FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 13th day of August, 2001 (the
"Agreement") by and among IDS Life Insurance Company of New York, organized
under the laws of the State of New York (the "Company"), on behalf of itself and
each separate account of the Company named in Schedule A to this Agreement, as
may be amended from time to time (each account referred to as the "Account" and
collectively as the "Accounts"); INVESCO Variable Investment Funds, Inc., an
open-end management investment company organized under the laws of the State of
Maryland (the "Fund"); INVESCO Funds Group, Inc., a corporation organized under
the laws of the State of Delaware and investment adviser to the Fund (the
"Adviser"); and INVESCO Distributors, Inc., a corporation organized under the
laws of the State of Delaware and principal underwriter/distributor of the Fund
(the "Distributor").
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 which have
entered into participation agreements substantially 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"); and
WHEREAS, the Company, as depositor, has established or will establish the
Accounts to serve as investment vehicles for certain variable annuity contracts
and variable life insurance policies and funding agreements offered by the
Company set forth on Schedule A (the "Contracts"); and
WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolutions 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, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Portfolios named in Schedule B, as
such schedule may be amended from time to time (the "Designated Portfolios") on
behalf of the Accounts to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Adviser and the Distributor agree as follows:
ARTICLE I - SALE OF FUND SHARES
1.1 The Fund agrees to sell to the Company those shares of the Designated
Portfolios which each Account orders, executing such orders on a daily
basis at the net asset value (and with no sales charges) next computed
after receipt and acceptance by the Fund or its designee of the order
for the shares of the Fund. For purposes of this Section 1.1, the
Company will be the designee of the Fund for receipt of such orders
from each Account and receipt by such designee will constitute receipt
by the Fund; provided that the Fund receives notice of such order by
11:00 a.m. Eastern Time on the next following business day. "Business
Day" will mean any day on which the New York Stock Exchange is open for
trading and on which the Fund calculates its net asset value pursuant
to the rules of the Securities and Exchange Commission (the
"Commission"). The Fund may net the notice of redemptions it receives
from the Company
-1-
under Section 1.3 of this Agreement against the notice of purchases it
receives from the Company under this Section 1.1.
1.2 The Company will pay for Fund shares on the next Business Day after an
order to purchase Fund shares is made in accordance with Section 1.1.
Payment will be made in federal funds transmitted by wire. Upon receipt
by the Fund of the payment, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of
the Fund.
1.3 The Fund agrees to redeem for cash, upon the Company's request, any
full or fractional shares of the Fund held by the Company, executing
such requests on a daily basis at the net asset value next computed
after receipt and acceptance by the Fund or its agent of the request
for redemption. For purposes of this Section 1.3, the Company will be
the designee of the Fund for receipt of requests for redemption from
each Account and receipt by such designee will constitute receipt by
the Fund; provided the Fund receives notice of such requests for
redemption by 11:00 a.m. Eastern Time on the next following Business
Day. Payment will be made in federal funds transmitted by wire to the
Company's account as designated by the Company in writing from time to
time, on the same Business Day the Fund receives notice of the
redemption order from the Company. After consulting with the Company,
the Fund reserves the right to delay payment of redemption proceeds,
but in no event may such payment be delayed longer than five (5)
calendar days to enable the Company to pay redemption proceeds within
the period specified Section 22(e) of the Investment Company Act of
1940 (the "1940 Act"). 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 11:00 Eastern Time,
payment for redeemed shares will be made on the next following Business
Day. The Fund may net the notice of purchases it receives from the
Company under Section 1.1 of this Agreement against the notice of
redemptions it receives from the Company under this Section 1.3.
1.4 The Fund agrees to make shares of the Designated Portfolios available
continuously for purchase at the applicable net asset value per share
by the Company and its separate accounts on those days on which the
Fund calculates its Designated Portfolio net asset value pursuant to
rules of the Commission; provided, however, that the Board of Directors
of the Fund (the "Fund Board") may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering of shares
of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the
Fund Board, acting in good faith and in light of its fiduciary duties
under federal and any applicable state laws, necessary in the best
interests of the shareholders of such Portfolio.
1.5 The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts,
qualified pension and retirement plans or such other persons as are
permitted under Section 817(h)(4) of the Internal Revenue Code of 1986,
as amended, (the "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 directly to the
general public.
1.6 The Fund will not sell Fund shares to any insurance company or separate
account unless an agreement containing provisions substantially the
same as Articles I, III, V, and VI of this Agreement are in effect to
govern such sales.
-2-
1.7 The Company agrees to purchase and redeem the shares of the Designated
Portfolios offered by the then current prospectus of the Fund in
accordance with the provisions of such prospectus.
1.8 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or to any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate sub-account of
each Account.
1.9 The Fund will furnish same day notice (by facsimile, followed by
written confirmation) to the Company of the declaration of any income,
dividends or capital gain distributions payable on each Designated
Portfolio's shares. The Company hereby elects to receive all such
dividends and distributions as are payable on the Portfolio shares in
the form of additional shares of that Portfolio at the ex-dividend date
net asset values. The Company reserves the right to revoke this
election and to receive all such dividends and distributions in cash.
The Fund will notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.10 The Fund will make the net asset value per share for each Designated
Portfolio available to the Company via electronic means on a daily
basis as soon as reasonably practical after the net asset value per
share is calculated and will use its best efforts to make such net
asset value per share available by 6:30 p.m., Eastern Time, but in any
event, no later than 7:00 p.m., Eastern Time, each business day. If the
Fund provides the Company materially incorrect net asset value per
share information (as determined under SEC guidelines), the Company
shall be entitled to an adjustment to the number of shares purchased or
redeemed to reflect the correct net asset value per share. Any material
error in the calculation or reporting of net asset value per share,
dividend or capital gain information shall be reported to the Company
upon discovery by the Fund.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the Securities Act of 1933 (the "1933 Act"), or are
exempt from registration thereunder, and that the Contracts will be
issued and sold in compliance with all applicable federal and state
laws. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable
law and that it has legally and validly established each Account as a
separate account under Section 4240 of the New York Insurance Law and
that each Account is or will be registered as a unit investment trust
in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts, or is exempt from
registration thereunder, and that it will maintain such registration
for so long as any Contracts are outstanding, as applicable. The
Company will amend the registration statement under the 1933 Act for
the Contracts and the registration statement under the 1940 Act for the
Account from time to time as required in order to effect the continuous
offering of the Contracts or as may otherwise be required by applicable
law. The Company will register and qualify the Contracts for sale in
accordance with the securities laws of the various states only if and
to the extent deemed necessary by the Company.
2.2 The Company represents that the Contracts are currently and at the time
of issuance are intended to be treated as annuity contracts and/or life
insurance policies (as applicable) under applicable provisions of the
Code, and further represents that it will make every effort to maintain
such treatment and that it will notify the Fund and the Adviser
immediately upon
-3-
having a reasonable basis for believing that the Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.3 The Company represents and warrants that it will not purchase shares of
the Designated Portfolio(s) with assets derived from tax-qualified
retirement plans except, indirectly, through Contracts purchased in
connection with such plans.
2.4 The Fund represents and warrants that shares of the Designated
Portfolio(s) 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 as an
open-end management investment company under the 1940 Act for as long
as such shares of the Designated Portfolio(s) 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 Portfolio(s) for sale in accordance with
the laws of the various states only if and to the extent deemed
advisable by the Fund.
2.5 The Fund represents that it will use its best efforts to comply with
any applicable state insurance laws or regulations as they may apply to
the investment objectives, policies and restrictions of the Portfolios,
as they may apply to the Fund, to the extent specifically requested in
writing by the Company. If the Fund cannot comply with such state
insurance laws or regulations, it will so notify the Company in
writing. The Fund makes no other representation as to whether any
aspect of its operations (including, but not limited to, fees and
expenses, and investment policies) complies with the insurance laws or
regulations of any state. The Company represents that it will use its
best efforts to notify the Fund of any restrictions imposed by state
insurance laws that may become applicable to the Fund as a result of
the Accounts' investments therein. The Fund and the Adviser agree that
they will furnish the information required by state insurance laws to
assist the Company in obtaining the authority needed to issue the
Contracts in various states.
2.6 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it reserves the right to make such payments in the
future. To the extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have the directors of
its Fund Board, a majority of whom are not "interested" persons of the
Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.7 The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that it does and will
comply in all material respects with applicable provisions of the 0000
Xxx.
2.8 The Fund represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Fund are and 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.
-4-
2.9 The Adviser represents and warrants that it is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended, and will remain duly registered under all applicable federal
and state securities laws and that it will perform its obligations for
the Fund in accordance in all material respects with the laws of the
State of Delaware and any applicable state and federal securities laws.
2.10 The Distributor represents and warrants that it is registered as a
broker-dealer under the Securities and Exchange Act of 1934, as amended
(the "1934 Act") and will remain duly registered under all applicable
federal and state securities laws, and is a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD") and
serves as principal underwriter/distributor of the Funds and that it
will perform its obligations for the Fund in accordance in all material
respects with the laws of the State of Delaware and any applicable
state and federal securities laws.
ARTICLE III - FUND COMPLIANCE
3.1 The Fund and the Adviser acknowledge that any failure (whether
intentional or in good faith or otherwise) to comply with the
requirements of Subchapter M of the Code or the diversification
requirements of Section 817(h) of the Code may result in the Contracts
not being treated as variable contracts for federal income tax
purposes, which would have adverse tax consequences for Contract owners
and could also adversely affect the Company's corporate tax liability.
The Fund and the Adviser further acknowledge that any such failure may
result in costs and expenses being incurred by the Company in obtaining
whatever regulatory authorizations are required to substitute shares of
another investment company for those of the failed Fund, as well as
fees and expenses of legal counsel and other advisors to the Company
and any federal income taxes, interest or tax penalties incurred by the
Company in connection with any such failure.
3.2 The Fund represents and warrants that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that
it will 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.
3.3 The Fund represents that it will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be
treated as variable contracts under the Code and the regulations issued
thereunder; including, but not limited to, that the Fund will at all
times comply with Section 817(h) of the 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 with Section 817(d) of the Code, relating to the
definition of a variable contract, and any amendments or other
modifications to such Section or Regulation. The Fund will notify the
Company immediately upon having a reasonable basis for believing that
the Fund or a Portfolio thereunder has ceased to comply with the
diversification requirements or that the Fund or Portfolio might not
comply with the diversification requirements in the future. In the
event of a breach of this representation by the Fund, it will take all
reasonable steps to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Treasury Regulation
1.817-5.
-5-
3.4 The Adviser agrees to provide the Company with a certificate or
statement indicating compliance by each Portfolio of the Fund with
Section 817(h) of the Code, such certificate or statement to be sent to
the Company no later than thirty (30) days following the end of each
calendar quarter.
ARTICLE IV - PROSPECTUS AND PROXY STATEMENTS/VOTING
4.1 The Fund will provide the Company with as many copies of the current
Fund prospectus and any supplements thereto for the Designated
Portfolio(s) as the Company may reasonably request for distribution, at
the Fund's expense, to Contract owners at the time of Contract
fulfillment and confirmation. To the extent that the Designated
Portfolio(s) are one or more of several Portfolios of the Fund, the
Fund shall bear the cost of providing the Company only with disclosure
related to the Designated Portfolio(s). The Fund will provide, at the
Fund's expense, as many copies of said prospectus as necessary for
distribution, at the Fund's expense, to existing Contract owners. The
Fund will provide the copies of said prospectus to the Company or to
its mailing agent. The Company will distribute the prospectus to
existing Contract owners and will xxxx the Fund for the reasonable cost
of such distribution. If requested by the Company, in lieu thereof, the
Fund will provide such documentation, including a final copy of a
current prospectus set in type at the Fund's expense, and other
assistance as is reasonably necessary in order for the Company at least
annually (or more frequently if the Fund prospectus is amended more
frequently) to have the new prospectus for the Contracts and the Fund's
new prospectus printed together, in which case the Fund agrees to pay
its proportionate share of reasonable expenses directly related to the
required disclosure of information concerning the Fund. The Fund will,
upon request, provide the Company with a copy of the Fund's prospectus
through electronic means to facilitate the Company's efforts to provide
Fund prospectuses via electronic delivery, in which case the Fund
agrees to pay its proportionate share of reasonable expenses related to
the required disclosure of information concerning the Fund.
4.2 The Fund's prospectus will state that the Statement of Additional
Information (the "SAI") for the Fund is available from the Company. The
Fund will provide the Company, at the Fund's expense, with as many
copies of the SAI and any supplements thereto as the Company may
reasonably request for distribution, at the Fund's expense, to
prospective Contract owners and applicants. To the extent that the
Designated Portfolio(s) are one or more of several Portfolios of the
Fund, the Fund shall bear the cost of providing the Company only with
disclosure related to the Designated Portfolio(s). The Fund will
provide, at the Fund's expense, as many copies of said SAI as necessary
for distribution, at the Fund's expense, to any existing Contract owner
who requests such statement or whenever state or federal law requires
that such statement be provided. The Fund will provide the copies of
said SAI to the Company or to its mailing agent. The Company will
distribute the SAI as requested or required and will xxxx the Fund for
the reasonable cost of such distribution.
4.3 The Fund, at its expense, will provide the Company or its mailing agent
with copies of reports to shareholders/Contract owners and other
permissible communications to shareholders/Contract owners in such
quantity as the Company will reasonably require. The Company will
distribute these reports and other communications to existing Contract
owners and will xxxx the Fund for the reasonable cost of such
distribution.
4.4 If and to the extent required by law, the Company will:
-6-
(a) assist in the solicitation of voting instructions from Contract
owners;
(b) vote the shares of the Designated Portfolios held in the Account
in accordance with instructions received from Contract 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 Company's Contract
owners,
so long as and to the extent that the Commission continues to interpret
the 1940 Act to require pass-through voting privileges for variable
Contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent
permitted by law. The Company will be responsible for assuring that the
Accounts participating in the Fund calculate voting privileges in a
manner consistent with all legal requirements, including the Proxy
Voting Procedures set forth in Schedule C and the Mixed and Shared
Funding Exemptive Order, as described in Section 7.1.
4.5 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular, the Fund either will
provide for annual meetings (except insofar as the Commission 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 the 0000 Xxx) as well as with Section 16(a) and, if
and when applicable, Section 16(b). Further, the Fund will act in
accordance with the Commission's interpretation of the requirements of
Section 16(a) with respect to periodic elections of directors and with
whatever rules the Commission may promulgate with respect thereto.
ARTICLE V - SALES MATERIAL AND INFORMATION
5.1 The Company will furnish, or will cause to be furnished, to the Fund or
the Adviser, each piece of sales literature or other promotional
material in which the Fund or the Adviser is named, at least ten (10)
Business Days prior to its use. No such material will be used if the
Fund or the Adviser reasonably objects to such use within five (5)
Business Days after receipt of such material.
5.2 The Company will not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement, prospectus or
SAI for Fund shares, as such registration statement, prospectus and SAI
may be amended or supplemented from time to time, or in reports or
proxy statements for the Fund, or in published reports for the Fund
which are in the public domain or approved by the Fund or the Adviser
for distribution, or in sales literature or other material provided by
the Fund or by the Adviser, except with permission of the Fund or the
Adviser. The Fund and the Adviser agree to respond to any request for
approval on a prompt and timely basis.
5.3 The Fund or the Adviser will furnish, or will cause to be furnished, to
the Company or its designee, each piece of sales literature or other
promotional material in which the Company or its separate account is
named, at least ten (10) Business Days prior to its use. No such
material
-7-
will be used if the Company reasonably objects to such use within five
(5) Business Days after receipt of such material.
5.4 The Fund and the Adviser will not give any information or make any
representations or statements on behalf of the Company or concerning
the Company, each Account, or the Contracts other than the information
or representations contained in a registration statement, prospectus or
SAI for the Contracts, as such registration statement, prospectus and
SAI 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 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements,
applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that materially affect the Fund or its
shares, within a reasonable time after the filing of each such document
with the Commission or the NASD.
5.6 The Company will provide to the Fund at least one complete copy of all
definitive prospectuses, definitive SAI, reports, solicitations for
voting instruction applications for exemptions, requests for no action
letters, and all amendments to any of the above, that materially affect
the Contracts or each Account, contemporaneously with the filing of
each such document with the Commission or the NASD (except that with
respect to post-effective amendments to such prospectuses and SAIs,
only those prospectuses and SAIs that materially affect the Fund will
be provided). In addition, the Company will provide to the Fund at
least one complete copy of (i) a registration statement that relates to
the Contracts or each Account, containing representative and relevant
disclosure concerning the Fund; and (ii) any post-effective amendments
to any registration statements relating to the Contracts or such
Account that refer to or relate to the Fund.
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, (i.e., on-line networks such as the Internet or
other electronic messages)), sales literature (i.e., any written
communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market
letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made
generally available to some or all agents or employees, registration
statements, prospectuses, SAIs, shareholder reports, and proxy
materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 0000 Xxx.
5.8 The Fund, the Adviser and the Distributor hereby consent to the
Company's use of the names of the INVESCO, AMVESCAP and INVESCO Funds
Group, Inc. as well as the names of the Designated Portfolios set
forth in Schedule B of this Agreement, in connection with marketing
the Contracts, subject to the terms of Sections 5.1 of this Agreement.
The Company
-8-
acknowledges and agrees that Adviser and Distributor and/or their
affiliates own all right, title and interest in and to the name INVESCO
and the INVESCO open circle design, and covenants not, at any time, to
challenge the rights of Adviser and Distributor and/or their affiliates
to such name or design, or the validity or distinctiveness thereof. The
Fund, the Adviser and the Distributor hereby consent to the use of any
trademark, trade name, service xxxx or logo used by the Fund, the
Adviser and the Distributor, subject to the Fund's, the Adviser's
and/or the Distributor's approval of such use and in accordance with
reasonable requirements of the Investment Company, the Adviser or the
Distributor, as provided in this Agreement. Such consent will terminate
with the termination of this Agreement. Adviser or Distributor may
withdraw this consent as to any particular use of any such name or
identifying marks at any time (i) upon Adviser's or Distributor's
reasonable determination that such use would have a material adverse
effect on the reputation or marketing efforts of the Adviser, the
Distributor or the Fund or (ii) if no investment company, or series or
class of shares of any investment company advised by Adviser or
distributed by Distributor continues to be offered through variable
insurance contracts issued by the Company; provided however, that
Adviser or Distributor may, in either's individual discretion, continue
to allow the Company to use materials prepared or printed prior to the
withdrawal of such authorization. The Company agrees and acknowledges
that all use of any designation comprised in whole or in part of the
name, trademark, trade name, service xxxx and logo under this Agreement
shall inure to the benefit of the Fund, Adviser and/or the Distributor.
5.9 The Fund, the Adviser, the Distributor and the Company agree to adopt
and implement procedures reasonably designed to ensure that information
concerning the Company, the Fund, the Adviser or the Distributor,
respectively, and their respective affiliated companies, that is
intended for use only by brokers or agents selling the Contracts is
properly marked as "Not For Use With The Public" and that such
information is only so used.
5.10 The Adviser will be responsible for calculating the performance
information for the Fund. The Company will be responsible for
calculating the performance information for the Contracts. The Adviser
will be liable to the Company for any material mistake it makes in
calculating the performance information for the Fund which causes
losses to the Company. The Company will be liable to the Adviser for
any material mistake it makes in calculating the performance
information for the Contracts which causes losses to the Adviser. Each
party will be liable for any material mistake it makes in reproducing
the performance information for Contracts or the Fund, as appropriate.
The Fund and the Adviser agree to provide the Company with performance
information for the Fund on a timely basis to enable the Company to
calculate performance information for the Contracts in accordance with
applicable state and federal law.
ARTICLES VI - FEES, COSTS AND EXPENSES
6.1 The Fund will pay no fee or other compensation to the Company under
this Agreement, except: (a) if the Fund or any Designated Portfolio
adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act
to finance distribution expenses, then, subject to obtaining any
required exemptive orders or other regulatory approvals, the Fund may
make payments to the Company or to the underwriter for the Contracts if
and in such amounts agreed to by the Fund in writing; and (b) the Fund
may pay fees to the Company for administrative services provided to
Contract owners that are not primarily intended to result in the sale
of shares of the Designated Portfolio or of underlying Contracts.
-9-
6.2 All expenses incident to performance by the Fund of this Agreement will
be paid by the Fund to the extent permitted by law. All shares of the
Designated Portfolios will be duly authorized for issuance and
registered in accordance with applicable federal law and, to the extent
deemed advisable by the Fund, in accordance with applicable state law,
prior to sale. The Fund will bear the expenses for the cost of
registration and qualification of the Fund's shares, including without
limitation, the preparation of and filing with the SEC of Forms N-SAR
and Rule 24f-2 Notices and payment of all applicable registration or
filing fees with respect to shares of the Fund; preparation and filing
of the Fund's prospectus, SAI and registration statement, proxy
materials and reports; typesetting the Fund's prospectus; typesetting
and printing proxy materials and reports to Contract owners (including
the costs of printing a Fund prospectus that constitutes an annual
report); the preparation of all statements and notices required by any
federal or state law; all taxes on the issuance or transfer of the
Fund's shares; any expenses permitted to be paid or assumed by the Fund
pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act; and
other costs associated with preparation of prospectuses and SAIs for
the Designated Portfolios in electronic or typeset format, as well as
any distribution expenses as set forth in Article IV of this Agreement.
ARTICLE VII - MIXED & SHARED FUNDING RELIEF
7.1 The Fund represents and warrants that it has received an order from the
Commission 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 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 and that may be imposed on the Company, the Fund and/or
the Adviser by virtue of the receipt of such order by the Commission,
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.
7.2 The Fund Board will monitor the Fund for the existence of any
irreconcilable material conflict among the interests of the Contract
owners of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons,
including, but not limited to: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any
similar action by insurance, tax, or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Portfolio are being
managed; (e) a difference in voting instructions given by Participating
Insurance Companies or by variable annuity and variable life insurance
Contract owners; or (f) a decision by an insurer to disregard the
voting instructions of Contract owners. The Fund Board will promptly
inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof. A majority of the Fund
Board will consist of persons who are not "interested" persons of the
Fund.
-10-
7.3 The Company will report any potential or existing conflicts of which it
is aware to the Fund Board. The Company agrees to assist the Fund Board
in carrying out its responsibilities, as delineated in the Mixed and
Shared Funding Exemptive Order, by providing the Fund Board with all
information reasonably necessary for the Fund Board to consider any
issues raised. This includes, but is not limited to, an obligation by
the Company to inform the Fund Board whenever Contract owner voting
instructions are to be disregarded. The Fund Board will record in its
minutes, or other appropriate records, all reports received by it and
all action with regard to a conflict.
7.4 If it is determined by a majority of the Fund Board, or a majority of
its disinterested directors, that an irreconcilable material conflict
exists, the Company and other Participating Insurance Companies will,
at their expense and to the extent reasonably practicable (as
determined by a majority of the disinterested directors), take whatever
steps are necessary to remedy or eliminate the irreconcilable material
conflict, up to and including: (a) withdrawing the assets allocable to
some or all of the Accounts (or sub-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 submitted to
a vote of all affected Contract owners and, as appropriate, segregating
the assets of any appropriate group (i.e., variable annuity Contract
owners or variable life insurance Contract owners of one or more
Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Contract owners the option of
making such a change; and (b) establishing a new registered management
investment company or managed separate account.
7.5 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions, and such
disregard of voting instructions could conflict with the majority of
Contract owner voting instructions, and the Company's judgment
represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the
affected sub-account of the Account's investment in the Fund and
terminate this Agreement with respect to such sub-account; provided,
however, that such withdrawal and termination will be limited to the
extent required by the foregoing irreconcilable material conflict as
determined by a majority of the disinterested directors of the Fund
Board. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination must take place within
six (6) months after the Fund gives written notice to the Company that
this provision is being implemented. Until the end of such six-month
period the Adviser and Fund will, to the extent permitted by law and
any exemptive relief previously granted to the Fund, continue to accept
and implement orders by the Company for the purchase (and redemption)
of shares of the Fund.
7.6 If an 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 sub-account of the Account's investment in the
Fund and terminate this Agreement with respect to such sub-account;
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
-11-
notice to the Company that this provision is being implemented. Until
the end of such six-month period the Advisor and Fund will, to the
extent permitted by law and any exemptive relief previously granted to
the Fund, continue to accept and implement orders by the Company for
the purchase (and redemption) of shares of the Fund.
7.7 For purposes of Sections 7.4 through 7.7 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, other than as specified in Section 7.4, will
the Fund be required to establish a new funding medium for the
Contracts. The Company will not be required by Section 7.4 to establish
a new funding medium for the Contracts if an offer to do so has been
declined by vote of a majority of Contract owners affected by the
irreconcilable material conflict.
7.8 The Company will at least annually submit to the Fund Board such
reports, materials or data as the Fund Board may reasonably request so
that the Fund Board may fully carry out the duties imposed upon it as
delineated in the Mixed and Shared Funding Exemptive Order, and said
reports, materials and data will be submitted more frequently if deemed
appropriate by the Fund Board.
7.9 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, 7.1, 7.2, 7.3, 7.4,
and 7.5 of this Agreement will continue in effect only to the extent
that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII - INDEMNIFICATION
8.1 Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless the Fund, the
Adviser, the Distributor, and each person, if any, who controls
or is associated with the Fund, the Adviser, or the Distributor
within the meaning of such terms under the federal securities
laws (but not any participating insurance company) and any
director, trustee, officer, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, expenses,
damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or actions in respect thereof
(including reasonable legal and other expenses), to which the
Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(1) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statement, prospectus or SAI for the
Contracts or contained in the Contracts or sales literature
or other
-12-
promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated or necessary
to make such statements not misleading in light of the
circumstances in which they were made; provided that this
agreement to indemnify will not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or
on behalf of the Fund, the Adviser, or the Distributor for
use in the registration statement, prospectus or SAI for the
Contracts or in the Contracts or sales literature (or any
amendment or supplement to any of the foregoing) 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, SAI or sales literature or other
promotional material of the Fund, or any amendment or
supplement to the foregoing, 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, SAI or sales literature
or other promotional material of the Fund (or any amendment
or supplement to the foregoing) or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make such statements not
misleading in light of the circumstances in which they were
made, if such a statement or omission was made in reliance
upon and in conformity with information furnished to the
Fund by or on behalf of the Company or persons under its
control; or
(4) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of
this Agreement; or
(5) arise out of any material breach of any representation
and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach by the
Company of this Agreement; except to the extent provided in
Sections 8.1(b) and 8.4 hereof. This indemnification will be
in addition to any liability that the Company otherwise may
have.
(b) No party will be entitled to indemnification under Section 8.1(a)
if such loss, claim, damage, liability or action 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.
-13-
8.2 Indemnification by the Adviser & Distributor
(a) The Adviser and Distributor agree 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,
employee or agent of the foregoing (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against
any and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written consent of
the Adviser and Distributor) or actions in respect thereof
(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 SAI for the Fund
or sales literature or other promotional material of the
Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated or necessary to make such statements
not misleading in light of the circumstances in which they
were made; provided that this agreement to indemnify will
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished
to the Adviser or the Fund by or on behalf of the Company
for use in the registration statement, prospectus or SAI for
the Fund or in sales literature of the Fund (or any
amendment or supplement thereto) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(2) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Contracts or in the Contract or Fund registration
statements, prospectuses or statements of additional
information or sales literature or other promotional
material for the Contracts or of the Fund, or any amendment
or supplement to the foregoing, not supplied by the Adviser,
the Distributor, or the Fund or persons under the control of
the Adviser, the Distributor, or the Fund respectively) or
wrongful conduct of the Adviser, the Distributor, or the
Fund or persons under the control of the Adviser, the
Distributor, 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, SAI or sales literature or other
promotional material covering the Contracts (or any
amendment or supplement thereto), or the omission or alleged
omission to state therein a material fact required to be
stated or necessary to make such statement or statements not
misleading in light of the circumstances in which they were
made, if such statement or omission was made in reliance
upon and in conformity with information furnished to the
Company by or on behalf of the Adviser, the Distributor, or
the Fund, or persons under any of their control; or
-14-
(4) arise as a result of any failure by the Fund, the
Distributor, or the Adviser to provide the services and
furnish the materials under the terms of this Agreement; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser, the
Distributor, or the Fund in this Agreement, or arise out of
or result from any other material breach of this Agreement
by the Adviser, the Distributor, or the Fund (including a
failure, whether intentional or in good faith or otherwise,
to comply with the requirements of Subchapter M of the Code
specified in Article III, Section 3.2 of this Agreement and
the diversification requirements specified in Article III,
Section 3.3 of this Agreement, as described more fully in
Section 8.5 below); except to the extent provided in
Sections 8.2(b) and 8.4 hereof. This indemnification will be
in addition to any liability that the Adviser or Distributor
otherwise may have.
(b) No party will be entitled to indemnification under Section 8.2(a)
if such loss, claim, damage, liability or action 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 or its obligations or
duties under this Agreement.
(c) The Indemnified Parties will promptly notify the Adviser, the
Fund, and the Distributor of the commencement of any litigation,
proceedings, complaints or actions by regulatory authorities
against them in connection with the issuance or sale of the
Contracts or the operation of the Account.
8.3 Indemnification by the Fund
(a) The Fund agrees to indemnify and hold harmless the Company and
each person, if any, who controls or is associated with the
Company within the meaning of such terms under the federal
securities laws and any director, officer, employee or agent of
the foregoing (collectively, the "Indemnified Parties" for
purposes of this Section 8.3) against any and all losses, claims,
expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or action in
respect thereof (including reasonable legal and other expenses)
to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements, are related to the operations of
the Fund and:
(1) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement; or
(2) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund (including a failure,
whether intentional or in good faith or otherwise, to comply
with the requirements of Subchapter M of the Code specified
in Article III, Section 3.2 of this Agreement and the
diversification requirements specified in Article III,
Section 3.3 of this Agreement as described more fully in
Section 8.5 below); or
-15-
(3) arise out of or result from the incorrect or untimely
calculation or reporting of daily net asset value per share
or dividend or capital gain distribution rate; except to the
extent provided in Sections 8.3(b) and 8.4 hereof. This
indemnification will be in addition to any liability that
the Fund otherwise may have.
(b) No party will be entitled to indemnification under Section 8.3(a)
if such loss, claim, damage, liability or action 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.
8.4 Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.4) will not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification
under this Article VIII ("Indemnified Party" for the purpose of this
Section 8.4) unless such Indemnified Party will have notified the
Indemnifying Party in writing within a reasonable time after the
summons or other first legal process giving information of the nature
of the claim upon such Indemnified Party (or after such party will have
received notice of such service on any designated agent), but failure
to notify the Indemnifying Party of any such claim will not relieve the
Indemnifying Party from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of the indemnification provision of this Article VIII, except
to the extent that the failure to notify results in the failure of
actual notice to the Indemnifying Party and such Indemnifying Party is
damaged solely as a result of failure to give such notice. In case any
such action is brought against the Indemnified Party, the Indemnifying
Party will be entitled to participate, at its own expense, in the
defense thereof. The Indemnifying Party also will be entitled to assume
the defense thereof, with counsel satisfactory to the party named in
the action. After notice from the Indemnifying Party to the Indemnified
Party of the Indemnifying Party's election to assume the defense
thereof, the Indemnified Party will bear the fees and expenses of any
additional counsel retained by it, and the Indemnifying Party will not
be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation, unless: (a) the Indemnifying Party and the Indemnified
Party will have mutually agreed to the retention of such counsel; or
(b) the named parties to any such proceeding (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. The Indemnifying Party will not be liable for any settlement of
any proceeding effected without its written consent but if settled with
such consent or if there is a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and
against any loss or liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement will be entitled to
the benefits of the indemnification contained in this Article VIII.
-16-
The indemnification provisions contained in this Article VIII will
survive any termination of this Agreement.
8.5 Indemnification for Failure to Comply with Diversification Requirements
The Fund and the Adviser acknowledge that any failure (whether
intentional or in good faith or otherwise) to comply with the
diversification requirements specified in Article III, Section 3.3 of
this Agreement may result in the Contracts not being treated as
variable contracts for federal income tax purposes, which would have
adverse tax consequences for Contract owners and could also adversely
affect the Company's corporate tax liability. Accordingly, without in
any way limiting the effect of Sections 8.2(a) and 8.3(a) hereof and
without in any way limiting or restricting any other remedies available
to the Company, the Fund, the Adviser and the Distributor will pay on a
joint and several basis all costs associated with or arising out of any
failure, or any anticipated or reasonably foreseeable failure, of the
Fund or any Portfolio to comply with Section 3.3 of this Agreement,
including all costs associated with correcting or responding to any
such failure; such costs may include, but are not limited to, the costs
involved in creating, organizing, and registering a new investment
company as a funding medium for the Contracts and/or the costs of
obtaining whatever regulatory authorizations are required to substitute
shares of another investment company for those of the failed Fund or
Portfolio (including but not limited to an order pursuant to Section
26(b) of the 1940 Act); fees and expenses of legal counsel and other
advisors to the Company and any federal income taxes or tax penalties
(or "toll charges" or exactments or amounts paid in settlement)
incurred by the Company in connection with any such failure or
anticipated or reasonably foreseeable failure. Such indemnification and
reimbursement obligation shall be in addition to any other
indemnification and reimbursement obligations of the Fund, the Adviser
and/or the Distributor under this Agreement.
8.6 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.
8.7. 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 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
-17-
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 IX - APPLICABLE LAW
9.1 This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware.
9.2 This Agreement will be subject to the provisions of the 1933 Act, the
1934 Act and the 1940 Act, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the Commission may grant (including, but not limited to,
the Mixed and Shared Funding Exemptive Order) and the terms hereof will
be interpreted and construed in accordance therewith.
ARTICLE X - TERMINATION
10.1 This Agreement will terminate:
(a) at the option of any party, with or without cause, with
respect to one, some or all of the Portfolios, upon sixty (60)
days' advance written notice to the other parties or, if
later, upon receipt of any required exemptive relief or orders
from the SEC, unless otherwise agreed in a separate written
agreement among the parties; or
(b) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio if shares of the
Portfolio are not reasonably available to meet the
requirements of the Contracts as determined in good faith by
the Company; or
(c) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
Company; or
(d) at the option of the Fund, upon written notice to the other
parties, upon institution of formal proceedings against the
Company by the NASD, the Commission, the Insurance Commission
of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale
of the Contracts, the administration of the Contracts, the
operation of the Account, or the purchase of the Fund shares,
provided that the Fund determines in its sole judgment,
exercised in good faith, that any such proceeding would have a
material adverse effect on the Company's ability to perform
its obligations under this Agreement; or
(e) at the option of the Company, upon written notice to the other
parties, upon institution of formal proceedings against the
Fund, the Distributor, or the Adviser by the NASD, the
Commission 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, the Distributor's, or the Adviser's ability to
perform its obligations under this Agreement; or
(f) at the option of the Company, upon written notice to the other
parties, if the Fund ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code, or
-18-
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 written notice to the other
parties, with respect to any Portfolio if the Fund fails to
meet the diversification requirements specified in Section 3.3
hereof or if the Company reasonably and in good faith believes
the Fund may fail to meet such requirements; or
(h) at the option of any party to this Agreement, upon written
notice to the other parties, upon another party's material
breach of any provision of this Agreement; or
(i) at the option of the Company, if the Company determines in its
sole judgment exercised in good faith that either the Fund or
the Adviser has suffered a material adverse change in its
business, operations or financial condition since the date of
this Agreement or is the subject of material adverse publicity
which is likely to have a material adverse impact upon the
business and operations of the Company, such termination to be
effective sixty (60) days' after receipt by the other parties
of written notice of the election to terminate; or
(j) at the option of the Fund or the Adviser, if the Fund or
Adviser respectively, determines in its sole judgment
exercised in good faith that the Company has suffered a
material adverse change in its business, operations or
financial condition since the date of this Agreement or is the
subject of material adverse publicity which is likely to have
a material adverse impact upon the business and operations of
the Fund or the Adviser, such termination to be effective
sixty (60) days' after receipt by the other parties of written
notice of the election to terminate; or
(k) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the Contract
owners having an interest in the Account (or any sub-account)
to substitute the shares of another investment company for the
corresponding Portfolio's 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 portfolio.
The Company will give sixty (60) days' prior written notice to
the Fund of the date of any proposed vote or other action
taken to replace the Fund's shares or of the filing of any
required regulatory approval(s); or
(1) at the option of the Company or the Fund upon a determination
by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable
material conflict exists among the interests of: (1) all
Contract owners of variable insurance products of all separate
accounts; or (2) the interests of the Participating Insurance
Companies investing in the Fund as set forth in Article VII of
this Agreement; or
(m) at the option of the Fund in the event any of the Contracts
are not issued or sold in accordance with applicable federal
and/or state law. Termination will be effective immediately
upon such occurrence without notice.
10.2 Notice Requirement
-19-
(a) No termination of this Agreement, except a termination under
Section 10.1 (m) of this Agreement, will be effective unless
and until the party terminating this Agreement gives prior
written notice to all other parties of its intent to
terminate, which notice will set forth the basis for the
termination.
(b) In the event that any termination of this Agreement is based
upon the provisions of Article VII, such prior written notice
will be given in advance of the effective date of termination
as required by such provisions.
10.3 Effect of Termination
Notwithstanding any termination of this Agreement, the Fund, the
Adviser and the Distributor will, at the option of the Company,
continue to make available additional shares of the Fund pursuant to
the terms and conditions of this Agreement, for all Contracts in effect
on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without limitation,
the owners of the Existing Contracts will be permitted to reallocate
investments in the Designated Portfolios (as in effect on such date),
redeem investments in the Designated Portfolios and/or invest in the
Designated Portfolios upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 10.3
will not apply to any terminations under Article VII and the effect of
such Article VII terminations will be governed by Article VII of this
Agreement.
10.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII to indemnify other parties will survive
and not be affected by any termination of this Agreement. In addition,
with respect to Existing Contracts, all provisions of this Agreement
also will survive and not be affected by any termination of this
Agreement.
ARTICLE XI - NOTICES
Any notice will be deemed duly given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
parties.
If to the Company:
IDS Life Insurance Company of New York
c/o American Express Financial Advisors Inc.
249 AXP Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Executive Vice President, Annuities
with a copy to:
IDS Life Insurance Company of New York
c/o American Express Financial Advisors Inc.
50607 AXP Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel's Office
-20-
If to the Fund:
INVESCO Variable Investment Funds, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx, Senior Vice President
If to the Adviser:
INVESCO Funds Group, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx, Senior Vice President
If to the Distributor:
INVESCO Distributors, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx, Senior Vice President
ARTICLE XII - MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither
the directors, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 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 12.2),
including without limitation all information regarding the
customers of the Protected Parties; or the accounts, account
numbers, names, addresses, social security numbers or any
other personal identifier of such customers; or any
information derived therefrom.
(b) The Fund, the Adviser and Distributor may not use or disclose
Confidential Information for any purpose other than to carry
out the purpose for which Confidential Information was
provided to the Fund, the Adviser and/or Distributor as set
forth in the Agreement; and the Fund, the Adviser and the
Distributor agree to cause all their employees, agents and
representatives, or any other party to whom the Fund, 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.
-21-
(c) The Fund, 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 Company's
performance of its duties under this Agreement are the
valuable property of the Protected Parties.
(d) The Fund, 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 Fund, the Distributor and the
Adviser further agree to cause all their agents, representatives
or subcontractors of, or any other party to whom the Fund, 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 12.2.
(e) The Fund, the Distributor and the Adviser acknowledge that any
breach of the agreements in this Section 12.2 would result in
immediate and irreparable harm to the Protected Parties for
which there would be no adequate remedy at law and agree that
in the event of such a breach, the Protected Parties will be
entitled to equitable relief by way of temporary and permanent
injunctions, as well as such other relief as any court of
competent jurisdiction deems appropriate.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
12.5 If any provision of this Agreement will be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement will not be affected thereby.
12.6 This Agreement will not be assigned by any party hereto without the
prior written consent of all the parties.
12.7 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, which the parties hereto are entitled
to under state and federal law.
12.8 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
12.9 Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including without limitation
the Commission, 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.
12.10 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
-22-
board action, as applicable, by such party and when so executed and
delivered this Agreement will be the valid and binding obligation of
such party enforceable in accordance with its terms.
12.11 The parties to this Agreement may amend the schedules to this Agreement
in writing from time to time to reflect changes in or relating to the
Contracts, the Accounts or the Portfolios of the Fund or other
applicable terms of this Agreement.
-23-
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
Attest: /s/ Xxxx Xxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------- -----------------------
Name: Xxxx Xxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxxxxx
Title: Assistance Secretary Title: President
INVESCO VARIABLE INVESTMENT FUNDS, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
Treasurer
INVESCO FUNDS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
Senior Vice President & Treasurer
INVESCO DISTRIBUTORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
Senior Vice President & Treasurer
-24-
PARTICIPATION AGREEMENT
SCHEDULE A
The following Separate Accounts and Associated Contracts of IDS Life Insurance
Company of New York are permitted in accordance with the provisions of this
Agreement to invest in Portfolios of the Fund shown in Schedule B:
Contracts Funded by Separate Account Name of Separate Account
American Express Retirement Advisor IDS Life of New York Variable Annuity
Advantage(SM) Variable Annuity Account Established April 17, 1996
PARTICIPATION AGREEMENT
SCHEDULE B
The Separate Account(s) shown on Schedule A may invest in the following
Portfolios of the Fund.
INVESCO VIF - Dynamics Fund
INVESCO VIF - Financial Services Fund
INVESCO VIF - Technology Fund
INVESCO VIF - Telecommunications Fund
PARTICIPATION AGREEMENT
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party,
if any, assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before the shareholder meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date and provide such information to the proxy
vendor that is selected by the Fund. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call in
the number of Customers to the Fund , as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
before the Customers' receipt of voting, instruction solicitation material.
The Fund will provide the last Annual Report to the Company pursuant to the
terms of Section 6.2 of the Agreement to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Fund or its
affiliate must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:
o name (legal name as found on account registration)
o address
o Fund or account number
o coding to state number of units
o individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, the Fund will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices
and statements will be sent to the proxy vendor of the Fund for insertion
into envelopes (envelopes and return envelopes are provided and paid for by
the Company). Contents of envelope sent to Customers will include:
o Voting Instruction Card(s)
o one proxy notice and statement (one document)
o return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
o "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
o cover letter - optional, supplied by Company and reviewed and
approved in advance by the Fund
6. The above contents should be received by the proxy vendor of the Fund
approximately 3-5 business days before mail date. The individual(s) in
charge at the proxy vendor of the Fund reviews and approves the contents of
the mailing package to ensure correctness and completeness. Copy of this
approval is sent to the Fund.
7. Package mailed by the proxy vendor of the Fund.
* The Fund must allow at least a 15-day solicitation time to the Company as
the shareowner. (A 5-week period is recommended.) Solicitation time is
calculated as calendar days from (but NOT including,) the meeting, counting
backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Fund in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial
estimates and the actual vote do not coincide, then an internal audit of
that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of SHARES.) The Fund must review
and approve tabulation format.
13. Final tabulation in shares is verbally given to the Fund on the morning of
the meeting not later than 10:00 a.m. Eastern time. The Fund may request an
earlier deadline if reasonable and if required to calculate the vote in
time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Fund will provide a standard form for each Certification.
15. The proxy vendor of the Fund shall box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will be
permitted reasonable access to such Cards.
16. All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
