PAGE 1
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.,
IDS LIFE INSURANCE COMPANY OF NEW YORK,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
AND
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
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TABLE OF CONTENTS
Description Page
Section 1. Available Funds........................................2
1.1 Availability.............................................2
1.2 Addition, Deletion or Modification of Funds..............2
1.3 No Sales to the General Public...........................2
Section 2. Processing Transactions................................2
2.1 Timely Pricing and Orders................................2
2.2 Timely Payments..........................................3
2.3 Applicable Price.........................................3
2.4 Dividends and Distributions..............................4
2.5 Book Entry...............................................4
Section 3. Costs and Expenses.....................................4
3.1 General..................................................4
3.2 Registration.............................................4
3.3 Other (Non-Sales-Related)................................5
3.4 Other (Sales-Related)....................................5
3.5 Parties To Cooperate.....................................5
Section 4. Legal Compliance.......................................5
4.1 Tax Laws.................................................5
4.2 Insurance and Certain Other Laws.........................8
4.3 Securities Laws..........................................8
4.4 Notice of Certain Proceedings and Other Circumstance.....9
4.5 IDS Life of New York To Provide Documents;
Information About AVIF..................................10
4.6 AVIF To Provide Documents; Information About
IDS Life of New York....................................11
Section 5. Mixed and Shared Funding..............................12
5.1 General.................................................12
5.2 Disinterested Directors.................................12
5.3 Monitoring for Material Irreconcilable Conflicts........13
5.4 Conflict Remedies.......................................13
5.5 Notice to IDS Life of New York..........................15
5.6 Information Requested by Board of Directors.............15
5.7 Compliance with SEC Rules...............................15
5.8 Other Requirements......................................15
Section 6. Termination...........................................15
6.1 Events of Termination...................................15
6.2 Notice Requirement for Termination......................16
6.3 Funds To Remain Available...............................17
6.4 Survival of Warranties and Indemnifications.............17
6.5 Continuance of Agreement for Certain Purposes...........17
Section 7. Parties To Cooperate Respecting Termination...........17
Section 8. Assignment............................................18
Section 9. Notices...............................................18
Section 10. Voting Procedures....................................19
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Description Page
Section 11. Foreign Tax Credits..................................19
Section 12. Indemnification......................................20
12.1 Of AVIF and AIM by IDS Life of New York and AEFA.......20
12.2 Of IDS Life of New York and AEFA by AVIF and AIM.......22
12.3 Effect of Notice.......................................24
12.4 Successors.............................................24
Section 13. Applicable Law.......................................24
Section 14. Execution in Counterparts............................25
Section 15. Severability.........................................25
Section 16. Rights Cumulative....................................25
Section 17. Headings.............................................25
Section 18. Confidentiality......................................25
Section 19. Trademarks and Fund Names............................26
Section 20. Parties to Cooperate.................................27
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PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 7th day of October, 1996
("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); AIM Distributors, Inc., a Delaware corporation ("AIM");
IDS Life Insurance Company of New York, a New York life insurance company ("IDS
Life of New York"), on behalf of itself and each of its segregated asset
accounts listed in Schedule A hereto, as the parties hereto may amend from time
to time (each, an "Account," and collectively, the "Accounts"); and American
Express Financial Advisors, Inc. ("AEFA"), an affiliate of IDS Life of New York
and the principal underwriter of the Contracts (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of nine separate series ("Series"), shares
("Shares") of each of which are registered under the Securities Act of 1933, as
amended (the "1933 Act") and are currently sold to one or more separate accounts
of life insurance companies to fund benefits under variable annuity contracts
and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto
as the Parties hereto may amend from time to time (each a "Fund"; reference
herein to "AVIF" includes reference to each Fund, to the extent the context
requires) available for purchase by the Accounts; and
WHEREAS, IDS Life of New York will be the issuer of certain variable
annuity contracts and variable life insurance contracts ("Contracts") as set
forth on Schedule A hereto, as the Parties hereto may amend from time to time,
which Contracts (hereinafter collectively, the "Contracts"), if required by
applicable law, will be registered under the 1933 Act; and
WHEREAS, IDS Life of New York will fund the Contracts through the Accounts,
each of which may be divided into two or more subaccounts ("Subaccounts";
reference herein to an "Account" includes reference to each Subaccount thereof
to the extent the context requires); and
WHEREAS, IDS Life of New York will serve as the depositor of the Accounts,
each of which is registered as a unit investment trust investment company under
the 1940 Act (or exempt therefrom), and the security interests deemed to be
issued by the Accounts under the Contracts will be registered as securities
under the 1933 Act (or exempt therefrom); and
PAGE 5
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, IDS Life of New York intends to purchase Shares in one or more of
the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, AEFA is a broker-dealer registered with the SEC under
the Securities Exchange Act of 1934 ("1934 Act") and a member in
good standing of the National Association of Securities Dealers,
Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
Section 1. Available Funds
1.1 Availability.
AVIF will make Shares of each Fund available to IDS Life of New York for
purchase and redemption at net asset value and with no sales charges, subject to
the terms and conditions of this Agreement. The Board of Directors of AVIF may
refuse to sell Shares of any Fund to any person, or suspend or terminate the
offering of Shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of the
Directors acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, such action is deemed in the best
interests of the shareholders of such Fund.
1.2 Addition, Deletion or Modification of Funds.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall
include a reference to any such additional Fund. Schedule A, as amended from
time to time, is incorporated herein by reference and is a part hereof.
1.3 No Sales to the General Public.
AVIF represents and warrants that no Shares of any Fund have been or will
be sold to the general public.
Section 2. Processing Transactions
2.1 Timely Pricing and Orders.
(a) AVIF or its designated agent will use its best efforts to provide IDS
Life of New York with the net asset value per Share for each Fund by 5:30 p.m.
Central Time on each Business Day. As used herein, "Business Day" shall mean any
day on which (i) the New York Stock Exchange is open for regular trading, (ii)
AVIF calculates the Fund's net asset value, and (iii) IDS Life of New York is
open for business.
PAGE 6
(b) IDS Life of New York will use the data provided by AVIF each Business
Day pursuant to paragraph (a) immediately above to calculate Account unit values
and to process transactions that receive that same Business Day's Account unit
values. IDS Life of New York will perform such Account processing the same
Business Day, and will place corresponding orders to purchase or redeem Shares
with AVIF by 9:00 a.m. Central Time the following Business Day; provided,
however, that AVIF shall provide additional time to IDS Life of New York in the
event that AVIF is unable to meet the 5:30 p.m. time stated in paragraph (a)
immediately above. Such additional time shall be equal to the additional time
that AVIF takes to make the net asset values available to IDS Life of New York.
(c) With respect to payment of the purchase price by IDS Life of New York
and of redemption proceeds by AVIF, IDS Life of New York and AVIF shall net
purchase and redemption orders with respect to each Fund and shall transmit one
net payment per Fund in accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value information
(as determined under SEC guidelines), IDS Life of New York 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 promptly upon discovery to IDS Life of New York.
2.2 Timely Payments.
IDS Life of New York will wire payment for net purchases to a custodial
account designated by AVIF by 1:00 p.m. Central Time on the same day as the
order for Shares is placed, to the extent practicable. AVIF will wire payment
for net redemptions to an account designated by IDS Life of New York by 1:00
p.m. Central Time on the same day as the Order is placed, to the extent
practicable, but in any event within five (5) calendar days after the date the
order is placed in order to enable IDS Life of New York to pay redemption
proceeds within the time specified in Section 22(e) of the 1940 Act or such
shorter period of time as may be required by law.
2.3 Applicable Price.
(a) Share purchase payments and redemption orders that result from purchase
payments, premium payments, surrenders and other transactions under Contracts
(collectively, "Contract transactions") and that IDS Life of New York receives
prior to the close of regular trading on the New York Stock Exchange on a
Business Day will be executed at the net asset values of the appropriate Funds
next computed after receipt by AVIF or its designated agent of the orders. For
purposes of this Section 2.3(a), IDS Life of New York shall be the designated
agent of AVIF for receipt of orders relating to Contract transactions on each
Business Day and receipt by such designated agent shall constitute receipt by
AVIF; provided that AVIF receives notice of such orders
PAGE 7
by 9:00 a.m. Central Time on the next following Business Day or such later time
as computed in accordance with Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by IDS Life of New York will
be effected at the net asset values of the appropriate Funds next computed after
receipt by AVIF or its designated agent of the order therefor, and such orders
will be irrevocable.
2.4 Dividends and Distributions.
AVIF will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to IDS Life of New York of any
income dividends or capital gain distributions payable on the Shares of any
Fund. IDS Life of New York hereby elects to reinvest all dividends and capital
gains distributions in additional Shares of the corresponding Fund at the
ex-dividend date net asset values until IDS Life of New York otherwise notifies
AVIF in writing, it being agreed by the Parties that the ex-dividend date and
the payment date with respect to any dividend or distribution will be the same
Business Day. IDS Life of New York reserves the right to revoke this election
and to receive all such income dividends and capital gain distributions in cash.
2.5 Book Entry.
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to IDS Life of New York. Shares ordered from
AVIF will be recorded in an appropriate title for IDS Life of New York, on
behalf of its Account.
Section 3. Costs and Expenses
3.1 General.
Except as otherwise specifically provided herein, each Party will bear all
expenses incident to its performance under this Agreement.
3.2 Registration.
(a) AVIF will bear the cost of its registering as a management investment
company under the 1940 Act and registering its Shares under 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
with respect to AVIF and its Shares and payment of all applicable registration
or filing fees with respect to any of the foregoing.
(b) IDS Life of New York will bear the cost of registering, to the extent
required, each 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 with
PAGE 8
respect to each 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).
(a) AVIF will bear, or arrange for others to bear, the costs of preparing,
filing with the SEC and setting for printing AVIF's prospectus, statement of
additional information and any amendments or supplements thereto (collectively,
the "AVIF Prospectus"), periodic reports to shareholders, AVIF proxy material
and other shareholder communications.
(b) IDS Life of New York will bear the costs of preparing, filing with the
SEC and setting for printing each Account's prospectus, statement of additional
information and any amendments or supplements thereto (collectively, the
"Account Prospectus"), any periodic reports to Contract owners, annuitants,
insureds or participants (as appropriate) under the Contracts (collectively,
"Participants"), voting instruction solicitation material, and other Participant
communications.
(c) IDS Life of New York will print in quantity and deliver to existing
Participants the documents described in Section 3.3(b) above and the prospectus
provided by AVIF in camera ready or computer diskette form. AVIF will print the
AVIF statement of additional information, proxy materials relating to AVIF and
periodic reports of AVIF.
3.4 Other (Sales-Related).
IDS Life of New York will bear the expenses of distribution. These expenses
would include by way of illustration, but are not limited to, the costs of
distributing to Participants the following documents, whether they relate to the
Account or AVIF: prospectuses, statements of additional information, proxy
materials and periodic reports. These costs would also include the costs of
preparing, printing, and distributing sales literature and advertising relating
to the Funds, as well as filing such materials with, and obtaining approval
from, the SEC, NASD, any state insurance regulatory authority, and any other
appropriate regulatory authority, to the extent required.
3.5 Parties To Cooperate.
Each Party agrees to cooperate with the others, as applicable, in arranging
to print, mail and/or deliver, in a timely manner, combined or coordinated
prospectuses or other materials of AVIF and the Accounts.
Section 4. Legal Compliance
4.1 Tax Laws.
(a) AVIF represents and warrants that each Fund is currently qualified as a
regulated investment company ("RIC") under Subchapter M of the Internal Revenue
Code of 1986, as amended (the
PAGE 9
"Code"), and represents that it will use its best efforts to qualify and to
maintain qualification of each Fund as a RIC. AVIF will notify IDS Life of New
York immediately upon having a reasonable basis for believing that a Fund has
ceased to so qualify or that it might not so qualify in the future.
(b) AVIF represents that it will use its best efforts to comply and to
maintain each Fund'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. AVIF will notify IDS Life of New York immediately upon having a
reasonable basis for believing that a Fund has ceased to so comply or that a
Fund might not so comply in the future. In the event of a breach of this Section
4.1(b) by AVIF, it will take all reasonable steps to adequately diversify the
Fund so as to achieve compliance within the grace period afforded by Section
1.817-5 of the regulations under the Code.
(c) IDS Life of New York agrees that if the Internal Revenue Service
("IRS") asserts in writing in connection with any governmental audit or review
of IDS Life of New York or, to IDS Life of New York's knowledge, of an
Participant, that any Fund has failed to comply with the diversification
requirements of Section 817(h) of the Code or IDS Life of New York otherwise
becomes aware of any facts that could give rise to any claim against AVIF or its
affiliates as a result of such a failure or alleged failure:
(i) IDS Life of New York shall promptly notify AVIF of
such assertion or potential claim (subject to the
Confidentiality provisions of Section 18 as to any
Participant);
(ii) IDS Life of New York shall consult with AVIF as to
how to minimize any liability that may arise as a
result of such failure or alleged failure;
(iii) IDS Life of New York shall use its best efforts
to minimize any liability of AVIF or its
affiliates resulting from such failure,
including, without limitation, demonstrating,
pursuant to Treasury Regulations Section
1.817-5(a)(2), to the Commissioner of the IRS
that such failure was inadvertent;
(iv) IDS Life of New York shall permit AVIF, its
affiliates and their legal and accounting
advisors to participate in any conferences,
settlement discussions or other administrative or
judicial proceeding or contests (including
judicial appeals thereof) with the IRS, any
Participant or any other claimant regarding any
claims that could give rise to liability to AVIF
or its affiliates as a result of such a failure
or alleged failure; provided, however, that IDS
Life of New York will retain control of the
conduct of such conferences discussions,
proceedings, contests or appeals;
PAGE 10
(v) any written materials to be submitted by IDS Life
of New York to the IRS, any Participant or any
other claimant in connection with any of the
foregoing proceedings or contests (including,
without limitation, any such materials to be
submitted to the IRS pursuant to Treasury
Regulations Section 1.8175(a)(2)), (a) shall be
provided by IDS Life of New York to AVIF
(together with any supporting information or
analysis); subject to the confidentiality
provisions of Section 18, at least ten (10)
business days or such shorter period to which the
Parties hereto agree prior to the day on which
such proposed materials are to be submitted, and
(b) shall not be submitted by IDS Life of New
York to any such person without the express
written consent of AVIF which shall not be
unreasonably withheld;
(vi) IDS Life of New York shall provide AVIF or its
affiliates and their accounting and legal
advisors with such cooperation as AVIF shall
reasonably request (including, without
limitation, by permitting AVIF and its accounting
and legal advisors to review the relevant books
and records of IDS Life of New York) in order to
facilitate review by AVIF or its advisors of any
written submissions provided to it pursuant to
the preceding clause or its assessment of the
validity or amount of any claim against its
arising from such a failure or alleged failure;
(vii) IDS Life of New York shall not with respect to
any claim of the IRS or any Participant that
would give rise to a claim against AVIF or its
affiliates (a) compromise or settle any claim,
(b) accept any adjustment on audit, or (c) forego
any allowable administrative or judicial appeals,
without the express written consent of AVIF or
its affiliates, which shall not be unreasonably
withheld, provided that IDS Life of New York
shall not be required, after exhausting all
administrative penalties, to appeal any adverse
judicial decision unless AVIF or its affiliates
shall have provided an opinion of independent
counsel to the effect that a reasonable basis
exists for taking such appeal; and provided
further that the costs of any such appeal shall
be borne equally by the Parties hereto; and
(viii) AVIF and its affiliates shall have no liability as a
result of such failure or alleged failure if IDS Life
of New York fails to comply with any of the foregoing
clauses (i) through (vii), and such failure could be
shown to have materially contributed to the
liability.
PAGE 11
Should AVIF or any of its affiliates refuse to give its written consent to
any compromise or settlement of any claim or liability hereunder, IDS Life of
New York may, in its discretion, authorize AVIF or its affiliates to act in the
name of IDS Life of New York in, and to control the conduct of, such
conferences, discussions, proceedings, contests or appeals and all
administrative or judicial appeals thereof, and in that event AVIF or its
affiliates shall bear the fees and expenses associated with the conduct of the
proceedings that it is so authorized to control; provided, that in no event
shall IDS Life of New York have any liability resulting from AVIF's refusal to
accept the proposed settlement or compromise with respect to any failure caused
by AVIF. As used in this Agreement, the term "affiliates" shall have the same
meaning as "affiliated person" as defined in Section 2(a)(3) of the 1940 Act.
(d) IDS Life of New York represents and warrants that the Contracts
currently are and will be treated as annuity contracts or life insurance
contracts under applicable provisions of the Code and that it will use its best
efforts to maintain such treatment; IDS Life of New York will notify AVIF
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.
(e) IDS Life of New York represents and warrants that each Account is a
"segregated asset account" and that interests in each Account are offered
exclusively through the purchase of or transfer into a "variable contract,"
within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. IDS Life of New York will use its best efforts to
continue to meet such definitional requirements, and it will notify AVIF
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.
4.2 Insurance and Certain Other Laws.
(a) AVIF will use its best efforts to comply with any applicable state
insurance laws or regulations, to the extent specifically requested in writing
by IDS Life of New York, including, the furnishing of information not otherwise
available to IDS Life of New York which is required by state insurance law to
enable IDS Life of New York to obtain the authority needed to issue the
Contracts in any applicable state.
(b) IDS Life of New York 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 each Account as a segregated asset account under Section 4240 of
the New York Insurance Law and the regulations thereunder, and (iii) the
Contracts comply in all material respects with all other applicable federal and
state laws and regulations.
PAGE 12
(c) AVIF represents and warrants that it 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.
4.3 Securities Laws.
(a) IDS Life of New York represents and warrants that (i) interests in each
Account pursuant to the Contracts will be registered under the 1933 Act to the
extent required by the 1933 Act, (ii) the Contracts will be duly authorized for
issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and New
York law, (iii) each Account is and will remain registered under the 1940 Act,
to the extent required by the 1940 Act, (iv) each Account does and will comply
in all material respects with the requirements of the 1940 Act and the rules
thereunder, to the extent required, (v) each 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, (vi) IDS Life of New York will amend the
registration statement for its Contracts under the 1933 Act and for its Accounts
under the 1940 Act from time to time as required in order to effect the
continuous offering of its Contracts or as may otherwise be required by
applicable law, and (vii) each Account Prospectus will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder.
(b) AVIF represents and warrants that (i) 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) AVIF is and will remain registered under the 1940 Act to the extent
required by the 1940 Act, (iii) AVIF 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) AVIF
does and will comply in all material respects with the requirements of the 1940
Act and the rules thereunder, (v) AVIF'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)
AVIF's Prospectus will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(c) AVIF will at its expense register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and to the extent
reasonably deemed advisable by AVIF.
(d) AVIF 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,
AVIF undertakes to
PAGE 13
have its Board of Directors, a majority of whom are not "interested" persons of
the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
(e) AVIF represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities having access to
the funds and/or securities of the Fund are and continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund in an amount not less than the minimal coverage as required currently by
Rule 17g-(1) of the 1940 Act or related provisions as maybe promulgated from
time to time. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.
4.4 Notice of Certain Proceedings and Other Circumstances.
(a) AVIF will immediately notify IDS Life of New York of (i) the issuance
by any court or regulatory body of any stop order, cease and desist order, or
other similar order with respect to AVIF's registration statement under the 1933
Act or AVIF Prospectus, (ii) any request by the SEC for any amendment to such
registration statement or AVIF Prospectus that may affect the offering of Shares
of AVIF, (iii) the initiation of any proceedings for that purpose or for any
other purpose relating to the registration or offering of AVIF's Shares, or (iv)
any other action or circumstances that may prevent the lawful offer or sale of
Shares of any Fund in any state or jurisdiction, including, without limitation,
any circumstances in which (a) such Shares are not registered and, in all
material respects, issued and sold in accordance with applicable state and
federal law, or (b) such law precludes the use of such Shares as an underlying
investment medium of the Contracts issued or to be issued by IDS Life of New
York. AVIF will make every reasonable effort to prevent the issuance, with
respect to any Fund, 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) IDS Life of New York will immediately notify AVIF of (i) the issuance
by any court or regulatory body of any stop order, cease and desist order, or
other similar order with respect to each Account's registration statement under
the 1933 Act relating to the Contracts or each Account Prospectus, (ii) any
request by the SEC for any amendment to such registration statement or Account
Prospectus that may affect the offering of Shares of AVIF, (iii) the initiation
of any proceedings for that purpose or for any other purpose relating to the
registration or offering of each Account's 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. IDS Life of New York 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.
PAGE 14
4.5 IDS Life of New York To Provide Documents; Information
About AVIF.
(a) IDS Life of New York will provide to AVIF or its designated agent at
least one (1) complete copy of all SEC registration statements, Account
Prospectuses, reports, any preliminary and final voting instruction solicitation
material, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to each Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) IDS Life of New York will provide to AVIF or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which AVIF or any of its affiliates is named, at least
five (5) Business Days prior to its use or such shorter period as the Parties
hereto may, from time to time, agree upon. No such material shall be used if
AVIF or its designated agent objects to such use within five (5) Business Days
after receipt of such material or such shorter period as the Parties hereto may,
from time to time, agree upon. AVIF hereby designates A I M as the entity to
receive such sales literature, until such time as AVIF appoints another
designated agent by giving notice to IDS Life of New York in the manner required
by Section 9 hereof.
(c) Neither IDS Life of New York nor any of its affiliates, will give any
information or make any representations or statements on behalf of or concerning
AVIF or its affiliates in connection with the sale of the Contracts other than
(i) the information or representations contained in the registration statement,
including the AVIF Prospectus contained therein, relating to Shares, as such
registration statement and AVIF Prospectus may be amended from time to time; or
(ii) in reports or proxy materials for AVIF; or (iii) in published reports for
AVIF that are in the public domain and approved by AVIF for distribution; or
(iv) in sales literature or other promotional material approved by AVIF, except
with the express written permission of AVIF.
(d) IDS Life of New York shall adopt and implement procedures reasonably
designed to ensure that information concerning AVIF and its affiliates that is
intended for use only by brokers or agents selling the Contracts (i.e.,
information that is not intended for distribution to Participants) ("broker only
materials") is so used, and neither AVIF nor any of its affiliates shall be
liable for any losses, damages or expenses relating to the improper use of such
broker only materials.
(e) For the purposes of this Section 4.5, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media, (e.g.,
on-line networks such as the Internet or other electronic messages), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public,
PAGE 15
including brochures, circulars, research reports, market letters, form letters,
seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under the NASD rules, the 1933 Act
or the ▇▇▇▇ ▇▇▇.
4.6 AVIF To Provide Documents; Information About IDS Life of
New York.
(a) AVIF will provide to IDS Life of New York at least one (1) complete
copy of all SEC registration statements, AVIF 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 relate to AVIF
or the Shares of a Fund, contemporaneously with the filing of such document with
the SEC or other regulatory authorities.
(b) AVIF will provide to IDS Life of New York camera ready or computer
diskette copies of all AVIF prospectuses and printed copies, in an amount
specified by IDS Life of New York, of AVIF statements of additional information,
proxy materials, periodic reports to shareholders and other materials required
by law to be sent to Participants who have allocated any Contract value to a
Fund. AVIF will provide such copies to IDS Life of New York in a timely manner
so as to enable IDS Life of New York, as the case may be, to print and
distribute such materials within the time required by law to be furnished to
Participants.
(c) AVIF will provide to IDS Life of New York or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which IDS Life of New York, or any of its respective
affiliates is named, or that refers to the Contracts, at least five (5) Business
Days prior to its use or such shorter period as the Parties hereto may, from
time to time, agree upon. No such material shall be used if IDS Life of New York
or its designated agent objects to such use within five (5) Business Days after
receipt of such material or such shorter period as the Parties hereto may, from
time to time, agree upon. IDS Life of New York shall receive all such sales
literature until such time as it appoints a designated agent by giving notice to
AVIF in the manner required by Section 9 hereof.
(d) Neither AVIF nor any of its affiliates will give any information or
make any representations or statements on behalf of or concerning IDS Life of
New York, each Account, or the Contracts other than (i) the information or
representations contained in the registration statement, including each Account
Prospectus contained therein, relating to the Contracts, as such registration
statement and Account Prospectus may be amended from time to time; or (ii) in
published reports for the Account or the Contracts that are in the public domain
and approved by IDS Life of New York for
PAGE 16
distribution; or (iii) in sales literature or other promotional material
approved by IDS Life of New York or its affiliates, except with the express
written permission of IDS Life of New York.
(e) AVIF shall cause its principal underwriter to adopt and implement
procedures reasonably designed to ensure that information concerning IDS Life of
New York, and its respective affiliates that is intended for use only by brokers
or agents selling the Contracts (i.e., information that is not intended for
distribution to Participants) ("broker only materials") is so used, and neither
IDS Life of New York, nor any of its respective affiliates shall be liable for
any losses, damages or expenses relating to the improper use of such broker only
materials.
(f) For purposes of this Section 4.6, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media, (e.g., on-line
networks such as the Internet or other electronic messages), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising under the
NASD rules, the 1933 Act or the 1940 Act.
Section 5. Mixed and Shared Funding
5.1 General.
The SEC has granted an order to AVIF exempting it from certain provisions
of the 1940 Act and rules thereunder so that AVIF may be available for
investment by certain other entities, including, without limitation, separate
accounts funding variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies unaffiliated with IDS Life
of New York, and trustees of qualified pension and retirement plans
(collectively, "Mixed and Shared Funding"). 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. Sections 5.2 through 5.8
below shall apply pursuant to such an exemptive order granted to AVIF. AVIF
hereby notifies IDS Life of New York that, in the event that AVIF implements
Mixed and Shared Funding, it may be appropriate to include in the prospectus
pursuant to which a Contract is offered disclosure regarding the potential risks
of Mixed and Shared Funding.
PAGE 17
5.2 Disinterested Directors.
AVIF agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not interested
persons of AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the
Rules thereunder and as modified by any applicable orders of the SEC, except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any director, then the operation of this condition
shall be suspended (a) for a period of forty-five (45) days if the vacancy or
vacancies may be filled by the Board; (b) for a period of sixty (60) days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.
5.3 Monitoring for Material Irreconcilable Conflicts.
AVIF 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 AVIF
("Participating Insurance Companies"), including each Account, and participants
in all qualified retirement and pension plans investing in AVIF ("Participating
Plans"). IDS Life of New York agrees to inform the Board of Directors of AVIF 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 Fund 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 Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to
disregard the voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the
voting instructions of Plan participants.
PAGE 18
Consistent with the SEC's requirements in connection with exemptive orders
of the type referred to in Section 5.1 hereof, IDS Life of New York 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 IDS Life of New York to disregard voting instructions of Participants.
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, IDS Life of New York will, if it is a
Participating Insurance Company for which a material irreconcilable conflict is
relevant, at its own 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 material irreconcilable conflict, which
steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all
of the Accounts from AVIF or any Fund and
reinvesting such assets in a different investment
medium, including another Fund of AVIF, 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
Participants, life insurance Participants or all
Participants) that votes in favor of such
segregation, or offering to the affected
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 IDS Life of
New York's decision to disregard Participant voting instructions and that
decision represents a minority position or would preclude a majority vote, IDS
Life of New York may be required, at AVIF's election, to withdraw each Account's
investment in AVIF or any Fund. No charge or penalty will be imposed as a result
of such withdrawal. Any such withdrawal must take place within six (6) months
after AVIF gives notice to IDS Life of New York that this provision is being
implemented, and until such withdrawal AVIF shall continue to accept and
implement orders by IDS Life of New York for the purchase and redemption of
Shares of AVIF.
(c) If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to IDS Life of New York conflicts with
the majority of other state
PAGE 19
regulators, then IDS Life of New York will withdraw each Account's investment in
AVIF within six (6) months after AVIF's Board of Directors informs IDS Life of
New York that it has determined that such decision has created a material
irreconcilable conflict, and until such withdrawal AVIF shall continue to accept
and implement orders by IDS Life of New York for the purchase and redemption of
Shares of AVIF. No charge or penalty will be imposed as a result of such
withdrawal.
(d) IDS Life of New York 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, however, will AVIF or any of its
affiliates be required to establish a new funding medium for any Contracts. IDS
Life of New York 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 IDS Life of New York.
AVIF will promptly make known in writing to IDS Life of New York 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.
IDS Life of New York and AVIF (or its investment adviser) will at least
annually submit to the Board of Directors of AVIF 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 or any exemptive order granted by the SEC to permit Mixed and Shared
Funding, 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 Participating Insurance Companies and Participating Plans 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 AVIF is serving as an investment medium for
variable life insurance Contracts, 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, AVIF agrees that it will comply with the
terms and
PAGE 20
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.
5.8 Other Requirements.
AVIF will require that each Participating Insurance Company and
Participating Plan enter into an agreement with AVIF that contains in substance
the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b),
4.5(a), 5, and 10 of this Agreement.
Section 6. Termination
6.1 Events of Termination.
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of any party, with or without cause with respect to the
Fund, upon six (6) months advance written notice to the other parties, or, if
later, upon receipt of any required exemptive relief from the SEC, unless
otherwise agreed to in writing by the parties; or
(b) at the option of AVIF upon institution of formal proceedings against
IDS Life of New York or its affiliates by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding IDS Life of New York's
obligations under this Agreement or related to the sale of the Contracts, the
operation of each Account, or the purchase of Shares, if, in each case, AVIF
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 the Fund with respect to which the Agreement is to be
terminated; or
(c) at the option of IDS Life of New York upon institution of formal
proceedings against AVIF, its principal underwriter, or its investment adviser
by the NASD, the SEC, or any state insurance regulator or any other regulatory
body regarding AVIF's obligations under this Agreement or related to the
operation or management of AVIF or the purchase of AVIF Shares, if, in each
case, IDS Life of New York 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 IDS Life of New York, or the
Subaccount corresponding to the Fund with respect to which the Agreement is to
be terminated; or
(d) at the option of any Party in the event that (i) the Fund's Shares are
not registered and, in all material respects, issued and sold in accordance with
any applicable federal or state 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 IDS Life of New York; or
PAGE 21
(e) upon termination of the corresponding Subaccount's
investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of IDS Life of New York if the Fund ceases to qualify as
a RIC under Subchapter M of the Code or under successor or similar provisions,
or if IDS Life of New York reasonably believes that the Fund may fail to so
qualify; or
(g) at the option of IDS Life of New York if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if IDS
Life of New York reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by IDS Life of New York
cease to qualify as annuity contracts or life insurance contracts under the Code
(other than by reason of the Fund's noncompliance with Section 817(h) or
Subchapter M of the Code) or if interests in an Account under the Contracts are
not registered, where required, and, in all material respects, are not issued or
sold in accordance with any applicable federal or state law; or
(i) upon another Party's material breach of any provision of
this Agreement.
6.2 Notice Requirement for Termination.
No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other Party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given at
least six (6) months in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of
Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given at
least ninety (90) days in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto; and
(c) in the event that any termination is based upon the provisions of
Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written
notice shall be given as soon as possible within twenty-four (24) hours after
the terminating Party learns of the event causing termination to be required.
6.3 Funds To Remain Available.
Notwithstanding any termination of this Agreement, AVIF will, at the option
of IDS Life of New York, 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
PAGE 22
"Existing Contracts."). Specifically, without limitation, the owners of the
Existing Contracts will be permitted to reallocate investments in the Fund (as
in effect on such date), redeem investments in the Fund and/or invest in the
Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 6.3 will not apply to any
terminations under Section 5 and the effect of such terminations will be
governed by Section 5 of this Agreement.
6.4 Survival of Warranties and Indemnifications.
All warranties and indemnifications will survive the termination of this
Agreement.
6.5 Continuance of Agreement for Certain Purposes.
If any Party terminates this Agreement with respect to any Fund pursuant to
Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, this
Agreement shall nevertheless continue in effect as to any Shares of that Fund
that are outstanding as of the date of such termination (the "Initial
Termination Date"). This continuation shall extend to the earlier of the date as
of which an Account owns no Shares of the affected Fund or a date (the "Final
Termination Date") six (6) months following the Initial Termination Date, except
that IDS Life of New York may, by written notice shorten said six (6) month
period in the case of a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g),
6.1(h) or 6.1(i).
Section 7. Parties To Cooperate Respecting Termination
The Parties hereto agree to cooperate and give reasonable assistance to one
another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Contracts in such Fund.
Section 8. Assignment
This Agreement may not be assigned by any Party, except with the written
consent of each other Party.
Section 9. Notices
Notices and communications required or permitted by Section 9 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 and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
PAGE 23
American Express Financial Advisors Inc.
IDS Life Insurance Company of New York
IDS Tower 10
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
cc: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Counsel
AIM Variable Insurance Funds, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
AIM Distributors, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
cc: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Assistant General Counsel
Section 10. Voting Procedures
Subject to the cost allocation procedures set forth in Section 3 hereof,
IDS Life of New York will distribute all proxy material furnished by AVIF to
Participants to whom pass-through voting privileges are required to be extended
and will solicit voting instructions from Participants. IDS Life of New York
will vote Shares in accordance with timely instructions received from
Participants. IDS Life of New York will vote Shares that are (a) not
attributable to Participants to whom pass-through voting privileges are
extended, or (b) attributable to Participants, but for which no timely
instructions have been received, in the same proportion as Shares for which said
instructions have been received from Participants, so long as and to the extent
that the SEC continues to interpret the 1940 Act to require pass through voting
privileges for Participants. Neither IDS Life of New York nor any of its
affiliates will in any way recommend action in connection with or oppose or
interfere with the solicitation of proxies for the Shares held for such
Participants. IDS Life of New York reserves the right to vote shares held in any
Account in its own right, to the extent permitted by law. IDS Life of New York
shall be responsible for assuring that each of its Accounts holding Shares
calculates voting privileges in a manner consistent with that of other
Participating Insurance Companies or in the manner required by the Mixed and
Shared Funding exemptive order obtained by AVIF. AVIF will notify IDS Life of
New York of any changes of interpretations or amendments to Mixed and Shared
Funding exemptive order it has obtained. AVIF will comply with all provisions of
the 1940 Act requiring voting by shareholders, and in particular, AVIF
PAGE 24
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 will comply with
Section 16(c) of the 1940 Act (although AVIF 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, AVIF will act in accordance with the SEC's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of directors and with whatever rules the SEC may promulgate with
respect thereto.
Section 11. Foreign Tax Credits
AVIF agrees to consult in advance with IDS Life of New York 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 its shareholders.
Section 12. Indemnification
12.1 Of AVIF and AIM by IDS Life of New York and AEFA.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below,
IDS Life of New York and AEFA agree to indemnify and hold harmless AVIF, AIM,
their respective affiliates, and each person, if any, who controls AVIF, AIM, or
their affiliates within the meaning of Section 15 of the 1933 Act and each of
their respective directors and officers, (collectively, the "Indemnified
Parties" for purposes of this Section 12.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of IDS Life of New York and AEFA) 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; provided, the Account owns shares of the Fund and insofar as
such losses, claims, 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 any Account's 1933 Act
registration statement, any Account Prospectus,
the Contracts, or 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; 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 IDS Life of New York or
AEFA by or on behalf of AVIF for use in any
Account's 1933 Act registration statement, any
Account Prospectus, the Contracts, or sales
literature or advertising or otherwise for use in
PAGE 25
connection with the sale of Contracts or Shares
(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 AVIF's
1933 Act registration statement, AVIF Prospectus,
sales literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing,
not supplied for use therein by or on behalf of
IDS Life of New York, AEFA or their respective
affiliates and on which such persons have
reasonably relied) or the negligent, illegal or
fraudulent conduct of IDS Life of New York, AEFA
or their respective affiliates 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 Shares; or
(iii) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in AVIF's 1933 Act
registration statement, AVIF Prospectus, sales
literature or advertising of AVIF, 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 AVIF,
AIM or their respective affiliates by or on
behalf of IDS Life of New York, AEFA or their
respective affiliates for use in AVIF's 1933 Act
registration statement, AVIF Prospectus, sales
literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing;
or
(iv) arise as a result of any failure by IDS Life of
New York or AEFA to perform the obligations,
provide the services and furnish the materials
required of them under the terms of this
Agreement, or any material breach of any
representation and/or warranty made by IDS Life
of New York or AEFA in this Agreement or arise
out of or result from any other material breach
of this Agreement by IDS Life of New York or
AEFA; or
(v) arise as a result of failure by the Contracts
issued by IDS Life of New York to qualify as
annuity contracts or life insurance contracts
PAGE 26
under the Code, otherwise than by reason of any
Fund's failure to comply with Subchapter M or Section
817(h) of the Code.
(b) Neither IDS Life of New York nor AEFA shall be liable under this
Section 12.1 with respect to any losses, claims, 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 (i) under this Agreement, or (ii) to
AVIF.
(c) Neither IDS Life of New York nor AEFA shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
or AIM shall have notified IDS Life of New York and AEFA 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 IDS Life of New
York and AEFA of any such action shall not relieve IDS Life of New York and AEFA
from any liability which they may have to the Indemnified Party against whom
such action is brought otherwise than on account of this Section 12.1. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, IDS Life of New York and AEFA shall be entitled to
participate, at their own expense, in the defense of such action and 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 IDS Life of New York or AEFA to such Indemnified
Party of IDS Life of New York's or AEFA's election to assume the defense
thereof, the Indemnified Party will cooperate fully with IDS Life of New York
and AEFA and shall bear the fees and expenses of any additional counsel retained
by it, and neither IDS Life of New York nor AEFA will 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.
12.2 Of IDS Life of New York and AEFA by AVIF and AIM.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e),
below, AVIF and AIM agree to indemnify and hold harmless IDS Life of New York,
AEFA, their respective affiliates, and each person, if any, who controls IDS
Life of New York, AEFA or their respective affiliates within the meaning of
Section 15 of the 1933 Act and each of their respective directors and officers,
(collectively, the "Indemnified Parties" for purposes of this Section 12.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of AVIF and AIM) 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,
PAGE 27
regulation, at common law, or otherwise; provided, the Account owns shares of
the Fund and insofar as such losses, claims, 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 AVIF's 1933 Act
registration statement, AVIF Prospectus or sales
literature or advertising of AVIF (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;
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 AVIF,
AIM or their respective affiliates by or on
behalf of IDS Life of New York, AEFA or their
respective affiliates for use in AVIF's 1933 Act
registration statement, AVIF Prospectus, or in
sales literature or advertising or otherwise for
use in connection with the sale of Contracts or
Shares (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 any
Account's 1933 Act registration statement, any
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 AVIF,
AIM or their respective affiliates and on which
such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of AVIF,
AIM, their respective affiliates or persons under
their control (including, without limitation,
their employees and "Associated Persons" as that
Term is defined in Section (n) of Article 1 of
the NASD By-Laws), in connection with the sale or
distribution of AVIF Shares; or
(iii) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in any Account's 1933 Act
registration statement, any 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, if
such statement or omission was made in reliance
upon and in conformity with information furnished
PAGE 28
to IDS Life of New York, AEFA or their respective
affiliates by or on behalf of AVIF or AIM for use in
any Account's 1933 Act registration statement, any
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 AVIF or AIM
to perform the obligations, provide the services
and furnish the materials required of them under
the terms of this Agreement, or any material
breach of any representation and/or warranty made
by AVIF or AIM in this Agreement or arise out of
or result from any other material breach of this
Agreement by AVIF or AIM.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e)
hereof, AVIF and AIM agree to indemnify and hold harmless the Indemnified
Parties from and against any and all losses, claims, damages, liabilities
(including amounts paid in settlement thereof with, the written consent of AVIF
or AIM) 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, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or actions directly or indirectly
result from or arise out of the failure of any Fund to operate as a regulated
investment company in compliance with (i) Subchapter M of the Code and
regulations thereunder, or (ii) Section 817(h) of the Code and regulations
thereunder, including, without limitation, any income taxes and related
penalties, rescission charges, liability under state law to Participants
asserting liability against IDS Life of New York pursuant to the Contracts, the
costs of any ruling and closing agreement or other settlement with the IRS, and
the cost of any substitution by IDS Life of New York of Shares of another
investment company or portfolio for those of any adversely affected Fund as a
funding medium for each Account that IDS Life of New York reasonably deems
necessary or appropriate as a result of the noncompliance.
(c) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any losses, claims, 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 (i) under this Agreement, or (ii) to IDS Life of New
York, AEFA, each Account or Participants.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any action against an Indemnified Party unless the Indemnified Party
shall have notified AVIF and AIM 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 AVIF and AIM of any such action shall
PAGE 29
not relieve AVIF and AIM from any liability which they may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this Section 12.2. Except as otherwise provided herein, in case any such
action is brought against an Indemnified Party, AVIF and AIM will be entitled to
participate, at their own expense, in the defense of such action and 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 IRS), with counsel approved by the Indemnified
Party named in the action, which approval shall not be unreasonably withheld.
After notice from AVIF or AIM to such Indemnified Party of AVIF's or AIM's
election to assume the defense thereof, the Indemnified Party will cooperate
fully with AVIF and AIM and shall bear the fees and expenses of any additional
counsel retained by it, and neither AVIF nor AIM will 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.
(e) In no event shall AVIF or AIM be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including,
without limitation, IDS Life of New York, AEFA or any other Participating
Insurance Company or any Participant, with respect to any losses, claims,
damages, liabilities or expenses that arise out of or result from (i) a breach
of any representation, warranty, and/or covenant made by IDS Life of New York or
AEFA hereunder or by any Participating Insurance Company under an agreement
containing substantially similar representations, warranties and covenants; (ii)
the failure by IDS Life of New York or any Participating Insurance Company to
maintain its segregated asset account (which invests in any Fund) as a legally
and validly established segregated asset account under applicable state law and
as a duly registered unit investment trust under the provisions of the 1940 Act
(unless exempt therefrom); or (iii) the failure by IDS Life of New York or any
Participating Insurance Company to maintain its variable annuity or life
insurance contracts (with respect to which any Fund serves as an underlying
funding vehicle) as annuity contracts or life insurance contracts under
applicable provisions of the Code.
12.3 Effect of Notice.
Any notice given by the indemnifying Party to an Indemnified Party referred
to in Sections 12.1(c) or 12.2(d) 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.
12.4 Successors.
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
PAGE 30
Section 13. Applicable Law
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Maryland law, without regard for that state's
principles of conflict of laws.
Section 14. 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 15. 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 16. 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 17. 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.
Section 18. Confidentiality
AVIF acknowledges that the identities of the customers of IDS Life of New
York or any of its affiliates (collectively, the "IDS Life of New York Protected
Parties" for purposes of this Section 18), information maintained regarding
those customers, and all computer programs and procedures or other information
developed by the IDS Life of New York Protected Parties or any of their
employees or agents in connection with IDS Life of New York's performance of its
duties under this Agreement are the valuable property of the IDS Life of New
York Protected Parties. AVIF agrees that if it comes into possession of any list
or compilation of the identities of or other information about the IDS Life of
New York Protected Parties' customers, or any other information or property of
the IDS Life of New York Protected Parties, other than such information as may
be independently developed or compiled by AVIF from information supplied to it
by the IDS Life of New York Protected Parties' customers who also maintain
accounts directly with AVIF, AVIF will hold such information or property in
confidence and refrain from using, disclosing or distributing any of such
information or other property except: (a) with IDS Life of New York's prior
written consent; or (b) as required by law or judicial process. IDS Life of New
York acknowledges that the identities of the customers of AVIF or any of its
affiliates (collectively the "AVIF Protected Parties" for purposes of this
PAGE 31
Section 18), information maintained regarding those customers, and all computer
programs and procedures or other information developed by the AVIF Protected
Parties or any of their employees or agents in connection with AVIF's
performance of its duties under this Agreement are the valuable property of the
AVIF Protected Parties. IDS Life of New York agrees that if it comes into
possession of any list or compilation of the identities of or other information
about the AVIF Protected Parties' customers or any other information or property
of the AVIF Protected Parties, other than such information as may be
independently developed or compiled by IDS Life of New York from information
supplied to it by the AVIF Protected Parties' customers who also maintain
accounts directly with IDS Life of New York, IDS Life of New York will hold such
information or property in confidence and refrain from using, disclosing or
distributing any of such information or other property except: (a) with AVIF's
prior written consent; or (b) as required by law or judicial process. Each party
acknowledges that any breach of the agreements in this Section 18 would result
in immediate and irreparable harm to the other parties for which there would be
no adequate remedy at law and agree that in the event of such a breach, the
other 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.
Section 19. Trademarks and Fund Names
(a) AIM, or its affiliates, owns all right, title and interest in and to
the name, trademark and service ▇▇▇▇ "AIM" and such other tradenames, trademarks
and service marks as may be set forth on Schedule B, as amended from time to
time by written notice from AIM to IDS Life of New York (the "AIM licensed
marks" or the "licensor's licensed marks") and is authorized to use and to
license other persons to use such marks. AIM hereby grants to IDS Life of New
York and its affiliates a non-exclusive license to use the AIM licensed marks in
connection with IDS Life of New York's performance of the services contemplated
under this Agreement, subject to the terms and conditions set forth in this
Section 19.
(b) The grant of license by AIM (a "licensor") to IDS Life of New York and
its affiliates (the "licensee") shall terminate automatically upon termination
of this Agreement. Upon automatic termination, the licensee shall cease to use
the licensor's licensed marks, except that IDS Life of New York shall have the
right to continue to service any outstanding Contracts bearing any of the AIM
licensed marks. Upon AIM's elective termination of this license, IDS Life of New
York and its affiliates shall immediately cease to issue any new annuity or life
insurance contracts bearing any of the AIM licensed marks and shall likewise
cease any activity which suggests that it has any right under any of the AIM
licensed marks or that it has any association with AIM, except that IDS Life of
New York shall have the right to continue to service outstanding Contracts
bearing any of the AIM licensed marks.
(c) The licensee shall obtain the prior written approval of the licensor
for the public release by such licensee of any materials bearing the licensor's
licensed marks. The licensor's approvals shall not be unreasonably withheld.
PAGE 32
(d) During the term of this grant of license, a licensor may request that a
licensee submit samples of any materials bearing any of the licensor's licensed
marks which were previously approved by the licensor but, due to changed
circumstances, the licensor may wish to reconsider. If, on reconsideration, or
on initial review, respectively, any such samples fail to meet with the written
approval of the licensor, then the licensee shall immediately cease distributing
such disapproved materials. The licensor's approval shall not be unreasonably
withheld, and the licensor, when requesting reconsideration of a prior approval,
shall assume the reasonable expenses of withdrawing and replacing such
disapproved materials. The licensee shall obtain the prior written approval of
the licensor for the use of any new materials developed to replace the
disapproved materials, in the manner set forth above.
(e) The licensee hereunder: (i) acknowledges and stipulates that, to the
best of the knowledge of the licensee, the licensor's licensed marks are valid
and enforceable trademarks and/or service marks and that such licensee does not
own the licensor's licensed marks and claims no rights therein other than as a
licensee under this Agreement; (ii) agrees never to contend otherwise in legal
proceedings or in other circumstances; and (iii) acknowledges and agrees that
the use of the licensor's licensed marks pursuant to this grant of license shall
inure to the benefit of the licensor.
Section 20. Parties to Cooperate
Each party to this Agreement will cooperate with each other party and all
appropriate governmental authorities (including, without limitation, the SEC,
the NASD and state insurance regulators) and will permit each other and such
authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
-------------------------
PAGE 33
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.
AIM VARIABLE INSURANCE
FUNDS, INC.
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Secretary Title: President
AIM DISTRIBUTORS, INC.
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ W. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: W. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Assistant General Title: Sr. Vice President
Counsel & Assistant
Secretary
IDS LIFE INSURANCE COMPANY
OF NEW YORK, on behalf of
itself and its separate
accounts
Attest: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Counsel Title: Chairman of the
Board and President
AMERICAN EXPRESS FINANCIAL
ADVISORS INC.
Attest: /s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Secretary Title: Senior Vice
President-Products
PAGE 34
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
o AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
o IDS Life of New York Flexible Portfolio Annuity Account
o IDS Life of New York Account 8
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
o Flexible Premium Deferred Variable Annuity Contract Form Nos.
31037, 31036 and 31038-▇▇▇ and 31039-SEP
o Flexible Premium Variable Life Insurance Policy Form No. 39060
o Flexible Premium Survivorship Variable Life Insurance Policy
Form No. 39090
PAGE 35
SCHEDULE B
o AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund
o AIM and Design