's shareholders.
Section 13. Indemnification
13.1 Indemnification of Fund, Distributor and Adviser by Insurer.
(a) Except to the extent provided in Sections 13.1(b) and 13.1(c),
below, Insurer agrees to indemnify and hold harmless the Fund, Distributor and
Adviser and each person, if any, who controls the Fund, Distributor or Adviser
within the meaning of Section 15 of the 1933 Act, and each of their directors
and officers, (collectively, the "Indemnified Parties" for purposes of this
Section 13. 1) against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with the written consent of
Insurer) or actions in respect thereof (including, to the extent reasonable,
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, expenses, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Separate
Account's 1933 Act registration statement, the Separate Account
Prospectus, the Contracts or, to the extent prepared by Insurer
or Contracts Distributor, sales literature or advertising for the
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to Insurer or Contracts
Distributor by or on behalf of the Fund, Distributor or Adviser
for use in the Separate Account's 1933 Act registration
statement, the Separate Account Prospectus, the Contracts, or
sales literature or advertising (or any amendment or supplement
to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in the Fund's 1933 Act registration statement, Fund
Prospectus, sales literature or advertising of the Fund, or any
amendment or supplement to any of the foregoing, not supplied for
use therein by or on behalf of Insurer or Contracts Distributor)
or the negligent, illegal or fraudulent conduct of Insurer or
Contracts Distributor or persons under their control (including,
without limitation, their employees and "Associated Persons," as
that term is defined in paragraph (m) of Article I of the NASD's
By-Laws), in connection with the sale or distribution of the
Contracts or Fund shares; or
-16-
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Fund's
1933 Act registration statement, Fund Prospectus, sales
literature or advertising of the Fund, or any amendment or
supplement to any of the foregoing, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon and in conformity with information furnished to the Fund,
Adviser or Distributor by or on behalf of Insurer or Contracts
Distributor for use in the Fund's 1933 Act registration
statement, Fund Prospectus, sales literature or advertising of
the Fund, or any amendment or supplement to any of the foregoing;
or
(iv) arise as a result of any failure by Insurer or Contracts
Distributor to perform the obligations, provide the services and
furnish the materials required of them under the terms of this
Agreement.
(b) Insurer shall not be liable under this Section 13.1 with respect to
any losses, claims, expenses, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of that Indemnified Party's reckless disregard of
obligations or duties under this Agreement or to Distributor or to the Fund.
(c) Insurer shall not be liable under this Section 13.1 with respect to
any action against an Indemnified Party unless the Fund, Distributor or Adviser
shall have notified Insurer in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify Insurer of any such action shall not relieve
Insurer from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of this Section 13. 1,
except to the extent that the failure to notify results in the failure of actual
notice to Insurer and Insurer is damaged solely as a result of the failure to
give such notice. In case any such action is brought against an Indemnified
Party, Insurer shall be entitled to participate, at its own expense, in the
defense of such action. Insurer also shall be entitled to assume the defense
thereof, with counsel approved by the Indemnified Party named in the action,
which approval shall not be unreasonably withheld. After notice from Insurer to
such Indemnified Party of Insurer's election to assume the defense thereof, the
Indemnified Party will cooperate fully with Insurer and shall bear the fees and
expenses of any additional counsel retained by it, and Insurer will not be
liable to such Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof, other than reasonable costs of
investigation.
13.2 Indemnification of Insurer and Contracts Distributor by
Adviser.
(a) Except to the extent provided in Sections 13.2(d) and 13.2(e),
below, Adviser agrees to indemnify and hold harmless Insurer and Contracts
Distributor and each person, if any, who controls Insurer or Contracts
Distributor within the meaning of Section 15 of the 1933 Act, and each of their
directors and officers, (collectively, the "Indemnified Parties" for purposes of
this Section 13.2) against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with the written consent of
Adviser) or actions in respect thereof (including, to the extent
-17-
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, expenses, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Fund's
1933 Act registration statement, Fund Prospectus, sales
literature or advertising of the Fund or, to the extent not
prepared by Insurer or Contracts Distributor, sales literature or
advertising for the Contracts (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which
they were made; provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
Distributor, Adviser or the Fund by or on behalf of Insurer or
Contracts Distributor for use in the Fund's 1933 Act registration
statement, Fund Prospectus, or in sales literature or advertising
(or any amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in the Separate Account's 1933 Act registration
statement, Separate Account Prospectus, sales literature or
advertising for the Contracts, or any amendment or supplement to
any of the foregoing, not supplied for use therein by or on
behalf of Distributor, Adviser, or the Fund) or the negligent,
illegal or fraudulent conduct of the Fund, Distributor, Adviser
or persons under their control (including, without limitation,
their employees and Associated Persons), in connection with the
sale or distribution of the Contracts or Fund shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Separate
Account's 1933 Act registration statement, Separate Account
Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading 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 Insurer or Contracts Distributor by or
on behalf of the Fund, Distributor or Adviser for use in the
Separate Account's 1933 Act registration statement, Separate
Account Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by the Fund, Adviser or
Distributor or persons under their respective control or subject
to their authorization to perform the obligations, provide the
services and furnish the materials required of them under the
terms of this Agreement including, but not limited to, a failure,
whether unintentional, in good faith or otherwise, any material
error 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
-18-
Section 13.2(a)(iv) as an "error"); provided, however, that the
foregoing will not apply where such error is the result of
incorrect information supplied by or on behalf of the Insurer to
the Fund or the Adviser, and will be limited to (i) reasonable
administrative costs necessary to correct such error, and (ii)
amounts which the Insurer has paid out of its own resources to
make Contract owners whole as a result of such error; or
(v) arise out of or result from any material breach of any
representation and/or any warranty made by the Adviser or the
Fund in this Agreement, or arise out of or result from any other
material breach of this Agreement by the Adviser or the Fund or
persons under their respective control or subject to their
authorization.
(b) Except to the extent provided in Sections 13.2(d) and 13.2(e)
hereof, Adviser agrees to indemnify and hold harmless the Indemnified Parties
from and against any and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement thereof with, except as set forth in
Section 13.2(c) below, the written consent of Adviser) or actions in respect
thereof (including, to the extent reasonable, legal and other expenses) to which
the Indemnified Parties may become subject directly or indirectly under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
expenses, damages, liabilities or actions directly or indirectly result from or
arise out of the failure of any Portfolio to operate as a regulated investment
company in compliance with (i) Subchapter M of the Code and regulations
thereunder and (ii) Section 817(h) of the Code and regulations thereunder
(except to the extent that such failure is caused by Insurer), including,
without limitation, any income taxes and related penalties, rescission charges,
liability under state law to Contract owners or Participants asserting liability
against Insurer or Contracts Distributor pursuant to the Contracts, the costs of
any ruling and closing agreement or other settlement with the Internal Revenue
Service, and the cost of any substitution by Insurer of shares of another
investment company or portfolio for those of any adversely affected Portfolio as
a funding medium for the Separate Account that Insurer deems necessary or
appropriate as a result of the noncompliance.
(c) The written consent of Adviser referred to in Section 13.2(b) above
shall not be required with respect to amounts paid in connection with any ruling
and closing agreement or other settlement with the Internal Revenue Service.
(d) Adviser shall not be liable under this Section 13.2 with respect to
any losses, claims, expenses, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of such Indemnified Party's reckless disregard of its
obligations and duties under this Agreement or to Insurer, Contracts Distributor
or the Separate Account.
(e) Adviser shall not be liable under this Section 13.2 with respect to
any action against an Indemnified Party unless Insurer or Contracts Distributor
shall have notified Adviser in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify Adviser of any such action shall not relieve
Adviser from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of this Section 13.2. In
case any such action is brought against an Indemnified Party, Adviser will be
entitled to
-19-
participate, at its own expense, in the defense of such action. Adviser also
shall be entitled to assume the defense thereof (which shall include, without
limitation, the conduct of any ruling request and closing agreement or other
settlement proceeding with the Internal Revenue Service), with counsel approved
by the Indemnified Party named in the action, which approval shall not be
unreasonably withheld. After notice from Adviser to such Indemnified Party of
Adviser's election to assume the defense thereof, the Indemnified Party will
cooperate fully with Adviser and shall bear the fees and expenses of any
additional counsel retained by it, and Adviser will not be liable to such
Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in connection with
the defense thereof, other than reasonable costs of investigation.
13.3 Effect of Notice.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Section 13.1(c) or 13.2(e) above of participation in or control
of any action by the indemnifying Party will in no event be deemed to be an
admission by the indemnifying Party of liability, culpability or responsibility,
and the indemnifying Party will remain free to contest liability with respect to
the claim among the Parties or otherwise.
Section 14. Limitation of Liability
Except as previously 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.
Section 15. Arbitration
Any controversy of claim arising 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 Insurer or an affiliate, one
of whom will be appointed by the Fund and/or the Adviser 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 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.
-20-
Section 16. Confidentiality
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 Contracts Distributor, Insurer
and their subsidiaries, affiliates and licensees (collectively the "Protected
Parties" for purposes of this Section 16), 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 Distributor nor the Adviser may use or disclose
Confidential Information for any purpose other than to carry out the purpose for
which Confidential Information was provided to Distributor and/or Adviser as set
forth in the Agreement; and the Distributor and the Adviser agree to cause all
their employees, agents and representatives, or any other Party to whom the
Distributor and/or the Adviser may provide access to or disclose Confidential
Information to limit the use and disclosure of Confidential Information to that
purpose.
(c) The Distributor and the Adviser 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 Insurer's
performance of its duties under this Agreement are the valuable property of the
Protected Parties.
(d) The Distributor and the Adviser 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
Distributor and the Adviser further agree to cause all their agents,
representatives or subcontractors of, or any other Party to whom the Distributor
and/or the Adviser may provide access to or disclose Confidential Information to
implement appropriate measures designed to meet the objectives set forth in this
Section 16.
(e) The Distributor and the Adviser acknowledge that any breach of the
agreements in this Section 16 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 contained in this Section 16 will survive any termination of this
Agreement.
-21-
Section 17. Applicable Law
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with New York law, without regard for that state's
principles of conflict of laws.
Section 18. Execution in Counterparts
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
Section 19. Severability
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
Section 20. Rights Cumulative
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.
Section 21. Restrictions on Sales of Fund Shares
Insurer agrees that the Fund will be permitted (subject to the other
terms of this Agreement) to make its shares available to separate accounts of
other life insurance companies.
Section 22. Headings
The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers signing below.
-22-
Attest: IDS LIFE INSURANCE COMPANY OF NEW YORK,
/s/ Xxxx Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------- -----------------------
Name: Xxxx Xxxxx Xxxxxxx Name: Xxxxx X. Xxxxxx
Title: Assistant Secretary Title: Vice President, Annuities
Attest: AMERICAN EXPRESS FINANCIAL ADVISORS INC.,
/s/ Xxxx Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------- -----------------------
Name: Xxxx Xxxxx Xxxxxxx Name: Xxxxx X. Xxxxxx
Title: Assistant Secretary Title: Vice President, Annuities
ALLIANCE CAPITAL MANAGEMENT LP
By: Alliance Capital Management
Corporation, its General Partner
By: /s/ Xxxxxx X. Xxxxxx, Xx.
-------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Vice President
ALLIANCE FUND DISTRIBUTORS, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
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EXHIBIT A
Funds--Class B shares of:
Alliance VP Growth & Income Portfolio
Combination Fixed and Variable Annuity Contracts:
Contract Name____________________________________________SEC Registration Number
IDS of New York Life Flexible Annuity____________________________________33-4174
IDS of New York Employee Benefit Annuity________________________________33-52567
IDS of New York Life Variable Retirement Annuity_________________________2-78194
IDS of New York Life Combination Retirement Annuity______________________2-78194
Combination Fixed and Variable Life Insurance Policies:
None
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