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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Post-Effective Amendment No. 1 (File No. 333-03867)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 X
Amendment No. 2 (File No. 811-07623)
IDS LIFE OF NEW YORK FLEXIBLE PORTFOLIO ANNUITY ACCOUNT
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(Exact Name of Registrant)
IDS Life Insurance Company of New York
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(Name of Depositor)
20 Madison Avenue Extension, Albany, New York 12203
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 671-4085
Sherilyn K. Beck, IDS Tower 10, Minneapolis, MN 55440-0010
-------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b) of Rule 485
X on May 1, 1997 pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a)(i) of Rule 485
on (date) pursuant to paragraph (a)(i) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Section 24-f of the Investment Company
Act of 1940. Registrant's Rule 24-2 Notice for its most recent fiscal year
ending Dec. 31, 1996 was filed on or about Feb. 19, 1997.
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CROSS REFERENCE SHEET
Cross reference sheet showing location in the prospectus of the information
called for by the items enumerated in Part A and B of Form N-4.
Negative answers omitted from prospectus are so indicated.
PART A PART B
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Section Section in Statement of
Item No. in Prospectus Item No. Additional Information
1 Cover page 15 Cover page
2 Key terms 16 Table of contents
3(a) Expense Summary 17(a) NA
(b) The Flexible Portfolio Annuity in brief (b) NA
(c) About IDS Life of New York*
4(a) Condensed Financial Information
(b) Performance information 18(a) NA
(c) Financial Statements (b) NA
(c) Independent auditors
5(a) Cover page; About IDS Life of New York (d) NA
(b) The variable account (e) NA
(c) The funds (f) Principal underwriter
(d) Cover page; The funds
(e) Voting rights 19(a) Distribution of the contracts*; About
(f) NA IDS Life of New York*
(g) NA (b) Charges*
6(a) Charges 20(a) Principal underwriter
(b) Charges (b) Principal underwriter
(c) Charges (c) NA
(d) Distribution of the contracts (d) NA
(e) The funds
(f) NA 21(a) Performance information
(b) Performance information
7(a) Buying your annuity; Benefits in case of
death; The annuity payout period 22 Calculating annuity payouts
(b) The variable account; Making the most of
your annuity, Transferring money between 23(a) NA
charge accounts (b) NA
(c) The funds; Charges
(d) Cover page
8(a) The annuity payout period
(b) Buying your annuity
(c) The annuity payout period
(d) The annuity payout period
(e) The annuity payout period
(f) The annuity payout period
9(a) Benefits in case of death
(b) Benefits in case of death
10(a) Buying your annuity; Valuing your
investment
(b) Valuing your investment
(c) Buying your annuity; Valuing your
investment
(d) NA
11(a) Surrendering your contract
(b) TSA - Special surrender provisions
(c) Surrendering your contract
(d) Buying your annuity
(e) The Flexible Portfolio Annuity in brief
12(a) Taxes
(b) Key terms
(c) NA
13 NA
14 Table of contents of the Statement of
Additional Information
*Designates section in the prospectus, which is hereby incorporated by reference
in this statement of Additional Information.
</TABLE>
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IDS Life of New York Flexible Portfolio Annuity
Prospectus
May 1, 1997
The Flexible Portfolio Annuity is an individual deferred fixed/variable annuity
contract offered by IDS Life Insurance Company of New York (IDS Life of New
York), a subsidiary of IDS Life Insurance Company (IDS Life), a subsidiary of
American Express Financial Corporation (AEFC). Purchase payments may be
allocated among different accounts, providing variable and/or fixed returns and
payouts. The annuity is available for qualified and nonqualified retirement
plans.
IDS Life of New York Flexible Portfolio Annuity Account
Sold by: IDS Life Insurance Company of New York, 20 Madison Ave.
Extension, Albany, NY 12203, Telephone: 800-541-2251.
This prospectus contains the information about the variable account that you
should know before investing. Refer to "The variable account" in this
prospectus.
The prospectus is accompanied or preceded by the following prospectuses: the
Retirement Annuity Mutual Funds (describing IDS Life Aggressive Growth Fund, IDS
Life International Equity Fund, IDS Life Capital Resource Fund, IDS Life Managed
Fund, IDS Life Special Income Fund, IDS Life Moneyshare Fund, IDS Life Growth
Dimensions Fund, IDS Life Global Yield Fund and IDS Life Income Advantage Fund);
AIM Variable Insurance Funds, Inc. (describing AIM V.I. Growth and Income Fund);
Putnam Variable Trust, formerly known as Putnam Capital Manager Trust
(describing Putnam VT New Opportunities Fund, formerly known as PCM New
Opportunities Fund); American Century Variable Portfolios, Inc., formerly known
as TCI Portfolios Inc. (describing American Century VP Value, formerly known as
TCI Value); Templeton Variable Products Series Fund (describing Templeton
Developing Markets Fund: Class 1) and Warburg Pincus Trust (describing Warburg
Pincus Trust/Small Company Growth Portfolio). Please read these documents
carefully and keep them for future reference.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, or any state securities commission, nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
A Statement of Additional Information (SAI) (incorporated by reference into this
prospectus) filed with the Securities and Exchange Commission (SEC), is
available without charge by contacting IDS Life of New York at the telephone
number above or by completing and sending the order form on the last page of
this prospectus. The table of contents of the SAI is on the last page of this
prospectus.
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Table of contents
Key terms.......................................................
The Flexible Portfolio Annuity in brief.........................
Expense summary.................................................
Condensed financial information (unaudited).......................
Financial statements............................................
Performance information.........................................
The variable account............................................
The funds.......................................................
IDS Life Aggressive Growth Fund............................
IDS Life International Equity Fund.........................
IDS Life Capital Resource Fund.............................
IDS Life Managed Fund......................................
IDS Life Special Income Fund...............................
IDS Life Moneyshare Fund...................................
IDS Life Growth Dimensions Fund............................
IDS Life Global Yield Fund.................................
IDS Life Income Advantage Fund.............................
AIM V.I. Growth and Income Fund............................
Putnam VT New Opportunities Fund...........................
American Century VP Value..................................
Templeton Developing Markets Fund: Class 1.................
Warburg Pincus Trust/Small Company Growth Portfolio........
The fixed account...............................................
Buying your annuity.............................................
The retirement date........................................
Beneficiary................................................
How to make purchase payments..............................
Charges.........................................................
Contract administrative charge.............................
Mortality and expense risk fee.............................
Surrender charge...........................................
Waiver of surrender charges................................
Valuing your investment.........................................
Number of units............................................
Accumulation unit value....................................
Net investment factor......................................
Factors that affect variable subaccount
accumulation units.........................................
Making the most of your annuity.................................
Automated dollar-cost averaging............................
Transferring money between subaccounts.....................
Transfer policies..........................................
How to request a transfer or a surrender...................
Surrendering your contract......................................
Surrender policies.........................................
Receiving payment when you request a surrender.............
TSA-special surrender provisions................................
Changing ownership..............................................
Benefits in case of death.......................................
The annuity payout period.......................................
Annuity payout plans.......................................
Death after annuity payouts begin..........................
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Taxes...........................................................
Voting rights...................................................
Substitution of investments.....................................
Distribution of the contracts...................................
About IDS Life of New York......................................
Regular and special reports.....................................
Services..................................................
Table of contents of the Statement of
Additional Information...................................
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Key terms
These terms can help you understand details about your annuity.
Accumulation unit - A measure of the value of each variable subaccount before
annuity payouts begin.
Annuitant - The person on whose life or life expectancy the annuity payouts are
based.
Annuity - A contract purchased from an insurance company that offers
tax-deferred growth of the investment until earnings are withdrawn, and that can
be tailored to meet the specific needs of the individual during retirement.
Annuity payouts - An amount paid at regular intervals under one of several plans
available to the owner and/or any other payee. This amount may be paid on a
variable or fixed basis or a combination of both.
Annuity unit - A measure of the value of each variable subaccount used to
calculate the annuity payouts you receive.
Beneficiary - The person designated to receive annuity benefits in case of the
owner's or annuitant's death.
Close of business - When the New York Stock Exchange (NYSE) closes, normally 4
p.m. Eastern time.
Code - Internal Revenue Code of 1986, as amended.
Contract value - The total value of your annuity before any applicable surrender
charge and any contract administrative charge have been deducted.
Contract year - A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
Fixed account - An account to which you may allocate purchase payments. Amounts
allocated to this account earn interest at rates that are declared periodically
by IDS Life of New York.
IDS Life of New York - In this prospectus, "we," "us," "our" and "IDS Life of
New York" refer to IDS Life Insurance Company of New York.
Mutual funds (funds) - Mutual funds or portfolios, each with a different
investment objective. (See "The funds.") You may allocate your purchase payments
into variable subaccounts investing in shares of any or all of these funds.
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Owner (you, your) - The person who controls the annuity (decides on investment
allocations, transfers, payout options, etc.). Usually, but not always, the
owner is also the annuitant. The owner is responsible for taxes, regardless of
whether he or she receives the annuity's benefits.
Purchase payments - Payments made to IDS Life of New York for an annuity.
Qualified annuity - An annuity purchased for a retirement plan that is subject
to applicable federal law and any rules of the plan itself. These plans include:
o Individual Retirement Annuities (IRAs)
o SIMPLE IRAs
o Simplified Employee pension (SEP) Plans
o Section 401(k) plans
o Custodial and trusteed pension and profit-sharing plans
o Tax-Sheltered Annuities (TSAs)
All other annuities are considered nonqualified annuities.
Retirement date - The date when annuity payouts are scheduled to begin. This
date is first established when you start your contract. You can change it in the
future.
Surrender charge - A deferred sales charge that may be applied if you surrender
your annuity before the retirement date.
Surrender value - The amount you are entitled to receive if you surrender your
annuity. It is the contract value minus any applicable surrender charge and
contract administrative charge.
Valuation date - Any normal business day, Monday through Friday, that the NYSE
is open. The value of each variable subaccount is calculated at the close of
business on each valuation date.
Variable account - Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one mutual fund. (See "The variable
account.") The value of your investment in each variable subaccount changes with
the performance of the particular fund.
The Flexible Portfolio Annuity in brief
Purpose: The Flexible Portfolio Annuity is designed to allow you to build up
funds for retirement. You do this by making one or more investments (purchase
payments) that may earn returns that increase the value of the annuity.
Beginning at a specified future date (the retirement date), the annuity provides
lifetime or other forms of payouts to you or to anyone you designate.
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Ten-day free look: You may return your annuity to your financial advisor or our
Albany office within 10 days after it is delivered to you and receive a full
refund of purchase payments. No charges will be deducted.
Accounts: You may allocate your purchase payments among any or all
of:
o variable subaccounts, each of which invests in a mutual fund with a
particular investment objective. The value of each variable subaccount varies
with the performance of the particular fund. We cannot guarantee that the
value at the retirement date will equal or exceed the total of purchase
payments allocated to the variable subaccounts. (p.14)
o one fixed account, which earns interest at rates that are
adjusted periodically by IDS Life of New York. (p.19)
Buying your annuity: Your financial advisor will help you complete and submit an
application. Applications are subject to acceptance at our Albany office. You
may buy a nonqualified annuity or a qualified annuity including an IRA. Payment
may be made either in a lump sum or installments:
o Minimum initial purchase payment - $2,000 ($1,000 for qualified annuities)
unless you pay in installments by means of a bank authorization or under a
group billing arrangement such as a payroll deduction.
o Minimum additional purchase payment - $50.
o Minimum installment payment - $50 monthly; $23.08 biweekly
(scheduled payment plan billing).
o Maximum first-year payment(s) - $50,000 to $1,000,000 depending
on your age.
o Maximum payment for each subsequent year - $50,000 to $100,000
depending upon your age. (p.22)
Transfers: Subject to certain restrictions you may redistribute
your money among accounts without charge at any time until annuity
payouts begin, and once per contract year among the variable
subaccounts thereafter. You may establish automated transfers
among the fixed account and variable subaccount(s). (p.30)
Surrenders: You may surrender all or part of your contract value at
any time before the retirement date. You also may establish
automated partial surrenders. Surrenders may be subject to charges
and tax penalties and may have other tax consequences; also,
certain restrictions apply. (p.34)
Changing ownership: You may change ownership of a nonqualified annuity by
written instruction, however, such changes of nonqualified annuities may have
federal income tax consequences. Certain restrictions apply concerning change of
ownership of a qualified annuity. (p.36)
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Benefits in case of death: If you or the annuitant dies before
annuity payouts begin, we will pay the beneficiary an amount at
least equal to the contract value. (p.37)
Annuity payouts: The contract value of your investment can be applied to an
annuity payout plan that begins on the retirement date. You may choose from a
variety of plans to make sure that payouts continue as long as they are needed.
If you purchased a qualified annuity, the payout schedule must meet the
requirements of the qualified plan. Payouts may be made on a fixed or variable
basis, or both. Total monthly payouts may include amounts from each variable
subaccount and the fixed account. During the annuity payout period, you cannot
be invested in more than five variable subaccounts at any one time unless we
agree otherwise. (p.38)
Taxes: Generally, your annuity grows tax-deferred until you
surrender it or begin to receive payouts. (Under certain
circumstances, IRS penalty taxes may apply.) Even if you direct
payouts to someone else, you will still be taxed on the income if
you are the owner. (p.42)
Charges: Your Flexible Portfolio Annuity is subject to a $30
annual contract administrative charge, a 1.25% mortality and
expense risk charge and a surrender charge. (p.24)
Expense summary
The purpose of this table is to help you understand the various costs and
expenses associated with your annuity.
You pay no sales charge when you purchase the annuity. All costs that you bear
directly or indirectly for the variable subaccounts and underlying mutual funds
are shown below. Some expenses may vary as explained under "Contract charges."
Contract Owner Expense
Surrender charge
(contingent deferred sales
charge as a percent of purchase
payments surrendered) Contract year
7 1-3
6 4
5 5
4 6
3 7
2 8
0 After 8 years
Annual Contract
Administrative Charge $30
Variable Account Annual Expense
Mortality and Expense Risk Fee
(as a percentage of daily net asset value) 1.25%
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Annual Operating Expenses of Underlying Mutual Funds
(as a percentage of average net assets)
<TABLE>
<CAPTION>
IDS Life IDS Life
Aggres- Inter- IDS Life IDS Life IDS Life IDS Life IDS Life AIM V.I. Putnam VT
sive national Capital IDS Life Special IDS Life Growth Global Income Growth and New Oppor-
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage Income tunities
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management
fees .60% .82% .60% .59% .59% .50% .63% .84% .63% .65% .63%
Other
expenses .09 .16 .08 .07 .10 .06 .22 .62 .54 .13 .09
Total .69%* .98%* .68%* .66%* .69%* .56%* .85%* 1.46%* 1.17%* .78%* .72%*
Warburg Pincus
Trust/Small
American Company
Century Templeton Growth
VP Developing (After Expense
Value Markets: Class 1 Reimbursements)
Management
fees 1.00% 1.25% .90%
Other
expenses -- .45 .26
Total 1.00%* 1.70%++ 1.16%+
</TABLE>
* Annualized operating expenses of underlying mutual funds at Dec. 31, 1996.
+ Figures in "Management fees," "Other expenses" and "Total" are based on actual
expenses for the fiscal year ended Dec. 31, 1996 net of any fee waivers or
expense reimbursments. Without such waivers or reimbursements, "Other expenses"
would equal .27% and "Total" would equal 1.17%. ++ Figures are estimates for
1997 based on annualized 1996 figures. The fund began operations in March 1996.
Figures do not reflect the Investment Manager's agreement in advance to waive a
portion of its fees during 1996. After the waiver, actual management fees and
total operating expenses of the portfolio in 1996 were 1.17% and 1.70% of all
net assets, respectively. This waiver agreement has been terminated.
<TABLE>
<CAPTION>
IDS Life IDS Life
Aggres- Inter- IDS Life IDS Life IDS Life IDS Life IDS Life AIM V.I. Putnam VT
sive national Capital IDS Life Special IDS Life Growth Global Income Growth and New Oppor-
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage Income tunities
Example:* You would pay the following expenses on a $1,000 investment, assuming
5% annual return and surrender at the end of each time period:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $ 92.70 $ 95.46 $ 92.60 $ 92.41 $ 92.70 $ 91.46 $ 94.22 $100.04 $ 97.27 $ 93.56 $ 92.98
3 years 140.11 148.42 139.83 139.25 140.11 136.37 144.70 162.06 153.84 142.70 140.98
5 years 167.24 181.43 166.75 165.76 167.24 160.82 175.09 204.54 190.63 171.66 168.72
10 years 235.95 266.27 234.89 232.77 235.95 222.08 252.79 314.56 285.66 245.45 239.13
American Warburg Pincus
Century Templeton Trust/Small
VP Developing Company
Value Markets: Class 1 Growth
1 year $ 95.65 $103.09 $ 97.18
3 years 148.99 171.08 153.55
5 years 182.40 219.69 190.15
10 years 268.32 345.50 284.65
</TABLE>
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You would pay the following expenses on the same investment assuming no
surrender or the selection of an annuity payout plan at the end of each time
period:
<TABLE>
<CAPTION>
IDS Life IDS Life
Aggres- Inter- IDS Life IDS Life IDS Life IDS Life IDS Life AIM V.I. Putnam VT
sive national Capital IDS Life Special IDS Life Growth Global Income Growth and New Oppor-
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage Income tunities
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $ 20.64 $ 23.62 $ 20.54 $ 20.34 $ 20.64 $ 19.31 $ 22.28 $ 28.54 $ 25.56 $21.51 $ 20.95
3 years 63.77 72.73 63.46 62.84 63.77 59.73 68.72 87.46 78.58 66.56 64.70
5 years 109.46 124.48 108.94 107.89 109.46 102.67 117.77 148.94 134.22 114.14 111.02
10 years 235.95 266.27 234.89 232.79 235.95 222.08 252.79 314.56 285.66 245.45 239.13
American Warburg Pincus
Century Templeton Trust/Small
VP Developing Company
Value Markets: Class 1 Growth
1 year $ 23.82 $31.82 $25.46
3 years 73.35 97.19 78.27
5 years 125.51 164.97 133.71
10 years 268.32 345.50 284.65
</TABLE>
This example should not be considered a representation of past or future
expenses. Actual expenses may be more or less than those shown.
* In this example, the $30 annual contract administrative charge is approximated
as a .074% charge based on the average contract size. IDS Life of New York has
entered into certain arrangements under which it is compensated by the funds'
advisors and/or distributors for the administrative services it provides to the
funds.
<PAGE>
Condensed Financial Information (unaudited)
Period from
Oct. 8, 1996 to
Dec. 31, 1996*
Subaccount GC (invests in IDS Life Capital
Resource Fund)
Accumulation unit value at beginning of
period................................... $1.00
Accumulation unit value at end of period. $1.02
Number of accumulation units outstanding
at end of period (000 omitted)........... 655
Ratio of operating expense to
average net assets..................... 1.25%
Subaccount GI (invests in IDS Life International
Equity Fund)
Accumulation unit value at beginning of
period................................... $1.00
Accumulation unit value at end of period. $1.02
Number of accumulation units outstanding
at end of period (000 omitted)........... 712
Ratio of operating expense to
average net assets..................... 1.25%
Subaccount GA (invests in IDS Life Aggressive
Growth Fund)
Accumulation unit value at beginning of
period.................................... $1.00
Accumulation unit value at end of period.. $1.01
Number of accumulation units outstanding
at end of period (000 omitted)............ 1,005
Ratio of operating expense to
average net assets..................... 1.25%
Subaccount GS (invests in IDS Life Special
Income Fund)
Accumulation unit value at beginning of
period................................... $1.00
Accumulation unit value at end of period. $1.02
Number of accumulation units outstanding
at end of period (000 omitted)........... 1,283
Ratio of operating expense to
average net assets..................... 1.25%
Subaccount GM (invests in IDS Life Moneyshare Fund)
Accumulation unit value at beginning of
period................................... $1.00
Accumulation unit value at end of period. $1.01
Number of accumulation units outstanding
at end of period (000 omitted)........... 2,865
Ratio of operating expense to
average net assets..................... 1.25%
1
Simple Yield 3.63%
1
Compound Yield 3.69%
Subaccount GD (invests in IDS Life Managed Fund)
Accumulation unit value at beginning of
period................................... $1.00
Accumulation unit value at end of period. $1.04
Number of accumulation units outstanding
at end of period (000 omitted)........... 1,301
Ratio of operating expense to
average net assets..................... 1.25%
Subaccount GG (invests in IDS Life Growth
Dimensions Fund)
Accumulation unit value at beginning of
period................................... $1.00
Accumulation unit value at end of period. $1.02
Number of accumulation units outstanding
at end of period (000 omitted)........... 3,667
Ratio of operating expense to
average net assets..................... 1.25%
1
Net of annual contact administrative charge and
mortality and expense risk fee.
<PAGE>
Condensed Financial Information (unaudited)
Period from
Oct. 8, 1996 to
Dec. 31, 1996*
Subaccount GY (invests in IDS Life Global Yield Fund)
Accumulation unit value at beginning of
period................................... $1.00
Accumulation unit value at end of period. $1.03
Number of accumulation units outstanding
at end of period (000 omitted)........... 592
Ratio of operating expense to
average net assets..................... 1.25%
Subaccount GV (invests in IDS Life Income
Advantage Fund)
Accumulation unit value at beginning of
period.................................... $1.00
Accumulation unit value at end of period.. $1.02
Number of accumulation units outstanding
at end of period (000 omitted)............ 1,917
Ratio of operating expense to
average net assets..................... 1.25%
Subaccount GW (invests in AIM V.I. Growth and Income)
Accumulation unit value at beginning of
period.................................... $1.00
Accumulation unit value at end of period.. $1.04
Number of accumulation units outstanding
at end of period (000 omitted)........... 1,386
Ratio of operating expense to
average net assets..................... 1.25%
Subaccount GN (invests in Putnam VT New Opportunities)
Accumulation unit value at beginning of
period................................... $1.00
Accumulation unit value at end of period. $0.93
Number of accumulation units outstanding
at end of period (000 omitted)........... 2,682
Ratio of operating expense to
average net assets..................... 1.25%
Subaccount GP (invests in American Century VP Value)
Accumulation unit value at beginning of
period................................... $1.00
Accumulation unit value at end of period. $1.06
Number of accumulation units outstanding
at end of period (000 omitted)........... 806
Ratio of operating expense to
average net assets..................... 1.25%
Subaccount GK (invests in Templeton Developing
Markets Fund)
Accumulation unit value at beginning of
period.................................... $1.00
Accumulation unit value at end of period.. $1.00
Number of accumulation units outstanding
at end of period (000 omitted)............ 1,399
Ratio of operating expense to
average net assets..................... 1.25%
Subaccount GT (invests in Warburg Pincus
Trust/Small Company Growth Portfolio)
Accumulation unit value at beginning of
period.................................... $1.00
Accumulation unit value at end of period.. $0.98
Number of accumulation units outstanding
at end of period (000 omitted)........... 1,781
Ratio of operating expense to
average net assets..................... 1.25%
*Operations commenced on Oct. 8, 1996.
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PAGE 14
Financial statements
The SAI, dated May 1, 1997, contains:
The audited financial statements of IDS Life Insurance Company of New York
including:
- balance sheets as of Dec. 31, 1996 and Dec. 31, 1995; and
- related statements of income and cash flows for each of
the three years in the period ended Dec. 31, 1996.
The audited financial statements of the Variable Account including:
-statements of net assets as of Dec. 31, 1996;
-statements of operations for the period from Oct. 8, 1996
(commencement of operations) to Dec. 31, 1996; and
-statements of changes in net assets for the period from Oct. 8,
1996 (commencement of operations) to Dec. 31, 1996.
Performance information
Performance information for the variable subaccounts may appear from time to
time in advertisements or sales literature. In all cases, such information
reflects the performance of a hypothetical investment in a particular account
during a particular time period. The performance figures are calculated on the
basis of historical performance of the funds. The performance figures relating
to these funds assume that the contract was offered prior to Sept. 5, 1996,
which it was not. Before the subaccounts began investing in these funds, the
figures show what the subaccount performance would have been if these
subaccounts had existed during the illustrated periods. Once these subaccounts
began investing in these funds, actual values are used for the calculations.
Simple yield - Account GM (investing in IDS Life Moneyshare Fund): Income over a
given seven-day period (not counting any change in the capital value of the
investment) is annualized (multiplied by 52) by assuming that the same income is
received for 52 weeks. This annual income is then stated as an annual percentage
return on the investment.
Compound yield - Account GM (investing in IDS Life Moneyshare Fund): Calculated
like simple yield, except that, when annualized, the income is assumed to be
reinvested. Compounding of reinvested returns increases the yield as compared to
a simple yield.
Yield - For accounts investing in income funds: Net investment income (income
less expenses) per accumulation unit during a given 30-day period is divided by
the value of the unit on the last day of the period. The result is converted to
an annual percentage.
Average annual total return: Expressed as an average annual compounded rate of
return of a hypothetical investment over a period of one, five and ten years (or
up to the life of the account if it is less than ten years old). This figure
reflects deduction of all applicable charges, including the contract
administrative charge, mortality and expense risk fee and surrender charge,
assuming a surrender at the end of the illustrated period. Optional average
annual total return quotations may be made that do not reflect a surrender
charge deduction (assuming no surrender).
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PAGE 15
Aggregate total return: Represents the cumulative change in the value of an
investment over a specified period of time (reflecting change in a subaccount's
accumulation unit value). The calculation assumes reinvestment of investment
earnings and reflects the deduction of all applicable charges, including the
contract administrative charge, mortality and expense risk fee and surrender
charge, assuming a surrender at the end of the illustrated period. Optional
aggregate total return quotations may be made that do not reflect a surrender
charge deduction (assuming no surrender). Aggregate total return may be shown by
means of schedules, charts or graphs.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the fund in which the
subaccount invests, and the market conditions during the given time period. Such
information is not intended to indicate future performance. Because advertised
yields and total return figures include all charges attributable to the annuity,
which has the effect of decreasing advertised performance, subaccount
performance should not be compared to that of mutual funds that sell their
shares directly to the public. (See the SAI for a further description of methods
used to determine yield and total return for the subaccounts.)
If you would like additional information about actual performance, contact your
financial advisor.
The variable account
Purchase payments can be allocated to any or all of the subaccounts of the
variable account that invest in shares of the following funds:
Subaccount
IDS Life Aggressive Growth Fund GA
IDS Life International Equity Fund GI
IDS Life Capital Resource Fund GC
IDS Life Managed Fund GD
IDS Life Special Income Fund GS
IDS Life Moneyshare Fund GM
IDS Life Growth Dimensions Fund GG
IDS Life Global Yield Fund GY
IDS Life Income Advantage Fund GV
AIM V.I. Growth and Income Fund GW
Putnam VT New Opportunities Fund GN
American Century VP Value GP
Templeton Developing Markets Fund: Class 1 GK
Warburg Pincus Trust/Small Company Growth Portfolio GT
Each variable subaccount meets the definition of a separate account under
federal securities laws. Income, capital gains and capital losses of each
subaccount are credited or charged to that subaccount alone. No variable
subaccount will be charged with liabilities of any other account or of our
general business. All obligations arising under the contracts are general
obligations of IDS Life of New York.
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The variable account was established under New York law on April 17, 1996 and is
registered as a unit investment trust under the Investment Company Act of 1940
(the 1940 Act). This registration does not involve any supervision of our
management or investment practices and policies by the SEC.
The funds
IDS Life Aggressive Growth Fund
Objective: capital appreciation. Invests primarily in common stock
of small-and medium-size companies. The fund also may invest in
warrants or debt securities or in large, well-established companies
when the portfolio manager believes such investments offer the best
opportunity for capital appreciation.
IDS Life International Equity Fund
Objective: capital appreciation. Invests primarily in common stock of foreign
issuers and foreign securities convertible into common stock. The fund also may
invest in certain international bonds if the portfolio manager believes they
have a greater potential for capital appreciation than equities.
IDS Life Capital Resource Fund
Objective: capital appreciation. Invests primarily in U.S. common
stocks and other securities convertible into common stock,
diversified over many different companies in a variety of
industries.
IDS Life Managed Fund
Objective: maximum total investment return. Invests primarily in
U.S. common stocks, securities convertible into common stock,
warrants, fixed income securities (primarily high-quality corporate
bonds) and money-market instruments. The fund invests in many
different companies in a variety of industries.
IDS Life Special Income Fund
Objective: high level of current income while conserving the value
of the investment for the longest time period. Invests primarily
in high-quality, lower-risk corporate bonds issued by many
different companies in a variety of industries, and in government
bonds.
IDS Life Moneyshare Fund
Objective: maximum current income consistent with liquidity and conservation of
capital. Invests in high-quality money market securities with remaining
maturities of 13 months or less. The fund also will maintain a dollar-weighted
average portfolio maturity not exceeding 90 days. The fund attempts to maintain
a constant net asset value of $1 per share.
IDS Life Growth Dimensions Fund
Objective: long-term growth of capital. Invests primarily in
common stocks of U.S. and foreign companies showing potential for
significant growth.
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IDS Life Global Yield Fund
Objective: high total return through income and growth of capital.
Invests primarily in a non-diversified portfolio of debt securities
of U.S. and foreign issuers.
IDS Life Income Advantage Fund
Objective: high current income, with capital growth as a secondary
objective. Invests primarily in long-term, high-yielding, high-
risk debt securities below investment grade issued by U.S. and
foreign corporations.
AIM V.I. Growth and Income Fund
Objective: growth of capital, with current income as a secondary objective. The
fund seeks to achieve its objective by generally investing at least 65% of its
net assets in stocks of companies believed by management to have the potential
for above average growth in revenues and earnings.
Putnam VT New Opportunities Fund
Objective: long-term capital appreciation. Invests principally in
common stocks of companies in sectors of the economy that Putnam
Investment Management, Inc., the funds' investment manager,
believes possess above-average, long-term growth potential.
American Century VP Value
Objective: long-term capital growth, with income as a secondary
objective. Invests primarily in securities that management
believes to be undervalued at the time of purchase.
Templeton Developing Markets Fund
Objective: long-term capital appreciation. Invests primarily in
equity securities of issuers in countries having developing
markets.
Warburg Pincus Trust/Small Company Growth Portfolio
Objective: capital growth. Invests primarily in equity securities
of small-sized domestic companies.
More comprehensive information regarding each fund is contained in the fund
prospectus. You should read the fund prospectus and consider carefully, and on a
continuing basis, which fund or combination of funds is best suited to your
long-term investment needs. There is no assurance that the investment objectives
of the funds will be attained nor is there any guarantee that the contract value
will equal or exceed the total purchase payments made. Some funds may involve
more risk than others--please monitor your investments accordingly.
All funds are available to serve as the underlying investment for variable
annuities, and some funds are available to serve as the underlying investment
for variable annuities, variable life insurance contracts and qualified plans.
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts, variable life insurance separate accounts and/or
qualified plans to invest in the available funds simultaneously. Although IDS
Life of New York and the funds do not currently foresee any such disadvantages,
the boards of directors or trustees
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of the appropriate funds will monitor events in order to identify any material
conflicts between such contract owners, policy owners and qualified plans to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that separate funds should be established for variable
annuity, variable life insurance and qualified plan separate accounts, the
variable annuity contract holders would not bear any expenses associated with
establishing separate funds.
The Internal Revenue Service (IRS) has issued final regulations relating to the
diversification requirements under Section 817(h) of the Code. Each mutual fund
intends to comply with these requirements.
The U.S. Treasury and the IRS have indicated that they may provide additional
guidance concerning how many variable subaccounts may be offered and how many
exchanges among variable subaccounts may be allowed before the owner is
considered to have investment control and thus is currently taxed on income
earned within variable subaccount assets. We do not know at this time what the
additional guidance will be or when action will be taken. We reserve the right
to modify the contract, as necessary, to ensure that the owner will not be
subject to current taxation as the owner of the variable subaccount assets.
We intend to comply with all federal tax laws to ensure that the contract
continues to qualify as an annuity for federal income tax purposes. We reserve
the right to modify the contract as necessary to comply with any new tax laws.
The investment managers for the funds are as follows:
o IDS Life Funds - IDS Life, IDS Tower 10, Minneapolis, MN 55440; American
Express Financial Corporation is the investment advisor of IDS Life Funds.
IDS International, Inc., a wholly-owned subsidiary of AEFC, is the
sub-investment advisor for IDS Life International Equity Fund;
o AIM V.I. Growth and Income Fund - A I M Advisors, Inc., 11
Greenway Plaza, Suite 1919, Houston, TX 77046-1173;
o Putnam VT New Opportunities Fund - Putnam Investment Management,
Inc., One Post Office Square, Boston, MA 02109;
o American Century VP Value - American Century Investment
Management, Inc., American Century Tower, 4500 Main Street,
Kansas City, MO 64111;
o Templeton Developing Markets Fund - Templeton Asset Management
Ltd., Temasek Blvd., #38-03, Suntec Tower One, Singapore
038987;
o Warburg Pincus Trust/Small Company Growth Portfolio - Warburg,
Pincus Counsellors, Inc., 466 Lexington Avenue, New York, NY
10017-3147.
The investment managers and advisors cannot guarantee that the
funds will meet their investment objectives. Please read the
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PAGE 19
prospectuses for the funds for complete information on investment risks,
deductions, expenses and other facts you should know before investing. These
prospectuses are available by contacting IDS Life of New York at the address or
telephone number on the front of this prospectus, or from your financial
advisor.
The fixed account
Purchase payments may also be allocated to the fixed account. The cash value of
the fixed account increases as interest is credited to the account. Purchase
payments and transfers to the fixed account become part of the general account
of IDS Life of New York, the company's main portfolio of investments. Interest
is credited daily and compounded annually. We may change the interest rates from
time to time.
Because of exemptive and exclusionary provisions, interests in the fixed account
have not been registered under the Securities Act of 1933 (1933 Act), nor is the
fixed account registered as an investment company under the 1940 Act.
Accordingly, neither the fixed account nor any interests in it are generally
subject to the provisions of the 1933 or 1940 Acts, and we have been advised
that the staff of the SEC has not reviewed the disclosures in this prospectus
that relate to the fixed account. Disclosures regarding the fixed account,
however, may be subject to certain generally applicable provisions of the
federal securities laws relating to the accuracy and completeness of statements
made in prospectuses.
Buying your annuity
Your financial advisor will help you prepare and submit your application, and
send it along with your initial purchase payment to our Albany office. As the
owner, you have all rights and may receive all benefits under the contract. The
annuity cannot be owned in joint tenancy, except in spousal situations. You
cannot buy an annuity or be an annuitant if you are 91 or older. Please remember
that investment performance, expenses and deduction of certain charges affect
accumulation value.
When you apply, you can select:
o the account(s) in which you want to invest;
o how you want to make purchase payments; and
o a beneficiary.
The contract provides for allocation of purchase payments to the subaccounts of
the variable account and/or to the fixed account in even 1% increments.
If your application is complete, we will process it and apply your purchase
payment to your account(s) within two business days after we receive it at our
Albany office. If your application is accepted, we will send you a contract. If
we cannot accept your application within five business days, we will decline it
and return your payment. We will credit additional purchase payments to your
account(s) at the next close of business after we receive and accept your
payments at our Albany office.
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The retirement date
Upon processing your application, we will establish the retirement date to the
maximum age or date as specified on the next page. You can also select a date
within the maximum limits. This date can be aligned with your actual retirement
from a job, or it can be a different future date, depending on your needs and
goals and on certain restrictions. You can also change the date, provided you
send us written instructions at least 30 days before annuity payouts begin.
For nonqualified annuities, the retirement date must be:
o no earlier than the 60th day after the contract's effective
date; and
o no later than the annuitant's 90th birthday or before the 10th contract
anniversary, if purchased after age 75.
For qualified annuities, to avoid IRS penalty taxes, the retirement date
generally must be:
o on or after the date the annuitant reaches age 59 1/2; and
o for IRA's, SIMPLE IRAs and SEPs, by April 1 of the year
following the calendar year when the annuitant reaches ages
70 1/2.
o for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires,
except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age 70
1/2.
If you are taking the minimum IRA or TSA distributions as required by the Code
from another tax-qualified investment, or in the form of partial surrenders from
this annuity, annuity payouts can start as late as the annuitant's 90th
birthday.
Beneficiary
If death benefits become payable before the retirement date, your named
beneficiary will receive all or part of the contract value.
If there is no named beneficiary, then you or your estate will be the
beneficiary. (See "Benefits in case of death" for more about beneficiaries.)
Minimum purchase payment
If single payment:
Nonqualified: $2,000
Qualified: $1,000
o Minimum additional purchase payment: $50
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PAGE 21
If installment payments:
o Minimum installment payment(s): $50 monthly; $23.08 biweekly
(scheduled payment plan billing)
Installments must total at least $600 in the first year.*
*If you make no purchase payments for 36 months, and your previous payments
total $600 or less, we have the right to give you 30 days' written notice and
pay you the total value of your contract in a lump sum.
Maximum first-year payment(s):
This maximum is based on your age or age of the annuitant (whomever
is older) on the effective date of the contract.
Up to age 75 $1 million
76 to 85 $500,000
86 to 90 $50,000
o Maximum payment for each subsequent year: **$100,000 Up to age 85
$ 50,000 Ages 86-90
**These limits apply in total to all IDS Life of New York annuities you own. We
reserve the right to increase maximum limits. For qualified annuities the
qualified plan's limits on annual contributions also apply.
How to make purchase payments
1 By letter
Send your check along with your name and account number to:
Regular mail:
IDS Life Insurance Company of New York
Box 5144
Albany, NY 12205
Express mail:
IDS Life Insurance Company of New York
20 Madison Ave. Extension
Albany, NY 12203
2 By scheduled payment plan
Your financial advisor can help you set up:
o an automatic payroll deduction, salary reduction or other group
billing arrangement; or
o a bank authorization.
Charges
Contract administrative charge
This fee is for establishing and maintaining your records. We deduct $30 from
the contract value on your contract anniversary.
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This $30 charge is waived if your contract value, or total purchase payments
less any payments surrendered, equals or exceeds $25,000 on your contract
anniversary.
If you surrender your contract, the charge will be deducted at the time of
surrender regardless of the contract value or purchase payments made. The charge
cannot be increased and does not apply after annuity payouts begin.
Mortality and expense risk fee
This fee is to cover the mortality risk and expense risk and is applied daily to
the variable subaccounts and reflected in the accumulation unit values of the
subaccounts. The subaccounts pay this fee at the time that dividends are
distributed from the funds in which they invest. Annually the fee totals 1.25%
of the subaccounts' average daily net assets. Approximately two-thirds of this
amount is for our assumption of mortality risk, and one-third is for our
assumption of expense risk. This fee does not apply to the fixed account.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific annuitant lives and no matter how long the entire
group of IDS Life of New York annuitants live. If, as a group, IDS Life of New
York annuitants outlive the life expectancy we have assumed in our actuarial
tables, then we must take money from our general assets to meet our obligations.
If, as a group, IDS Life of New York annuitants do not live as long as expected,
we could profit from the mortality risk fee. Expense risk arises because the
contract administrative charge cannot be increased and may not cover our
expenses. Any deficit would have to be made up from our general assets.
We may use any profits realized from the mortality and expense risk fee for any
proper corporate purpose, including, among others, payment of distribution
(selling) expenses. We do not expect that the surrender charge, discussed in the
following paragraphs, will cover sales and distribution expenses.
Surrender charge
A surrender charge applies to all purchase payments surrendered in the first
eight contract years. The surrender amount you request is determined by drawing
from your total contract value in the following order:
o First, we surrender any contract earnings (contract value minus
all purchase payments received and not previously surrendered).
There is no surrender charge on contract earnings. Note:
Contract earnings are determined by looking at the entire
contract value, not the earnings of any particular variable
subaccount or the fixed account.
o If necessary, we surrender amounts representing purchase payments not
previously surrendered. The surrender charge rate on these purchase payments
is as follows:
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PAGE 23
Surrender charge as
percent of purchase
payments surrendered Contract year
- -------------------- -------------
7 1-3
6 4
5 5
4 6
3 7
2 8
0 After 8 years
The surrender charge is calculated so that the total amount surrendered, minus
any surrender charge, equals the amount you request.
Waiver of surrender charges
There are no surrender charges for:
o contract earnings;
o minimum required distributions after you reach age 70 1/2; (for
qualified plans)
o contracts settled using an annuity payout plan; and
o death benefits.
Other information on charges: AEFC makes certain custodial services available to
some custodial and trusteed pension and profit sharing plans and 401(k) plans
funded by IDS Life of New York annuities. Fees for these services start at $30
per calendar year per participant. A termination fee for owners under age 59 1/2
will be charged (fee waived in case of death or disability).
Possible group reductions: In some cases (for example, an employer making the
annuity available to employees), lower sales and administrative expenses may be
incurred due to the size of the group, the average contribution and the use of
group enrollment procedures. In such cases, we may be able to reduce or
eliminate the contract administrative and surrender charges. However, we expect
this to occur infrequently.
Valuing your investment
Here is how your accounts are valued:
Fixed account: The amounts allocated to the fixed account are valued directly in
dollars and equal the sum of your purchase payments, plus interest earned, less
any amounts surrendered or transferred and any contract administrative charge
assessed.
Variable subaccounts: Amounts allocated to the variable subaccounts are
converted into accumulation units. Each time you make a purchase payment or
transfer amounts into one of the variable subaccounts, a certain number of
accumulation units are credited to your contract for that subaccount.
Conversely, each
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PAGE 24
time you take a partial surrender, transfer amounts out of a variable
subaccount, or are assessed a contract administrative charge, a certain number
of accumulation units are subtracted from your contract.
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the underlying fund. The dollar value of each
accumulation unit can rise or fall daily depending on the performance of the
underlying mutual fund and on certain fund expenses. Here is how unit values are
calculated:
Number of units
To calculate the number of accumulation units for a particular subaccount, we
divide your investment, by the current accumulation unit value.
Accumulation unit value
The current accumulation unit value for each variable subaccount equals the last
value times the subaccount's current net investment factor.
Net investment factor
o Determined each business day by adding the underlying mutual fund's current
net asset value per share, plus per share amount of any current dividend or
capital gain distribution; then
o dividing that sum by the previous net asset value per share; and
o subtracting the percentage factor representing the mortality and
expense risk fee from the result.
Because the net asset value of the underlying mutual fund may fluctuate, the
accumulation unit value may increase or decrease. You bear this investment risk
in a variable subaccount.
Factors that affect variable subaccount accumulation units Accumulation units
may change in two ways; in number and in value. Here are the factors that
influence those changes:
The number of accumulation units you own may fluctuate due to:
o additional purchase payments allocated to the variable
subaccount(s);
o transfers into or out of the variable subaccount(s);
o partial surrenders;
o surrender charges; and/or
o contract administrative charges.
Accumulation unit values may fluctuate due to:
o changes in underlying mutual fund(s) net asset value; o dividends distributed
to the variable subaccount(s);
o capital gains or losses of underlying mutual funds;
o mutual fund operating expenses; and/or
o mortality and expense risk fees.
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Making the most of your annuity
Automated dollar-cost averaging
You can use automated transfers to take advantage of dollar-cost averaging
(investing a fixed amount at regular intervals). For example, you might have a
set amount transferred monthly from a relatively conservative variable
subaccount to a more aggressive one, or to several others.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market value(s) of the underlying
mutual fund(s). Since you invest the same amount each period, you automatically
acquire more units when the market value falls, fewer units when it rises. The
potential effect is to lower the average cost per unit. For specific features
contact your financial advisor.
How dollar-cost averaging works
Amount Accumulation Number of units
Month invested unit value purchased
Jan $100 $20 5.00
Feb 100 18 5.56
March 100 17 5.88
April 100 15 6.67
May 100 16 6.25
June 100 18 5.56
July 100 17 5.88
Aug 100 19 5.26
Sept 100 21 4.76
Oct 100 20 5.00
(footnotes to table) By investing an equal number of dollars each
month...
(arrow in table pointing to April) you automatically buy more units when the per
unit market price is low...
(arrow in table pointing to Sept.) and fewer units when the per
unit market price is high.
You have paid an average price of only $17.91 per unit over the 10 months, while
the average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any variable subaccount will gain
in value, nor will it protect against a decline in value if market prices fall.
Because this strategy involves continuous investing, your success with
dollar-cost averaging will depend upon your willingness to continue to invest
regularly through periods of low price levels. Dollar-cost averaging can be an
effective way to help meet your long-term goals.
Transferring money between subaccounts
You may transfer money from any one subaccount, or the fixed account, to another
subaccount before annuity payouts begin.
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PAGE 26
If we receive your request before the close of business, we will process it that
day. Requests received after the close of business will be processed the next
business day. There is no charge for transfers. Before making a transfer, you
should consider the risks involved in switching investments.
Certain restrictions apply to transfers involving the fixed account. We may
suspend or modify transfer privileges at any time. Excessive trading activity
can disrupt mutual fund management strategy and increase expenses, which are
borne by all contract owners participating in the fund regardless of their
transfer activity. We may apply modifications or restrictions in any manner
reasonably designed to prevent any use of the transfer right we consider to be
to the disadvantage of other contract owners.
Transfer policies
o Before annuity payouts begin, you may transfer contract values between the
variable subaccounts, or from the variable subaccount(s) to the fixed account
at any time. However, if you have made a transfer from the fixed account to
the variable subaccount(s), you may not make a transfer (including automated
transfers) from any variable subaccount back to the fixed account until the
next contract anniversary.
o You may transfer contract values from the fixed account to the variable
subaccount(s) once a year during a 31-day transfer period starting on each
contract anniversary (except for automated transfers, which can be set up at
any time for transfer periods of your choosing subject to certain minimums).
o If we receive your transfer request within 30 days before the contract
anniversary date, the transfer from the fixed account to the variable
subaccount(s) will be effective on the anniversary.
o If we receive your request on or within 30 days after the contract
anniversary date, the transfer from the fixed account to the variable
subaccount(s) will be effective on the day we receive it.
o We will not accept requests for transfers from the fixed account at any other
time.
o Once annuity payouts begin, no transfers may be made to or from the fixed
account, but transfers may be made once per contract year among the variable
subaccounts. During the annuity payout period, you cannot be invested in more
than five variable subaccounts at any one time unless we agree otherwise.
How to request a transfer or a surrender
1 By letter
Send your name, account number, Social Security Number or Taxpayer
Identification Number and signed request for a transfer or surrender to:
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PAGE 27
Regular mail:
IDS Life Insurance Company of New York
P.O. Box 5144
Albany, NY 12205
Express mail:
IDS Life Insurance Company of New York
20 Madison Avenue Ext.
Albany, NY 12203
Minimum amount
Mail transfers: $250 or entire account balance
Mail surrenders: $250 or entire account balance
Maximum amount
Mail transfers: None (up to contract value)
Mail surrenders: None (up to contract value)
2 By automated transfers and automated partial surrenders
Your financial advisor can help you set up automated transfers among your
subaccount or fixed account or partial surrenders from the accounts. You can
start or stop this service by written request or other method acceptable to IDS
Life of New York. You must allow 30 days for IDS Life of New York to change any
instructions that are currently in place.
o Automated transfers from the fixed account to any one of the variable
subaccount(s) may not exceed an amount that, if continued, would deplete the
fixed account within 12 months.
o Automated surrenders may be restricted by applicable law under
some contracts.
o You may not make additional purchase payments if automated
partial surrenders are in effect.
o Automated partial surrenders may result in IRS taxes and penalties on all or
part of the amount surrendered.
Minimum amount
Automated transfers or surrenders: $50
Maximum amount
Automated transfers or surrenders: None (except for automated
transfers from the fixed
account)
Surrendering your contract
As owner, you may surrender all or part of your contract at any time before
annuity payouts begin by sending a written request or calling IDS Life of New
York. For total surrenders we will compute the value of your contract at the
close of business after we receive your request. We may ask you to return the
contract. You may have to pay surrender charges (see "Surrender charge") and IRS
taxes and penalties (see "Taxes"). No surrenders may be made after annuity
payouts begin.
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PAGE 28
Surrender policies
If you have a balance in more than one account and request a partial surrender,
we will withdraw money from all your accounts in the same proportion as your
value in each account correlates to your total contract value, unless you
request otherwise. The minimum contract value after partial surrender is $600.
Receiving payment when you request a surrender
By regular or express mail:
o Payable to owner;
o Mailed to address of record;
o Special payee and/or addressee.
Note: You will be charged a fee if you request express mail
delivery.
By wire:
o Request that payment be wired to your bank;
o Bank account must be in the same ownership as your contract;
o Pre-authorization required. For instructions, contact your
financial advisor.
Payment normally will be sent within seven days after receiving your request.
However, we may postpone the payment if:
-the surrender amount includes a purchase payment check that
has not cleared;
-the NYSE is closed, except for normal holiday and weekend
closings;
-trading on the NYSE is restricted, according to SEC rules;
-an emergency, as defined by SEC rules, makes it impractical
to sell securities or value the net assets of the accounts;
or
-the SEC permits us to delay payment for the protection of
security holders.
TSA-special surrender provisions
Participants in Tax-Sheltered Annuities: The Code imposes certain restrictions
on your right as owner to receive early distributions from a TSA:
o Distributions attributable to salary reduction contributions made after Dec.
31, 1988, plus the earnings on them, or to transfers or rollovers of such
amounts from other contracts, may be made from the TSA only if:
-you have attained age 59 1/2;
-you have become disabled as defined in the Code;
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PAGE 29
-you have separated from the service of the employer who
purchased the annuity; or
-the distribution is made to your beneficiary because of your
death.
o If you encounter a financial hardship (within the meaning of the Code), you
may receive a distribution of all contract values attributable to salary
reduction contributions made after Dec.
31, 1988, but not the earnings on them.
o Even though a distribution may be permitted under the above
rules, it still may be subject to IRS taxes and penalties. (See
"Taxes.")
o The above restrictions on the right to receive a distribution do not affect
the availability of the amount credited to the contract as of Dec. 31, 1988.
The restrictions do not apply to transfers or exchanges of contract value
within the annuity, or to another registered variable annuity contract or
investment vehicle available through the employer.
o If the contract has a loan provision, the right to receive a loan from your
fixed account is described in detail in your contract. You may borrow from
the contract value allocated to the fixed account.
o For certain types of contributions under a TSA contract to be excluded from
taxable income, the employer must comply with certain nondiscrimination
requirements. You should consult your employer to determine whether the
nondiscrimination rules apply to you.
Changing ownership
You may change ownership of your nonqualified annuity at any time by filing a
change of ownership with us at our Albany office. The change will become binding
upon us when we receive and record it.
We will honor any change of ownership request believed to be authentic and will
use reasonable procedures to confirm that it is. If these procedures are
followed, we take no responsibility for the validity of the change.
If you have a nonqualified annuity, you may lose your tax advantages by
transferring, assigning or pledging any part of it.
(See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose to any person except IDS
Life of New York.
However, if the owner is a trust or custodian, or an employer acting in a
similar capacity, ownership of a contract may be transferred to the annuitant.
<PAGE>
PAGE 30
Benefits in case of death
If you or the annuitant dies (or, for qualified annuities, if the annuitant
dies) before annuity payouts begin, we will pay the beneficiary as follows:
If death occurs before the annuitant's 75th birthday, the beneficiary receives
the greatest of:
o the contract value;
o the contract value as of the most recent sixth contract
anniversary, minus any surrenders since that anniversary; or
o purchase payments, minus any surrenders.
If death occurs on or after the annuitant's 75th birthday, the beneficiary
receives the greater of:
o the contract value; or
o the contract value as of the most recent sixth contract anniversary, minus
any surrenders since that anniversary.
If death occurs on or after the annuitant's 75th birthday, the beneficiary
receives the contract value.
If your spouse is sole beneficiary under a nonqualified annuity and you die
before the retirement date, your spouse may keep the annuity as owner. To do
this your spouse must, within 60 days after we receive proof of death, give us
written instructions to keep the contract in force.
Under a qualified annuity, if the annuitant dies before the retirement date, and
the spouse is the only beneficiary, the spouse may keep the annuity in force
until the date on which the annuitant would have reached age 70 1/2 or any other
date permitted by the Code. To do this, the spouse must give us written
instructions within 60 days after we receive proof of death.
Payments: We will pay the beneficiary in a single sum unless you
have given us other written instructions, or the beneficiary may
receive payouts under any annuity payout plan available under this
contract if:
o the beneficiary asks us in writing within 60 days after we
receive proof of death;
o payouts begin no later than one year after death, or other date
permitted by the Code; and
o the payout period does not extend beyond the beneficiary's life
or life expectancy.
When paying the beneficiary, we will determine the contract's value
at the next close of business after our death claim requirements
are fulfilled. Interest, if any, will be paid from the date of
death at a rate no less than required by law. We will mail payment
to the beneficiary within seven days after our death claim
requirements are fulfilled. (See "Taxes.")
<PAGE>
PAGE 31
The annuity payout period
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we will mutually agree on other payout
arrangements. The amount available for payouts under the plan you select is the
contract value on your retirement date. No surrender charges are deducted under
the payout plans listed below.
You also decide whether annuity payouts are to be made on a fixed
or variable basis, or a combination of fixed and variable. Amounts
of fixed and variable payouts depend on:
o the annuity payout plan you select;
o the annuitant's age and, in most cases, sex;
o the annuity table in the contract;
o the amounts you allocated to the account(s) at settlement.
In addition, for variable payouts only, amounts depend on the investment
performance of the subaccount(s) you select. These payouts will vary from month
to month because the performance of the underlying mutual funds will fluctuate.
(In the case of fixed annuities, payouts remain the same from month to month.)
For information with respect to transfers between accounts after annuity payouts
begin, see "Transfer policies."
Annuity payout plans
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are to be used to purchase
the payout plan.
o Plan A - Life annuity - no refund: Monthly payouts are made until the
annuitant's death. Payouts end with the last payout before the annuitant's
death; no further payouts will be made. This means that if the annuitant dies
after only one monthly payout has been made, no more payouts will be made.
o Plan B - Life annuity with five, ten or 15 years certain: Monthly payouts are
made for a guaranteed payout period of five, ten or 15 years that the annuitant
elects. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period has expired.
The guaranteed payout period is calculated from the retirement date. If the
annuitant outlives the elected guaranteed payout period, payouts will continue
until the annuitant's death.
o Plan C - Life annuity - installment refund: Monthly payouts are made until the
annuitant's death, with our guarantee that payouts will continue for some period
of time. Payouts will be made for at least the number of months determined by
dividing the amount applied under this option by the first monthly payout,
whether or not the annuitant is living.
<PAGE>
PAGE 32
o Plan D - Joint and last survivor life annuity - no refund: Monthly payouts are
made while both the annuitant and a joint annuitant are living. If either
annuitant dies, monthly payouts continue at the full amount until the death of
the surviving annuitant. Payouts end with the death of the second annuitant.
o Plan E - Payouts for a specified period: Monthly payouts are
made for a specific payout period of ten to 30 years chosen by the
annuitant. Payouts will be made only for the number of years
specified whether the annuitant is living or not. Depending on the
time period selected, it is foreseeable that an annuitant can
outlive the payout period selected. In addition, a 10% IRS penalty
tax could apply under this payout plan. (See "Taxes.")
Restrictions for some qualified plans: If you purchased a qualified annuity, you
must select a payout plan that provides for payouts:
o over the life of the annuitant;
o over the joint lives of the annuitant and a designated
beneficiary;
o for a period not exceeding the life expectancy of the
annuitant; or
o for a period not exceeding the joint life expectancies
of the annuitant and a designated beneficiary.
If we do not receive instructions: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
If monthly payouts would be less than $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum.
Death after annuity payouts begin
If you or the annuitant dies after annuity payouts begin, any amount payable to
the beneficiary will be provided in the annuity payout plan in effect.
Taxes
Generally, under current law, any increase in your contract value is taxable to
you only when you receive a payout or surrender. (See detailed discussion
below.) Any portion of the annuity payouts and any surrenders you request that
represent ordinary income are normally taxable. You will receive a 1099 tax
information form for any year in which a taxable distribution was made according
to our records.
Annuity payouts under nonqualified annuities: A portion of each payout will be
ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment
<PAGE>
PAGE 33
and will not be taxed. All amounts received after your investment in the annuity
is fully recovered will be subject to tax.
Tax law requires that all nonqualified deferred annuity contracts issued by the
same company to the same owner during a calendar year are to be taxed as a
single, unified contract when distributions are taken from any one of such
contracts.
Annuity payouts under qualified annuities: Under a qualified annuity, the entire
payout generally will be includable as ordinary income and subject to tax except
to the extent that contributions were made with after-tax dollars. If you or
your employer invested in your contract with pre-tax dollars as part of a
qualified retirement plan, such amounts are not considered to be part of your
investment in the contract and will be taxed when paid to you.
Surrenders: If you surrender part or all of your contract before your annuity
payouts begin, your surrender payment will be taxed to the extent that the value
of your contract immediately before the surrender exceeds your investment. You
also may have to pay a 10% IRS penalty for surrenders before reaching age 59
1/2. For qualified annuities, other penalties may apply if you surrender your
annuity before your plan specifies that you can receive payouts.
Death benefits to beneficiaries: The death benefit under an annuity is not
tax-exempt. Any amount received by the beneficiary that represents previously
deferred income earnings within the contract, is taxable as ordinary income to
the beneficiary in the year(s) he or she receives the payment(s).
Annuities owned by corporations, partnerships or trusts: For nonqualified
annuities annual increase in the value of annuities held by such entities
generally will be treated as ordinary income received during that year. This
provision is effective for purchase payments made after Feb. 28, 1986. However,
if the trust was set up for the benefit of a natural person only, the income
will continue to be tax-deferred.
Penalties: If you receive amounts from your contract before reaching age 59 1/2,
you may have to pay a 10% IRS penalty on the amount includable in your ordinary
income. If you receive amounts from your SIMPLE IRA before reaching age 59 1/2,
generally, the IRS 10% penalty provisions apply. However, if you receive these
amounts before age 59 1/2 and within the first two years of your participation
in the SIMPLE IRA plan, the IRS penalty will be assessed at the rate of 25%
instead of 10%. However, this penalty will not apply to any amount received by
you or your beneficiary:
o because of your death;
o because you become disabled (as defined in the Code);
o if the distribution is part of a series of substantially equal
periodic payments, made at least annually, over your life or life expectancy
(or joint lives or life expectancies of you and your beneficiary); or
o if it is allocable to an investment before Aug. 14, 1982 (except
for qualified annuities).
<PAGE>
PAGE 34
For other qualified annuities, other penalties or exceptions may apply if you
surrender your annuity before your plan specifies that payouts can be made.
Withholding, generally: If you receive all or part of the contract value from an
annuity, withholding may be imposed against the taxable income portion of the
payout. Any withholding that is done represents a prepayment of your tax due for
the year. You take credit for such amounts on the annual tax return that you
file.
If the payout is part of an annuity payout plan, the amount of withholding
generally is computed using payroll tables. You can provide us with a statement
of how many exemptions to use in calculating the withholding. As long as you've
provided us with a valid Social Security Number or Taxpayer Identification
Number, you
can elect not to have any withholding occur.
If the distribution is any other type of payment (such as a partial or full
surrender), withholding is computed using 10% of the taxable portion. Similar to
above, as long as you've provided us with a valid Social Security Number or
Taxpayer Identification Number, you can elect not to have this withholding
occur.
If a distribution is taken from a contract offered under a Section 457 Plan
(deferred compensation plan of state and local governments and tax-exempt
organizations), withholding is computed using payroll methods depending upon the
type of payment.
The state also may impose withholding requirements similar to the federal
withholding described above. Therefore, any payment from which federal
withholding is deducted may also have state withholding deducted.
The withholding requirements may differ if payment is being made to a non-U.S.
citizen or if the payment is being delivered outside the United States.
Withholding from qualified annuities: If you receive directly all or part of the
contract value from a qualified annuity (except an IRA or SIMPLE IRA), mandatory
20% income tax withholding generally will be imposed at the time the payout is
made. This mandatory withholding is in place of the elective withholding
discussed above. This mandatory withholding will not be imposed if:
o instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan;
o the payout is one in a series of substantially equal periodic payouts, made
at least annually, over your life or life expectancy (or the joint lives or
life expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more; or
o the payment is a minimum distribution required under the Code.
Payments made to a surviving spouse instead of being directly rolled over to an
IRA may also be subject to mandatory 20% income tax withholding.
<PAGE>
PAGE 35
State withholding also may be imposed on taxable distributions.
Transfer of ownership of a nonqualified annuity: If you make such a transfer
without receiving adequate consideration, the transfer is considered a gift, and
also may be considered a surrender for federal income tax purposes. If the gift
is a currently taxable event for income tax purposes, the amount of deferred
earnings at the time of the transfer will be taxed to the original owner, who
also may be subject to a 10% IRS penalty as discussed earlier. In this case, the
new owner's investment in the annuity will be the value of the annuity at the
time of the transfer.
Collateral assignment of a nonqualified annuity: If you collaterally assign or
pledge your contract, earnings on purchase payments you made after Aug. 13, 1982
will be taxed to you like a surrender.
Important: Our discussion of federal tax laws is based upon our understanding of
these laws as they are currently interpreted. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
Tax qualification: The contract is intended to qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, notwithstanding any
other provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any such amendments.
Voting rights
As a contract owner with investments in the variable subaccount(s) you may vote
on important mutual fund policies until annuity payouts begin. Once they begin,
the person receiving them has voting rights. We will vote fund shares according
to the instructions of the person with voting rights.
Before annuity payouts begin, the number of votes is determined by applying the
percentage interest in each variable subaccount to the total number of votes
allowed to the subaccount.
After annuity payouts begin, the number of votes is equal to:
o the reserve held in each subaccount for the contract,
divided by;
o the net asset value of one share of the applicable underlying
mutual fund.
As we make annuity payouts, the reserve for the annuity decreases; therefore,
the number of votes also will decrease.
<PAGE>
PAGE 36
We calculate votes separately for each subaccount not more than 60 days before a
shareholders' meeting. Notice of these meetings, proxy materials and a statement
of the number of votes to which the voter is entitled, will be sent.
We will vote shares for which we have not received instructions in the same
proportion as the votes for which we have received instructions. We also will
vote the shares for which we have voting rights in the same proportion as the
votes for which we have received instructions.
Substitution of investments
If shares of any fund should not be available for purchase by the appropriate
variable subaccount or if, in the judgment of IDS Life of New York's Management,
further investment in such shares is no longer appropriate in view of the
purposes of the subaccount, investment in the subaccount may be discontinued or
another registered open-end management investment company may be substituted for
fund shares held in the subaccounts if IDS Life of New York believes it would be
in the best interest of persons having voting rights under the contract. The
variable account may be operated as a management company under the 1940 Act or
it may be deregistered under this Act if the registration is no longer required.
In the event of any such substitution or change, IDS Life of New York, without
the consent or approval of the owners, may amend the contract and take whatever
action is necessary and appropriate. However, no such substitution or change
will be made without the necessary approval of the SEC and state insurance
departments. IDS Life of New York will notify owners of any substitution or
change.
Distribution of the contracts
American Express Financial Advisors Inc., a registered broker/dealer and an
affiliate of IDS Life of New York, is the sole distributor of the contract. IDS
Life of New York pays total commissions of up to 7.0% of the total purchase
payments received on the contracts. A portion of this total commission is paid
to district managers and field vice presidents of the selling representative.
About IDS Life of New York
The Flexible Portfolio Annuity is issued by IDS Life of New York. IDS Life of
New York is a wholly-owned subsidiary of IDS Life, which is a wholly-owned
subsidiary of AEFC. AEFC is a wholly-owned subsidiary of the American Express
Company, a financial services company headquartered in New York City.
IDS Life of New York is a stock life insurance company organized in 1972 under
the laws of the State of New York and located at 20 Madison Ave. Ext., Albany,
NY. IDS Life of New York is licensed in New York and North Dakota and conducts a
conventional life insurance business in the State of New York.
American Express Financial Advisors Inc. is the principal
underwriter for the Accounts. Its corporate office is IDS Tower
<PAGE>
PAGE 37
10, Minneapolis, MN 55440-0010. American Express Financial
Advisors Inc. is a wholly-owned subsidiary of AEFC.
American Express Financial Advisors Inc. offers mutual funds,
investment certificates and a broad range of financial management
services. IDS Life of New York offers insurance and annuities.
American Express Financial Advisors Inc. serves individuals and
businesses through its nationwide network of more than 175 offices
and more than 7,800 financial advisors.
Other subsidiaries provide investment management and related services for
pension, profit-sharing, employee savings and endowment funds of businesses and
institutions.
Regular and special reports
Services
To help you track and evaluate the performance of your annuity, we provide:
Quarterly statements showing the value of your investment.
Annual reports containing required information on the annuity and its underlying
investments.
A personalized annuity progress report detailing the cumulative return since the
contract was purchased and the average annual rate of return on your
investments. This report, which is unique in the industry, is available upon
request from your financial advisor.
Table of contents of the Statement of Additional Information
IDS Life of New York Preferred Retirement
Account.......................................3
Performance information.......................3
Calculating annuity payouts...................7
Rating agencies...............................8
Principal underwriter.........................9
Independent auditors..........................9
Prospectus....................................9
Financial statements -
IDS Life of New York Flexible Portfolio Annuity Account
IDS Life Insurance Company of New York
- -------------------------------------------------------------------
Please check the appropriate box to receive a copy of the Statement of
Additional Information for:
_____ IDS Life of New York Flexible Portfolio Annuity
_____ IDS Life Retirement Annuity Mutual Funds
_____ AIM Variable Insurance Funds, Inc.
<PAGE>
PAGE 38
_____ Putnam Variable Trust
_____ American Century Variable Portfolios, Inc.
_____ Templeton Variable Products Series Fund
_____ Warburg Pincus Trust/Small Company Growth Portfolio
Please return this request to:
IDS Life of New York Annuity Service
IDS Life Insurance Company of New York
Box 5144
Albany, NY 12205
Your name _______________________________________________________
Address _________________________________________________________
City ______________________ State ______________ Zip ___________
<PAGE>
PAGE 39
STATEMENT OF ADDITIONAL INFORMATION
for
IDS LIFE OF NEW YORK FLEXIBLE PORTFOLIO ANNUITY
IDS Life of New York Flexible Portfolio Annuity Account
May 1, 1997
IDS Life of New York Flexible Portfolio Annuity Account is a separate account
established and maintained by IDS Life Insurance Company of New York (IDS Life
of New York).
This Statement of Additional Information, dated May 1, 1997, is not a
prospectus. It should be read together with the account's prospectus, dated May
1, 1997, which may be obtained from your financial advisor, or by writing or
calling IDS Life of New York at the address or telephone number below.
IDS Life Insurance Company of New York
20 Madison Avenue Extension
Albany, NY 12203
800-541-2251
<PAGE>
PAGE 40
TABLE OF CONTENTS
IDS Life of New York Preferred Retirement Account.............p. 3
Performance Information.......................................p. 3
Calculating Annuity Payouts...................................p. 7
Rating Agencies...............................................p. 8
Principal Underwriter.........................................p. 9
Independent Auditors..........................................p. 9
Prospectus....................................................p. 9
Financial Statements
IDS Life of New York Flexible Portfolio Annuity Account
IDS Life Insurance Company of New York
<PAGE>
PAGE 41
IDS LIFE OF NEW YORK PREFERRED RETIREMENT ACCOUNT
The Flexible Portfolio Annuity may be used to fund the IDS Life of New York
Preferred Retirement Account (PRA) as a way to build tax-deferred retirement
income. The PRA can be used to supplement, or as an alternative to, a
non-deductible IRA or other retirement plan.
The advantages of the IDS Life of New York Preferred Retirement Account over a
non-deductible IRA are shown below:
IDS Life of New York Non-deductible IRA
Preferred Retirement
Account
- -------------------------------------------------------------
Maximum $50,000 to $1 million $2,000 per year
amount you initially, then $50,000 ($4,000 per year for
can to $100,000 per year married individuals
contribute depending on your filing jointly)
age. (spouse can have
own plan)
- --------------------------------------------------------------
Highest age The later of age 90 70 1/2 years old
you can or the 10th contract
contribute anniversary
- --------------------------------------------------------------
Types of Any type: wages, Generally limited
income you investment income, to income from
can gifts, inheritance, employment
contribute etc.
- --------------------------------------------------------------
Records None required, but You must keep all
you must IDS Life of New York records yourself
keep furnishes you regular
reports for your files
- --------------------------------------------------------------
Reports you None You must report all
must file contributions and
with the withdrawals each
IRS year
- --------------------------------------------------------------
Age at which The later of age 90 70 1/2 years old
you must or the 10th contract
begin anniversary
withdrawals
- --------------------------------------------------------------
PERFORMANCE INFORMATION
The following performance figures are calculated on the basis of historical
performance of the funds. The performance figures relating to these funds assume
that the contract was offered prior to Sept. 5, 1996 which it was not. Before
the subaccounts began investing in these funds, the figures show what the
subaccount performance would have been if these subaccounts had existed during
<PAGE>
PAGE 42
the illustrated periods. Once these subaccounts began investing in
these funds, actual values are used for the calculations.
Calculation of yield for Subaccount GM (Investing in IDS Life
Moneyshare Fund)
Subaccount GM, which invests in IDS Life Moneyshare Fund, calculates an
annualized simple yield and a compound yield based on a seven-day period.
The simple yield is calculated by determining the net change in the value of a
hypothetical subaccount having the balance of one accumulation unit at the
beginning of the seven-day period. (The net change does not include capital
change, but does include a pro rata share of the annual contract charges,
including the annual contract administrative charge and the mortality and
expense risk fee.) The net change in the subaccount value is divided by the
value of the subaccount at the beginning of the period to obtain the return for
the period. That return is then multiplied by 365/7 to obtain an annualized
figure. The value of the hypothetical subaccount includes the amount of any
declared dividends, the value of any shares purchased with any dividend paid
during the period and any dividends declared for such shares. The variable
subaccount's yield does not include any realized or unrealized gains or losses,
nor does it include the effect of any applicable surrender charge.
The subaccount calculates its compound yield according to the following formula:
Compound Yield = [(return for seven-day period +1) 365/7] - 1
Annualized Yield based on 30-day Period ended Dec. 31, 1996
Subaccount investing in: Simple Yield Compound Yield
IDS Life Moneyshare Fund 3.63% 3.69%
The rate of return, or yield, on the subaccount's accumulation unit may
fluctuate daily and does not provide a basis for determining future yields.
Investors must consider, when comparing an investment in subaccount GM with
fixed annuities, that fixed annuities often provide an agreed-to or guaranteed
fixed yield for a stated period of time, whereas the variable subaccount's yield
fluctuates. In comparing the yield of subaccount GM to a money market fund, you
should consider the different services that the annuity provides.
Calculation of yield for Subaccounts (Investing in income funds)
Quotations of yield will be based on all investment income earned during a
particular 30-day period, less expenses accrued during the period (net
investment income) and will be computed by dividing net investment income per
accumulation unit by the value of an accumulation unit on the last day of the
period, according to the following formula:
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PAGE 43
YIELD = 2 [(a-b + 1)6 - 1]
cd
where: a = dividends and investment income earned during the
period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of accumulation units outstanding
during the period that were entitled to receive dividends.
d = the maximum offering price per accumulation unit on
the last day of the period.
Yield on the subaccount is earned from the increase in the net asset value of
shares of the fund in which the subaccount invests and from dividends declared
and paid by the fund, which are automatically invested in shares of the fund.
Annualized Yield based on 30-day Period ended Dec. 31, 1996
Subaccount investing in: Yield
IDS Life Special Income 7.28%
IDS Life Global Yield 2.73
IDS Life Income Advantage 8.65
Calculation of average annual total return
Quotations of average annual total return for a subaccount will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in the annuity contract over a period of one, five and ten years (or,
if less, up to the life of the account), calculated according to the following
formula:
P(1+T) n = ERV
where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical $1,000 payment made
at the beginning of the one, five, or ten year (or other)
period at the end of the one, five, or ten year (or other)
period (or fractional portion thereof).
Average Annual Total Return For Period Ended: Dec. 31, 1996
Average Annual Total Return with Surrender
<TABLE>
<CAPTION>
Since
Subaccount investing in:* 1 Year 5 Year 10 Year Inception
- -----------------------
<S> <C> <C> <C> <C>
IDS Life
Aggressive Growth Fund (1/92) 7.96% --% --% 10.09%
Global Yield (4/96) -- -- -- 0.14%
Growth Dimensions (4/96) -- -- -- 3.83
Income Advantage (4/96) -- -- -- 2.05
Capital Resource Fund (10/81) -0.21 6.21 12.27 --
International Equity Fund (1/92) 1.38 -- -- 7.83
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Managed Fund (4/86) 8.72 8.67 11.28 --
Moneyshare Fund (10/81) -3.09 1.61 4.44 --
Special Income Fund (10/81) -1.02 7.45 7.76 --
AIM
AIM V.I. Growth and Income Fund (5/94) 11.34 -- -- 15.81
American Century VP Value (5/96) -- -- -- 4.25
PUTNAM VT
New Opportunities Fund (5/94) 1.70 -- -- 19.14
Templeton Developing Markets Fund:
Class 1 (5/96) -- -- -- -13.75
Warburg Pincus Trust
Small Company Growth (6/95) 12.39 -- -- 24.79
Average Annual Total Return without Surrender
Since
Subaccount investing in: 1 Year 5 Year 10 Year Inception
- -----------------------
IDS Life
Aggressive Growth Fund (1/92)* 14.96% --% --% 11.03%
Capital Resource Fund (10/81) 6.79 7.29 12.27 --
Global Yield (4/96) -- -- -- 7.14%
Growth Dimensions (4/96) -- -- -- 10.83
Income Advantage (4/96) -- -- -- 4.95
International Equity Fund (1/92) 8.38 9.66 -- 8.37
Managed Fund (4/86) 15.72 2.89 11.28 --
Moneyshare Fund (10/81) 3.91 8.48 4.44 --
Special Income Fund (10/81) 5.80 -- 7.76 --
AIM
AIM V.I. Growth and Income Fund (5/94) 18.34 -- -- 17.83
American Century VP Value (5/96) -- -- -- 11.25
PUTNAM VT
New Opportunities Fund (5/94) 8.70 -- -- 21.07
Templeton Developing Markets Fund:
Class 1 (5/96) -- -- -- -6.75
Warburg Pincus Trust
Small Company Growth Portfolio (6/95) 12.39 -- -- 24.79
</TABLE>
* Inception dates of the Funds are shown in parentheses.
Aggregate Total Return
Aggregate total return represents the cumulative change in the value of an
investment over a specified period of time (reflecting change in a subaccount's
accumulation unit value) and is computed by the following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000.
ERV = Ending Redeemable Value of a hypothetical $1,000
payment made at the beginning of the one, five, or ten year (or
other) period at the end of the one, five, or ten year (or
other) period (or fractional portion thereof).
The Securities and Exchange Commission requires that an assumption be made that
the contract owner surrenders the entire contract at the end of the one, five
and ten year periods (or, if less, up to the life of the account) for which
performance is required to be calculated. In addition, performance figures may
be shown without the deduction of a surrender charge.
Total return figures reflect the deduction of all applicable charges including
the contract administrative charge and mortality and expense risk fee.
<PAGE>
PAGE 45
Performance of the subaccounts may be quoted or compared to rankings, yields, or
returns as published or prepared by independent rating or statistical services
or publishers or publications such as The Bank Rate Monitor National Index,
Barron's, Business Week, CDA Technologies, Donoghue's Money Market Fund Report,
Financial Services Week, Financial Times, Financial World, Forbes, Fortune,
Global Investor, Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Morningstar, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report, Sylvia Porter's
Personal Finance, USA Today, U.S. News and World Report, The Wall Street Journal
and Wiesenberger Investment Companies Service.
CALCULATING ANNUITY PAYOUTS
The Variable Account
The following calculations are done separately for each of the subaccounts of
the variable account. The separate monthly payouts, added together, make up your
total variable annuity payout.
Initial Payout: To compute your first monthly payment, we:
o determine the dollar value of your annuity as of the valuation
date seven days before the retirement date.
o apply the result to the annuity table contained in the
contract or another table at least as favorable. The annuity table shows
the amount of the first monthly payment for each $1,000 of value which
depends on factors built into the table, as described below.
Annuity Units: The value of your subaccount is then converted to annuity units.
To compute the number credited to you, we divide the first monthly payment by
the annuity unit value (see below) on the valuation date on (or next day
preceding) the seventh calendar day before the retirement date. The number of
units in your subaccount is fixed. The value of the units fluctuates with the
performance of the underlying mutual fund.
Subsequent Payouts: To compute later payouts, we multiply:
o the annuity unit value on the valuation date on or immediately
preceding the seventh calendar day before the payout is due;
by
o the fixed number of annuity units credited to you.
Annuity Table: The table shows the amount of the first monthly payment for each
$1,000 of contract value according to the age and, when applicable, the sex of
the annuitant. (Where required by law, we will use a unisex table of settlement
rates.) The table assumes that the contract value is invested at the beginning
of the annuity payout period and earns a 5% rate of return, which is reinvested
and helps to support future payouts.
Substitution of 3.5% Table: If you ask us at least 30 days before the retirement
date, we will substitute an annuity table based on an assumed 3.5% investment
rate for the 5% table in the contract. The assumed investment rate affects both
the amount of the first payout and the extent to which subsequent payouts
increase or
<PAGE>
PAGE 46
decrease. Using the 5% table results in a higher initial payment, but later
payouts will increase more slowly when annuity unit values are rising and
decrease more rapidly when they are declining.
Annuity Unit Values: This value was originally set at $1 for each
variable subaccount. To calculate later values we multiply the
last annuity value by the product of:
o the net investment factor; and
o the neutralizing factor. The purpose of the neutralizing factor is to
offset the effect of the assumed investment rate built into the annuity
table. With an assumed investment rate of 5%, the neutralizing factor is
0.999866 for a one day valuation period.
Net Investment Factor:
o Determined each business day by adding the underlying mutual fund's
current net asset value per share plus per share amount of any current
dividend or capital gain distribution; then
o dividing that sum by the previous net asset value per share;
and
o subtracting the percentage factor representing the mortality
and expense risk fee from the result.
Because the net asset value of the underlying mutual fund may fluctuate, the net
investment factor may be greater or less than one, and the accumulation unit
value may increase or decrease. You bear this investment risk in a variable
subaccount.
The Fixed Account
Your fixed annuity payout amounts are guaranteed. Once calculated,
your payout will remain the same and never change. To calculate
your annuity payouts we:
o take the value of your fixed account at the retirement date or
the date you have selected to begin receiving your annuity
payouts; then
o using an annuity table we apply the value according to the
annuity payout plan you select; and
o the annuity payout table we use will be the one in effect at the time
you choose to begin your annuity payouts. The table will be equal to or
greater than the table in your contract.
RATING AGENCIES
The following chart reflects the ratings given to IDS Life of New York by
independent rating agencies. These agencies evaluate the financial soundness and
claims-paying ability of insurance companies based on a number of different
factors. This information does not relate to the management or performance of
the variable subaccounts of the annuity. This information relates only to the
fixed account and reflects IDS Life of New York's ability to make annuity
payouts and to pay death benefits and other distributions from the annuity.
<PAGE>
PAGE 47
Rating agency Rating
A.M. Best A+
(Superior)
Duff & Phelps AAA
Moody's Aa2
PRINCIPAL UNDERWRITER
The principal underwriter for the variable account is American Express Financial
Advisors Inc., which offers the variable annuities on a continuous basis.
INDEPENDENT AUDITORS
The financial statements of IDS Life of New York Flexible Portfolio Annuity
Account as of Dec. 31, 1996 and for the period from Oct. 8, 1996 (commencement
of operations) to Dec. 31, 1996 and the financial statements of IDS Life
Insurance Company of New York as of Dec. 31, 1996 and 1995, and for each of the
three years in the period ended Dec. 31, 1996, appearing in this prospectus and
Statement of Additional Information have been audited by Ernst & Young LLP,
independent auditors, as stated in their reports appearing herein.
PROSPECTUS
The prospectus dated May 1, 1997, is hereby incorporated in this Statement of
Additional Information by reference.
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Flexible Portfolio Annuity Account
- -----------------------------------------------------------------------------------------------------------
Statements of Net Assets Dec. 31, 1996
Segregated Asset Subaccounts
----------------------------------------------------------------------
Assets GC GI GA GS GM
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund -
28,190 shares at net asset value
of $23.68 per share (cost $715,685) $667,467 $ -- $ -- $ -- $ --
IDS Life International Equity -
52,971 shares at net asset value
of $13.77 per share (cost $725,422) -- 729,547 -- -- --
IDS Life Aggressive Growth -
65,016 shares at net asset value
of $15.66 per share (cost $1,104,393) -- -- 1,018,173 -- --
IDS Life Special Income Fund -
110,172 shares at net asset value
of $11.90 per share (cost $1,315,124) -- -- -- 1,310,677 --
IDS Life Moneyshare Fund, Inc. -
2,889,440 shares at net asset value
of $1.00 per share (cost $2,889,199) -- -- -- -- 2,889,208
IDS Life Managed Fund, Inc. -
80,790 shares at net asset value
of $16.77 per share (cost $1,397,566) -- -- -- -- --
IDS Life Growth Dimensions Fund -
335,581 shares at net asset value
of $11.11 per share (cost $3,745,658) -- -- -- -- --
IDS Life Global Yield Fund -
57,961 shares at net asset value
of $10.49 per share (cost $605,733) -- -- -- -- --
IDS Life Income Advantage Fund -
194,843 shares at net asset value
of $10.04 per share (cost $1,940,350) -- -- -- -- --
AIM V.I. Growth and Income Fund -
95,862 shares at net asset value
of $15.03 per share (cost $1,429,039) -- -- -- -- --
Putnam VT New Opportunities Fund -
145,709 shares at net asset value
of $17.22 per share (cost $2,558,861) -- -- -- -- --
American Century VP Value -
153,840 shares at net asset value
of $5.58 per share (cost $831,625) -- -- -- -- --
Templeton Developing Markets Fund -
148,360 shares at net asset value
of $9.43 per share (cost $1,390,163) -- -- -- -- --
Warburg Pincus Trust/Small
Company Growth Portfolio -
123,150 shares at net asset value
of $14.25 per share (cost $1,705,567) -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------
667,467 729,547 1,018,173 1,310,677 2,889,208
- -----------------------------------------------------------------------------------------------------------
Dividends receivable -- -- -- 5,207 9,099
Accounts receivable from IDS Life
of New York for contract purchase payments 1,340 2,029 8,874 86,751 114,263
- -----------------------------------------------------------------------------------------------------------
Total assets 668,807 731,576 1,027,047 1,402,635 3,012,570
- -----------------------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------------------
Payable to IDS Life of New York for:
Mortality and expense risk fee 599 635 881 911 2,321
Payable to mutual funds for investments
purchased 1,340 2,029 8,874 91,047 121,042
- -----------------------------------------------------------------------------------------------------------
Total liabilities 1,939 2,664 9,755 91,958 123,363
- -----------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period $666,868 $728,912 $1,017,292 $1,310,677 $2,889,207
- -----------------------------------------------------------------------------------------------------------
Accumulation units outstanding 655,487 711,793 1,004,549 1,282,750 2,865,321
- -----------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit $1.02 $1.02 $1.01 $1.02 $1.01
- -----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Flexible Portfolio Annuity Account
- -----------------------------------------------------------------------------------------------------------
Statements of Net Assets - continued Dec. 31, 1996
Segregated Asset Subaccounts
-----------------------------------------------------------------
Assets GD GG GY GV GW
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund -
28,190 shares at net asset value
of $23.68 per share (cost $715,685) $ -- $ -- $ -- $ -- $ --
IDS Life International Equity -
52,971 shares at net asset value
of $13.77 per share (cost $725,422) -- -- -- -- --
IDS Life Aggressive Growth -
65,016 shares at net asset value
of $15.66 per share (cost $1,104,393) -- -- -- -- --
IDS Life Special Income Fund -
110,172 shares at net asset value
of $11.90 per share (cost $1,315,124) -- -- -- -- --
IDS Life Moneyshare Fund, Inc. -
2,889,440 shares at net asset value
of $1.00 per share (cost $2,889,199) -- -- -- -- --
IDS Life Managed Fund, Inc. -
80,790 shares at net asset value
of $16.77 per share (cost $1,397,566) 1,355,135 -- -- -- --
IDS Life Growth Dimensions Fund -
335,581 shares at net asset value
of $11.11 per share (cost $3,745,658) -- 3,728,317 -- -- --
IDS Life Global Yield Fund -
57,961 shares at net asset value
of $10.49 per share (cost $605,733) -- -- 608,245 -- --
IDS Life Income Advantage Fund -
194,843 shares at net asset value
of $10.04 per share (cost $1,940,350) -- -- -- 1,955,541 --
AIM V.I. Growth and Income Fund -
95,862 shares at net asset value
of $15.03 per share (cost $1,429,039) -- -- -- -- 1,440,812
Putnam VT New Opportunities Fund -
145,709 shares at net asset value
of $17.22 per share (cost $2,558,861) -- -- -- -- --
American Century VP Value -
153,840 shares at net asset value
of $5.58 per share (cost $831,625) -- -- -- -- --
Templeton Developing Markets Fund -
148,360 shares at net asset value
of $9.43 per share (cost $1,390,163) -- -- -- -- --
Warburg Pincus Trust/Small
Company Growth Portfolio -
123,150 shares at net asset value
of $14.25 per share (cost $1,705,567) -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------
1,355,135 3,728,317 608,245 1,955,541 1,440,812
- -----------------------------------------------------------------------------------------------------------
Dividends receivable -- -- 1,109 10,832 --
Accounts receivable from IDS Life
of New York for contract purchase payments 4,385 38,280 1,559 93,065 1,968
- -----------------------------------------------------------------------------------------------------------
Total assets 1,359,520 3,766,597 610,913 2,059,438 1,442,780
- -----------------------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------------------
Payable to IDS Life of New York for:
Mortality and expense risk fee 1,108 3,093 522 1,561 1,252
Payable to mutual funds for investments
purchased 4,385 38,280 2,146 102,336 1,968
- -----------------------------------------------------------------------------------------------------------
Total liabilities 5,493 41,373 2,668 103,897 3,220
- -----------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period $1,354,027 $3,725,224 $608,245 $1,955,541 $1,439,560
- -----------------------------------------------------------------------------------------------------------
Accumulation units outstanding 1,300,874 3,667,122 591,941 1,917,299 1,385,927
- -----------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit $1.04 $1.02 $1.03 $1.02 $1.04
- -----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Flexible Portfolio Annuity Account
- ----------------------------------------------------------------------------------------------------------------
Statements of Net Assets - continued Dec. 31, 1996
Segregated Asset Subaccounts
--------------------------------------------------------- Combined
Assets GN GP GK GT Variable
Account
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund -
28,190 shares at net asset value
of $23.68 per share (cost $715,685) $ -- $ -- $ -- $ -- $ 667,467
IDS Life International Equity -
52,971 shares at net asset value
of $13.77 per share (cost $725,422) -- -- -- -- 729,547
IDS Life Aggressive Growth -
65,016 shares at net asset value
of $15.66 per share (cost $1,104,393) -- -- -- -- 1,018,173
IDS Life Special Income Fund -
110,172 shares at net asset value
of $11.90 per share (cost $1,315,124) -- -- -- -- 1,310,677
IDS Life Moneyshare Fund, Inc. -
2,889,440 shares at net asset value
of $1.00 per share (cost $2,889,199) -- -- -- -- 2,889,208
IDS Life Managed Fund, Inc. -
80,790 shares at net asset value
of $16.77 per share (cost $1,397,566) -- -- -- -- 1,355,135
IDS Life Growth Dimensions Fund -
335,581 shares at net asset value
of $11.11 per share (cost $3,745,658) -- -- -- -- 3,728,317
IDS Life Global Yield Fund -
57,961 shares at net asset value
of $10.49 per share (cost $605,733) -- -- -- -- 608,245
IDS Life Income Advantage Fund -
194,843 shares at net asset value
of $10.04 per share (cost $1,940,350) -- -- -- -- 1,955,541
AIM V.I. Growth and Income Fund -
95,862 shares at net asset value
of $15.03 per share (cost $1,429,039) -- -- -- -- 1,440,812
Putnam VT New Opportunities Fund -
145,709 shares at net asset value
of $17.22 per share (cost $2,558,861) 2,509,101 -- -- -- 2,509,101
American Century VP Value -
153,840 shares at net asset value
of $5.58 per share (cost $831,625) -- 858,425 -- -- 858,425
Templeton Developing Markets Fund -
148,360 shares at net asset value
of $9.43 per share (cost $1,390,163) -- -- 1,399,032 -- 1,399,032
Warburg Pincus Trust/Small
Company Growth Portfolio -
123,150 shares at net asset value
of $14.25 per share (cost $1,705,567) -- -- -- 1,754,883 1,754,883
- ----------------------------------------------------------------------------------------------------------------
2,509,101 858,425 1,399,032 1,754,883 22,224,563
- ----------------------------------------------------------------------------------------------------------------
Dividends receivable -- -- -- -- 26,247
Accounts receivable from IDS Life
of New York for contract purchase payments 44,304 34,520 11,338 14,133 456,809
- ----------------------------------------------------------------------------------------------------------------
Total assets 2,553,405 892,945 1,410,370 1,769,016 22,707,619
- ----------------------------------------------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------------------------------------------
Payable to IDS Life of New York for:
Mortality and expense risk fee 2,168 739 1,186 1,492 18,468
Payable to mutual funds for investments
purchased 44,304 34,520 11,338 14,133 477,742
- ----------------------------------------------------------------------------------------------------------------
Total liabilities 46,472 35,259 12,524 15,625 496,210
- ----------------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period $2,506,933 $857,686 $1,397,846 $1,753,391 $22,211,409
- ----------------------------------------------------------------------------------------------------------------
Accumulation units outstanding 2,682,128 806,200 1,398,887 1,780,636
- ----------------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit $0.93 $1.06 $1.00 $0.98
- ----------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Flexible Portfolio Annuity Account
- ------------------------------------------------------------------------------------------------------------------
Statements of Operations * Period ended Dec. 31, 1996
Segregated Asset Subaccounts
-------------------------------------------------------------
GC GI GA GS GM
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividend income from mutual funds $ 48,538 $ 5,916 $ 54,404 $ 8,923 $ 13,778
- ------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fee 816 972 1,269 1,199 3,527
- ------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net 47,722 4,944 53,135 7,724 10,251
- ------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments - net
- ------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of investments
in mutual funds:
Proceeds from sales 12,537 11,454 93,987 6,863 259,517
Cost of investments sold 13,004 11,168 46,757 6,847 259,517
- ------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (467) 286 47,230 16 --
- ------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments (48,218) 4,125 (86,220) (4,447) 9
- ------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments (48,685) 4,411 (38,990) (4,431) 9
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from operations $ (963) $ 9,355 $ 14,145 $ 3,293 $ 10,260
- ------------------------------------------------------------------------------------------------------------------
*Period from Oct. 8, 1996 (commencement of operations) to Dec. 31, 1996.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Flexible Portfolio Annuity Account
- -----------------------------------------------------------------------------------------------------------------
Statements of Operations * - continued Period ended Dec. 31, 1996
Segregated Asset Subaccounts
-----------------------------------------------------------
GD GG GY GV GW
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividend income from mutual funds $ 48,137 $ 3,183 $ 1,976 $ 15,104 $ 13,073
- -----------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fee 1,558 4,438 741 2,145 1,926
- -----------------------------------------------------------------------------------------------------------------
Investment income (loss) - net 46,579 (1,255) 1,235 12,959 11,147
- -----------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments - net
- -----------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of investments
in mutual funds:
Proceeds from sales 201 37,456 59,251 75,003 16,234
Cost of investments sold 210 36,714 58,986 74,856 15,800
- -----------------------------------------------------------------------------------------------------------------
Net realized gain(loss) on investments (9) 742 265 147 434
- -----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments (42,431) (17,341) 2,512 15,191 11,773
- -----------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments (42,440) (16,599) 2,777 15,338 12,207
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) from operations $ 4,139 $(17,854) $ 4,012 $ 28,297 $ 23,354
- -----------------------------------------------------------------------------------------------------------------
*Period from Oct. 8, 1996 (commencement of operations) to Dec. 31, 1996.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Flexible Portfolio Annuity Account
- ------------------------------------------------------------------------------------------------------------------------
Statements of Operations * - continued Period ended Dec. 31, 1996
Segregated Asset Subaccounts
------------------------------------------------------ Combined
GN GP GK GT Variable
Account
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividend income from mutual funds $ - $ - $ - $ - $ 213,032
- ------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fee 3,269 1,124 1,645 2,166 26,795
- ------------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net (3,269) (1,124) (1,645) (2,166) 186,237
- ------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments - net
- ------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of investments
in mutual funds:
Proceeds from sales 31,255 7,554 14,509 14,648 640,469
Cost of investments sold 32,023 7,291 14,497 14,806 592,476
- ------------------------------------------------------------------------------------------------------------------------
Net realized gain(loss) on investments (768) 263 12 (158) 47,993
- ------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments (49,760) 26,800 8,869 49,316 (129,822)
- ------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments (50,528) 27,063 8,881 49,158 (81,829)
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from operations $(53,797) $25,939 $ 7,236 $46,992 $ 104,408
- ------------------------------------------------------------------------------------------------------------------------
*Period from Oct. 8, 1996 (commencement of operations) to Dec. 31, 1996.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Flexible Portfolio Annuity Account
- ---------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets * Period ended Dec. 31, 1996
Segregated Asset Subaccounts
---------------------------------------------------------------------------
Operations GC GI GA GS GM
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 47,722 $ 4,944 $ 53,135 $ 7,724 $ 10,251
Net realized gain (loss) on investments (467) 286 47,230 16 --
Net change in unrealized appreciation or
depreciation of investments (48,218) 4,125 (86,220) (4,447) 9
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from operations (963) 9,355 14,145 3,293 10,260
- ---------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ---------------------------------------------------------------------------------------------------------------------
Variable annuity contract purchase payments 640,115 662,945 989,369 1,269,850 3,312,798
Net transfers** 27,716 56,639 13,778 37,534 (433,851)
Contract terminations:
Surrender benefits -- (27) -- -- --
Increase from contract transactions 667,831 719,557 1,003,147 1,307,384 2,878,947
- ---------------------------------------------------------------------------------------------------------------------
Net assets at beginning of period -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Net assets at end of period $666,868 $728,912 $1,017,292 $1,310,677 $2,889,207
- ---------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ---------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of period -- -- -- -- --
Contract purchase payments 628,152 655,908 990,500 1,245,785 3,296,776
Net transfers** 27,335 55,912 14,049 36,965 (431,455)
Contract terminations:
Surrender benefits -- (27) -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Units outstanding at end of period 655,487 711,793 1,004,549 1,282,750 2,865,321
- ---------------------------------------------------------------------------------------------------------------------
*Period from Oct. 8, 1996 (commencement of operations) to Dec. 31, 1996.
**Includes transfer activity from (to) other Accounts and transfers (from) to IDS Life of New York for conversion
from (to) Fixed Account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Flexible Portfolio Annuity Account
- ---------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets * - continued Period ended Dec. 31, 1996
Segregated Asset Subaccounts
--------------------------------------------------------------------------
Operations GD GG GY GV GW
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 46,579 $ (1,255) $ 1,235 $ 12,959 $ 11,147
Net realized gain (loss) on investments (9) 742 265 147 434
Net change in unrealized appreciation or
depreciation of investments (42,431) (17,341) 2,512 15,191 11,773
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from operations 4,139 (17,854) 4,012 28,297 23,354
- ---------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ---------------------------------------------------------------------------------------------------------------------
Variable annuity contract purchase payments 1,270,380 3,496,209 537,267 1,835,892 1,262,754
Net transfers** 79,578 246,923 66,990 91,390 153,452
Contract terminations:
Surrender benefits (70) (54) (24) (38) --
Increase from contract transactions 1,349,888 3,743,078 604,233 1,927,244 1,416,206
- ---------------------------------------------------------------------------------------------------------------------
Net assets at beginning of period -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Net assets at end of period $1,354,027 $3,725,224 $608,245 $1,955,541 $1,439,560
- ---------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ---------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of period -- -- -- -- --
Contract purchase payments 1,224,359 3,425,193 526,438 1,826,587 1,236,087
Net transfers** 76,583 241,982 65,527 90,750 149,840
Contract terminations:
Surrender benefits (68) (53) (24) (38) --
- ---------------------------------------------------------------------------------------------------------------------
Units outstanding at end of period 1,300,874 3,667,122 591,941 1,917,299 1,385,927
- ---------------------------------------------------------------------------------------------------------------------
*Period from Oct. 8, 1996 (commencement of operations) to Dec. 31, 1996.
**Includes transfer activity from (to) other Accounts and transfers (from) to IDS Life of New York for conversion
from (to) Fixed Account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Flexible Portfolio Annuity Account
- -------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets * - continued Period ended Dec. 31, 1996
Segregated Asset Subaccounts
------------------------------------------------------------------ Combined
Operations GN GP GK GT Variable
Account
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ (3,269) $ (1,124) $ (1,645) $ (2,166) $ 186,237
Net realized gain (loss) on investments (768) 263 12 (158) 47,993
Net change in unrealized appreciation or
depreciation of investments (49,760) 26,800 8,869 49,316 (129,822)
- -------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from operations (53,797) 25,939 7,236 46,992 104,408
- -------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- -------------------------------------------------------------------------------------------------------------------------
Variable annuity contract purchase payments 2,392,793 745,842 1,255,828 1,590,766 21,262,808
Net transfers** 167,937 85,905 134,807 115,665 844,463
Contract terminations:
Surrender benefits -- -- (25) (32) (270)
Increase from contract transactions 2,560,730 831,747 1,390,610 1,706,399 22,107,001
- -------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of period -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $2,506,933 $857,686 $1,397,846 $1,753,391 $22,211,409
- -------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- -------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of period -- -- -- --
Contract purchase payments 2,504,655 723,028 1,263,919 1,659,770
Net transfers** 177,473 83,172 134,993 120,900
Contract terminations:
Surrender benefits -- -- (25) (34)
- -------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of period 2,682,128 806,200 1,398,887 1,780,636
- -------------------------------------------------------------------------------------------------------------------------
*Period from Oct. 8, 1996 (commencement of operations) to Dec. 31, 1996.
**Includes transfer activity from (to) other Accounts and transfers (from) to IDS Life of New York for conversion
from (to) Fixed Account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
IDS Life of New York Flexible Portfolio Annuity Account
Notes to Financial Statements
- -------------------------------------------------------------------
1. Organization
IDS Life of New York Flexible Portfolio Annuity Account (the Account) was
established as a segregated asset account of IDS Life Insurance Company of New
York (IDS Life of New York) under New York law and is registered as a unit
investment trust under the Investment Company Act of 1940. The Account commenced
operations on Oct. 8, 1996.
The assets of the Account are held for the exclusive benefit of the Flexible
Portfolio Annuity contract owners and are not chargeable with liabilities
arising out of the business conducted by any other segregated asset accounts or
by IDS Life of New York. Contract owners allocate their variable purchase
payments to one or more of the fourteen subaccounts. Such funds are then
invested in shares of nine mutual funds organized by IDS Life Insurance Company
(IDS Life) as the investment vehicles for variable annuity contracts issued by
IDS Life of New York and by IDS Life or in shares of one fund organized by AIM
Advisors, Inc., one fund organized by Putnam Investment Management, Inc., one
fund organized by American Century Investment Management, Inc., one fund
organized by Templeton Asset Management Ltd. or one fund portfolio organized by
Warburg Pincus Counsellors, Inc.
Each Fund is registered under the Investment Company Act of 1940 as a
diversified, (non-diversified for Global Yield) open-end management investment
company, except for Putnam Variable Trust, which was organized on Sept. 24, 1987
and is a Massachusetts business trust. IDS Life Capital Resource Fund, IDS Life
Special Income Fund and IDS Life Moneyshare Fund, Inc. commenced operations on
Oct. 13, 1981. IDS Life Managed Fund, Inc. commenced operations on April 30,
1986. IDS Life Aggressive Growth Fund and IDS Life International Equity Fund
commenced operations on Jan. 13, 1992. IDS Life Global Yield Fund, IDS Life
Income Advantage Fund and IDS Life Growth Dimensions Fund commenced operations
on April 30, 1996. AIM V.I. Growth and Income Fund commenced operations on May
2, 1994. Putnam VT New Opportunities Fund commenced operations on May 2, 1994.
American Century VP Value commenced operations on May 1, 1996. Templeton
Developing Markets Fund commenced operations March 4, 1996. Warburg Pincus
Trust/Small Company Growth Portfolio commenced operations on June 30, 1995.
Funds allocated to subaccount GC are invested in the shares of IDS Life Capital
Resource Fund; subaccount GI invests in the shares of IDS Life International
Equity Fund; subaccount GA invests in the shares of IDS Life Aggressive Growth
Fund; subaccount GS invests in the shares of IDS Life Special Income Fund;
subaccount GM invests in the shares of IDS Life Moneyshare Fund, Inc.;
subaccount GD invests in the shares of IDS Life Managed Fund, Inc.; subaccount
GG invests in the shares of IDS Life Growth Dimensions Fund; subaccount GY
invests in the shares of IDS Life Global Yield Fund; subaccount GV invests in
the shares of IDS Life Income Advantage Fund; subaccount GW invests in the
shares of AIM V.I. Growth and Income Fund; subaccount GN invests in the shares
of Putnam VT New Opportunities Fund; subaccount GP invests in the shares of
American Century VP Value; subaccount GK invests in the shares of Templeton
Developing Markets Fund and subaccount GT invests in the shares of Warburg
Pincus Trust/Small Company Growth Portfolio.
IDS Life, parent company of IDS Life of New York, serves as investment manager
and American Express Financial Corporation (AEFC) is the investment advisor for
each of the IDS Life Funds. IDS International, Inc., a wholly owned subsidiary
of AEFC, is the sub-investment advisor for IDS Life International Equity Fund.
AIM Advisors, Inc. is the investment manager for AIM V.I. Growth and Income
Fund. Putnam Investment Management, Inc. is the investment manager for Putnam VT
New Opportunities Fund. Investors Research Corporation is the investment manager
for American Century VP Value. Templeton Asset Management Ltd. is the investment
manager for the Templeton Developing Markets Fund. Warburg Pincus Counsellors,
Inc. is the investment manager for the Warburg Pincus Trust/Small Company Growth
Portfolio.
- -------------------------------------------------------------------
2. Summary of Significant Accounting Policies
Investments in Mutual Funds Investments in shares of the mutual funds are stated
at market value, which is the net asset value per share as determined by the
respective funds. Investment transactions are accounted for on the date the
shares are purchased and sold. The cost of investments sold and redeemed is
determined on the average cost method. Dividend distributions received from the
mutual funds are reinvested, net of any expenses payable to IDS Life of New
York, in additional shares of the mutual funds and are recorded as income by the
subaccounts on the ex-dividend date.
Unrealized appreciation or depreciation of investments in the accompanying
financial statements represents the subaccounts' share of the mutual funds'
undistributed net investment income, undistributed realized gain or loss and the
unrealized appreciation or depreciation on their investment securities.
Federal Income Taxes IDS Life of New York is taxed as a life insurance company.
The Account is treated as part of IDS Life of New York for federal income tax
purposes. Under existing tax law, no income taxes are payable with respect to
any income of the Account.
- -------------------------------------------------------------------
3. Mortality and Expense Risk Fee and Contract Charges
IDS Life of New York makes contractual assurances to the Account that possible
future adverse changes in administrative expenses and mortality experience of
the annuitants and beneficiaries will not affect the Account. The mortality and
expense risk fee paid to IDS Life of New York is computed daily and is equal, on
an annual basis, to 1.25 percent of the average daily net assets of the
subaccounts.
An annual charge of $30 is deducted from the contract value of each Flexible
Portfolio Annuity contract. The annual charges are deducted at contract year end
during the accumulation period for administrative services provided to the
Account by IDS Life of New York. The deduction will be allocated to the
subaccounts on a pro-rata basis. If the contract value or total purchase
payments (less any payments surrendered) equals or exceeds $25,000 on the
contract anniversary, the charge will be waived. The charge cannot be increased
and does not apply after annuity payouts begin.
<PAGE>
- -------------------------------------------------------------------
4. Surrender Charges
There are surrender charges for all purchase payments surrendered in the first
eight contract years. Charges by IDS Life of New York for surrenders are not
available on an individual segregated asset account basis. Charges for all
segregated asset accounts amounted to $551,374 in 1996. Such charges are not an
expense of the subaccounts or the Account. They are deducted from contract
surrender benefits paid by IDS Life of New York
- --------------------------------------------------------------
5. Investment Transactions
The subaccounts' purchases of mutual fund shares (net of charges), including
reinvestment of dividend distributions, were as follows:
<TABLE>
<CAPTION>
Period from
Oct. 8, 1996
(commencement of
operations) to
Subaccount Investment Dec. 31, 1996
<S> <C>
GC IDS Life Capital Resource Fund.......... $ 728,688
GI IDS Life International Equity Fund...... 736,590
GA IDS Life Aggressive Growth Fund......... 1,151,150
GS IDS Life Special Income Fund............ 1,321,971
GM IDS Life Moneyshare Fund, Inc........... 3,148,716
GD IDS Life Managed Fund, Inc.............. 1,397,776
GG IDS Life Growth Dimensions Fund......... 3,782,372
GY IDS Life Global Yield Fund.............. 664,719
GV IDS Life Income Advantage Fund.......... 2,015,206
GW AIM V.I. Growth and Income Fund......... 1,444,838
GN Putnam VT New Opportunities Fund........ 2,590,884
GP American Century VP Value............... 838,917
GK Templeton Developing Markets Fund....... 1,404,660
GT Warburg Pincus Trust/Small Company
Growth Portfolio...................... 1,720,373
- ----------------------------------------------------------------------
$22,946,860
</TABLE>
<PAGE>
IDS Life of New York Flexible Portfolio Annuity Account
Annual Financial Information
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company of New York
We have audited the accompanying individual and combined statements of net
assets of the segregated asset subaccounts of IDS Life of New York Flexible
Portfolio Annuity Account (comprised of subaccounts GC, GI, GA, GS, GM, GD, GG,
GY, GV, GW, GN, GP, GK and GT) as of December 31, 1996, and the related
statements of operations and changes in net assets for the period October 8,
1996 (commencement of operations) to December 31, 1996. These financial
statements are the responsibility of the management of IDS Life Insurance
Company of New York. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1996 with the affiliated and
unaffiliated mutual fund managers. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the individual and combined financial position of the
segregated asset subaccounts of IDS Life of New York Flexible Portfolio Annuity
Account at December 31, 1996, and the individual and combined results of their
operations and changes in their net assets for the period described above, in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
March 21, 1997
<PAGE>
<PAGE>
The financial statements shown below are those of the insurance company and not
those of any other entity. They are included for the purpose of informing
investors as to the financial condition of the insurance company and its ability
to carry out its obligations under its variable contracts.
IDS LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
Dec. 31, Dec. 31,
ASSETS 1996 1995
- ------ ----------- ------
(thousands)
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1996, $604,635; 1995, $683,147) $ 585,812 $ 642,580
Available for sale, at fair value (Fair value:
1996, $590,608; 1995, $577,068) 601,623 601,298
Mortgage loans on real estate 160,017 158,730
Policy loans 20,077 18,035
Other investments 1,374 1,915
----------- ------
Total investments 1,368,903 1,422,558
Accrued investment income 21,068 22,572
Deferred policy acquisition costs 119,183 109,800
Other assets 3,950 2,108
Separate account assets 950,018 724,212
-------- ---------
Total assets $2,463,122 $2,281,250
======== ========
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEETS (continued)
Dec. 31, Dec. 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 1996 1995
- ------------------------------------ ---------- ---------
(thousands)
Liabilities:
Future policy benefits:
Fixed annuities $1,054,954 $1,109,167
Universal life-type insurance 142,278 136,475
Traditional life, disability income
and long-term care insurance 45,338 42,477
Policy claims and other policyholders' funds 3,155 3,644
Deferred income taxes 9,046 15,663
Amounts due to brokers 3,007 10,000
Other liabilities 25,463 21,029
Separate account liabilities 950,018 724,212
--------- ---------
Total liabilities 2,233,259 2,062,667
Stockholder's equity:
Capital stock, $10 par value per share;
200,000 shares authorized, issued and outstanding 2,000 2,000
Additional paid-in capital 49,000 49,000
Net unrealized gain on investments 6,943 15,341
Retained earnings 171,920 152,242
--------- -----------
Total stockholder's equity 229,863 218,583
-------- -----------
Total liabilities and stockholder's equity $2,463,122 $2,281,250
======== ========
Commitments and contingencies (Note 7)
See accompanying notes.
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF INCOME
Years ended Dec.31,
1996 1995 1994
--------- ------- -------
(thousands)
Revenues:
Traditional life, disability income
and long-term care insurance
premiums $ 10,931 $ 9,280 $ 7,846
Policyholder and contractholder charges 15,832 13,216 11,607
Mortality and expense risk fees 8,574 6,213 4,562
Net investment income 109,468 110,924 108,143
Net realized gain (loss) on investments (1,424) 1,548 957
------ ------ -------
Total revenues 143,381 141,181 133,115
-------- -------- -------
Benefits and expenses:
Death and other benefits:
Traditional life, disability income
and long-term care insurance 4,182 3,354 6,016
Universal life-type insurance
and investment contracts 4,409 4,548 3,773
Increase in liabilities for future
policy benefits for traditional life,
disability income and
long-term care insurance 2,324 1,958 506
Interest credited on universal life-type
insurance and investment contracts 65,099 68,630 65,018
Amortization of deferred policy
acquisition costs 16,071 13,085 12,994
Other insurance and operating expenses 8,972 7,474 8,359
-------- ------- ------
Total benefits and expenses 101,057 99,049 96,666
------- ------- -------
Income before income taxes 42,324 42,132 36,449
Income taxes 14,640 14,745 12,794
------- ------- -------
Net income $ 27,684 $ 27,387 $ 23,655
====== ====== ======
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
Years ended Dec. 31,
1996 1995 1994
--------- --------- ------
(thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $27,684 $27,387 $23,655
Adjustments to reconcile net income to net
cash provided by operating activities:
Policy loan issuance, excluding universal
life-type insurance (2,473) (2,093) (1,365)
Policy loan repayment, excluding universal
life-type insurance 1,571 881 849
Change in accrued investment income 1,504 (1,055) (175)
Change in deferred policy acquisition
costs, net (9,087) (11,017) (11,522)
Change in liabilities for future policy
benefits for traditional life, disability income
and long-term care insurance 2,861 1,931 501
Change in policy claims and other
policyholders' funds (489) 427 870
Change in deferred income taxes (2,095) (1,301) (4,321)
Change in other liabilities 4,434 2,429 (1,711)
(Accretion of discount)
amortization of premium, net (652) (480) 2,464
Net realized (gain) loss on investments 1,424 (1,548) (957)
Policyholder and contractholder
charges, non-cash (7,831) (6,962) (6,000)
Other, net (1,781) (508) 689
--------- ----- ------
Net cash provided by operating
activities $15,070 $ 8,091 $2,977
------- ------- ------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS (continued)
Years ended Dec. 31,
1996 1995 1994
------- ------- -----
(thousands)
<S> <C> <C> <C>
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases $ -- $ (37,540) $ (36,560)
Maturities, sinking fund payments and calls 39,082 34,216 78,757
Sales 14,465 28,905 2,649
Fixed maturities available for sale:
Purchases (97,370) (133,503) (117,965)
Maturities, sinking fund payments and calls 71,939 44,234 70,316
Sales 15,669 8,839 14,533
Other investments, excluding policy loans:
Purchases (14,802) (1,939) (47,353)
Sales 12,659 5,993 2,975
Change in amounts due to brokers (6,993) 10,000 (4,952)
------- ------- -------
Net cash provided by (used in)
investing activities 34,649 (40,795) (37,600)
--------- -------- ---------
Cash flows from financing activities:
Activity related to universal life-type insurance
and investment contracts:
Considerations received 131,011 159,431 188,469
Surrenders and death benefits (236,689) (190,695) (212,171)
Interest credited to account balances 65,099 68,630 65,018
Universal life-type insurance policy loans:
Issuance (4,490) (4,870) (3,907)
Repayment 3,350 2,946 2,476
Cash dividend to parent (8,000) (8,000) --
------ ------- ---
Net cash (used in) provided by financing
activities (49,719) 27,442 39,885
-------- ------- -------
Net (decrease) increase in cash and cash
equivalents -- (5,262) 5,262
Cash and cash equivalents at
beginning of year -- 5,262 --
-------- ------ -------
Cash and cash equivalents at
end of year $ -- $ -- $ 5,262
========= ======= =======
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ thousands)
1. Summary of significant accounting policies
Nature of business
IDS Life Insurance Company of New York (the Company) is engaged in the
insurance and annuity business in the state of New York. The Company's
principal products are deferred annuities and universal life insurance
which are issued primarily to individuals. It offers single premium and
flexible premium deferred annuities on both a fixed and variable dollar
basis. Immediate annuities are offered as well. The Company's insurance
products include universal life (fixed and variable), whole life,
single premium life and term products (including waiver of premium and
accidental death benefits). The Company also markets disability income
and long-term care insurance.
Basis of presentation
The Company is a wholly owned subsidiary of IDS Life Insurance Company
(IDS Life), which is a wholly owned subsidiary of American Express
Financial Corporation, which is a wholly owned subsidiary of American
Express Company. The accompanying financial statements have been
prepared in conformity with generally accepted accounting principles
which vary in certain respects from reporting practices prescribed or
permitted by the New York Department of Insurance as reconciled in Note
11.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Investments
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and
carried at amortized cost. All other fixed maturities and all
marketable equity securities are classified as available for sale and
carried at fair value. Unrealized gains and losses on securities
classified as available for sale are carried as a separate component of
stockholder's equity, net of deferred taxes.
Realized investment gain or loss is determined on an identified cost
basis.
Prepayments are anticipated on certain investments in mortgage-backed
securities in determining the constant effective yield used to
recognize interest income. Prepayment estimates are based on
information received from brokers who deal in mortgage-backed
securities.
Mortgage loans on real estate are carried at amortized cost less
reserves for mortgage loan losses. The estimated fair value of the
mortgage loans is determined by a discounted cash flow analysis using
mortgage interest rates currently offered for mortgages of similar
maturities.
Impairment of mortgage loans is measured as the excess of the loan's
recorded investment over its present value of expected principal and
interest payments discounted at the loan's effective interest rate, or
the fair value of collateral. The amount of the impairment is recorded
in a reserve for mortgage loan losses. The reserve for mortgage loans
losses is maintained at a level that management believes is adequate to
absorb estimated losses in the portfolio. The level of the reserve
account is determined based on several factors, including historical
experience, expected future principal and interest payments, estimated
collateral values, and current and anticipated economic and political
conditions. Management regularly evaluates the adequacy of the reserve
for mortgage loan losses.
The Company generally stops accruing interest on mortgage loans for
which interest payments are delinquent more than three months. Based on
management's judgement as to the ultimate collectibility of principal,
interest payments received are either recognized as income or applied
to the recorded investment in the loan.
The cost of interest rate caps is amortized to investment income over
the life of the contracts and payments received as a result of these
agreements are recorded as a reduction of investment income when
realized. The amortized cost of interest rate caps is included in other
investments.
Policy loans are carried at the aggregate of the unpaid loan balances
which do not exceed the cash surrender values of the related policies.
When evidence indicates a decline, which is other than temporary, in
the underlying value or earning power of individual investments, such
investments are written down to the fair value by a charge to income.
Statements of cash flows
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These
securities are carried principally at amortized cost which approximates
fair value.
Supplementary information to the statements of cash flows is summarized
as follows:
1996 1995 1994
-------- -------- ------
Cash paid during the year for:
Income taxes $15,247 $15,026 $17,386
Interest on borrowings 777 742 147
Recognition of profits on annuity contracts and insurance policies
Profits on fixed deferred annuities are recognized by the Company over
the lives of the contracts, using primarily the interest method.
Profits represent the excess of investment income earned from
investment of contract considerations over interest credited to
contract owners and other expenses.
The retrospective deposit method is used in accounting for universal
life-type insurance. This method recognizes profits over the lives of
the policies in proportion to the estimated gross profits expected to
be realized.
Premiums on traditional life, disability income and long-term care
insurance policies are recognized as revenue when due, and related
benefits and expenses are associated with premium revenue in a manner
that results in recognition of profits over the lives of the insurance
policies. This association is accomplished by means of the provision
for future policy benefits and the deferral and subsequent amortization
of policy acquisition costs.
Policyholder and contractholder charges include the monthly cost of
insurance charges and issue and administrative fees. These charges also
include the minimum death benefit guarantee fees received from the
variable life insurance separate accounts. Management and other fees
include investment management fees and mortality and expense risk fees
from the variable annuity and variable life insurance separate accounts
and underlying funds.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales compensation,
policy issue costs, underwriting and certain sales expenses, have been
deferred on insurance and annuity contracts. The deferred acquisition
costs for most single premium deferred annuities and installment
annuities are amortized in relation to surrender charge revenue and a
portion of the excess of investment income earned from investment of
the contract considerations over the interest credited to contract
owners. The costs for universal life-type insurance and certain
installment annuities are amortized as a percentage of the estimated
gross profits expected to be realized on the policies. For traditional
life, disability income and long-term care insurance policies, the
costs are amortized over an appropriate period in proportion to premium
revenue.
Liabilities for future policy benefits
Liabilities for universal life-type insurance, single premium deferred
annuities and installment annuities are accumulation values.
Liabilities for fixed annuities in a benefit status are based on the
Progressive Annuity Table with interest at 5 percent, the 1971
Individual Annuity Table with interest at 7 percent or 8.25 percent, or
the 1983a Table with various interest rates ranging from 5.5 percent to
9.5 percent, depending on year of issue.
Liabilities for future benefits on traditional life insurance are based
on the net level premium method and anticipated rates of mortality,
policy persistency and interest earnings. Anticipated mortality rates
generally approximate the 1955-1960 Select and Ultimate Basic Table for
policies issued prior to 1980, the 1965-1970 Select and Ultimate Basic
Table for policies issued from 1981-1984 and the 1975-1980 Select and
Ultimate Basic Table for policies issued after 1984. Anticipated policy
persistency rates vary by policy form, issue age and policy duration
with persistency on cash value plans generally anticipated to be better
than persistency on term insurance plans. Anticipated interest rates
are 4% for policies issued before 1974, 5.25% for policies issued from
1974-1980, and range from 10% to 6% depending on policy form, issue
year and policy duration for policies issued after 1980.
Liabilities for future disability income policy benefits include both
policy reserves and claim reserves. Policy reserves are based on the
net level premium method and anticipated rates of morbidity, mortality,
policy persistency and interest earnings. Anticipated morbidity rates
are based on the 1964 Commissioners Disability Table for policies
issued before 1996 and the 1985 CIDA table for policies issued in 1996.
Anticipated mortality rates are based on the 1958 Commissioners
Standard Ordinary Table for policies issued before 1996 and the
1975-1980 Basic Table for policies issued in 1996. Anticipated policy
persistency rates vary by policy form, occupation class, issue age and
policy duration. Anticipated interest rates are 3% for policies issued
before 1996 and grade from 7.5% to 5% over five years for policies
issued in 1996. Claim reserves are calculated on the basis of
anticipated rates of claim continuance and interest earnings.
Anticipated claim continuance rates are based on the 1964 Commissioners
Disability Table for claims incurred before 1993 and the 1985 CIDA
Table for claims incurred after 1992. Anticipated interest rates are 8%
for claims incurred prior to 1992, 7% for claims incurred in 1992 and
6% for claims incurred after 1992.
Liabilities for future long-term care policy benefits include both
policy reserves and claim reserves. Policy reserves are based on the
net level premium method and anticipated rates of morbidity, mortality,
policy persistency and interest earnings. Anticipated morbidity rates
are based on the 1985 National Nursing Home Survey. Anticipated
mortality rates are based on the 1983a Table. Anticipated policy
persistency rates vary by policy form, issue age and policy duration.
Anticipated interest rates are 9.5% grading to 7% over 10 years for
policies issued from 1989-1992 and 7.75% grading to 7% over 4 years for
policies issued after 1992. Claim reserves are calculated on the basis
of anticipated rates of claim continuance and interest earnings.
Anticipated claim continuance rates are based on the 1985 National
Nursing Home Survey. Anticipated interest rates are 8% for claims
incurred prior to 1992, 7% claims incurred in 1992 and 6% for claims
incurred after 1992.
Reinsurance
The maximum amount of life insurance risk retained by the Company on
any one life is $750 of life and waiver of premium benefits plus $50 of
accidental death benefits. The maximum amount of disability income risk
retained by the Company on any one life is $6 of monthly benefit for
benefit periods longer than three years. The excesses are reinsured
with other life insurance companies on a yearly renewable term basis.
Long-term care policies are primarily reinsured on a coinsurance basis.
Federal income taxes
The Company's taxable income is included in the consolidated federal
income tax return of American Express Company. The Company provides for
income taxes on a separate return basis, except that, under an
agreement between American Express Financial Corporation and American
Express Company, tax benefit is recognized for losses to the extent
they can be used on the consolidated tax return. It is the policy of
American Express Financial Corporation to reimburse subsidiaries for
all tax benefits.
Included in other liabilities at Dec. 31, 1996 and 1995 are $5,161 and
$3,971, respectively, payable to IDS Life for federal income taxes.
Separate account business
The separate account assets and liabilities represent funds held for
the exclusive benefit of the variable annuity and variable life
insurance contract owners.
The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the separate accounts
will not be affected by future variations in the actual life expectancy
experience of the annuitants and the beneficiaries from the mortality
assumptions implicit in the annuity contracts. The Company makes
periodic fund transfers to, or withdrawals from, the separate accounts
for such actuarial adjustments for variable annuities that are in the
benefit payment period. For variable life insurance, the Company
guarantees that the rates at which insurance charges and administrative
fees are deducted from contract funds will not exceed contractual
maximums. The Company also guarantees that the death benefit will
continue payable at the initial level regardless of investment
performance so long as minimum premium payments are made.
Accounting changes
The Financial Accounting Standards Board's (FASB) Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," was
effective Jan. 1, 1996. The new rule did not have a material impact on
the Company's results of operations or financial condition.
Reclassification
Certain 1995 and 1994 amounts have been reclassified to conform to the
1996 presentation.
2. Investments
Fair values of investments in fixed maturities represent quoted market
prices and estimated values when quoted prices are not available.
Estimated values are determined by established procedures involving,
among other things, review of market indices, price levels of current
offerings of comparable issues, price estimates and market data from
independent brokers and financial files.
Net realized gain (loss) on investments for the years ended Dec. 31 is
summarized as follows:
1996 1995 1994
------ ------ -----
Fixed maturities $ (572) $1,997 $948
Mortgage loans (855) (487) -
Other investments 3 38 9
---------- ----- --
$(1,424) $1,548 $957
======== ====== ====
Changes in net unrealized appreciation (depreciation) of investments
for the years ended Dec. 31 are summarized as follows:
1996 1995 1994
---------- --------- --------
Fixed maturities:
Held to maturity $(21,744) $73,970 $(84,244)
Available for sale (13,215) 43,726 (38,226)
<PAGE>
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities and equity securities at Dec. 31, 1996
are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 4,498 $ 144 $ -- $ 4,642
Corporate bonds and obligations 523,807 23,060 2,964 543,903
Mortgage-backed securities 57,507 409 1,826 56,090
--------- --------- ------ ---------
$585,812 $23,613 $4,790 $604,635
======== ======= ====== ========
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
State and municipal obligations $ 105 $ 10 $ -- $ 115
Corporate bonds and obligations 260,966 8,857 1,181 268,642
Mortgage-backed securities 329,537 5,788 2,459 332,866
-------- -------- ------ --------
$590,608 $14,655 $3,640 $601,623
======== ======= ====== ========
</TABLE>
The change in net unrealized loss on available for sale securities
included as a separate component of stockholder's equity was $8,398 in
1996.
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities and equity securities at Dec. 31, 1995
are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 5,003 $ 199 $ -- $ 5,202
State and municipal obligations 150 -- 2 148
Corporate bonds and obligations 578,253 41,939 2,027 618,165
Mortgage-backed securities 59,174 846 388 59,632
--------- --------- ------- ---------
$642,580 $42,984 $2,417 $683,147
======== ======= ====== ========
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
State and municipal obligations $ 105 $ 10 $ -- $ 115
Corporate bonds and obligations 248,973 17,470 497 265,946
Mortgage-backed securities 327,990 9,157 1,910 335,237
-------- -------- ------ --------
Total fixed maturities 577,068 26,637 2,407 601,298
Equity securities 10 -- -- 10
----------- ------- --------- -----------
$577,078 $26,637 $2,407 $601,308
======== ======= ====== ========
</TABLE>
The change in net unrealized gain on available for sale securities
included as a separate component of stockholder's equity was $27,710 in
1995.
<PAGE>
The amortized cost and fair value of investments in fixed maturities at
Dec. 31, 1996 by contractual maturity are shown below. Expected
maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call
or prepayment penalties.
Amortized Fair
Held to maturity Cost Value
Due in one year or less $ 11,777 $ 11,912
Due from one to five years 125,637 132,169
Due from five to ten years 321,472 333,245
Due in more than ten years 69,419 71,219
Mortgage-backed securities 57,507 56,090
--------- ---------
$585,812 $604,635
======== ========
Amortized Fair
Available for sale Cost Value
Due in one year or less $ 39,155 $ 39,695
Due from one to five years 55,313 58,288
Due from five to ten years 127,642 130,246
Due in more than ten years 38,961 40,528
Mortgage-backed securities 329,537 332,866
-------- --------
$590,608 $601,623
======== ========
During the years ended Dec. 31, 1996, 1995 and 1994, fixed maturities
classified as held to maturity were sold with amortized cost of
$14,507, $27,971 and $2,735, respectively. Net gains and losses on
these sales were not significant. The sale of these fixed maturities
was due to significant deterioration in the issuers' creditworthiness.
As a result of adopting the FASB Special Report, "A Guide to
Implementation of Statement 115 on Accounting for Certain Investments
in Debt and Equity Securities," the Company reclassified securities
with a book value of $15,607 and net unrealized gains of $144 from held
to maturity to available for sale in December 1995.
In addition, fixed maturities available for sale were sold during 1996
with proceeds of $15,669 and gross realized gains and losses of $28 and
$1,541, respectively. Fixed maturities available for sale were sold
during 1995 with proceeds of $8,839 and gross realized gains and losses
of $nil and $74, respectively. Fixed maturities available for sale were
sold during 1994 with proceeds of $14,533 and gross realized gains and
losses of $181 and $308, respectively.
At Dec. 31, 1996, bonds carried at $261 were on deposit with the state
of New York as required by law.
Net investment income for the years ended Dec. 31 is summarized as
follows:
1996 1995 1994
---------- --------- -------
Interest on fixed maturities $ 95,574 $ 97,092 $ 93,800
Interest on mortgage loans 14,171 13,888 13,226
Other investment income 1,293 1,291 1,219
Interest on cash equivalents 67 186 363
----------- ---- ------
111,105 112,457 108,608
Less investment expenses 1,637 1,533 465
---------- ------ -------
$109,468 $110,924 $108,143
======== ======== ========
<PAGE>
At Dec. 31, 1996, investments in fixed maturities comprised 87 percent
of the Company's total invested assets. Securities are rated by Moody's
and Standard & Poor's (S&P), except for securities carried at
approximately $130 million which are rated by American Express
Financial Corporation internal analysts using criteria similar to
Moody's and S&P. A summary of investments in fixed maturities, at
amortized cost, by rating on Dec. 31 is as follows:
Rating 1996 1995
---------------------- ------- --------
Aaa/AAA $ 396,097 $ 391,321
Aa/AA 13,996 17,572
Aa/A 10,197 9,950
A/A 196,542 209,483
A/BBB 62,488 61,912
Baa/BBB 336,706 357,445
Baa/BB 51,639 46,029
Below investment grade 108,755 125,936
----------- --------
$1,176,420 $1,219,648
========== ==========
At Dec. 31, 1996, 94 percent of the securities rated Aaa/AAA are GNMA,
FNMA and FHLMC mortgage-backed securities. No holdings of any other
issuer are greater than 1 percent of the Company's total investments
in fixed maturities.
At Dec. 31, 1996, approximately 11.6 percent of the Company's invested
assets were mortgage loans on real estate. Summaries of mortgage loans
by region and by type of real estate are as follows:
<TABLE>
<CAPTION>
Dec. 31, 1996 Dec. 31, 1995
------------------------ ----------------------------
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
-------------- ------ ----------- --------- -----------
<S> <C> <C> <C> <C>
West North Central $ 23,191 $1,342 $ 23,705 $ --
East North Central 33,430 1,708 34,207 --
South Atlantic 35,501 -- 38,802 2,033
Middle Atlantic 22,889 -- 23,502 --
Pacific 12,986 -- 13,150 --
Mountain 15,425 -- 14,937 5,084
New England 8,805 -- 8,982 --
East South Central 8,825 -- 1,613 7,407
West South Central 265 -- 277 --
--------- ---------- ---- -------
161,317 3,050 159,175 14,524
Less allowance for losses 1,300 -- 445 --
------ --- ---- -------
$160,017 $3,050 $158,730 $14,524
======== ====== ======== =======
Dec. 31, 1996 Dec. 31, 1995
--------------------- --------------------------
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
------------------------- -------- ----------- ------- -----------
Apartments $ 70,292 $ 1,708 $ 64,136 $7,988
Department/retail stores 48,476 1,342 55,308 --
Office buildings 18,684 -- 12,367 6,536
Industrial buildings 11,956 -- 13,255 --
Nursing/retirement 6,477 -- 6,565 --
Medical buildings 5,167 -- 5,255 --
Other -- -- 2,012 --
Hotels/motels 265 -- 277 --
------ ---- --- -------
161,317 3,050 159,175 14,524
Less allowance for losses 1,300 -- 445 --
----- ----- ---- -------
$160,017 $ 3,050 $158,730 $14,524
======== ======= ======== =======
</TABLE>
<PAGE>
Mortgage loan fundings are restricted by state insurance regulatory
authority to 80 percent or less of the market value of the real estate
at the time of origination of the loan. The Company holds the mortgage
document, which gives the right to take possession of the property if
the borrower fails to perform according to the terms of the agreement.
The fair value of the mortgage loans is determined by a discounted cash
flow analysis using mortgage interest rates currently offered for
mortgages of similar maturities. Commitments to purchase mortgages are
made in the ordinary course of business. The fair value of the mortgage
commitments is $nil.
At Dec. 31, 1996 and 1995, the Company's recorded investment in
impaired loans was $1,327 and $2,052 with a reserve of $1,300 and $445,
respectively. During 1996 and 1995, the average recorded investment in
impaired loans was $1,628 and $3,003, respectively.
The Company recognized $152 and $204 of interest income related to
impaired loans for the year ended Dec. 31, 1996 and 1995, respectively.
The following table presents changes in the reserve for investment
losses related to all loans:
1996 1995
------ -----
Balance, Jan. 1 $ 445 $445
Provision for investment losses 855 --
------ ----
Balance, Dec. 31 $1,300 $445
====== ====
3. Income taxes
The Company qualifies as a life insurance company for federal income
tax purposes. As such, the Company is subject to the Internal Revenue
Code provisions applicable to life insurance companies.
Income tax expense consists of the following:
1996 1995 1994
------ ------ ------
Federal income taxes:
Current $15,735 $15,146 $16,419
Deferred (2,095) (1,301) (4,320)
------- ------ -------
13,640 13,845 12,099
State income taxes-current 1,000 900 695
----- ------ -----
Income tax expense $14,640 $14,745 $12,794
======= ======= =======
Increases (decreases) to the federal tax provision applicable to pretax
income based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1996 1995 1994
-------------------- --------------------- --------------------
Provision Rate Provision Rate Provision Rate
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes based
on the statutory rate $14,813 35.0% $14,746 35.0% $12,757 35.0%
Increases (decreases) are
attributable to:
Tax-excluded interest
and dividend income (458) (1.1) (464) (1.1) (554) (1.5)
Other, net (716) (1.7) (437) (1.0) (104) (0.3)
---- ---- ---- ---- ----- ----
Federal income taxes $13,639 32.2% $13,845 32.9% $12,099 33.2%
======= ==== ======= ==== ======= ====
</TABLE>
<PAGE>
A portion of life insurance company income earned prior to 1984 was not
subject to current taxation but was accumulated, for tax purposes, in a
"policyholders' surplus account." At Dec. 31, 1996, the Company had a
policyholders' surplus account balance of $798. The policyholders'
surplus account is only taxable if dividends to the stockholder exceed
the stockholder's surplus account or if the Company is liquidated.
Deferred income taxes of $279 have not been established because no
distributions of such amounts are contemplated.
Significant components of the Company's deferred tax assets and
liabilities as of Dec. 31 are as follows:
1996 1995
-------- ------
Deferred tax assets:
Policy reserves $28,809 $26,237
Other 4,018 2,791
------- -----
Total deferred tax assets 32,827 29,028
------ ------
Deferred tax liabilities:
Deferred policy acquisition costs 35,302 33,001
Investments 6,571 11,690
------ ------
Total deferred tax
liabilities 41,873 44,691
------ -------
Net deferred tax liabilities $(9,046) $(15,663)
======= ========
The Company is required to establish a "valuation allowance" for any
portion of the deferred tax assets that management believes will not be
realized. In the opinion of management, it is more likely than not that
the Company will realize the benefit of the deferred tax assets and,
therefore, no such valuation allowance has been established.
4. Stockholder's equity
Retained earnings available for distribution as dividends to the parent
are limited to the Company's surplus as determined in accordance with
accounting practices prescribed by the New York Department of
Insurance. Statutory unassigned surplus aggregated $94,007 as of Dec.
31, 1996 and $85,964 as of Dec. 31, 1995 (see Note 3 with respect to
the income tax effect of certain distributions).
Dividends paid to parent were $8,000 in 1996, $8,000 in 1995 and $nil
in 1994.
5. Retirement plan and services
Until July 1, 1995, the Company participated in the IDS Retirement Plan
of American Express Financial Corporation which covered all permanent
employees age 21 and over who had met certain employment requirements.
Effective July 1, 1995, the IDS Retirement Plan was merged with
American Express Company's American Express Retirement Plan, which
simultaneously was amended to include a cash balance formula and a lump
sum distribution option. Employer contributions to the plan are based
on participants' age, years of service and total compensation for the
year. Funding of retirement costs for this plan complies with the
applicable minimum funding requirements specified by ERISA. The
Company's share of the total net periodic pension cost was $34, $33 and
$33 in 1996, 1995 and 1994, respectively.
The Company has a "Sales Benefit Plan" which is an unfunded,
noncontributory retirement plan for all eligible financial advisors.
Total plan costs for 1996, 1995 and 1994, which are calculated on the
basis of commission earnings of the individual financial advisors, were
$1,474, $1,392 and $1,372, respectively. Such costs are included in
deferred policy acquisition costs.
The Company also participates in defined contribution pension plans of
American Express Company which cover all employees who have met certain
employment requirements. Company contributions to the plans are a
percent of either each employee's eligible compensation or basic
contributions. Costs of these plans charged to operations in 1996, 1995
and 1994 were $248, $231 and $251, respectively.
The Company participates in defined benefit health care plans of
American Express Financial Corporation that provide health care and
life insurance benefits to retired employees and retired financial
advisors. The plans include participant contributions and
service-related eligibility requirements. Upon retirement, such
employees are considered to have been employees of American Express
Financial Corporation. American Express Financial Corporation expenses
these benefits and allocates the expenses to its subsidiaries.
Accordingly, costs of such benefits to the Company are included in
employee compensation and benefits and cannot be identified on a
separate company basis.
6. Incentive plan and operating expenses
The Company maintains a "Persistency Payment Plan." Under the terms of
this plan, financial advisors earn additional compensation based on the
volume and persistency of insurance sales. The total costs for the plan
for 1996, 1995 and 1994 were $1,424, $1,720 and $1,287, respectively.
Such costs are included in deferred policy acquisition costs.
Charges by IDS Life and American Express Financial Corporation for the
use of joint facilities, marketing services and other services
aggregated $12,389, $12,122 and $9,314 for 1996, 1995 and 1994,
respectively. Certain of the costs assessed to the Company are included
in deferred policy acquisition costs.
7. Commitments and contingencies
At Dec. 31, 1996 and 1995, traditional life insurance and universal
life-type insurance in force aggregated $4,053,561 and $3,502,851,
respectively, of which $203,963 and $163,462 were reinsured at the
respective year ends.
In addition, the Company has a stop loss reinsurance agreement with IDS
Life covering ordinary life benefits. IDS Life agrees to pay all death
benefits incurred each year which exceed 125 percent of normal claims,
where normal claims are defined in the agreement as .095 percent of the
mean retained life insurance in force. Premiums ceded to IDS Life
amounted to $98, $85 and $76 for the years ended Dec. 31, 1996, 1995
and 1994, respectively. Claim recoveries under the terms of this
reinsurance agreement were $861, $1,426 and $nil in 1996, 1995 and
1994, respectively.
Premiums ceded to reinsurers other than IDS Life amounted to $747, $667
and $735 for the years ended Dec. 31, 1996, 1995 and 1994,
respectively. Reinsurance recovered from reinsurers other than IDS Life
amounted to $66, $576 and ($107) for the years ended Dec. 31, 1996,
1995 and 1994.
Reinsurance contracts do not relieve the Company from its primary
obligations to policyholders.
The Company has an agreement to assume a block of extended term life
insurance business. The amount of insurance in force related to this
agreement was $345,943 and $392,106 at Dec. 31, 1996 and 1995,
respectively. The accompanying statement of income includes premiums of
$nil for the years ended Dec. 31, 1996, 1995 and 1994, and decrease in
liabilities for future policy benefits of $2,010, 2,039 and $2,538
related to this agreement for the years ended Dec. 31, 1996, 1995 and
1994, respectively.
8. Lines of credit
The Company has available lines of credit with two banks and American
Express Financial Corporation (AEFC) aggregating $55,000 of which
$25,000 is with AEFC. The lines of credit are at 40 to 80 basis points
over each lender's cost of funds. The $10,000 line of credit with one
bank expired on Dec. 31, 1996 and the Company did not seek renewal. The
$20,000 line of credit with the other bank expires on June 30, 1997 and
the Company expects to seek renewal. Outstanding borrowings under these
agreements were $nil at Dec. 31, 1996 and 1995.
<PAGE>
9. Derivative financial instruments
The Company enters into transactions involving derivative financial
instruments to manage its exposure to interest rate risk, including
hedging specific transactions. The Company does not hold derivative
instruments for trading purposes. The Company manages risks associated
with these instruments as described below.
Market risk is the possibility that the value of the derivative
financial instruments will change due to fluctuations in a factor from
which the instrument derives its value, primarily an interest rate. The
Company is not impacted by market risk related to derivatives held for
non-trading purposes beyond that inherent in cash market transactions.
Derivatives held for purposes other than trading are largely used to
manage risk and, therefore, the cash flow and income effects of the
derivatives are inverse to the effects of the underlying transactions.
Credit risk is the possibility that the counterparty will not fulfill
the terms of the contract. The Company monitors credit exposure related
to derivative financial instruments through established approval
procedures, including setting concentration limits by counterparty and
industry, and requiring collateral, where appropriate. A vast majority
of the Company's counterparties are rated A or better by Moody's and
Standard & Poor's.
Credit exposure related to interest rate caps is measured by
replacement cost of the contracts. The replacement cost represents the
fair value of the instruments.
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid
over the life of the agreement. Notional amounts are not recorded on
the balance sheet. Notional amounts far exceed the related credit
exposure.
The Company's holdings of derivative financial instruments are as
follows:
Notional Carrying Fair Total Credit
Dec. 31, 1996 Amount Value Value Exposure
------------- ------ ------- ----- ---------
Assets:
Interest rate caps $250,000 $1,374 $832 $832
======== ====== ==== ====
Dec. 31, 1995
Assets:
Interest rate caps $300,000 $1,905 $745 $745
======== ====== ==== ====
The fair values of derivative financial instruments are based on market
values, dealer quotes or pricing models. The interest rate caps expire
on various dates from 1997 to 2000.
Interest rate caps are used to manage the Company's exposure to
interest rate risk. These instruments are used primarily to protect the
margin between interest rates earned on investments and the interest
rates credited to related annuity contract holders.
<PAGE>
10. Fair values of financial instruments
The Company discloses fair value information for most on- and
off-balance sheet financial instruments for which it is practicable to
estimate that value. Fair values of life insurance obligations,
receivables and all non-financial instruments, such as deferred
acquisition costs are excluded. Off-balance sheet intangible assets,
such as the value the field force, are also excluded. Management
believes the value of excluded assets is significant. The fair value of
the Company, therefore, cannot be estimated by aggregating the amounts
presented.
<TABLE>
<CAPTION>
1996 1995
------- ------
Carrying Fair Carrying Fair
Financial Assets Value Value Value Value
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $ 585,812 $ 604,635 $ 642,580 $ 683,147
Available for sale 601,623 601,623 601,298 601,298
Mortgage loans on real estate (Note 2) 160,017 164,444 158,730 168,194
Other:
Equity securities (Note 2) -- -- 10 10
Derivative financial instruments (Note 9) 1,374 832 1,905 745
Separate accounts assets (Note 1) 950,019 950,019 724,212 724,212
Financial Liabilities
Future policy benefits for
fixed annuities 979,030 946,359 1,038,431 1,005,004
Separate account liabilities 880,160 838,492 678,263 645,389
</TABLE>
At Dec. 31, 1996 and 1995, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related
contracts carried at $72,252 and $67,843, respectively, and policy
loans of $3,672 and $2,893, respectively. The fair value of these
benefits is based on the status of the annuities at Dec. 31, 1996 and
1995. The fair value of deferred annuities is estimated as the carrying
amount less any surrender charges and related loans. The fair value for
annuities in non-life contingent payout status is estimated as the
present value of projected benefit payments at rates appropriate for
contracts issued in 1996 and 1995.
At Dec. 31, 1996 and 1995, the fair value of liabilities related to
separate accounts is estimated as the carrying amount less applicable
surrender charges and less variable insurance contracts carried at
$69,859 and $45,949, respectively.
<PAGE>
11. Statutory insurance accounting practices
Reconciliations of net income for 1996, 1995 and 1994 and stockholder's
equity at Dec. 31, 1996 and 1995, as shown in the accompanying
financial statements, to that determined using statutory accounting
practices are as follows:
1996 1995 1994
-------- -------- -------
Net income, per accompanying
financial statements $27,684 $27,387 $23,655
Deferred policy acquisition costs (9,087) (11,017) (11,522)
Adjustments of future policy
benefit liabilities (9,683) (10,655) 13,741
Deferred federal income taxes (2,095) (1,301) (4,321)
Provision for losses on investments 877 -- (1,652)
IMR gain/loss transfer and amortization 1,010 (331) (54)
Adjustment to separate account reserves 8,863 20,769 142
Other, net 116 948 144
------- -------- --------
Net income, on basis of
statutory accounting practices $17,685 $25,800 $20,133
======= ======= =======
1996 1995
-------- -------
Stockholder's equity, per accompanying
financial statements $229,863 $218,583
Deferred policy acquisition costs (119,183) (109,800)
Adjustments of future policy benefit liabilities 13,458 23,172
Deferred federal income taxes 9,046 15,663
Securities valuation reserve (19,446) (18,029)
Adjustments of separate account liabilities 43,189 34,326
Net unrealized loss on investments (11,016) (24,231)
Premiums due, deferred and advance 1,149 925
Deferred revenue liability 1,342 794
Allowance for losses 1,349 445
Non-admitted assets (634) (578)
Interest maintenance reserve (1,432) (2,442)
Other, net (281) 347
-------- ------
Stockholder's equity, on basis of statutory
accounting practices $147,404 $139,175
======== ========
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company of New York
We have audited the accompanying balance sheets of IDS Life Insurance Company of
New York (a wholly owned subsidiary of IDS Life Insurance Company) as of
December 31, 1996 and 1995, and the related statements of income and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IDS Life Insurance Company of
New York at December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.
Ernst & Young LLP
February 7, 1997
Minneapolis, Minnesota
<PAGE>
PAGE 48
PART C.
Item 24. Financial Statements and Exhibits
(a) Financial statements included in part B of this Registration
Statement:
IDS Life Insurance Company of New York:
Balance sheets as of Dec. 31, 1996 and 1995.
Statements of income and cash flows for each of the three
years in the period ended Dec. 31, 1996.
Notes to Financial Statements.
Report of Independent Auditors dated February 7, 1997.
The audited financial statements of the Variable Account including:
- statements of net assets as of Dec. 31, 1996,
- statements of operations for the period from Oct. 8, 1996
(commencement of operations) to Dec. 31, 1996,
- statements of changes in net assets for the period from
Oct. 8, 1996 (commencement of operations) to Dec. 31,
1996,
- Notes to Financial Statements, and - Report of Independent Auditors
dated February 7, 1997.
(b) Exhibits:
1. Consent in writing in Lieu of Meeting of IDS Life of New York
establishing the IDS Life of New York Flexible Portfolio Annuity Account
dated on April 17, 1996, filed electronically as Exhibit 1 to Initial
Registration Statement is incorporated herein by reference.
2. Not applicable.
3. Not applicable.
4.1 Copy of Qualified Deferred Annuity Contract Form No. 31037-NY
(10/95) filed electronically as Exhibit 4.1 to Initial
Registration Statement is incorporated herein by reference.
4.2 Copy of Non-Qualified Deferred Annuity Contract, Form No.
31036-NY (10/95), filed electronically as Exhibit 4.2 to
Initial Registration Statement is incorporated herein by
reference.
4.3 Copy of Deferred Annuity Contract (IRA), Form No. 31038-NY
(10/95), filed electronically as Exhibit 4.3 to Initial
Registration Statement is incorporated herein by reference.
4.4 Copy of Deferred Annuity Contract (SEP), Form No. 31039-NY
(10/95), filed electronically as Exhibit 4.4 to Initial
Registration Statement is incorporated herein by reference.
5. Form of Application to be filed by amendment.
<PAGE>
PAGE 49
6.1 Copy of the revised charter of IDS Life of New York dated April 1992,
filed electronically as Exhibit 6.1 to Initial Registration Statement is
incorporated herein by reference.
6.2 Copy of Amended By-Laws of IDS Life of New York dated May 1992, filed
electronically as Exhibit 6.2 to Initial Registration Statement is
incorporated herein by reference.
7. Not applicable.
8.1 Copy of Participation Agreement between IDS Life Insurance Company of
New York and Putnam Capital Manager Trust and Putnam Mutual Funds Corp.,
filed electronically herewith.
8.2 Copy of Participation Agreement between IDS Life Insurance
Company of New York and Templeton Variable Products Series
Fund and Franklin Templeton Distributors, Inc., filed
electronically herewith.
8.3 Copy of Participation Agreement between IDS Life Insurance
Company of New York and Warburg Pincus Trust and Warburg
Pincus Counsellors, Inc. and Counsellors Securities, Inc.,
filed electronically herewith.
8.4 Copy of Participation Agreement between IDS Life Insurance
Company of New York and AIM Variable Insurance Funds, Inc. and
AIM Distributors, Inc., filed electronically herewith.
8.5 Copy of Participation Agreement between IDS Life Insurance
Company of New York and TCI Portfolios, Inc. and Investors
Research Corporation, filed electronically herewith.
9. Opinion of counsel, dated August 13, 1996, filed electronically as
Exhibit 9 to Pre-effective Amendment 1, is incorporated herein by
reference.
10. Consent of Independent Auditors, filed electronically
herewith.
11. Financial Statement Schedules and Report of Independent
Auditors, filed electronically herewith.
Financial Statement Schedules:
Schedule I - Summary of Investments Other Than
Investments In Related Parties
Schedule III - Supplementary Insurance Information
Schedule IV - Reinsurance
Schedule V - Valuation and Qualifying Accounts
Report of Independent Auditors dated February 7, 1997
All other schedules to the Financial Statements required by Article 7 of
Regulation S-X are not required under the related instructions or are
inapplicable and, therefore, have been omitted.
12. Not applicable.
<PAGE>
PAGE 50
13. Copy of schedule for computation of each performance quotation provided
in the Registration Statement in response to Item 21, filed
electronically as Exhibit 13 to Initial Registration Statement is
incorporated herein by reference.
14. Financial Data Schedule filed electronically herewith.
15. Power of Attorney to sign this Registration Statement dated
March 26, 1997, filed electronically herewith.
Item 25. Directors and Officers of the Depositor (IDS Life
Insurance Company of New York)
Positions and
Name Principal Business Address Offices with Depositor
Mario Alaia 20 Madison Avenue Extension Claims Officer and
Albany, NY Assistant Secretary
Darrell C. Beckstrom IDS Tower 10 Underwriting Officer
Minneapolis, MN 55440
John C. Boeder 20 Madison Avenue Extension Director
Albany, NY
Eugene C. Chen 20 Madison Avenue Extension Chief Actuary
Albany, NY
Roger C. Corea 20 Madison Avenue Extension Director
Albany, NY
Charles A. Cuccinello 20 Madison Avenue Extension Director
Albany, NY
Darlene S. Farron 20 Madison Avenue Extension Treasurer
Albany, NY
Milton R. Fenster 20 Madison Avenue Extension Director
Albany, NY
Donna M. Gaglione 20 Madison Avenue Extension Secretary
Albany, NY
Margaret M. Grogan, M.D. Bethlehem Terrace Apts. Medical Director
Slingerland, NY
Lorraine R. Hart IDS Tower 10 Investment Officer
Minneapolis, MN 55440
Robert A. Hatton IDS Tower 10 Director, Vice
Minneapolis, MN 55440 President and Chief
Operating Officer
<PAGE>
PAGE 51
Item 25. (Continued) Directors and Officers of the Depositor (IDS Life
Insurance Company of New York)
Positions and
Name Principal Business Address Offices with Depositor
Richard W. Kling IDS Tower 10 Director, Chairman of
Minneapolis, MN 55440 the Board and President
Edward Landes IDS Tower 10 Director
Minneapolis, MN 55440
Thomas V. Nicolosi Suite 220 Director
500 Mamaroneck Avenue
Harrison, NY 10528
Stephen P. Norman World Financial Center Director
New York, NY
Kevin E. Palmer IDS Tower 10 Reinsurance Actuary
Minneapolis, MN 55440
Louise M. Parent World Financial Center Director
New York, NY
Carl N. Platou IDS Tower 10 Director
Minneapolis, MN 55440
Gordon H. Ritz 404 WCCO Radio Bldg. Director
Minneapolis, MN
F. Dale Simmons IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant Treasurer
Richard M. Starr 20 Madison Avenue Extension Director
Albany, NY
William A. Stoltzmann IDS Tower 10 Counsel and Assistant
Minneapolis, MN 55440 Secretary
Michael R. Woodward 20 Madison Avenue Extension Director
Albany, NY
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
IDS Life Insurance Company of New York is a wholly-owned
subsidiary of IDS Life Insurance Company which is a
wholly-owned subsidiary of American Express Financial
Corporation. American Express Financial Corporation is a
wholly-owned subsidiary of American Express Company (American
Express).
The following list includes the names of major subsidiaries of
American Express.
<PAGE>
PAGE 52
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant (Continued)
Jurisdiction
Name of Subsidiary of Incorporation
I. Travel Related Services
American Express Travel Related
Services Company, Inc. New York
II. International Banking Services
American Express Bank Ltd. Connecticut
III. Companies engaged in Financial Services
Advisory Capital Strategies Group Inc. Minnesota
American Centurion Life Assurance Company New York
American Enterprise Investment Services Inc. Minnesota
American Enterprise Life Insurance Company Indiana
American Express Client Services Corporation Minnesota
American Express Financial Advisors Inc. Delaware
American Express Financial Corporation Delaware
American Express Insurance Agency of Arizona Inc.Arizona
American Express Insurance Agency of Idaho Inc. Idaho
American Express Insurance Agency of Nevada Inc. Nevada
American Express Minnesota Foundation Minnesota
American Express Property Casualty Insurance
Agency of Kentucky Inc. Kentucky
American Express Property Casualty Insurance
Agency of Mississippi Inc. Mississippi
American Express Property Casualty Insurance
Agency of Pennsylvania Inc. Pennsylvania
American Express Service Corporation Delaware
American Express Tax and Business Services Inc. Minnesota
American Express Trust Company Minnesota
American Partners Life Insurance Company Arizona
AMEX Assurance Company Illinois
IDS Advisory Group Inc. Minnesota
IDS Aircraft Services Corporation Minnesota
IDS Cable Corporation Minnesota
IDS Cable II Corporation Minnesota
IDS Capital Holdings Inc. Minnesota
IDS Certificate Company Delaware
IDS Deposit Corp. Utah
IDS Fund Management Limited U.K.
IDS Futures Corporation Minnesota
IDS Insurance Agency of Alabama Inc. Alabama
IDS Insurance Agency of Arkansas Inc. Arkansas
IDS Insurance Agency of Massachusetts Inc. Massachusetts
IDS Insurance Agency of Mississippi Ltd. Mississippi
IDS Insurance Agency of New Mexico Inc. New Mexico
IDS Insurance Agency of North Carolina Inc. North Carolina
IDS Insurance Agency of Ohio Inc. Ohio
IDS Insurance Agency of Texas Inc. Texas
<PAGE>
PAGE 53
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant (Continued)
Jurisdiction
Name of Subsidiary of Incorporation
IDS Insurance Agency of Utah Inc. Utah
IDS Insurance Agency of Wyoming Inc. Wyoming
IDS International, Inc. Delaware
IDS Life Insurance Company Minnesota
IDS Life Insurance Company of New York New York
IDS Management Corporation Minnesota
IDS Partnership Services Corporation Minnesota
IDS Plan Services of California, Inc. Minnesota
IDS Property Casualty Insurance Company Wisconsin
IDS Real Estate Services, Inc. Delaware
IDS Realty Corporation Minnesota
IDS Sales Support Inc. Minnesota
IDS Securities Corporation Delaware
Investors Syndicate Development Corp. Nevada
Item 27. Number of Contractowners
On Jan. 1, 1997, there were 754 contract owners of
qualified contracts and there were 1,104 owners of non-
qualified contracts.
Item 28. Indemnification
The By-Laws of the depositor provide that it shall indemnify any
person who was or is a party or is threatened to be made a party,
by reason of the fact that he is or was a director, officer,
employee or agent of this Corporation, or is or was serving at
the direction of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture,
trust or other enterprise, to any threatened, pending or
completed action, suit or proceeding, wherever brought, to the
fullest extent permitted by the laws of the State of Minnesota,
as now existing or hereafter amended, provided that this Article
shall not indemnify or protect any such director, officer,
employee or agent against any liability to the Corporation or its
security holders to which he would otherwise be subject by reason
of willful misfeasance, bad faith, or gross negligence, in the
performance of his duties or by reason of his reckless disregard
of his obligations and duties.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to director, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
<PAGE>
PAGE 54
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
PAGE 55
Item 29. Principal Underwriters.
(a) American Express Financial Advisors acts as principal
underwriter for the following investment companies:
IDS Bond Fund, Inc.; IDS California Tax-Exempt Trust; IDS Discovery
Fund, Inc.; IDS Equity Select Fund, Inc.; IDS Extra Income Fund, Inc.;
IDS Federal Income Fund, Inc.; IDS Global Series, Inc.; IDS Growth
Fund, Inc.; IDS High Yield Tax- Exempt Fund, Inc.; IDS International
Fund, Inc.; IDS Investment Series, Inc.; IDS Managed Retirement Fund,
Inc.; IDS Market Advantage Series, Inc.; IDS Money Market Series, Inc.;
IDS New Dimensions Fund, Inc.; IDS Precious Metals Fund, Inc.; IDS
Progressive Fund, Inc.; IDS Selective Fund, Inc.; IDS Special
Tax-Exempt Series Trust; IDS Stock Fund, Inc.; IDS Strategy Fund, Inc.;
IDS Tax-Exempt Bond Fund, Inc.; IDS Tax-Free Money Fund, Inc.; IDS
Utilities Income Fund, Inc., Growth Trust; Growth and Income Trust;
Income Trust, Tax-Free Income Trust, World Trust and IDS Certificate
Company.
(b) As to each director, officer or partner of the principal
underwriter:
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ronald G. Abrahamson Vice President- None
IDS Tower 10 Service Quality and
Minneapolis, MN 55440 Reengineering
Douglas A. Alger Vice President-Field None
IDS Tower 10 Compensation and
Minneapolis, MN 55440 Administration
Peter J. Anderson Senior Vice President- Vice
IDS Tower 10 Investments President
Minneapolis, MN 55440
Ward D. Armstrong Vice President- None
IDS Tower 10 American Express,
Minneapolis, MN 55440 Institutional Services
John M. Baker Vice President- None
Plan Sponsor Services
Joseph M. Barsky III Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
Robert C. Basten Vice President-Tax None
IDS Tower 10 and Business Services
Minneapolis, MN 55440
Timothy V. Bechtold Vice President-Risk None
IDS Tower 10 Management Products
Minneapolis, MN 55440
<PAGE>
PAGE 56
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
John D. Begley Group Vice President- None
Suite 100 Ohio/Indiana
7760 Olentangy River Rd.
Columbus, OH 43235
Jack A. Benjamin Group Vice President- None
Suite 200 Greater Pennsylvania
3500 Market Street
Camp Hill, PA 17011
Alan F. Bignall Vice President- None
IDS Tower 10 Technology and
Minneapolis, MN 55440 Development
Brent L. Bisson Group Vice President- None
Ste 900 E. Westside Twr Los Angeles Metro
11835 West Olympic Blvd.
Los Angeles, CA 90064
John C. Boeder Vice President- None
IDS Tower 10 Mature Market Group
Minneapolis, MN 55440
Walter K. Booker Group Vice President- None
Suite 200 New Jersey
3500 Market Street
Camp Hill, NJ 17011
Bruce J. Bordelon Group Vice President- None
Galleria One Suite 1900 Gulf States
Galleria Blvd.
Metairie, LA 70001
Charles R. Branch Group Vice President- None
Suite 200 Northwest
West 111 North River Dr
Spokane, WA 99201
Karl J. Breyer Senior Vice President- None
IDS Tower 10 Corporate Affairs and
Minneapolis, MN 55440 Special Counsel
Daniel J. Candura Vice President- None
IDS Tower 10 Marketing Support
Minneapolis, MN 55440
Cynthia M. Carlson Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Securities Services
<PAGE>
PAGE 57
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Orison Y. Chaffee III Vice President-Field None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
James E. Choat Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440
Kenneth J. Ciak Vice President and None
IDS Property Casualty General Manager-
1400 Lombardi Avenue IDS Property Casualty
Green Bay, WI 54304
Roger C. Corea Group Vice President- None
290 Woodcliff Drive Upstate New York
Fairport, NY 14450
Henry J. Cormier Group Vice President- None
Commerce Center One Connecticut
333 East River Drive
East Hartford, CT 06108
John M. Crawford Group Vice President- None
Suite 200 Arkansas/Springfield/Memphis
10800 Financial Ctr Pkwy
Little Rock, AR 72211
Kevin F. Crowe Group Vice President- None
Suite 312 Carolinas/Eastern Georgia
7300 Carmel Executive Pk
Charlotte, NC 28226
Colleen Curran Vice President and None
IDS Tower 10 Assistant General Counsel
Minneapolis, MN 55440
Regenia David Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440
Luz Maria Davis Vice President- None
IDS Tower 10 Communications
Minneapolis, MN 55440
Scott M. DiGiammarino Group Vice President- None
Suite 500 Washington/Baltimore
8045 Leesburg Pike
Vienna, VA 22182
<PAGE>
PAGE 58
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Bradford L. Drew Group Vice President- None
Two Datran Center Eastern Florida
Penthouse One B
9130 S. Dadeland Blvd.
Miami, FL 33156
William H. Dudley Director and Executive Board member
IDS Tower 10 Vice President-
Minneapolis MN 55440 Investment Operations
Gordon L. Eid Senior Vice President None
IDS Tower 10 and General Counsel
Minneapolis, MN 55440
Robert M. Elconin Vice President- None
IDS Tower 10 Government Relations
Minneapolis, MN 55440
Mark A. Ernst Vice President- None
IDS Tower 10 Retail Services
Minneapolis, MN 55440
Joseph Evanovich Jr. Group Vice President- None
One Old Mill Nebraska/Iowa/Dakotas
101 South 108th Avenue
Omaha, NE 68154
Louise P. Evenson Group Vice President- None
Suite 200 San Francisco Bay Area
1333 N. California Blvd.
Walnut Creek, CA 94596
Gordon M. Fines Vice President- None
IDS Tower 10 Mutual Fund Equity
Minneapolis MN 55440 Investments
Douglas L. Forsberg Vice President- None
IDS Tower 10 Institutional Products
Minneapolis, MN 55440 Group
Jeffrey P. Fox Vice President and None
IDS Tower 10 Corporate Controller
Minneapolis, MN 55440
William P. Fritz Group Vice President- None
Suite 160 Northern Missouri
12855 Flushing Meadows Dr
St. Louis, MO 63131
<PAGE>
PAGE 59
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Carl W. Gans Group Vice President- None
8500 Tower Suite 1770 Twin City Metro
8500 Normandale Lake Blvd.
Bloomington, MN 55437
John J. Golden Vice President- None
IDS Tower 10 Human Resources Planning
Minneapolis, MN 55440 and Field Support
Morris Goodwin Jr. Vice President and None
IDS Tower 10 Corporate Treasurer
Minneapolis, MN 55440
Bruce M. Guarino Group Vice President- None
Suite 1736 Hawaii
1585 Kapiolani Blvd.
Honolulu, HI 96814
David A. Hammer Vice President None
IDS Tower 10 and Marketing
Minneapolis, MN 55440 Controller
Teresa A. Hanratty Group Vice President- None
Suites 6&7 Northern New England
169 South River Road
Bedford, NH 03110
John R. Hantz Group Vice President- None
Suite 107 Detroit Metro
17177 N. Laurel Park
Livonia, MI 48154
Robert L. Harden Group Vice President- None
Two Constitution Plaza Boston Metro
Boston, MA 02129
Lorraine R. Hart Vice President- None
IDS Tower 10 Insurance Investments
Minneapolis, MN 55440
Scott A. Hawkinson Vice President-Assured None
IDS Tower 10 Assets Product Development
Minneapolis, MN 55440 and Management
Brian M. Heath Group Vice President- None
Suite 150 North Texas
801 E. Campbell Road
Richardson, TX 75081
<PAGE>
PAGE 60
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Janis K. Heaney Vice President- None
IDS Tower 10 Incentive Compensation
Minneapolis, MN 55440
James G. Hirsh Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
David J. Hockenberry Group Vice President- None
30 Burton Hills Blvd. Eastern Tennessee
Suite 175
Nashville, TN 37215
Kevin P. Howe Vice President- None
IDS Tower 10 Government and
Minneapolis, MN 55440 Customer Relations and
Chief Compliance Officer
David R. Hubers Chairman, Chief Board member
IDS Tower 10 Executive Officer and
Minneapolis, MN 55440 President
James M. Jensen Vice President- None
IDS Tower 10 Life Products
Minneapolis, MN 55440
Marietta L. Johns Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440
James E. Kaarre Vice President- None
IDS Tower 10 Marketing Promotions
Minneapolis, MN 55440
Matthew N. Karstetter Vice President- None
IDS Tower 10 Investment Accounting
Minneapolis, MN 55440
Linda B. Keene Vice President- None
IDS Tower 10 Market Development
Minneapolis, MN 55440
G. Michael Kennedy Vice President-Investment None
IDS Tower 10 Services and Investment
Minneapolis, MN 55440 Research
Susan D. Kinder Senior Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440
<PAGE>
PAGE 61
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Richard W. Kling Senior Vice President- None
IDS Tower 10 Products
Minneapolis, MN 55440
Paul F. Kolkman Vice President- None
IDS Tower 10 Actuarial Finance
Minneapolis, MN 55440
Claire Kolmodin Vice President- None
IDS Tower 10 Service Quality
Minneapolis, MN 55440
David S. Kreager Group Vice President- None
Ste 108 Trestle Bridge V Greater Michigan
5136 Lovers Lane
Kalamazoo, MI 49002
Steven C. Kumagai Director and Senior None
IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management and Business
Systems
Mitre Kutanovski Group Vice President- None
Suite 680 Chicago Metro
8585 Broadway
Merrillville, IN 48410
Edward Labenski Jr. Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Kurt A. Larson Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Lori J. Larson Vice President- None
IDS Tower 10 Variable Assets Product
Minneapolis, MN 55440 Development
Ryan R. Larson Vice President- None
IDS Tower 10 IPG Product Development
Minneapolis, MN 55440
Daniel E. Laufenberg Vice President and None
IDS Tower 10 Chief U.S. Economist
Minneapolis, MN 55440
Richard J. Lazarchic Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
<PAGE>
PAGE 62
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Peter A. Lefferts Senior Vice President- None
IDS Tower 10 Corporate Strategy and
Minneapolis, MN 55440 Development
Douglas A. Lennick Director and Executive None
IDS Tower 10 Vice President-Private
Minneapolis, MN 55440 Client Group
Mary J. Malevich Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Fred A. Mandell Vice President- None
IDS Tower 10 Field Marketing Readiness
Minneapolis, MN 55440
Daniel E. Martin Group Vice President- None
Suite 650 Pittsburgh Metro
5700 Corporate Drive
Pittsburgh, PA 15237
William J. McKinney Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440 Support
Thomas W. Medcalf Vice President- None
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440
William C. Melton Vice President- None
IDS Tower 10 International Research
Minneapolis, MN 55440 and Chief International
Economist
William Miller Vice President and None
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440
James A. Mitchell Executive Vice President- None
IDS Tower 10 Marketing and Products
Minneapolis, MN 55440
John P. Moraites Group Vice President- None
Union Plaza Suite 900 Kansas/Oklahoma
3030 Northwest Expressway
Oklahoma City, OK 73112
Pamela J. Moret Vice President-Retail None
IDS Tower 10 Services
Minneapolis, MN 55440
<PAGE>
PAGE 63
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Alan D. Morgenstern Group Vice President- None
Suite 200 Central California/
3500 Market Street Western Nevada
Camp Hill, NJ 17011
Barry J. Murphy Senior Vice President- None
IDS Tower 10 Client Service
Minneapolis, MN 55440
Mary Owens Neal Vice President- None
IDS Tower 10 Mature Market Segment
Minneapolis, MN 55440
Robert J. Neis Vice President- None
IDS Tower 10 Technology Services
Minneapolis, MN 55440
Thomas V. Nicolosi Group Vice President- None
Suite 220 New York Metro Area
500 Mamaroneck Avenue
Harrison, NY 10528
James R. Palmer Vice President- None
IDS Tower 10 Taxes
Minneapolis, MN 55440
Carla P. Pavone Vice President- None
IDS Tower 10 Specialty Service Teams
Minneapolis, MN 55440 and Emerging Business
Susan B. Plimpton Vice President- None
IDS Tower 10 Segmentation Development
Minneapolis, MN 55440 and Support
Larry M. Post Group Vice President- None
One Tower Bridge Philadelphia Metro
100 Front Street 8th Fl
West Conshohocken, PA 19428
Ronald W. Powell Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
James M. Punch Vice President- None
IDS Tower 10 Geographical Service
Minneapolis, MN 55440 Teams
<PAGE>
PAGE 64
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Frederick C. Quirsfeld Vice President-Taxable None
IDS Tower 10 Mutual Fund Investments
Minneapolis, MN 55440
Debra J. Rabe Vice President-Financial None
IDS Tower 10 Planning
Minneapolis, MN 55440
R. Daniel Richardson Group Vice President- None
Suite 800 Southern Texas
Arboretum Plaza One
9442 Capital of Texas Hwy N.
Austin, TX 78759
Roger B. Rogos Group Vice President- None
One Sarasota Tower Western Florida
Suite 700
Two N. Tamiami Trail
Sarasota, FL 34236
ReBecca K. Roloff Vice President-Private None
IDS Tower 10 Client Group
Minneapolis, MN 55440
Stephen W. Roszell Vice President- None
IDS Tower 10 Advisory Institutional
Minneapolis, MN 55440 Marketing
Max G. Roth Group Vice President- None
Suite 201 S IDS Ctr Wisconsin/Upper Michigan
1400 Lombardi Avenue
Green Bay, WI 54304
John P. Ryan Vice President and None
IDS Tower 10 General Auditor
Minneapolis, MN 55440
Erven Samsel Senior Vice President- None
45 Braintree Hill Park Field Management
Suite 402
Braintree, MA 02184
Russell L. Scalfano Group Vice President- None
Suite 201 Illinois/Indiana/Kentucky
101 Plaza East Blvd.
Evansville, IN 47715
William G. Scholz Group Vice President- None
Suite 205 Arizona/Las Vegas
7333 E Doubletree Ranch Rd
Scottsdale, AZ 85258
<PAGE>
PAGE 65
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Stuart A. Sedlacek Vice President- None
IDS Tower 10 Assured Assets
Minneapolis, MN 55440
Donald K. Shanks Vice President- None
IDS Tower 10 Property Casualty
Minneapolis, MN 55440
F. Dale Simmons Vice President-Senior None
IDS Tower 10 Portfolio Manager,
Minneapolis, MN 55440 Insurance Investments
Judy P. Skoglund Vice President- None
IDS Tower 10 Human Resources and
Minneapolis, MN 55440 Organization Development
Julian W. Sloter Group Vice President- None
Ste 1700 Orlando FinCtr Orlando/Jacksonville
800 North Magnolia Ave.
Orlando, FL 32803
Ben C. Smith Vice President- None
IDS Tower 10 Workplace Marketing
Minneapolis, MN 55440
William A. Smith Vice President and None
IDS Tower 10 Controller-Private
Minneapolis, MN 55440 Client Group
James B. Solberg Group Vice President- None
466 Westdale Mall Eastern Iowa Area
Cedar Rapids, IA 52404
Bridget Sperl Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440 Management Services
Paul J. Stanislaw Group Vice President- None
Suite 1100 Southern California
Two Park Plaza
Irvine, CA 92714
Lois A. Stilwell Group Vice President- None
Suite 433 Outstate Minnesota Area/
9900 East Bren Road North Dakota/Western Wisconsin
Minnetonka, MN 55343
William A. Stoltzmann Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
<PAGE>
PAGE 66
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
James J. Strauss Vice President- None
IDS Tower 10 Corporate Planning
Minneapolis, MN 55440 and Analysis
Jeffrey J. Stremcha Vice President-Information None
IDS Tower 10 Resource Management/ISD
Minneapolis, MN 55440
Barbara Stroup Stewart Vice President-Corporate None
IDS Tower 10 Reengineering
Minneapolis, MN 55440
Neil G. Taylor Group Vice President- None
Suite 425 Seattle/Tacoma
101 Elliott Avenue West
Seattle, WA 98119
John R. Thomas Senior Vice President- Board member
IDS Tower 10 Information and
Minneapolis, MN 55440 Technology
Melinda S. Urion Senior Vice President Treasurer
IDS Tower 10 and Chief Financial
Minneapolis, MN 55440 Officer
Peter S. Velardi Group Vice President- None
Suite 180 Atlanta/Birmingham
1200 Ashwood Parkway
Atlanta, GA 30338
Charles F. Wachendorfer Group Vice President- None
Suite 100 Denver/Salt Lake City/
Stanford Plaza II Albuquerque
7979 East Tufts Ave Pkwy
Denver, CO 80237
Wesley W. Wadman Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Norman Weaver Jr. Senior Vice President- None
1010 Main St Suite 2B Field Management
Huntington Beach, CA 92648
Michael L. Weiner Vice President- None
IDS Tower 10 Tax Research and Audit
Minneapolis, MN 55440
Lawrence J. Welte Vice President- None
IDS Tower 10 Investment Administration
Minneapolis, MN 55440
<PAGE>
PAGE 67
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Jeffry M. Welter Vice President- None
IDS Tower 10 Equity and Fixed Income
Minneapolis, MN 55440 Trading
William N. Westhoff Senior Vice President- None
IDS Tower 10 Global Investments
Minneapolis, MN 55440
Thomas L. White Group Vice President- None
Suite 200 Cleveland Metro
28601 Chagrin Blvd.
Woodmere, OH 44122
Eric S. Williams Group Vice President- None
Suite 250 Virginia
3951 Westerre Parkway
Richmond, VA 23233
Edwin M. Wistrand Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
Michael R. Woodward Senior Vice President- None
32 Ellicott St Ste 100 Field Management
Batavia, NY 14020
Item 29 (c).
<TABLE>
<CAPTION>
Net Underwriting
Name of Principal Discounts and Compensation on Brokerage
Underwriter Commissions Redemption Commissions Compensation
<S> <C> <C> <C> <C>
American Express 673,634 34,957 None None
Financial Advisors,
Inc.
</TABLE>
<PAGE>
PAGE 68
Item 30. Location of Accounts and Records
IDS Life Insurance Company of New York
20 Madison Avenue Extension
Albany, NY 12203
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Registrant undertakes to file a post-effective
amendment to this registration statement as
frequently as is necessary to ensure that the
audited financial statements in the
registration statement are never more than 16
months old for so long as payments under the
variable annuity contracts may be accepted.
(b) Registrant undertakes to include either (1) as
part of any application to purchase a contract
offered by the prospectus, a space that an
applicant can check to request a Statement of
Additional Information, or (2) a post card or
similar written communication affixed to or
included in the prospectus that the applicant
can remove to send for a Statement of
Additional Information.
(c) Registrant undertakes to deliver any Statement of
Additional Information and any financial
statements required to be made available under
this Form promptly upon written or oral request.
(d) Registrant represents that it is relying upon
the no-action assurance given to the American
Council of Life Insurance (pub. avail. Nov. 28,
1988). Further, Registrant represents that it
has complied with the provisions of paragraphs
(1)-(4) of that no-action letter.
(e) The sponsoring insurance company represents that
the fees and charges deducted under the contract,
in the aggregate, are reasonable in relation to
the services rendered, the expenses expected to be
incurred, and the risks assumed by the insurance
company.
<PAGE>
PAGE 69
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, IDS Life Insurance Company of New York, on behalf of the Registrant
certifies that it meets requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Registration Statement to be signed on its behalf in
the City of Minneapolis, and State of Minnesota, on the 22nd day of April, 1997.
IDS LIFE OF NEW YORK FLEXIBLE PORTFOLIO ANNUITY ACCOUNT
(Registrant)
By IDS Life Insurance Company of New York
(Sponsor)
By /s/ Richard W. Kling
Richard W. Kling
President
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities indicated on the 22nd day of
April, 1997.
Signature Title
/s/ John C. Boeder* Director
John C. Boeder
/s/ Roger C. Corea* Director
Roger C. Corea
/s/ Charles A. Cuccinello* Director
Charles A. Cuccinello
/s/ Darlene S. Farron* Treasurer
Darlene S. Farron
/s/ Robert Hatton* Director, Vice President
Robert Hatton and Chief Operating Officer
/s/ Richard W. Kling* Director, Chairman of the
Richard W. Kling Board and President
/s/ Edward Landes* Director
Edward Landes
/s/ Thomas V. Nicolosi* Director
Thomas V. Nicolosi
/s/ Stephen P. Norman* Director
Steven P. Norman
/s/ Richard M. Starr* Director
Richard M. Starr
<PAGE>
PAGE 70
*Signed pursuant to Power of Attorney dated March 26, 1997, filed electronically
herein by:
- ---------------------------
Sherilyn K. Beck
<PAGE>
PAGE 71
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 1
This Registration Statement is comprised of the following papers and documents:
The Cover Page.
Cross-reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements.
Part C.
Other Information.
The signatures.
Exhibits.
<PAGE>
PAGE 1
IDS Life of New York Flexible Portfolio Annuity Account (FPA-NY)
Registration No. 333-03867/811-07623
EXHIBIT INDEX
8.1 Copy of Participation Agreement between IDS Life
Insurance Company of New York and Putnam Capital
Manager Trust and Putnam Mutual Funds Corp.
8.2 Copy of Participation Agreement between IDS Life
Insurance Company of New York and Templeton Variable
Products Series Fund and Franklin Templeton
Distributors, Inc.
8.3 Copy of Participation Agreement between IDS Life
Insurance Company of New York and Warburg Pincus Trust
and Warburg Pincus Counsellors, Inc. and Counsellors
Securities, Inc.
8.4 Copy of Participation Agreement between IDS Life
Insurance Company of New York and AIM Variable
Insurance Funds, Inc. and AIM Distributors, Inc.
8.5 Copy of Participation Agreement between IDS Life
Insurance Company of New York and TCI Portfolios, Inc.
and Investors Research Corporation.
10. Consent of Independent Auditors.
11. Financial Statement Schedules and Report of Independent
Auditors.
14. Financial Data Schedule.
15. Power of Attorney dated March 26, 1997.
<PAGE>
PAGE 1
PARTICIPATION AGREEMENT
By and Among
IDS LIFE INSURANCE COMPANY OF NEW YORK
And
PUTNAM CAPITAL MANAGER TRUST
And
PUTNAM MUTUAL FUNDS CORP.
THIS AGREEMENT, made and entered into this 7th day of October, 1996 by and among
IDS Life Insurance Company of New York organized under the laws of the State of
New York (the "Company"), on its own behalf and on behalf of each separate
account of the Company named in Schedule 1 to this Agreement, as may be amended
from time to time (each account referred to as the "Account"), Putnam Capital
Manager Trust, an open-end management investment company and business trust
organized under the laws of the Commonwealth of Massachusetts (the "Fund") and
Putnam Mutual Funds Corp., a Massachusetts corporation (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 that have
entered into participation agreements with the Fund and the Distributor (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 Fund has received an order from the Securities & Exchange
Commission (the "SEC") granting Participating Insurance Companies and variable
annuity separate accounts and variable life insurance separate accounts relief
from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity separate accounts and variable life
insurance separate accounts of both affiliated and unaffiliated Participating
Insurance Companies and qualified pension and retirement plans outside of the
separate account context (the "Mixed and Shared Funding Exemptive Order"). The
parties to this Agreement agree that the conditions or undertakings specified in
the Mixed and Shared Funding Exemptive Order and that may be imposed on the
Company, the Fund and/or the Distributor by virtue of the receipt of such order
by the SEC will be incorporated herein by reference, and such parties agree to
comply with such conditions and undertakings to the extent applicable to each
such party; and
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (the "1933 Act"); and
<PAGE>
PAGE 2
WHEREAS, the Company has registered or will register certain variable annuity
contracts and variable life insurance contracts (the "Contracts") under the 1933
Act; and
WHEREAS, the Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of the Company
under the insurance laws of the State of New York, to set aside and invest
assets attributable to the Contracts; and
WHEREAS, the Company has registered the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Portfolios named in Schedule 2, as
such schedule may be amended from time to time (the "Designated Portfolios") on
behalf of the Account to fund the Contracts, and the Fund is authorized to sell
such shares to unit investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund
and the Distributor agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees, subject to the terms of this
Agreement, to sell to the Company those shares of the
Designated Portfolios that each Account orders,
executing such orders on a daily basis at the net asset
value next computed after receipt and acceptance by 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 9:00 a.m. Central
Time on the next following business day. "Business Day"
will mean any day on which the New York Stock Exchange
is open for trading and on which the Fund calculates
its net asset value pursuant to the rules of the SEC.
1.2. 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 above. Payment will
be in federal funds transmitted by wire. The Company
will only purchase Fund shares to fund Contracts sold
by the Company or by brokerdealers affiliated with the
Company.
1.3. The Fund agrees to make shares of the Designated
Portfolios available indefinitely, subject to Article
X, for purchase at the applicable net asset value per
share by Participating Insurance Companies and their
separate accounts on those days on which the Fund
calculates its Designated Portfolio net asset value
pursuant to rules of the SEC; provided, however, that
<PAGE>
PAGE 3
the Trustees of the Fund (the "Trustees") 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 Trustees,
acting in good faith and in light of their fiduciary duties
under federal and any applicable state laws, necessary or in
the best interests of the shareholders of such Portfolio.
1.4. 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
applicable provisions of the Internal Revenue Code of
1986, as amended, (the "Internal Revenue Code"), and
regulations promulgated thereunder, the sale to which
will not impair the tax treatment currently afforded
the Contracts. No shares of any Portfolio will be sold
to the general public.
1.5. 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
1.5, 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 request
for redemption by 9:00 a.m. Central Time on the next
following Business Day. Payment will be in federal
funds transmitted by wire to the Company's account as
designated by the Company in writing from time to time,
on such next Business Day as the Fund receives notice
of the redemption order from the Company. If
notification of redemption is received after 9:00 a.m.
Central Time on a Business Day, payment for redeemed
shares will be made on the next following Business Day.
The Fund reserves the right to delay payment of
redemption proceeds, but in no event may such payment
be delayed longer than the period permitted under
Section 22(e) of 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.
1.6. 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. The Company will provide
the Fund with such information about the sales and
redemptions of shares as the Fund may reasonably
request.
<PAGE>
PAGE 4
1.7. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the
Company or any Account. Purchase and redemption orders for
Fund shares will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.8. The Fund will furnish same day notice (by wire or
telephone, followed by written confirmation) to the
Company of the declaration of any income, dividends or
capital gain distributions payable on each Designated
Portfolio's shares. The Company hereby elects to
receive all such dividends and distributions as are
payable on the Designated Portfolio shares in the form
of additional shares of that Designated Portfolio. The
Company reserves the 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.
1.9. The Fund will make the net asset value per share for
each Designated Portfolio available to the Company on a
daily basis as soon as reasonably practical after the
net asset value per share is calculated and will use
its best efforts to make such net asset value per share
available by 5:30 p.m., Central Time, but other than
with respect to events outside the control of the Fund,
in no event later than 6:00 p.m., Central Time, each
business day.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts
are or will be registered under the 1933 Act and that
the Contracts will be issued and sold in compliance
with all applicable federal and state laws, including
state insurance suitability requirements. The Company
further represents and warrants that it is an insurance
company duly organized and in good standing under
applicable law and that it has legally and validly
established each Account as a separate account under
applicable state law and has registered the Account as
a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated
investment account for the Contracts, and that it will
maintain such registration for so long as any Contracts
are outstanding. The Company 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 any state only if and to the extent deemed
necessary by the Company.
<PAGE>
PAGE 5
2.2. The Company represents that the Contracts are currently
and at the time of issuance will be treated as annuity
or life insurance contracts under applicable provisions
of the Internal Revenue Code, and that it will make
every effort to maintain such treatment and that it
will notify the Fund and the Distributor immediately
upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.3. The Company represents and warrants that it will not purchase
shares of the Designated Portfolios with assets derived from
tax-qualified retirement plans except, indirectly, through
Contracts purchased in connection with such plans.
2.4. The Company agrees that it will notify the Fund and the
Distributor if the Company adds an aggressive growth fund with
similar objectives to the Fund as an investment option under
the Contracts sixty (60) days prior to the effective date of
such addition.
2.5. The Fund represents and warrants that Fund shares of
the Designated Portfolios sold pursuant to this
Agreement will be registered under the 1933 Act and
duly authorized for issuance in accordance with
applicable law and that the Fund is and will remain
registered under the 1940 Act for as long as such
shares of the Designated Portfolios are sold. The Fund
will amend the registration statement for its shares
under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering
of its shares. The Fund will register and qualify the
shares of the Designated Portfolios for sale in
accordance with the laws of any state only if and to
the extent deemed advisable by the Fund based solely on
the sale of Fund shares to the Company.
2.6. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the
Internal Revenue Code, and that it will make every
effort to maintain such qualification (under Subchapter
M or any successor or similar provision) and that it
will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so
qualify or that it might not so qualify in the future.
2.7. The Fund represents that its investment objectives,
policies and restrictions comply with applicable state
securities laws as they may apply to the Fund. The Fund
makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and
expenses and investment policies, objectives and
restrictions) complies with the insurance laws and
regulations of any state. The Fund and the Distributor
agree that they will furnish the information required
by state insurance laws so that the Company can obtain
the authority needed to issue the Contracts in any
applicable state.
<PAGE>
PAGE 6
2.8. 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
Trustees, a majority of whom are not "interested"
persons of the Fund, formulate and approve any plan
under Rule 12b-1 to finance distribution expenses.
2.9. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts
and that it does and will comply in all material respects with
applicable provisions of the 1940 Act.
2.10. The Distributor represents and warrants that it is 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 any
applicable state and federal securities laws.
2.11. The Fund 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
may be promulgated from time to time. The aforesaid
bond includes coverage for larceny and embezzlement and
is issued by a reputable bonding company.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Fund will provide such documentation, including a
final copy of a current prospectus set in type or a
computer diskette 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
Fund's prospectus and the prospectuses of other funds
in which assets attributable to the Contracts may be
invested printed together in one document. The Company
will bear the expense of printing and distributing
prospectuses. The Fund will provide such documentation
to the Company in a timely manner so that the Company
can print and distribute the prospectuses within the
time required by applicable law.
3.2. The Fund's prospectus will state that the statement of
additional information 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 statement of
additional information as the Company may reasonably
request for distribution, at the Company's expense, to
prospective contractowners and applicants. The Fund
<PAGE>
PAGE 7
will provide, at the Fund's expense, as many copies of said
statement of additional information as necessary for
distribution, at the Fund's expense, to any existing
contractowner who requests such statement or whenever state or
federal law otherwise requires that such statement be
provided. The Fund will provide the copies of said statement
of additional information to the Company or to its mailing
agent in a timely manner so that the Company can distribute
the statement of additional information within the time
required by applicable law. The Company will distribute the
statement of additional information as requested or required
and will bill the Fund for the reasonable cost of such
distribution.
3.3. The Fund, at its expense, will provide the Company or
its mailing agent with copies of its proxy material, if
any, reports to shareholders and other communications
to shareholders in such quantity as the Company will
reasonably require and in a timely manner so that the
Company can distribute these documents within the time
required by applicable law. The Company will distribute
this proxy material, reports and other communications
to existing contractowners, such distribution to be at
the Company's expense.
3.4. If and to the extent required by law and the Mixed &
Shared Funding Exemptive Order, the Company will:
(a) solicit voting instructions from
contractowners;
(b) vote the shares of the Designated Portfolios
held in the Account in accordance with
instructions received from contractowners;
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 contractowners;
so long as and to the extent that the SEC continues to
interpret the 1940 Act and the Mixed & Shared Funding
Exemptive Order to require pass-through voting
privileges for variable contractowners. The Company
reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the
extent permitted by law and the Mixed & Shared Funding
Exemptive Order. The Company will be responsible for
assuring that each Account participating in the Fund
calculates voting privileges in a manner consistent
with all legal requirements, including the Mixed and
Shared Funding Exemptive Order.
<PAGE>
PAGE 8
3.5. The Fund will comply with all provisions of the 1940
Act requiring voting by shareholders, and in
particular, the Fund either will provide for annual
meetings (except insofar as the SEC may interpret
Section 16 of the 1940 Act not to require such
meetings) or, as the Fund currently intends, to comply
with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of
that Act) as well as with Sections 16(a) and, if and
when applicable, 16(b). Further, the Fund will act in
accordance with the SEC's interpretation of the
requirements of Section 16(a) with respect to periodic
elections of Trustees and with whatever rules the SEC
may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company will furnish, or will cause to be
furnished, to the Distributor, each piece of sales
literature or other promotional material in which the
Fund, its investment adviser or the Distributor is
named, at least ten (10)
business days prior to its use. No such material will
be used if the Fund or the Distributor reasonably
objects to such use within five (5) business days after
receipt of such material.
4.2. 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
statement of additional information for Fund shares, as
such registration statement, prospectus and statement
of additional information may be amended or
supplemented from time to time, or in reports or proxy
statements for the Fund, or in published reports for
the Fund which are in the public domain or approved by
the Fund or the Distributor for distribution, or in
sales literature or other material provided by the Fund
or by the Distributor, except with permission of the
Fund or the Distributor. The Fund and the Distributor
agree to respond to any request for approval on a
prompt and timely basis. Nothing in this Section 4.2
will be construed as preventing the Company or its
employees or agents from giving advice on investment in
the Fund.
4.3. The Fund or the Distributor 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 Account is named, at least
ten (10) business days prior to its use. No such
material will be used if the Company reasonably objects
to such use within five (5) business days after receipt
of such material.
<PAGE>
PAGE 9
4.4. The Fund and the Distributor will not give any
information or make any representations or statements
on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the
information or representations contained in a
registration statement, prospectus or statement of
additional information for the Contracts, as such
registration statement, prospectus and statement of
additional information may be amended or supplemented
from time to time, or in published reports for each
Account or the Contracts which are in the public domain
or approved by the Company for distribution to
contractowners, 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.
4.5. The Fund will provide to the Company at least one
complete copy of all registration statements,
prospectuses, statements of additional information,
reports, proxy statements, sales literature and other
promotional materials naming the Company or the
Account, and all amendments to any of the above, that
relate to the Fund or its shares, promptly following
the filing of such document with the SEC or the NASD.
4.6. The Company will provide to the Fund at least one
complete copy of all registration statements,
prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales
literature and other promotional materials,
applications for exemptions, requests for no action
letters, and all amendments to any of the above, that
relate to the Contracts or each Account, promptly
following the filing of such document with the SEC or
the NASD.
4.7. For purposes of this Article IV, 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
<PAGE>
PAGE 10
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.
4.8. The Fund and the Distributor hereby consent to the Company's
use of the names "Putnam", "Putnam Capital Manager Trust", and
"PCM", in connection with marketing the Contracts, subject to
the terms of Sections 4.1 and 4.2 of this Agreement. Such
consent will terminate with the termination of this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Fund and the Distributor 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 Distributor
may make payments to the Company if and in such amounts
agreed to by the Distributor in writing; and (b) the
Fund may pay fees to the Company for services provided
to contractowners that are not primarily intended to
result in the sale of shares of the Designated
Portfolio or of underlying contracts.
5.2. 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;
preparation and filing of the Fund's prospectus,
statement of additional information and registration
statement, proxy materials and reports; setting the
Fund's prospectus in type; setting in type and printing
proxy materials and reports to contractowners 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 all
other expenses set forth in Article III of this
Agreement.
5.3. The Company will bear all expenses incident to the
performance of its obligations under this Agreement.
The Company will bear those expenses of: (a) printing
and distributing the Fund's prospectus to existing and
prospective contractowners; (b) distributing reports to
contractowners; and (c) distributing the Fund's proxy
materials to contractowners as set forth in Article III
of this Agreement.
<PAGE>
PAGE 11
ARTICLE VI. Diversification
6.1. The Fund will comply with Section 817(h) of the
Internal Revenue Code and Treasury Regulation 1.817-5,
relating to the diversification requirements for
variable annuity, endowment, or life insurance
contracts. In the event of a breach of this Article VI
by the Fund, it will take all reasonable steps: (a) to
notify the Company of such breach; and (b) to
adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Treasury
Regulation.
ARTICLE VII. Potential Conflicts
7.1. The Trustees will monitor the Fund for the existence of
any irreconcilable material conflict among the
interests of the contractowners of all separate
accounts investing in the Fund. An irreconcilable
material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar
action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision
in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a
difference in voting instructions given by
Participating Insurance Companies or by variable
annuity and variable life insurance contractowners; or
(f) a decision by an insurer to disregard the voting
instructions of contractowners. The Trustees will
promptly inform the Company if it determines that an
irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing
conflicts of which it is aware to the Trustees. The
Company agrees to assist the Trustees in carrying out
their responsibilities, as delineated in the Mixed and
Shared Funding Exemptive
Order, by providing the Trustees with all information
reasonably necessary for them to consider any issues raised.
This includes, but is not limited to, an obligation by the
Company to inform the Trustees whenever contractowner voting
instructions are to be disregarded. The Trustees will record
in their minutes, or other appropriate records, all reports
received by them and all action with regard to a conflict.
7.3. If it is determined by a majority of the Trustees, or a
majority of the disinterested Trustees, 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
<PAGE>
PAGE 12
Trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and
including: (a) withdrawing the assets allocable to some or all
of the Accounts from the Fund or any Portfolio and reinvesting
such assets in a different investment medium, including (but
not limited to) another Portfolio of the Fund, or submitting
the question whether such segregation should be implemented to
a vote of all affected contractowners and, as appropriate,
segregating the assets of any appropriate group (i.e.,
variable annuity contractowners or variable life insurance
contractowners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or
offering to the affected contractowners the option of making
such a change; and (b) establishing a new registered
management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of
a decision by the Company to disregard contractowner
voting instructions, and such disregard of voting
instructions could conflict with the majority of
contractowner voting instructions, and the Company's
judgment represents a minority position that would
preclude a majority vote, the Company may be required,
at the Fund's election, to withdraw the affected
subaccount of the Account's investment in the Fund and
terminate this Agreement with respect to such
subaccount; provided, however, that such withdrawal and
termination will be limited to the extent required by
the foregoing irreconcilable material conflict as
determined by a majority of the disinterested Trustees.
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 Distributor 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.
7.5. If a material irreconcilable conflict arises because of
a particular state insurance regulator's decision
applicable to the Company to disregard contractowner
voting instructions, and that decision represents a
minority position that would preclude a majority vote,
then the Company may be required, at the Fund's
direction, to withdraw the affected subaccount of the
Account's investment in the Fund and terminate this
Agreement with respect to such subaccount; provided,
however, that such withdrawal and termination will be
limited to the extent required by the foregoing
irreconcilable material conflict as determined by a
majority of the disinterested Trustees. 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
<PAGE>
PAGE 13
notice to the Company that this provision is being
implemented. Until the end of such six-month period the
Distributor 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. For purposes of Sections 7.3 through 7.6 of this
Agreement, a majority of the disinterested Trustees
will determine whether any proposed action adequately
remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new
funding medium for the Contracts. The Company will not
be required to establish a new funding medium for the
Contracts if an offer to do so has been declined by
vote of a majority of contractowners affected by the
irreconcilable material conflict.
7.7. The Company will at least annually submit to the
Trustees such reports, materials or data as the
Trustees may reasonably request so that they may fully
carry out the duties imposed upon them 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 Trustees.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T)
are amended, or Rule 6e-3 is adopted, to provide
exemptive relief from any provision of the 1940 Act or
the rules promulgated thereunder with respect to mixed
or shared funding (as defined in the Mixed and Shared
Funding Exemptive Order) on terms and conditions
materially different from those contained in the Mixed
and Shared Funding Exemptive Order, then: (a) the Fund
and/or the Participating Insurance Companies, as
appropriate, will take such steps as may be necessary
to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are
applicable; and (b) Sections 3.4, 3.5, 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.
<PAGE>
PAGE 14
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold
harmless the Fund, the Distributor, and each
person, if any, who controls or is associated
with the Fund or the Distributor within the
meaning of such terms under the federal
securities laws and any director, trustee,
officer, partner, employee or agent of the
foregoing (collectively, the "Indemnified
Parties" for purposes of this Section 8.1 )
against any and all losses, claims, expenses,
damages, liabilities (including amounts paid
in settlement with the written consent of the
Company which consent may not be unreasonably
withheld) or litigation (including reasonable
legal and other expenses) to which the
Indemnified Parties may become subject under
any statute, regulation, at common law or
otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions
in respect thereof) or settlements:
(1) arise out of or are based upon any untrue
statements or alleged untrue statements of any
material fact contained in the registration
statement, prospectus or statement of
additional information for the Contracts or
contained in the Contracts or sales literature
or other promotional material for the Contracts
(or any amendment or supplement to any of the
foregoing), or arise out of or are based upon
the omission or the alleged omission to state
therein a material fact required to be stated
or necessary to make such statements not
misleading in light of the circumstances in
which they were made; provided that this
agreement to indemnify will not apply as to any
Indemnified Party if such statement or omission
or such alleged statement or omission was made
in reliance upon and in conformity with
information furnished to the Company by or on
behalf of the Distributor or the Fund for use
in the registration statement, prospectus or
statement of additional information for the
Contracts or in the Contracts or sales
literature (or any amendment or supplement) or
otherwise for use in connection with the sale
of the Contracts or Fund shares; or
<PAGE>
PAGE 15
(2) arise out of or as a result of statements
or representations by or on behalf of the
Company (other than statements or
representations contained in the Fund
registration statement, prospectus, statement
of additional information or sales literature
or other promotional material of the Fund (or
any amendment or supplement) not supplied by
the Company or persons under control of the
Company), or wrongful conduct of the Company or
persons under its control, with respect to the
sale or distribution of the Contracts or Fund
shares; or
(3)arise out of any untrue statement or alleged
untrue statement of a material fact contained
in the Fund registration statement, prospectus,
statement of additional information or sales
literature or other promotional material of the
Fund (or amendment or supplement) or the
omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make such statements not
misleading in light of the circumstances in
which they were made, if such a statement or
omission was made in reliance upon and in
conformity with information furnished to the
Fund or the Distributor by or on behalf of the
Company or persons under its control; or
(4) 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 the loss, claim,
damage, liability or litigation for which
indemnification is sought is due to the
willful misfeasance, bad faith, or gross
negligence in the performance of such party's
duties under this Agreement, or by reason of
such party's reckless disregard of its
obligations or duties under this Agreement by
such party.
(c) An Indemnified Party promptly will notify the
Company of the commencement of any litigation,
proceedings, complaints or actions by
regulatory authorities against him, her or it
in connection with the issuance or sale of the
Fund shares or the Contracts or the operation
of the Fund.
<PAGE>
PAGE 16
8.2. Indemnification By The Distributor
(a) The Distributor agrees to indemnify and hold
harmless the Company and each person, if any,
who controls or is associated with the
Company within the meaning of such terms
under the federal securities laws and any
director, trustee, officer, partner, employee
or agent of the foregoing (collectively, the
"Indemnified Parties" for purposes of this
Section 8.2) against any and all losses,
claims, expenses, damages, liabilities
(including amounts paid in settlement with
the written consent of the Distributor which
consent may not be unreasonably withheld) or
litigation (including reasonable legal and
other expenses) to which the Indemnified
Parties may become subject under any statute,
regulation, at common law or otherwise,
insofar as such losses, claims, damages,
liabilities or expenses (or actions in
respect thereof) or settlements:
(1) arise out of or are based upon any untrue
statements or alleged untrue statements of
any material fact contained in the 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 Distributor or Fund by or on
behalf of the Company for use in the 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 the Fund (or any amendment or supplement)
not supplied by the Distributor or the Fund
or persons under the control of the
Distributor or the Fund respectively) or
<PAGE>
PAGE 17
wrongful conduct of the Distributor or persons
under the control of the Distributor, with
respect to the sale or distribution of the
Contracts or Fund shares; or
(3) arise out of any untrue statement or alleged
untrue statement of a material fact contained
in a registration statement, prospectus,
statement of additional information or sales
literature or other promotional material
covering the Contracts (or any amendment or
supplement thereto), or the omission or
alleged omission to state therein a material
fact required to be stated or necessary to
make such statement or statements not
misleading in light of the circumstances in
which they were made, if such statement or
omission was made in reliance upon and in
conformity with information furnished to the
Company by or on behalf of the Distributor or
persons under the control of the Distributor;
or
(4) arise out of or result from any material
breach of any representation and/or warranty
made by the Distributor in this Agreement or
arise out of or result from any other
material breach of this Agreement by the
Distributor (including a failure, whether
unintentional or in good faith or otherwise,
to comply with the diversification
requirements and procedures related thereto
specified in Article VI of this Agreement);
or
(5) arise out of or result from any failure to
supply timely and accurate net asset value
information related to the Fund, as
contemplated by Article I, which failure is
the result of gross negligence or willful
misconduct of the Distributor or its
affiliates (it being agreed that neither the
Distributor or such affiliates assume
responsibility for the timing or accuracy of
prices supplied by independent third parties,
such as pricing services and market makers);
except to the extent provided in Sections
8.2(b) and 8.4 hereof.
(b) No party will be entitled to indemnification
under Section 8.2(a) if the loss, claim,
damage, liability or litigation for which
indemnification is sought is due to the
willful misfeasance, bad faith, or gross
negligence in the performance of such party's
duties under this Agreement, or by reason of
such party's reckless disregard of its
obligations or duties under this Agreement by
such party.
<PAGE>
PAGE 18
(c) The Indemnified Parties will promptly notify
the Distributor and the Fund of the
commencement of any litigation, proceedings,
complaints or actions by regulatory authorities
against them in connection with the issuance or
sale of the Contracts or the operation of the
Account.
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, trustee, officer, partner, 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 which consent
may not be unreasonably withheld) or
litigation (including reasonable legal and
other expenses) to which the Indemnified
Parties may become subject under any statute,
regulation, at common law or otherwise,
insofar as such losses, claims, damages,
liabilities or expenses (or actions in
respect thereof or settlements, are related
to the operations of the Fund and:
(1) arise out of or based upon any untrue
statement or alleged untrue statement of any
material fact contained in the registration
statement, prospectus or statement of
additional information for the Fund (or any
amendment or supplement to any of the
foregoing), or arise out of or are based upon
the omission or the alleged omission to state
therein a material fact required to be stated
therein or necessary to make the statements
therein not misleading in light of the
circumstances in which they were made, provided
that this agreement to indemnify shall not
apply as to any Indemnified Party if such
statement or omission or such alleged statement
or omission was made in reliance upon and in
conformity with information furnished to the
Distributor or Fund by or on behalf of the
Company for use in the registration statement,
prospectus, or statement of additional
information for the Fund (or any amendment or
supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares;
or (2) arise out of or result from any material
breach of any representation and/or warranty
made by the Fund in this Agreement or arise out
of or
<PAGE>
PAGE 19
result from any other material breach of this
Agreement by the Fund;
except to the extent provided in Sections
8.3(b) and 8.4 hereof.
(b) No party will be entitled to indemnification
under Section 8.3(a) if the loss, claim,
damage, liability or litigation for which
indemnification is sought 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
by such party.
(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 will have been served upon such
Indemnified Party (or after such party will have received
notice of such service on any designated agent), but failure
to notify the Indemnifying Party of any such claim will not
relieve the Indemnifying Party from any liability which it may
have to the Indemnified Party against whom such action is
brought otherwise than on account of the indemnification
provision of this Article 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
<PAGE>
PAGE 20
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 (such consent may not be unreasonably withheld) 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. The
indemnification provisions contained in this Article VIII will
survive any termination of this Agreement.
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 Minnesota
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
exemptionsfrom those statutes, rules and regulations as
the SEC may grant (including, but not limited to, the
Mixed and Shared Funding Exemptive Order) and the terms
hereof will be interpreted and construed in accordance
therewith.
ARTICLE X. Termination
10.1. This Agreement will terminate:
(a) at the option of any party, with or without
cause, with respect to some or all of the
Designated Portfolios, upon six (6) month's
advance written notice to the other parties or,
if later, upon receipt of any required
exemptive relief or orders from the SEC,
<PAGE>
PAGE 21
unless otherwise agreed in a separate written
agreement among the parties; or
(b) at the option of the Company, upon receipt of
the Company's written notice by the other
parties, with respect to any Designated
Portfolio if shares of the Designated Portfolio
are not reasonably available to meet the
requirements of the Contracts as determined in
good faith by the Company; or
(c) at the option of the Company, upon receipt of
the Company's written notice by the other
parties, with respect to any Designated
Portfolio in the event any of the Designated
Portfolio's shares are not registered, issued
or sold in accordance with applicable state
and/or federal law or such law precludes the
use of such shares as the underlying
investment media of the Contracts issued or
to be issued by Company; or
(d) at the option of the Fund or the Distributor,
upon receipt of the Fund's or the
Distributor's written notice by the other
parties, upon institution of formal
proceedings against the Company by the NASD,
the SEC, the insurance commission of any
state or any other regulatory body, provided
that the Fund or the Distributor determines
in its sole judgment, exercised in good
faith, that any such proceeding would have a
material adverse effect on the Company's
ability to perform its obligations under this
Agreement; or
(e) at the option of the Company, upon receipt of
the Company's written notice by the other
parties, upon institution of formal
proceedings against the Fund or the
Distributor by the NASD, the SEC, or any
state securities or insurance department or
any other regulatory body, provided that the
Company determines in its sole judgment,
exercised in good faith, that any such
proceeding would have a material adverse
effect on the Fund's or the Distributor's
ability to perform its obligations under this
Agreement; or
(f) at the option of the Company, upon receipt of
the Company's written notice by the other
parties, if the Fund ceases to qualify as a
Regulated Investment
<PAGE>
PAGE 22
Company under Subchapter M of the Internal
Revenue Code, or under any successor or similar
provision, or if the Company reasonably and in
good faith believes that the Fund may fail to
so qualify; or
(g) at the option of the Company, upon receipt of
the Company's written notice by the other
parties, with respect to any Designated
Portfolio if the Fund fails to meet the
diversification requirements specified in
Article VI 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
Distributor 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 Distributor,
if the Fund or Distributor 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
Distributor, 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 contractowners having
an interest in the Account (or any
subaccount) to substitute the shares of
another investment company for the
corresponding Designated Portfolio shares of
the Fund in accordance with the terms of the
Contracts for which those Designated
<PAGE>
PAGE 23
Portfolio shares had been selected to serve as
the underlying investment media. The Company
will give sixty (60) days' prior written notice
to the Fund of the date of any proposed vote or
other action taken to replace the Fund's
shares; or
(l) at the option of the Company or the Fund upon
a determination by a majority of the
Trustees, or a majority of the disinterested
members, that an irreconcilable material
conflict exists among the interests of: (1)
all contractowners of variable insurance
products of all separate accounts; or (2) the
interests of the Participating Insurance
Companies investing in the Fund as set forth
in Article 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; or
(n) with respect to any Designated Portfolio, upon
sixty (60) days' advance written notice from
the Distributor to the Company, upon a decision
by the Distributor or the Fund to cease
offering shares of the Designated Portfolio for
sale; or
(o) at the option of the Distributor or the Fund,
upon sixty (60) days' prior written notice to
the Company, if the Company delivers the notice
contemplated by Section 2.4.
10.2. Notice Requirement
(a) No termination of this Agreement will be
effective unless and until the party
terminating this Agreement gives prior written
notice to all other parties of its intent to
terminate, which notice will set forth the
basis for the termination.
(b) In the event that any termination of this
Agreement is based upon the provisions of
Article VII, such prior written notice will be
given in advance of the effective date of
termination as required by such provisions.
<PAGE>
PAGE 24
10.3. Effect of Termination
Notwithstanding any termination of this Agreement, the
Fund 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 Portfolios (as in effect on such
date), redeem investments in the Portfolios and/or
invest in the Portfolios upon the making of additional
purchase payments under the Existing Contracts to the
same extent as if this Agreement had not terminated.
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
11.1. 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.
IDS Tower 10
Minneapolis, MN 55440-0010
Attention: Mr. Wendell Halvorson
<PAGE>
PAGE 25
With a simultaneous copy to:
IDS Life Insurance Company of New York
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
Attention: Ms. Mary Ellyn Minenko
Counsel
If to the Fund:
One Post Office Square
Boston, MA 02109
Attention: Mr. John R. Verani
If to the Distributor:
One Post Office Square
Boston, MA 02109
Attention: General Counsel
ARTICLE XII. Miscellaneous
12.1. A copy of the Agreement and Declaration of Trust of the
Fund is on file with the Secretary of State of the
Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the
Trustees of the Fund as Trustees and not individually
and that the obligations of or arising out of this
instrument, including without limitations Article VII
are not binding upon any of the Trustees or
shareholders individually but binding only upon the
assets and property of the Fund.
12.2. The Fund and the Distributor acknowledge that the
identities of the customers of the Company or any of
its affiliates (collectively the "Protected Parties"
for purposes of this Section 12.2), information
maintained regarding those customers, and all computer
programs and procedures or other information developed
or used by the Protected Parties or any of their
employees or agents with respect to such customers are
the valuable property of the Protected Parties. The
Fund and the Distributor agree that if they come into
possession of any list or compilation of the identities
of or other information about the Protected Parties'
customers, or any other confidential information or
property of the Protected Parties, other than such
information as may be independently developed or
compiled by the Fund or the Distributor from
information supplied to them by the Protected Parties'
customers who also maintain accounts directly with the
Fund or the Distributor, the Fund and the Distributor
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
the Company's prior written consent; or (b) as required
by law or judicial process. The Fund and the
Distributor acknowledge that any breach of the
<PAGE>
PAGE 26
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. Each party to this Agreement will cooperate with each
other party and all appropriate governmental
authorities (including without limitation the SEC, the
NASD and state insurance regulators) and will permit
each other and such authorities reasonable access to
its books and records in connection with any
investigation or inquiry relating to this Agreement or
the transactions contemplated hereby. The Fund agrees
that the Company will have the right to inspect, audit
and copy all records pertaining to the performance of
services under this Agreement pursuant to the
requirements of any state insurance department.
12.8. Each party represents that the execution and delivery
of this Agreement and the consummation of the
transactions contemplated herein have been duly
authorized by all necessary corporate or board action,
as applicable, by such party and when so executed and
delivered this Agreement will be the valid and binding
obligation of such party enforceable in accordance with
its terms.
12.9. The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating
to the Contracts, the Accounts or the Designated Portfolios of
the Fund or other applicable terms of this Agreement.
<PAGE>
PAGE 27
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
SEAL
By: /s/ Richard W. Kling
Name: Richard W. Kling
Chairman of the Board
Title: and President
ATTEST:
By: /s/ William A. Stoltzmann
Name: William A. Stoltzmann
Title: Counsel
PUTNAM CAPITAL MANAGER TRUST
SEAL
By: /s/ John R. Verani
Name: John R. Verani
Title: Vice President
PUTNAM MUTUAL FUNDS CORP.
SEAL
By: /s/ Jeffrey Miller
Name: Jeffrey Miller
Title: Managing Director
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Schedule 1
PARTICIPATION AGREEMENT
By and Among
IDS LIFE INSURANCE COMPANY OF NEW YORK
And
PUTNAM CAPITAL MANAGER TRUST
And
PUTNAM MUTUAL FUNDS CORP.
The following separate accounts of IDS Life Insurance Company of New York are
permitted in accordance with the provisions of this Agreement to invest in
Designated Portfolios of the Fund shown in Schedule 2:
IDS Life of New York Flexible Portfolio Annuity Account established
April 17, 1996.
IDS Life of New York Account 8 established September 12, 1985.
October 7, 1996
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Schedule 2
PARTICIPATION AGREEMENT
By and Among
IDS LIFE INSURANCE COMPANY OF NEW YORK
And
PUTNAM CAPITAL MANAGER TRUST
And
PUTNAM MUTUAL FUNDS CORP.
The Separate Account(s) shown on Schedule 1 may invest in the following
Designated Portfolios of the Putnam Capital Manager
Trust:
PCM New Opportunities Fund
October 7, 1996
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PAGE 1
PARTICIPATION AGREEMENT
By and Among
IDS LIFE INSURANCE COMPANY OF NEW YORK
And
TEMPLETON VARIABLE PRODUCTS SERIES FUND
And
FRANKLIN TEMPLETON DISTRIBUTORS, INC.
THIS AGREEMENT, made and entered into this 7th day of October, 1996 by and among
IDS Life Insurance Company of New York organized under the laws of the State of
New York (the "Company"), on its own behalf and on behalf of each separate
account of the Company named in Schedule 1 to this Agreement, as may be amended
from time to time (each account referred to as the "Account"), Templeton
Variable Products Series Fund an open-end management investment company and
business trust organized under the laws of the State of Massachusetts (the
"Fund") and Franklin Templeton Distributors, Inc. a corporation organized under
the laws of the State of California (the "Underwriter"), the Fund's principal
underwriter.
WHEREAS, the Fund engages in business as an open-end management investment
company and was established for the purpose of serving as the investment vehicle
for separate accounts established for variable life insurance contracts and
variable annuity contracts to be offered by insurance companies that have
entered into participation agreements substantially identical 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 Fund has received an order from the Securities & Exchange
Commission (the "SEC") granting Participating Insurance Companies and their
variable annuity separate accounts and variable life insurance separate accounts
relief from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the
Investment Company Act of 1940, as amended, (the "1940 Act") and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Fund to be sold to and held by variable annuity separate accounts
and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and certain 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 Underwriter by
virtue of the receipt of such order by the SEC will be incorporated herein by
reference, and such parties agree to comply with such conditions and
undertakings to the extent applicable to each such party; and
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PAGE 2
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Company has registered or will register certain variable annuity
contracts (the "Contracts") under the 1933 Act; and
WHEREAS, the Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of the Company
under the insurance laws of the State of New York, to set aside and invest
assets attributable to the Contracts; and
WHEREAS, the Company has registered the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Portfolios named in Schedule 2, as
such schedule may be amended from time to time (the "Designated Portfolios") on
behalf of the Account to fund the Contracts, and the Fund is authorized to sell
such shares to unit investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund
and the Underwriter agree as follows:
ARTICLE I. Sale and Redemption of Fund Shares
1.1. The Fund agrees to sell to the Company those shares of
the Designated Portfolios that each Account orders,
executing such orders on a daily basis at the net asset
value next computed after receipt and acceptance by the
Fund or its designee of the order for the shares of the
Fund, as established in accordance with the provisions
of the then-current prospectus of the Fund describing
purchase procedures on those days on which the Fund
calculates its net asset value pursuant to rules of the
SEC, and the Fund shall use reasonable efforts to
calculate such net asset value on each day on which the
New York Stock Exchange is open for trading. 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 10:00 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 SEC.
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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 above. Payment will be in federal funds
transmitted by wire to the Fund.
1.3. The Fund agrees to make shares of the Designated
Portfolios available for purchase at the applicable net
asset value per share by Participating Insurance
Companies and their separate accounts on those days on
which the Fund calculates its Designated Portfolio net
asset value pursuant to rules of the SEC; provided,
however, that the Board of Trustees 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.
1.4. 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
applicable provisions of the Internal Revenue Code of
1986, as amended, (the "Internal Revenue Code"), and
regulations promulgated thereunder, the sale to which
will not impair the tax treatment currently afforded
the Contracts. No shares of any Portfolio will be sold
to the general public. The Company agrees that it will
use Fund shares only for the purpose of funding the
Contracts through the Accounts listed on Schedule 1, as
amended from time to time.
1.5. 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, and VII of this Agreement are in
effect to govern such sales. The Fund will make
available upon written request from the Company a list
of all other Participating Insurance Companies.
1.6. 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
1.6, 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 request
for redemption by 10:00 a.m. Eastern Time on the next
following Business Day. Payment will be in federal
funds transmitted by wire to the Company's account as
designated by the Company in writing from time to time,
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on the same Business Day the Fund receives notice of the
redemption order from the Company; provided the Fund receives
notice of redemption by 10:00 a.m. Eastern Time. If the Fund
receives notice of the redemption after 10:00 a.m. Eastern
Time, payment for the redeemed shares will be made on the next
following Business Day. The Fund reserves the right to delay
payment of redemption proceeds, but in no event may such
payment be delayed longer than the period permitted under
Section 22(e) of 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.
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 any Account. Purchase and redemption orders for
Fund shares will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund will furnish same day notice (by wire or
telephone, followed by written confirmation) to the
Company of the declaration of any income, dividends or
capital gain distributions payable on each Designated
Portfolio's shares. The Company hereby elects to
receive all such dividends and distributions as are
payable on the Designated Portfolio shares in the form
of additional shares of that Designated Portfolio. The
Company reserves the 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 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 6:00 p.m. Eastern Time
each business day.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts
are or will be registered under the 1933 Act and that
the Contracts will be issued and sold in compliance
with all applicable federal and state laws, including
state insurance suitability requirements. The Company
further represents and warrants that it is an insurance
company duly organized and in good standing under
applicable law and that it has legally and validly
established each Account as a separate account under
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New York law and has registered the Account as a unit
investment trust in accordance with the provisions of the 1940
Act to serve as a segregated investment account for the
Contracts, and that it will maintain such registration for so
long as any Contracts are outstanding. The Company 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 will be treated as annuity
contracts under applicable provisions of the Internal
Revenue Code, and that it will make every effort to
maintain such treatment and that it will notify the
Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have
ceased to be so treated or that they might not be so
treated in the future.
2.3. The Company represents and warrants that it will not purchase
shares of the Designated Portfolios with assets derived from
tax-qualified retirement plans except, indirectly, through
Contracts purchased in connection with such plans.
2.4. The Fund represents and warrants that Fund shares of
the Designated Portfolios sold pursuant to this
Agreement will be registered under the 1933 Act and
duly authorized for issuance in accordance with
applicable law and that the Fund is and will remain
registered under the 1940 Act for as long as such
shares of the Designated Portfolios are sold. The Fund
will amend the registration statement for its shares
under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering
of its shares. The Fund will register and qualify the
shares of the Designated Portfolios for sale in
accordance with the laws of any state only if and to
the extent deemed advisable by the Fund.
2.5. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the
Internal Revenue Code, and that it will make every
effort to maintain such qualification (under Subchapter
M or any successor or similar provision) and that it
will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so
qualify or that it might not so qualify in the future.
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2.6. The Fund represents that its investment objectives,
policies and restrictions comply with applicable state
investment laws as they may apply to the Fund. The
Fund makes no representation as to whether any aspect
of its operations (including, but not limited to, fees
and expenses and investment policies, objectives and
restrictions) complies with the insurance laws and
regulations of any state. The Fund and the Underwriter
agree that they will furnish the information required
by state insurance laws so that the Company can obtain
the authority needed to issue the Contracts in any
applicable state.
2.7. 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 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.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Massachusetts and that
it does and will comply in all material respects with
applicable provisions of the 1940 Act.
2.9. The Underwriter represents and warrants that it will
distribute the Fund shares of the Designated Portfolios in
accordance with all applicable federal and state securities
laws including, without limitation, the 1933 Act, the 1934 Act
and the 1940 Act.
2.10. The Underwriter represents and warrants that the adviser for
the Fund is 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 any applicable state and federal
securities laws.
2.11. The Fund 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
may be promulgated from time to time. The aforesaid
bond includes coverage for larceny and embezzlement and
is issued by a reputable bonding company.
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ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Fund or the Underwriter will provide the Company,
at the Company's expense, with as many copies of the
current Fund prospectus for the Designated Portfolios,
annual report, semi-annual report and other shareholder
communications, including any amendments and
supplements to any of the foregoing, as the Company may
reasonably request for distribution, at the Company's
expense, to prospective contractowners and applicants.
The Fund or the Underwriter will provide the Company,
at the Fund's expense, with as many copies of said
documents as necessary for distribution, at the
Company's expense, to existing contractowners. The
Fund will provide the copies of said documents to the
Company or to its mailing agent. The Company will
distribute such documents to existing contractowners.
If requested by the Company in lieu thereof, the Fund
will provide such documentation, including a final copy
of such documents set in type or a computer diskette 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 Fund's prospectus
and the prospectuses of other mutual funds printed
together, in which case the Fund will pay its share of
reasonable expenses directly related to the required
disclosure of information concerning the Fund.
3.2. The Fund's prospectus will state that the statement of
additional information for the Fund is available from
the Company. The Fund will provide the Company, at the
Company's expense, with as many copies of the statement
of additional information as the Company may reasonably
request for distribution, at the Company's expense, to
prospective contractowners and applicants. The Fund
will provide, at the Fund's expense, as many copies of
said statement of additional information as necessary
for distribution, at the Fund's expense, to any
existing contractowner who requests such statement or
whenever state or federal law otherwise requires that
such statement be provided. The Fund will provide the
copies of said statement of additional information to
the Company or to its mailing agent. The Company will
distribute the statement of additional information as
requested or required and will bill the Fund for the
reasonable cost of such distribution.
3.3. The Fund, at its expense, will provide the Company or its
mailing agent with copies of its proxy material in such
quantity as the Company will reasonably require for
distribution to contractowners. The Company will distribute
this proxy material to contractowners at its expense.
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3.4. The Company assumes responsibility for ensuring that
current prospectuses, annual and semi-annual reports,
shareholder communications and proxy material are
delivered to contractowners in accordance with
applicable securities laws provided the Company
receives the required information and/or documentation
from the Fund within a reasonable time to allow for
compliance with such laws.
3.5. If and to the extent required by law the Company will:
(a) solicit voting instructions from contractowners;
(b) vote the shares of the Designated Portfolios held in
the Account in accordance with instructions received
from contractowners; 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
contractowners;
so long as and to the extent that the SEC continues to
interpret the 1940 Act to require pass-through voting
privileges for variable contractowners. The Company reserves
the right to vote Fund shares held in any segregated asset
account in its own right, to the extent permitted by law.
Participating Insurance Companies will be responsible for
assuring that each of their separate accounts participating in
the Fund calculates voting privileges in a manner consistent
with all legal requirements, including the Mixed and Shared
Funding Exemptive Order.
3.6. The Fund will comply with all provisions of the 1940
Act requiring voting by shareholders, and in
particular, the Fund either will provide for annual
meetings (except insofar as the SEC may interpret
Section 16 of the 1940 Act not to require such
meetings) or, as the Fund currently intends, to comply
with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of
that Act) as well as with Sections 16(a) and, if and
when applicable, 16(b). Further, the Fund will act in
accordance with the SEC's interpretation of the
requirements of Section 16(a) with respect to periodic
elections of directors and with whatever rules the SEC
may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company will furnish, or will cause to be furnished, to
the Fund or the Underwriter, each piece of sales literature or
other promotional material in which the Fund, the Underwriter
or the adviser of the Fund is named, at least ten (10)
business days prior to
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its use. No such material will be used if the Fund or the
Underwriter reasonably objects to such use within five (5)
business days after receipt of such material.
4.2. The Company and its agents will not give any
information or make any representations or statements
on behalf of the Fund or concerning the Fund, the
Underwriter or the adviser for the Fund, in connection
with the sale of the Contracts other than the
information or representations contained in and
accurately derived from the registration statement,
prospectus or statement of additional information for
Fund shares, as such registration statement, prospectus
and statement of additional information may be amended
or supplemented from time to time, or in reports or
proxy statements for the Fund, or in published reports
for the Fund which are in the public domain or approved
by the Fund or the Underwriter for distribution, or in
sales literature or other material provided by the Fund
or by the Underwriter, except with permission of the
Fund or the Underwriter. The Fund and the Underwriter
agree to respond to any request for approval on a
prompt and timely basis. Nothing in this Section 4.2
will be construed as preventing the Company or its
employees or agents from giving advice on investment in
the Fund, subject to compliance with applicable state
and federal law.
4.3. The Fund or the Underwriter 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 Account is named, at least
ten (10) business days prior to its use. No such
material will be used if the Company reasonably objects
to such use within five (5) business days after receipt
of such material.
4.4. The Fund and the Underwriter 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 and
accurately derived from a registration statement,
prospectus or statement of additional information for
the Contracts, as such registration statement,
prospectus and statement of additional information may
be amended or supplemented from time to time, or in
published reports for each Account or the Contracts
which are in the public domain or approved by the
Company for distribution to contractowners, 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.
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4.5. The Fund will provide to the Company at least one
complete copy of all registration statements,
prospectuses, statements of additional information,
reports, proxy statements, sales literature and other
promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to
any of the above, that relate to the Fund or its
shares, contemporaneously with the filing of such
document with the SEC or the NASD.
4.6. The Company will provide to the Fund at least one
complete copy of all registration statements,
prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales
literature and other promotional materials,
applications for exemptions, requests for no action
letters, and all amendments to any of the above, that
relate to the Contracts or each Account,
contemporaneously with the filing of such document with
the SEC or the NASD.
4.7. For purposes of this Article IV, 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.
4.8. The Company agrees and acknowledges that the
Underwriter (or its affiliates) is the sole owner of
the name and mark "Franklin Templeton" and that all use
of any designation comprised in whole or part of such
name or mark under this Agreement shall inure to the
benefit of the Underwriter. Except as provided in
Section 4.1, the Company shall not use any such name or
mark on its own behalf or on behalf of the Accounts or
Contracts in any registration statement, advertisement,
sales literature or other materials relating to the
Accounts or Contracts without the prior written consent
of the Underwriter. Upon termination of this Agreement
for any reason, the Company shall cease all use of any
such name or mark as soon as reasonably practicable.
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ARTICLE V. Fees and Expenses
5.1. 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 if and in such amounts agreed to by the Fund in
writing; and (b) the Fund may pay fees to the Company
for services provided to contractowners that are not
primarily intended to result in the sale of shares of
the Designated Portfolio or of underlying contracts.
5.2. 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;
preparation and filing of the Fund's prospectus,
statement of additional information and registration
statement, proxy materials and reports; setting in type
and printing the Fund's prospectus; setting in type and
printing proxy materials and reports to contractowners
(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 all other
typesetting, printing and distribution expenses set
forth in Article III of this Agreement.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the
Contracts in such a manner as to ensure that the
Contracts will be treated as variable annuity contracts
under the Internal Revenue Code and the regulations
issued thereunder. Without limiting the scope of the
foregoing, the Fund will comply with Section 817(h) of
the Internal Revenue Code and Treasury Regulation
1.817-5, as amended from time to time, relating to the
diversification requirements for variable annuity,
endowment, or life insurance contracts and any
amendments or other modifications to such Section or
Regulation. In the event of a breach of this Article
VI by the Fund, it will take all reasonable steps: (a)
to notify the Company of such breach; and (b) to
adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Treasury
Regulation 1.817-5.
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ARTICLE VII. Potential Conflicts
7.1. The Fund Board will monitor the Fund for the existence
of any irreconcilable material conflict among the
interests of the contractowners of all separate
accounts investing in the Fund. An irreconcilable
material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar
action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision
in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a
difference in voting instructions given by
Participating Insurance Companies or by variable
annuity and variable life insurance contractowners; or
(f) a decision by an insurer to disregard the voting
instructions of contractowners. The Fund Board will
promptly inform the Company if it determines that an
irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing
conflicts of which it is aware to the Fund Board. The
Company agrees to assist the Fund Board in carrying out
its responsibilities, as delineated in the 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 contractowner
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.
7.3. If it is determined by a majority of the Fund Board, or
a majority of its disinterested directors, that an
irreconcilable material conflict exists, the Company
and other Participating Insurance Companies will, at
their expense and to the extent reasonably practicable
(as determined by a majority of the disinterested
directors), take whatever steps are necessary to remedy
or eliminate the irreconcilable material conflict, up
to and including: (a) withdrawing the assets allocable
to some or all of the Accounts from the Fund or any
Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to)
another Portfolio of the Fund, or submitting the
question whether such segregation should be implemented
to a
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vote of all affected contractowners and, as appropriate,
segregating the assets of any appropriate group (i.e.,
variable annuity contractowners or variable life insurance
contractowners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or
offering to the affected contractowners the option of making
such a change; and (b) establishing a new registered
management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of
a decision by the Company to disregard contractowner
voting instructions, and such disregard of voting
instructions could conflict with the majority of
contractowner voting instructions, and the Company's
judgment represents a minority position or would
preclude a majority vote, the Company may be required,
at the Fund's election, to withdraw the affected
subaccount of the Account's investment in the Fund and
terminate this Agreement with respect to such
subaccount; provided, however, that such withdrawal and
termination will be limited to the extent required by
the foregoing irreconcilable material conflict as
determined by a majority of the disinterested directors
of the Fund Board. No charge or penalty will be
imposed as a result of such withdrawal. Any such
withdrawal and termination must take place within six
(6) months after the Fund gives written notice to the
Company that this provision is being implemented.
Until the end of such six-month period the Underwriter
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.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision
applicable to the Company conflicts with the majority
of other state insurance regulators, then the Company
will withdraw the affected subaccount of the Account's
investment in the Fund and terminate this Agreement
with respect to such subaccount; provided, however,
that such withdrawal and termination will be limited to
the extent required by the foregoing irreconcilable
material conflict as determined by a majority of the
disinterested directors of the Fund Board. No charge
or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination must
take place within six (6) months after the Fund gives
written notice to the Company that this provision is
being implemented. Until the end of such six-month
period the 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.
<PAGE>
PAGE 14
7.6. For purposes of Sections 7.3 through 7.6 of this
Agreement, a majority of the disinterested members of
the Fund Board will determine whether any proposed
action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to
establish a new funding medium for the Contracts. The
Company will not be required by Section 7.3 to
establish a new funding medium for the Contracts if an
offer to do so has been declined by vote of a majority
of contractowners affected by the irreconcilable
material conflict.
7.7. The Company will at least annually submit to the Fund
Board such reports, materials or data as the Fund Board
may reasonably request so that the Fund Board may fully
carry out the duties imposed upon it as delineated in
the Mixed and Shared Funding Exemptive Order, and said
reports, materials and data will be submitted more
frequently if deemed appropriate by the Fund Board.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T)
are amended, or Rule 6e-3 is adopted, to provide
exemptive relief from any provision of the 1940 Act or
the rules promulgated thereunder with respect to mixed
or shared funding (as defined in the Mixed and Shared
Funding Exemptive Order) on terms and conditions
materially different from those contained in the Mixed
and Shared Funding Exemptive Order, then: (a) the Fund
and/or the Participating Insurance Companies, as
appropriate, will take such steps as may be necessary
to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are
applicable; and (b) Sections 3.5, 3.6, 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 Underwriter, and each person, if any, who
controls or is associated with the Fund or the
Underwriter within the meaning of such terms under the
federal securities laws and any director, trustee,
officer, partner, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes
of this Section 8.1) against any and all losses,
claims, expenses, damages, liabilities (including
amounts paid in settlement with the written consent of
the Company) or litigation (including reasonable legal
and other expenses), to which the Indemnified Parties
may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
<PAGE>
PAGE 15
(1) arise out of or are based upon any untrue
statements or alleged untrue statements of any
material fact contained in the registration
statement, prospectus or statement of additional
information for the Contracts or contained in the
Contracts or sales literature or other promotional
material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged
omission to state therein a material fact required
to be stated or necessary to make such statements
not misleading in light of the circumstances in
which they were made; provided that this agreement
to indemnify will not apply as to any Indemnified
Party if such statement or omission or such
alleged statement or omission was made in reliance
upon and in conformity with information furnished
to the Company by or on behalf of the Underwriter
or the Fund for use in the registration statement,
prospectus or statement of additional information
for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or
otherwise for use in connection with the sale of
the Contracts or Fund shares; or
(2) arise out of or as a result of statements or
representations by or on behalf of the Company
(other than statements or representations
contained in the Fund registration statement,
prospectus, statement of additional information or
sales literature or other promotional material of
the Fund (or any amendment or supplement) not
supplied by the Company or persons under its
control) or wrongful conduct of the Company or
persons under its control, with respect to the
sale or distribution of the Contracts or Fund
shares; or
(3) arise out of any untrue statement or alleged
untrue statement of a material fact contained in
the Fund registration statement, prospectus,
statement of additional information or sales
literature or other promotional material of the
Fund (or amendment or supplement) or the omission
or alleged omission to state therein a material
fact required to be stated therein or necessary to
make such statements not misleading in light of
the circumstances in which they were made, if such
a statement or omission was made in reliance upon
and in conformity with information furnished to
the Fund 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
<PAGE>
PAGE 16
(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 litigation is due to the willful misfeasance, bad
faith, or gross negligence in the performance of such
party's duties under this Agreement, or by reason of
such party's reckless disregard of its obligations or
duties under this Agreement by the party seeking
indemnification.
(c) The Indemnified Parties promptly will notify the Company of
the commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Fund shares or the Contracts
or the operation of the Fund.
8.2. Indemnification By The Underwriter
(a) The Underwriter agrees to indemnify and hold harmless
the Company and each person, if any, who controls or is
associated with the Company within the meaning of such
terms under the federal securities laws and any
director, trustee, officer, partner, employee or agent
of the foregoing (collectively, the "Indemnified
Parties" for purposes of this Section 8.2) against any
and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written
consent of the Underwriter) or litigation (including
reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or
settlements:
(1) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in the registration
statement, prospectus or statement of additional
information for the Fund or sales literature or
other promotional material of the Fund (or any
amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or
the alleged omission to state therein a material
fact required to be stated or necessary to make
such statements not misleading in light of the
circumstances in which they were made; provided
that this agreement to indemnify will not apply as
<PAGE>
PAGE 17
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 Underwriter or Fund by or on behalf of
the Company for use in the registration statement,
prospectus or statement of additional information for
the Fund or in sales literature of the Fund (or any
amendment or supplement thereto) or 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) not supplied
by the Underwriter or the Fund or persons under
the control of the Underwriter or the Fund
respectively) or wrongful conduct of the
Underwriter or the Fund or persons under the
control of the Underwriter or the Fund
respectively, with respect to the sale or
distribution of the Contracts or Fund shares; or
(3) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, statement of
additional information or sales literature or
other promotional material covering the Contracts
(or any amendment or supplement thereto), or the
omission or alleged omission to state therein a
material fact required to be stated or necessary
to make such statement or statements not
misleading in light of the circumstances in which
they were made, if such statement or omission was
made in reliance upon and in conformity with
information furnished to the Company by or on
behalf of the Underwriter or the Fund or persons
under the control of the Underwriter or the Fund;
or
(4) arise as a result of any failure by the Fund or
the Underwriter to provide the services and
furnish the materials under the terms of this
Agreement (including a failure, whether
unintentional or in good faith or otherwise, to
comply with the diversification requirements and
procedures related thereto specified in Article VI
of this Agreement); or
<PAGE>
PAGE 18
(5) arise out of or result from any material breach of
any representation and/or warranty made by the
Underwriter or the Fund in this Agreement, or
arise out of or result from any other material
breach of this Agreement by the Underwriter or the
Fund;
except to the extent provided in Sections 8.2(b)
and 8.4 hereof.
(b) No party will be entitled to indemnification under
Section 8.2(a) if such loss, claim, damage, liability
or litigation is due to the willful misfeasance, bad
faith, or gross negligence in the performance of such
party's duties under this Agreement, or by reason of
such party's reckless disregard of its obligations or
duties under this Agreement by the party seeking
indemnification.
(c) The Indemnified Parties will promptly notify the Underwriter
and the Fund of the commencement of any litigation,
proceedings, complaints or actions by regulatory authorities
against them in connection with the issuance or sale of the
Contracts or the operation of the Account.
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, trustee, officer, partner, 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 litigation (including
reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or
settlements, 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 (including a
failure, whether unintentional or in good faith or
otherwise, to comply with the diversification and
other qualification requirements specified in
Article VI); 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; or
<PAGE>
PAGE 19
(3) arise out of or result from the incorrect or
untimely calculation or reporting of the 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.
(b) No party will be entitled to indemnification under
Section 8.3(a) if such loss, claim, damage, liability
or litigation is due to the willful misfeasance, bad
faith, or gross negligence in the performance of such
party's duties under this Agreement, or by reason of
such party's reckless disregard of its obligations and
duties under this Agreement by the party seeking
indemnification.
(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.
(d) It is understood and expressly stipulated that neither the
holders of shares of the Fund nor any Fund Board member,
officer, agent or employee of the Fund shall be personally
liable hereunder, nor shall any resort be had to other private
property for the satisfaction of any claim or obligation
hereunder, but the Fund only shall be liable.
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 will have been served upon
such Indemnified Party (or after such party will have
received notice of such service on any designated
agent), but failure to notify the Indemnifying Party of
any such claim will not relieve the Indemnifying Party
from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise
than on account of the indemnification provision of
this Article 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
<PAGE>
PAGE 20
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. The indemnification provisions contained
in this Article VIII will survive any termination of
this Agreement.
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 Minnesota.
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 SEC may grant (including, but not limited to,
the Mixed and Shared Funding Exemptive Order) and the
terms hereof will be interpreted and construed in
accordance therewith.
<PAGE>
PAGE 21
ARTICLE X. Termination
10.1. This Agreement will terminate:
(a) at the option of any party, with or without cause, with
respect to some or all of the Designated Portfolios, upon
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 receipt of the Company's
written notice by the other parties, with respect to any
Designated Portfolio if shares of the Designated Portfolio are
not reasonably available to meet the requirements of the
Contracts as determined in good faith by the Company; or
(c) at the option of the Company, upon receipt of the
Company's written notice by the other parties, with
respect to any Designated Portfolio in the event any of
the Designated Portfolio's shares are not registered,
issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of
such shares as the underlying investment media of the
Contracts issued or to be issued by Company; or
(d) at the option of the Fund, upon receipt of the Fund's
written notice by the other parties, upon institution
of formal proceedings against the Company by the NASD,
the SEC, the insurance commission of any state or any
other regulatory body regarding the Company's duties
under this Agreement or related to the sale of the
Contracts, the administration of the Contracts, the
operation of the Account, or the purchase of the Fund
shares, provided that the Fund determines in its sole
judgment, exercised in good faith, that any such
proceeding would have a material adverse effect on the
Company's ability to perform its obligations under this
Agreement; or
(e) at the option of the Company, upon receipt of the
Company's written notice by the other parties, upon
institution of formal proceedings against the Fund or
the Underwriter by the NASD, the SEC, or any state
securities or insurance department or any other
regulatory body, regarding the Fund's or the
Underwriter's duties under this Agreement or related to
the sale of Fund shares or the administration of the
Fund, provided that the Company determines in its sole
judgment, exercised in good faith, that any such
proceeding would have a material adverse effect on the
Fund's or the Underwriter's ability to perform its
obligations under this Agreement; or
<PAGE>
PAGE 22
(f) at the option of the Company, upon receipt of the Company's
written notice by the other parties, if the Fund ceases to
qualify as a Regulated Investment Company under Subchapter M
of the Internal Revenue Code, or under any successor or
similar provision, or if the Company reasonably and in good
faith believes that the Fund may fail to so qualify; or
(g) at the option of the Company, upon receipt of the Company's
written notice by the other parties, with respect to any
Designated Portfolio if the Fund fails to meet the
diversification requirements specified in Article VI 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 Underwriter has suffered a material adverse change in its
business, operations or financial condition since the date of
this Agreement or
<PAGE>
PAGE 23
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 Underwriter, if the
Fund or Underwriter 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 Underwriter, 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 contractowners having an interest in the Account
(or any subaccount) to substitute the shares of another
investment company for the corresponding Designated
Portfolio shares of the Fund in accordance with the
terms of the Contracts for which those Designated
Portfolio shares had been selected to serve as the
underlying investment media. The Company will give
sixty (60) days' prior written notice to the Fund of
the date of any proposed vote or other action taken to
replace the Fund's shares; or
(l) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a
majority of the disinterested Fund Board members, that
an irreconcilable material conflict exists among the
interests of: (1) all contractowners of variable
insurance products of all separate accounts; or (2) the
interests of the Participating Insurance Companies
investing in the Fund as set forth in Article 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
(a) No termination of this Agreement will be effective unless and
until the party terminating this Agreement gives prior written
notice to all other parties of its intent to terminate, which
notice will set forth the basis for the termination.
<PAGE>
PAGE 24
(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 and the Underwriter will, at the option of the
Company, continue to make available additional shares
of the Fund pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts.").
Specifically, without limitation, the owners of the
Existing Contracts will be permitted to reallocate
investments in the Portfolios (as in effect on such
date), redeem investments in the Portfolios and/or
invest in the Portfolios upon the making of additional
purchase payments under the Existing Contracts. The
parties agree that this Section 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
11.1 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.
IDS Tower 10
Minneapolis, MN 55440-0010
Attn: Wendell Halvorson
<PAGE>
PAGE 25
With a simultaneous copy to:
IDS Life Insurance Company of New York
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
Attn: Mary Ellyn Minenko
Counsel
If to the Fund or the Underwriter:
Templeton Variable Products Series Fund
or Franklin Templeton Distributors, Inc.
700 Central Avenue
St. Petersburg, FL 33701
Attn: Ellen F. Stoutamire
Associate Counsel
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, trustees, officers,
partners, employees, agents or shareholders assume any
personal liability for obligations entered into on behalf of
the Fund.
12.2. The Fund and the Underwriter acknowledge that the
identities of the customers of the Company or any of
its affiliates (collectively the "Protected Parties"
for purposes of this Section 12.2), information
maintained regarding those customers, and 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. The Fund
and the Underwriter agree that if they come into
possession of any list or compilation of the identities
of or other information about the Protected Parties'
customers, or any other information or property of the
Protected Parties, other than such information as may
be independently developed or compiled by the Fund or
the Underwriter from information supplied to them by
the Protected Parties' customers who also maintain
accounts directly with the Fund or the Underwriter, the
Fund and the Underwriter 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 the Company's prior
written consent; or (b) as required by law or judicial
process. The Fund and the Underwriter 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
<PAGE>
PAGE 26
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. Each party to this Agreement will cooperate with each
other party and all appropriate governmental
authorities (including without limitation the SEC, the
NASD and state insurance regulators) and will permit
each other and such authorities reasonable access to
its books and records in connection with any
investigation or inquiry relating to this Agreement or
the transactions contemplated hereby. The Fund agrees
that the Company will have the right to inspect, audit
and copy all records pertaining to the performance of
services under this Agreement pursuant to the
requirements of any state insurance department.
12.8. Each party represents that the execution and delivery
of this Agreement and the consummation of the
transactions contemplated herein have been duly
authorized by all necessary corporate or board action,
as applicable, by such party and when so executed and
delivered this Agreement will be the valid and binding
obligation of such party enforceable in accordance with
its terms.
12.9. The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating
to the Contracts, the Accounts or the Designated Portfolios of
the Fund or other applicable terms of this Agreement.
<PAGE>
PAGE 27
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
SEAL By: /s/ Richard W. Kling
Name: Richard W. Kling
Title: Chairman of the Board and President
ATTEST
By: /s/ William A. Stoltzman
Name: William A. Stoltzman
Title: Counsel
TEMPLETON VARIABLE PRODUCTS SERIES FUND
SEAL By: /s/ Charles E. Johnson
Name: Charles E. Johnson
Title: President
FRANKLIN TEMPLETON DISTRIBUTORS, INC.
SEAL By: /s/ Charles E. Johnson
Name: Charles E. Johnson
Title: President
<PAGE>
PAGE 28
Schedule 1
PARTICIPATION AGREEMENT
By and Among
IDS LIFE INSURANCE COMPANY OF NEW YORK
And
TEMPLETON VARIABLE PRODUCTS SERIES FUND
And
FRANKLIN TEMPLETON DISTRIBUTORS, INC.
The following separate accounts of IDS Life Insurance Company of New York are
permitted in accordance with the provisions of this Agreement to invest in
Designated Portfolios of the Fund shown in Schedule 2:
IDS Life of New York Flexible Portfolio Annuity
Account,
established April 17, 1996
_____________, 1996
<PAGE>
PAGE 29
Schedule 2
PARTICIPATION AGREEMENT
By and Among
IDS LIFE INSURANCE COMPANY OF NEW YORK
And
TEMPLETON VARIABLE PRODUCTS SERIES FUND
And
FRANKLIN TEMPLETON DISTRIBUTORS, INC.
The Separate Account(s) shown on Schedule 1 may invest in the following
Designated Portfolios of the Templeton Variable Products
Series Fund:
Templeton Developing Markets Fund
October 7, 1996
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PARTICIPATION AGREEMENT
By and Among
IDS LIFE INSURANCE COMPANY OF NEW YORK
And
WARBURG PINCUS TRUST
And
WARBURG, PINCUS COUNSELLORS, INC.
And
COUNSELLORS SECURITIES INC.
THIS AGREEMENT, made and entered into this 7th day of October, 1996 by and among
IDS Life Insurance Company of New York, organized under the laws of the State of
New York (the "Company"), on its own behalf and on behalf of each separate
account of the Company named in Schedule 1 to this Agreement, as may be amended
from time to time (each account referred to as the "Account"), Warburg Pincus
Trust, an open-end management investment company and business trust organized
under the laws of the Commonwealth of Massachusetts (the "Fund"); Warburg,
Pincus Counsellors, Inc. a corporation organized under the laws of the State of
Delaware (the "Adviser"); and Counsellors Securities Inc., a corporation
organized under the laws of the State of New York ("CSI").
WHEREAS, the Fund engages in business as an open-end management investment
company and was established for the purpose of serving as the investment vehicle
for separate accounts established for variable life insurance contracts and
variable annuity contracts to be offered by insurance companies that have
entered into participation agreements similar to this Agreement (the
"Participating Insurance Companies"), and
WHEREAS, beneficial interests in the Fund are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (the "Portfolios"); and
WHEREAS, the Fund has received an order from the Securities and Exchange
Commission (the "SEC") granting Participating Insurance Companies and variable
annuity separate accounts and variable life insurance separate accounts relief
from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity separate accounts and variable life
insurance separate accounts of both affiliated and unaffiliated Participating
Insurance Companies and qualified pension and retirement plans outside of the
separate account context (the "Mixed and Shared Funding Exemptive Order"). The
parties to this Agreement agree that the conditions or undertakings specified in
the Mixed and Shared Funding Exemptive Order and that may be imposed on the
Company, the Fund, the Adviser and/or CSI by virtue of the receipt of such order
by the SEC will be incorporated herein by reference, and such parties agree to
comply with such conditions and undertakings to the extent applicable to each
such party; and
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WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Company has registered or will register certain variable annuity
contracts (the "Contracts") under the 1933 Act; and
WHEREAS, the Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of the Company
under the insurance laws of the State of New York, to set aside and invest
assets attributable to the Contracts; and
WHEREAS, the Company has registered the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, CSI, the Fund's distributor, is registered as a broker-dealer with the
SEC under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
is a member in good standing of the National Association of Securities Dealers,
Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Portfolios named in Schedule 2, as
such schedule may be amended from time to time (the "Designated Portfolios") on
behalf of the Account to fund the Contracts, and the Fund is authorized to sell
such shares to unit investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Adviser and CSI 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 that each Account orders, executing
such orders on a daily basis at the net asset value next
computed after receipt and acceptance by the Fund or its
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 10:00 a.m. Eastern Time on the next following
business day ("T+1"). "Business Day" will mean any day on
which the New York Stock Exchange, Inc. (the "NYSE") is open
for trading and on which the Fund calculates its net asset
value pursuant to the rules of the SEC.
1.2. The Company will pay for Fund shares on T+1 in each case that
an order to purchase Fund shares is made in accordance with
Section 1.1 above. Payment will be in federal funds
transmitted by wire. This wire transfer will be initiated by
12:00 p.m. Eastern Time.
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1.3. The Fund agrees to make shares of the Designated Portfolios
available for purchase at the applicable net asset value per
share by Participating Insurance Companies and their separate
accounts on those days on which the Fund calculates its
Designated Portfolio net asset value pursuant to rules of the
SEC; provided, however, that the Fund, the Adviser, or CSI
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 its or their sole
discretion, necessary in the best interests of the Fund as
described in the prospectus for the Designated Portfolio.
1.4. On each Business Day on which the Fund calculates its net
asset value, the Company will aggregate and calculate the net
purchase or redemption orders for each Account maintained by
the Fund in which contractowner assets are invested. Net
orders will only reflect orders that the Company has received
prior to the close of regular trading on the NYSE (currently
4:00 p.m., Eastern Time) on that Business Day. Orders that
the Company has received after the close of regular trading
on the NYSE will be treated as though received on the next
Business Day. Each communication of orders by the Company
will constitute a representation that such orders were
received by it prior to the close of regular trading on the
NYSE on the Business Day on which the purchase or redemption
order is priced in accordance with Rule 22c-1 under the 1940
Act. Other procedures relating to the handling of orders
will be in accordance with the prospectus and statement of
additional information of the relevant Designated Portfolio
or with oral or written instructions that CSI or the Fund
will forward to the Company from time to time.
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 applicable provisions of
the Internal Revenue Code of 1986, as amended, (the "Internal
Revenue Code"), and regulations promulgated thereunder, the
sale to which will not impair the tax treatment currently
afforded the Contracts. No shares of any Portfolio will be
sold to the general public except as set forth in this
Section 1.5.
1.6. 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 designee of the request for redemption. For
purposes of this Section 1.6, 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 request for redemption by 10:00 a.m. Eastern Time
on the next following Business Day. Payment will be in
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PAGE 4
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. The Fund reserves the right to delay payment of redemption
proceeds, but in no event may such payment be delayed longer than the
period permitted by 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 10:00 a.m.
Eastern Time, payment for redeemed shares will be made on the next
following Business Day.
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 any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate subaccount of
each Account.
1.9. The Fund will furnish same day notice (by telecopier,
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 Designated Portfolio
shares in the form of additional shares of that Designated
Portfolio. The Fund will notify the Company of the number of
shares so issued as payment of such dividends and
distributions. The Company reserves the right to revoke this
election upon reasonable prior notice to the Fund and to
receive all such dividends and distributions in cash.
1.10. The Fund will make the net asset value per share for each Designated
Portfolio available to the Company on a daily basis as soon as
reasonably practical after the net asset value per share is calculated
and will use its best efforts to make such net asset value per share
available by 6:00 p.m., Eastern Time, but in no event later than 7:00
p.m., Eastern Time, each Business Day.
1.11. In the event adjustments are required to correct any error in
the computation of the net asset value of the Fund's shares,
the Fund or CSI will notify the Company as soon as
practicable after discovering the need for those adjustments
that result in an aggregate reimbursement of $150 or more.
The Company will make an adjustment to any contractowner's
account that requires an adjustment of $10 or more. Any such
notice will state for each day for which an error occurred
the incorrect price, the correct price and, to the extent
communicated to the Fund's shareholders, the reason for the
price change. The Company may send this notice or a
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derivation thereof (so long as such derivation is approved in advance
by CSI or the Adviser) to contractowners whose accounts are affected by
the price change. The parties will negotiate in good faith to develop a
reasonable method for effecting such adjustments.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act and that the Contracts
will be issued and sold in compliance with all applicable
federal and state laws, including state insurance suitability
requirements. The Company further represents and warrants
that it is an insurance company duly organized and in good
standing under applicable law and that it has legally and
validly established each Account as a separate account under
applicable state law and has registered the Account as a unit
investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the
Contracts, and that it will maintain such registration for so
long as any Contracts are outstanding. The Company 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 any state 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 will be treated as annuity contracts
under applicable provisions of the Internal Revenue Code, and
that it will make every effort to maintain such treatment and
that it will notify the Fund and the Adviser immediately upon
having a reasonable basis for believing that the Contracts
have ceased to be so treated or that they might not be so
treated in the future.
2.3. The Company represents and warrants that it will not purchase shares of
the Designated Portfolios with assets derived from tax-qualified
retirement plans except, indirectly, through Contracts purchased in
connection with such plans.
2.4. The Fund represents and warrants that Fund shares of the
Designated Portfolios sold pursuant to this Agreement will be
registered under the 1933 Act and duly authorized for
issuance in accordance with applicable law and that the Fund
is and will remain registered under the 1940 Act for as long
as such shares of the Designated Portfolios are sold. The
Fund will amend the registration statement for its shares
under the 1933 Act and the 1940 Act from time to time as
required in order to effect the continuous offering of its
shares or as may otherwise be required by applicable law.
The Fund will register and qualify the shares of the
Designated Portfolios for sale in accordance with the laws of
any state only if and to the extent deemed advisable by the
Fund.
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2.5. The Fund represents that each Designated Portfolio is
currently qualified as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code, and that it will
make every effort to maintain such qualification (under
Subchapter M or any successor or similar provision) and that
it will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so
qualify or that a Designated Portfolio might not so qualify
in the future.
2.6. The Fund represents and warrants that in performing the
services described in this Agreement, the Fund will comply
with all applicable laws, rules and regulations. The Fund
makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses
and investment policies, objectives and restrictions)
complies with the insurance laws and regulations of any
state. The Fund and CSI agree that upon request they will
use their best efforts to furnish the information required by
state insurance laws so that the Company can obtain the
authority needed to issue the Contracts in any applicable
state.
2.7. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under
the 1940 Act, 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 its Board of Trustees of the Fund
(the "Fund Board"), formulate and approve any plan under Rule
12b-1 to finance distribution expenses in accordance with the
1940 Act.
2.8. The Fund represents that it is lawfully organized and validly existing
under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with applicable provisions of
the 1940 Act.
2.9. CSI represents and warrants that it will distribute the Fund shares of
the Designated Portfolios in accordance with all applicable federal and
state securities laws including, without limitation, the 1933 Act, the
1934 Act and the 1940 Act.
2.10. CSI represents and warrants that it is 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 any applicable state and federal securities laws.
2.11. The Fund represents and warrants that all of its trustees,
officers, employees, 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
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PAGE 7
aforesaid bond includes coverage for larceny and embezzlement and is
issued by a reputable bonding company. CSI and the Adviser represent
and warrant that they are and continue to be at all times covered by
policies similar to the aforesaid bond.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Fund or CSI will provide the Company, at the Fund's or
its affiliate's expense, with as many copies of the current
Fund prospectus for the Designated Portfolios as the Company
may reasonably request for distribution, at the Company's
expense, to prospective contractowners and applicants. The
Fund or CSI will provide, at the Fund's or its affiliate's
expense, as many copies of said prospectus as necessary for
distribution, at the Company's expense, to existing
contractowners. The Fund or CSI will provide the copies of
said prospectus to the Company or to its mailing agent. If
requested by the Company in lieu thereof, the Fund or CSI
will provide such documentation, including a computer
diskette or a final copy of a current prospectus set in type
at the Fund's or its affiliate's expense, and such 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 Fund's
prospectus and the prospectuses of other mutual funds in
which assets attributable to the Contracts may be invested
printed together in one document, in which case the Fund or
its affiliate will bear its reasonable share of expenses as
described above, allocated based on the proportionate number
of pages of the Fund's and other funds' respective portions
of the document.
3.2. The Fund or CSI will provide the Company, at the Fund's or
its affiliate's expense, with as many copies of the statement
of additional information as the Company may reasonably
request for distribution, at the Company's expense, to
prospective contractowners and applicants. The Fund or CSI
will provide, at the Fund's or its affiliate's expense, as
many copies of said statement of additional information as
necessary for distribution, at the Company's expense, to any
existing contractowner who requests such statement or
whenever state or federal law otherwise requires that such
statement be provided. The Fund or CSI will provide the
copies of said statement of additional information to the
Company or to its mailing agent.
3.3. The Fund or CSI, at the Fund's or its affiliate's expense, will provide
the Company or its mailing agent with copies of its proxy material, if
any, reports to shareholders and other communications to shareholders
in such quantity as the Company will reasonably require. The Company
will distribute this proxy material, reports and other communications
to existing contractowners and tabulate the votes.
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PAGE 8
3.4. If and to the extent required by law the Company will:
(a) solicit voting instructions from contractowners;
(b) vote the shares of the Designated Portfolios held in
the Account in accordance with instructions received
from contractowners; and
(c) vote shares of the Designated Portfolios held in the Account
for which no timely instructions have been received, as well
as shares it owns, in the same proportion as shares of such
Designated Portfolio for which instructions have been received
from the Company's contractowners;
so long as and to the extent that the SEC continues to
interpret the 1940 Act to require pass-through voting
privileges for variable contractowners. Except as set forth
above, 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 each of its separate accounts participating in
the Fund calculates voting privileges in a manner consistent
with all legal requirements, including the Mixed and Shared
Funding Exemptive Order.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular, the Fund
either will provide for annual meetings (except insofar as
the SEC may interpret Section 16 of the 1940 Act not to
require such meetings) or, as the Fund currently intends,
will comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of
that Act) as well as with Sections 16(a) and, if and when
applicable, 16(b). Further, the Fund will act in accordance
with the SEC's interpretation of the requirements of Section
16(a) with respect to periodic elections of trustees and with
whatever rules the SEC may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. CSI will provide the Company on a timely basis with
investment performance information for each Designated
Portfolio in which the Company maintains an Account,
including total return for the preceding calendar month and
calendar quarter, the calendar year to date, and the prior
one-year, five-year, and ten-year (or life of the Designated
Portfolio) periods. The Company may, based on the
SEC-mandated information supplied by CSI, prepare
communications for contractowners ("Contractowner
Materials"). The Company will provide copies of all
Contractowner Materials concurrently with their first use for
CSI's internal recordkeeping purposes. It is understood that
neither CSI nor any Designated Portfolio will be responsible
for errors or omissions in, or the content of, Contractowner
Materials except to the extent that the error or omission
resulted from information provided by or on behalf of CSI or
the Designated Portfolio. Any printed information that is
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PAGE 9
furnished to the Company other than each Designated Portfolio's
prospectus or statement of additional information (or information
supplemental thereto), periodic reports and proxy solicitation
materials is CSI's sole responsibility and not the responsibility of
any Designated Portfolio or the Fund. The Company agrees that the
Portfolios, the shareholders of the Portfolios and the officers and
governing Board of the Fund will have no liability or responsibility to
the Company in these respects.
4.2. 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
statement of additional information for Fund shares, as such
registration statement, prospectus and statement of
additional information may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund,
or in published reports for the Fund which are in the public
domain or approved by the Fund or CSI for distribution, or in
sales literature or other material provided by the Fund or by
CSI, except with permission of the Fund or CSI. The Fund and
CSI agree to respond to any request for approval on a prompt
and timely basis. Nothing in this Section 4.2 will be
construed as preventing the Company or its employees or
agents from giving advice on investment in the Fund.
4.3. The Fund, the Adviser and CSI will not give any information
or make any representations or statements on behalf of the
Company or concerning the Company, each Account, or the
Contracts other than the information or representations
contained in a registration statement, prospectus or
statement of additional information for the Contracts, as
such registration statement, prospectus and statement of
additional information may be amended or supplemented from
time to time, or in published reports for each Account or the
Contracts which are in the public domain or approved by the
Company for distribution to contractowners, 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. The Fund, the Adviser or CSI 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 Account is named, at least ten (10)
business days prior to its use. No such material will be
used if the Company reasonably objects to such use within
five (5) Business Days after receipt of such material.
4.4. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate
to the Fund or
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PAGE 10
its shares, contemporaneously with the filing of such document with the
SEC, the NASD or other regulatory authority.
4.5. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, statements
of additional information, reports, solicitations for voting
instructions, sales literature and other promotional
materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that
relate to the Contracts or each Account, contemporaneously
with the filing of such document with the SEC, the NASD or
other regulatory authority.
4.6. For purposes of this Article IV, 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, proxy materials
and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 1940
Act.
4.7. The Fund and CSI hereby consent to the Company's use of the names
Warburg Pincus Trust - Small Company Growth Portfolio (or the name of
any other Designated Portfolio) and Warburg, Pincus Counsellors, Inc.
in connection with the marketing of the Contracts, subject to the terms
of Sections 4.1 and 4.2 of this Agreement. Such consent will terminate
with the termination of this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Fund, the Adviser and CSI will pay no distribution fee or
other compensation to the Company under this Agreement
pursuant to Rule 12b-1 under the 1940 Act except if the Fund
or any Designated Portfolio adopts and implements a plan
pursuant to Rule 12b-1 to finance distribution expenses,
then, subject to obtaining any required exemptive orders or
other regulatory approvals, the Fund may make payments to the
Company if and in such amounts agreed to by the Fund in
writing.
5.2. All expenses incident to performance by the Fund of this
Agreement will be paid by the Fund to the extent permitted by
law. The Fund will bear the expenses for the cost of
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PAGE 11
registration and qualification of the Fund's shares; preparation and
filing of the Fund's prospectus, statement of additional information
and registration statement, proxy materials and reports; setting in
type and printing the Fund's prospectus; setting in type and printing
proxy materials and reports by it to contractowners (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
all other expenses set forth in Article III of this Agreement.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated
as variable annuity contracts under the Internal Revenue Code
and the regulations issued thereunder. Without limiting the
scope of the foregoing, the Fund will comply with Section
817(h) of the Internal Revenue Code and Treasury Regulation
1.817-5, as amended from time to time, relating to the
diversification requirements for variable annuity, endowment,
or life insurance contracts and any amendments or other
modifications to such Section or Regulation. In the event of
a breach of this Article VI by the Fund, it will take all
reasonable steps: (a) to notify the Company of such breach;
and (b) to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Treasury
Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Fund Board will monitor the Fund for the existence of any
irreconcilable material conflict among the interests of the
contractowners of all separate accounts investing in the
Fund. An irreconcilable material conflict may arise for a
variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax or securities laws or
regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of any
Portfolio are being managed; (e) a difference in voting
instructions given by Participating Insurance Companies or by
variable annuity and variable life insurance contractowners;
or (f) a decision by an insurer to disregard the voting
instructions of contractowners. The Fund Board will promptly
inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts
of which it is aware to the Fund Board. The Company agrees
to assist the Fund Board in carrying out its
responsibilities, as delineated in the Mixed and Shared
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PAGE 12
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 contractowner voting
instructions are to be disregarded. The Company's responsibilities
hereunder will be carried out with a view only to the interest of
contractowners.
7.3. If it is determined by a majority of the Fund Board, or a
majority of its disinterested trustees, that an
irreconcilable material conflict exists, the Company will, at
its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested trustees), take
whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including: (a)
withdrawing the assets allocable to some or all of the
Accounts from the Fund or any Designated Portfolio and
reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Fund,
or submitting the question whether such segregation should be
implemented to a vote of all affected contractowners and, as
appropriate, segregating the assets of any appropriate group
(i.e., variable annuity contractowners or variable life
----
insurance contractowners of one or more Participating
Insurance Companies) that votes in favor of such segregation,
or offering to the affected contractowners the option of
making such a change; and (b) establishing a new registered
management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contractowner voting
instructions, and the Company's judgment represents a
minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw
the affected subaccount of the Account's investment in the
Fund and terminate this Agreement with respect to such
subaccount; provided, however, that such withdrawal and
termination will be limited to the extent required by the
foregoing irreconcilable material conflict as determined by a
majority of the disinterested trustees of the Fund Board. No
charge or penalty will be imposed as a result of such
withdrawal.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to
the Company conflicts with the majority of other state
insurance regulators, then the Company will withdraw the
affected subaccount of the Account's investment in the Fund
and terminate this Agreement with respect to such subaccount;
provided, however, that such withdrawal and termination will
be limited to the extent required by the foregoing
irreconcilable material conflict as determined by a majority
of the disinterested trustees of the Fund Board. No charge
or penalty will be imposed as a result of such withdrawal.
<PAGE>
PAGE 13
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Fund Board will
determine whether any proposed action adequately remedies any
irreconcilable material conflict, but in no event will the
Fund or the Adviser (or any other investment adviser to the
Fund) be required to establish a new funding medium for the
Contracts. The Company will not be required by Section 7.3
to establish a new funding medium for the Contracts if an
offer to do so has been declined by vote of a majority of
contractowners materially affected by the irreconcilable
material conflict.
7.7. The Company will at least annually submit to the Fund Board such
reports, materials or data as the Fund Board may reasonably request so
that the Fund Board may fully carry out the duties imposed upon it as
delineated in the Mixed and Shared Funding Exemptive Order, and said
reports, materials and data will be submitted more frequently if deemed
appropriate by the Fund Board.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief
from any provision of the 1940 Act or the rules promulgated
thereunder with respect to mixed or shared funding (as
defined in the Mixed and Shared Funding Exemptive Order) on
terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order,
then: (a) the Fund and/or the Participating Insurance
Companies, as appropriate, will take such steps as may be
necessary to comply with Rules 6e-2 and 6e-3(T), as amended,
and Rule 6e-3, as adopted, to the extent such rules are
applicable; and (b) Sections 3.4, 3.5, 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, CSI, and each person, if any, who
controls or is associated with the Fund, the Adviser or
CSI within the meaning of such terms under the federal
securities laws and any director, trustee, officer,
partner, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes
of this Section 8.1) against any and all losses,
claims, expenses, damages, liabilities (including
amounts paid in settlement with the written consent of
the Company) or litigation (including reasonable legal
and other expenses), to which the Indemnified Parties
may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
<PAGE>
PAGE 14
(1) arise out of or are based upon any untrue
statements or alleged untrue statements of any
material fact contained in the registration
statement, prospectus or statement of additional
information for the Contracts or contained in the
Contracts or sales literature or other
promotional material for the Contracts (or any
amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or
the alleged omission to state therein a material
fact required to be stated or necessary to make
such statements not misleading in light of the
circumstances in which they were made; provided
that this agreement to indemnify will not apply
as to any Indemnified Party if such statement or
omission or such alleged statement or omission
was made in reliance upon and in conformity with
written information furnished to the Company by
the Fund, the Adviser or CSI for use in the
registration statement, prospectus or statement
of additional information for the Contracts or in
the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund
shares; or
(2) arise out of or as a result of statements or
representations by or on behalf of the Company or
wrongful conduct of the Company or persons under its
control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(3) arise out of any untrue statement or alleged
untrue statement of a material fact contained in
the Fund registration statement, prospectus,
statement of additional information or sales
literature or other promotional material of the
Fund (or amendment or supplement) or the omission
or alleged omission to state therein a material
fact required to be stated therein or necessary
to make such statements not misleading in light
of the circumstances in which they were made, if
such a statement or omission was made in reliance
upon and in conformity with information furnished
to the Fund 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;
<PAGE>
PAGE 15
except to the extent provided in Sections 8.1(b) and
8.3 hereof. This indemnification will be in addition
to any liability that the Company otherwise may have.
(b) No party will be entitled to indemnification under
Section 8.1(a) to the extent such loss, claim, damage,
liability or litigation is due to the willful
misfeasance, bad faith, or gross negligence in the
performance of such party's duties under this
Agreement, or by reason of such party's reckless
disregard of its obligations or duties under this
Agreement by the party seeking indemnification.
(c) The Indemnified Parties promptly will notify the Company of
the commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Fund shares or the Contracts
or the operation of the Fund.
8.2. Indemnification By The Adviser, the Fund and CSI
(a) The Adviser, the Fund and CSI, in each case solely to
the extent relating to such party's responsibilities
hereunder, 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, trustee, officer, partner, 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) or litigation (including
reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or
settlements:
(1) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in the registration
statement, prospectus or statement of additional
information for the Fund or sales literature or
other promotional material of the Fund (or any
amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or
the alleged omission to state therein a material
fact required to be stated or necessary to make
such statements not misleading in light of the
circumstances in which they were made (in each
case substantially as transmitted to you by the
Fund or CSI); 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
<PAGE>
PAGE 16
reliance upon and in conformity with information
furnished to the Adviser, CSI or the Fund by or on
behalf of the Company for use in the registration
statement, prospectus or statement of additional
information for the Fund or in sales literature of
the Fund (or any amendment or supplement 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 or wrongful conduct of the Adviser,
the Fund or CSI or persons under the control of the
Adviser, the Fund or CSI respectively, with respect
to the sale of the Fund shares; or
(3) arise out of any untrue statement or alleged
untrue statement of a material fact contained in
a registration statement, prospectus, statement
of additional information or sales literature or
other promotional material covering the Contracts
(or any amendment or supplement thereto), or the
omission or alleged omission to state therein a
material fact required to be stated or necessary
to make such statement or statements not
misleading in light of the circumstances in which
they were made, if such statement or omission was
made in reliance upon and in conformity with
written information furnished to the Company by
the Adviser, the Fund or CSI or persons under the
control of the Adviser, the Fund or CSI; or
(4) arise as a result of any failure by the Fund, the
Adviser or CSI to provide the services and
furnish the materials under the terms of this
Agreement (including a failure, whether
unintentional or in good faith or otherwise, to
comply with the diversification requirements and
procedures related thereto specified in Article
VI of this Agreement); or
(5) arise out of or result from any material breach of
any representation and/or warranty made by the
Adviser, the Fund or CSI in this Agreement, or arise
out of or result from any other material breach of
this Agreement by the Adviser, the Fund or CSI;
except to the extent provided in Sections 8.2(b)
and 8.3 hereof.
(b) No party will be entitled to indemnification under Section
8.2(a) to the extent such loss, claim, damage, liability or
litigation is due to the willful misfeasance, bad faith, or
gross negligence in the performance of such party's duties
under this Agreement, or by reason of such party's reckless
<PAGE>
PAGE 17
disregard of its obligations or duties under this
Agreement by the party seeking indemnification.
(c) The Indemnified Parties will promptly notify the Adviser, the
Fund and CSI 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 Procedure
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.3) 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 8.3) unless such Indemnified Party will have notified the
Indemnifying Party in writing within a reasonable time after the
summons or other first legal process giving information of the nature
of the claim will have been served upon such Indemnified Party (or
after such party will have received notice of such service on any
designated agent), but failure to notify the Indemnifying Party of any
such claim will not relieve the Indemnifying Party from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of the indemnification provision of
this Article 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
<PAGE>
PAGE 18
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. The indemnification provisions contained in this Article
VIII will survive any termination of this Agreement.
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 Minnesota.
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 SEC may grant (including, but not limited to, the
Mixed and Shared Funding Exemptive Order) and the terms hereof will be
interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement will terminate:
(a) at the option of any party, with or without cause, with
respect to some or all of the Designated Portfolios, upon
ninety (90) days' advance written notice to the other parties
or, if later, upon receipt of any required exemptive relief or
orders from the SEC, unless otherwise agreed in a separate
written agreement among the parties; or
(b) at the option of the Company, upon receipt of the Company's
written notice by the other parties, with respect to any
Designated Portfolio if shares of the Designated Portfolio are
not reasonably available to meet the requirements of the
Contracts as determined in good faith by the Company; or
(c) at the option of the Company, upon receipt of the
Company's written notice by the other parties, with
respect to any Designated Portfolio in the event any of
the Designated Portfolio's shares are not registered,
issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of
such shares as the underlying investment media of the
Contracts issued or to be issued by Company; or
(d) at the option of the Fund, upon receipt of the Fund's
written notice by the other parties, upon institution
of formal proceedings against the Company by the NASD,
the SEC, the insurance commission of any state or any
other regulatory body regarding the Company's duties
under this Agreement or related to the sale of the
Contracts, the administration of the Contracts, the
operation of the Account, or the purchase of the Fund
shares, provided that the Fund determines in its sole
<PAGE>
PAGE 19
judgment, exercised in good faith, that any such proceeding
would have a material adverse effect on the Company's ability
to perform its obligations under this Agreement; or
(e) at the option of the Company, upon receipt of the
Company's written notice by the other parties, upon
institution of formal proceedings against the Fund or
CSI by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body,
provided that the Company determines in its sole
judgment, exercised in good faith, that any such
proceeding would have a material adverse effect on the
Fund's or CSI's ability to perform its obligations
under this Agreement; or
(f) at the option of the Company, upon receipt of the
Company's written notice by the other parties, if, with
respect to any Designated Portfolio, the Designated
Portfolio ceases to qualify as a Regulated Investment
Company under Subchapter M of the Internal Revenue
Code, or under any successor or similar provision, or
if the Company reasonably and in good faith believes
that the Designated Portfolio may fail to so qualify;
or
(g) at the option of the Company, upon receipt of the
Company's written notice by the other parties, if, with
respect to any Designated Portfolio, the Designated
Portfolio fails to meet the diversification
requirements specified in Article VI hereof or if the
Company reasonably and in good faith believes the
Designated Portfolio 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, the Adviser or CSI 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 CSI, if the Fund or CSI
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
<PAGE>
PAGE 20
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 contractowners having an interest in the Account
(or any subaccount) to substitute the shares of another
investment company for the corresponding Designated
Portfolio shares of the Fund in accordance with the
terms of the Contracts for which those Designated
Portfolio shares had been selected to serve as the
underlying investment media. The Company will give
sixty (60) days' prior written notice to the Fund of
the date of any proposed vote or other action taken to
replace the Fund's shares; or
(l) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a
majority of the disinterested Fund Board members, that
an irreconcilable material conflict exists among the
interests of: (1) all contractowners of variable
insurance products of all separate accounts; or (2) the
interests of the Participating Insurance Companies
investing in the Fund as set forth in Article 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
Except as specified in Section 10.1(m), no termination of this
Agreement will be effective unless and until the party terminating this
Agreement gives prior written notice to all other parties of its intent
to terminate, which notice will set forth the basis for the
termination.
10.3. Effect of Termination
In the event of any termination of this Agreement other than pursuant
to subsection (L) of Section 10.1, the Fund and CSI 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.
<PAGE>
PAGE 21
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,
each party's obligations under Section 12.6 will survive and not be
affected by any termination of this Agreement. Finally, 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
11.1 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.
IDS Tower 10
Minneapolis, MN 55440-0010
Attn: Wendell Halvorsen
With a simultaneous copy to:
IDS Life Insurance Company of New York
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
Attn: Mary Ellyn Minenko
Counsel
If to the Fund, the Adviser and/or CSI:
466 Lexington Avenue
10th Floor
New York, NY 10017
Attn: Eugene P. Grace
Senior Vice President
ARTICLE XII. Miscellaneous
12.1. The Fund, the Adviser and CSI acknowledge that the identities
of the customers of the Company or any of its affiliates
(collectively the "Company Protected Parties" for purposes of
this Section 12.1), information maintained regarding those
customers, and all computer programs and procedures or other
information developed or used by the Company 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 Company Protected
Parties. The Fund, the Adviser and CSI agree that if they
<PAGE>
PAGE 22
come into possession of any list or compilation of the identities of or
other information about the Company Protected Parties' customers, or
any other information or property of the Company Protected Parties,
other than such information as is publicly available or as may be
independently developed or compiled by the Fund, the Adviser or CSI
from information supplied to them by the Company Protected Parties'
customers who also maintain accounts directly with the Fund, the
Adviser or CSI, the Fund, the Adviser and CSI 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 the Company's prior written consent; or (b) as
required by law or judicial process. The Company acknowledges that the
identities of the customers of the Fund, the Adviser, CSI or any of
their affiliates (collectively the "Adviser Protected Parties" for
purposes of this Section 12.1), information maintained regarding those
customers, and all computer programs and procedures or other
information developed or used by the Adviser Protected Parties or any
of their employees or agents in connection with the Funds', the
Adviser's or CSI's performance of their respective duties under this
Agreement are the valuable property of the Adviser Protected Parties.
The Company agrees that if it comes into possession of any list or
compilation of the identities of or other information about the Adviser
Protected Parties' customers, or any other information or property of
the Adviser Protected Parties, other than such information as is
publicly available or as may be independently developed or compiled by
the Company from information supplied to them by the Adviser Protected
Parties' customers who also maintain accounts directly with the
Company, the Company 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 the Fund's, the
Adviser's or CSI'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 12.1 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.
12.2. 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.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
12.4. 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.
<PAGE>
PAGE 23
12.5. This Agreement will not be assigned by any party hereto
without the prior written consent of all the parties.
12.6. Each party to this Agreement will maintain all records
required by law, including records detailing the services it
provides. Such records will be preserved, maintained and
made available to the extent required by law and in
accordance with the 1940 Act and the rules thereunder. Each
party to this Agreement will cooperate with each other party
and all appropriate governmental authorities (including
without limitation the SEC, the NASD and state insurance
regulators) and will permit each other and such authorities
reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby. Upon request by the
Fund or CSI, the Company agrees to promptly make copies or,
if required, originals of all records pertaining to the
performance of services under this Agreement available to the
Fund or CSI, as the case may be. The Fund agrees that the
Company will have the right to inspect, audit and copy all
records pertaining to the performance of services under this
Agreement pursuant to the requirements of any state insurance
department. Each party also agrees to promptly notify the
other parties if it experiences any difficulty in maintaining
the records in an accurate and complete manner. This
provision will survive termination of this Agreement.
12.7. Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or board action, as
applicable, by such party and when so executed and delivered this
Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms.
12.8. The parties to this Agreement acknowledge and agree that all
liabilities of the Fund arising, directly or indirectly,
under this agreement, will be satisfied solely out of the
assets of the Fund and that no trustee, officer, agent or
holder of shares of beneficial interest of the Fund will be
personally liable for any such liabilities. No Portfolio
will be liable for the obligations or liabilities of any
other Portfolio.
12.9 The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts,
the Accounts or the Designated Portfolios of the Fund or other
applicable terms of this Agreement.
<PAGE>
PAGE 24
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
SEAL By: /s/ Richard W. Kling
Name: Richard W. Kling
Title: Charirman of the Board and President
ATTEST:
By: /s/ William A. Stoltzman
Name: William A. Stoltzman
Title: Counsel
WARBURG PINCUS TRUST
SEAL By: /s/ Eugene P. Grace
Name: Eugene P. Grace
Title: Vice President & Secretary
WARBURG, PINCUS COUNSELLORS, INC.
SEAL By: /s/ Eugene P. Grace
Name: Eugene P. Grace
Title: Senior Vice President & Assistant
Secretary
COUNSELLORS SECURITIES INC.
SEAL By: /s/ Eugene P. Grace
Name: Eugene P. Grace
Title: Vice President
<PAGE>
PAGE 25
Schedule 1
PARTICIPATION AGREEMENT
By and Among
IDS LIFE INSURANCE COMPANY OF NEW YORK
And
WARBURG PINCUS TRUST
And
WARBURG, PINCUS COUNSELLORS, INC.
And
COUNSELLORS SECURITIES INC.
The following separate accounts of IDS Life Insurance Company of New York are
permitted in accordance with the provisions of this Agreement to invest in
Designated Portfolios of the Fund shown in Schedule 2:
IDS Life of New York Flexible Portfolio Annuity Account, established April
17, 1996.
October 7, 1996
<PAGE>
PAGE 26
Schedule 2
PARTICIPATION AGREEMENT
By and Among
IDS LIFE INSURANCE COMPANY OF NEW YORK
And
WARBURG PINCUS TRUST
And
WARBURG, PINCUS COUNSELLORS, INC.
And
COUNSELLORS SECURITIES INC.
The Separate Account(s) shown on Schedule 1 may invest in the following
Designated Portfolios of the Warburg Pincus Trust:
Small Company Growth Portfolio
October 7, 1996
<PAGE>
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.
<PAGE>
PAGE 2
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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PAGE 3
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
<PAGE>
PAGE 4
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>
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.
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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>
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>
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>
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>
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>
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>
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>
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>
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>
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 1940 Act.
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>
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.
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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>
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>
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>
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>
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>
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>
PAGE 23
American Express Financial Advisors Inc.
IDS Life Insurance Company of New York
IDS Tower 10
Minneapolis, MN 55440-0010
Facsimile: 612-671-2269
Attn: Mr. Wendell Halvorson
cc: Mary Ellyn Minenko, Esq.
Counsel
AIM Variable Insurance Funds, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046
Facsimile: 713-993-9185
Attn: Nancy L. Martin, Esq.
AIM Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046
Facsimile: 713-993-9185
Attn: Mr. Gary Littlepage
cc: Nancy L. Martin, 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>
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>
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>
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>
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>
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>
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>
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>
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 mark "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>
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>
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/ Nancy L. Martin By: /s/ Robert H. Graham
Nancy L. Martin Name: Robert H. Graham
Assistant Secretary Title: President
AIM DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ W. Gary Littlepage
Nancy L. Martin Name: W. Gary Littlepage
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/ William A. Stoltzmann By: /s/ Richard W. Kling
Name: William A. Stoltzmann Name: Richard W. Kling
Title: Counsel Title: Chairman of the
Board and President
AMERICAN EXPRESS FINANCIAL
ADVISORS INC.
Attest: /s/ Mary Jo Olson By: /s/ Richard W. Kling
Name: Mary Jo Olson Name: Richard W. Kling
Title: Assistant Secretary Title: Senior Vice
President-Products
<PAGE>
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-IRA 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>
PAGE 35
SCHEDULE B
o AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund
o AIM and Design
<PAGE>
PAGE 1
FUND PARTICIPATION AGREEMENT
THIS FUND PARTICIPATION AGREEMENT is made and entered into as of July 31,
1996 by and among IDS LIFE INSURANCE COMPANY OF NEW YORK (the "Company"), TCI
PORTFOLIOS, INC. (the "Issuer") and the investment adviser of the Issuer,
INVESTORS RESEARCH CORPORATION ("Investors Research").
WHEREAS, the Company offers to the public certain qualified and
nonqualified variable annuity contracts (collectively, the "Contracts", which
the Company has registered under the Securities Act of 1933, as amended (the
"1933 Act"); and
WHEREAS, the Company wishes to offer as investment options under the
Contracts, TCI Value (the "Fund"), a series of mutual fund shares to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), and issued by the Issuer; and
WHEREAS, on the terms and conditions hereinafter set forth, Investors
Research and the Issuer desire to make shares of the Funds available as
investment options under the Contracts;
NOW, THEREFORE, the Company, the Issuer and Investors Research agree as
follows:
1. Transactions in the Funds. Subject to the terms and conditions of this
Agreement, the Issuer will make shares of the Funds available to be purchased,
exchanged, or redeemed, by the Company on behalf of the Account (defined in
Section 6(a) below) through a single account per Fund at the net asset value
applicable to each order. The Funds' shares shall be purchased and redeemed on a
net basis in such quantity and at such time as determined by the Company to
satisfy the requirements of the Contracts for which the Funds serve as
underlying investment media. Dividends and capital gains distributions will be
automatically reinvested in full and fractional shares of the Funds.
2. Administrative Services. The Company shall be solely responsible for
providing all administrative services for the Contracts owners. The Company
agrees that it will maintain and preserve all records as required by law to be
maintained and preserved, and will otherwise comply with all laws, rules and
regulations applicable to the marketing of the Contracts and the provision of
administrative services to the Contract owners.
3. Processing and Timing of Transactions.
(a) The Issuer hereby appoints the Company as its agent for the limited
purpose of accepting purchase and redemption orders for Fund shares from the
Contract owners. On each day the New York Stock Exchange (the "Exchange") is
open for business (each, a "Business Day"), the Company may receive instructions
from the Contract owners for the purchase or redemption of shares of the Funds
("Orders"). Orders received and accepted by the Company prior to the close of
regular trading on the Exchange (the "Close of Trading") on any given Business
Day (currently, 3:00 p.m. Central time) and transmitted to the Issuer by 9:00
a.m. Central
<PAGE>
PAGE 2
time on the next following Business Day will be executed by the Issuer at the
net asset value determined as of the Close of Trading on the previous Business
Day ("Day 1"). Any Orders received by the Company after the Close of Trading,
and all Orders that are transmitted to the Issuer after 9:00 a.m. Central time
on the next following Business Day, will be executed by the Issuer at the net
asset value determined following receipt by the Issuer of such Order. The day as
of which an Order is executed by the Issuer pursuant to the provisions set forth
above is referred to herein as the "Effective Trade Date".
(b) By 5:30 p.m. Central time on each Business Day, Investors Research will
provide to the Company via facsimile or other electronic transmission acceptable
to the Company the Funds' net asset value, dividend and capital gain information
and, in the case of income funds, the daily accrual for interest rate factor
(mil rate), determined at the Close of Trading.
(c) By 9:00 am. Central time on each Business Day, the Company will provide
to Investors Research via facsimile or other electronic transmission acceptable
to Investors Research a report (referred to in subsection (a) above) stating
whether the Orders received by the Company from Contract owners by the Close of
Trading on the preceding Business Day resulted in the Account being a net
purchaser or net seller of shares of the Funds. As used in this Agreement, the
phrase "other electronic transmission acceptable to Investors Research" includes
the use of remote computer terminals located at the premises of the Company, its
agents or affiliates, which terminals may be linked electronically to the
computer system of Investors Research, its agents or affiliates (hereinafter,
"Remote Computer Terminals").
(d) Upon the timely receipt from the Company of the report described in
subsection (c) above, Investors Research will execute the purchase or redemption
transactions (as the case may be) at the net asset value computed as of the
Close of Trading on Day 1. Payment for net purchase transactions shall be made
by wire transfer by the Company to the custodial account designated by the Fund
on the Business Day next following the Effective Trade Date. Such wire transfers
shall be initiated by the Company's bank prior to 3:00 p.m. Central time and
received by the Funds prior to 5:00 p.m. Central time on the Business Day next
following the Effective Trade Date. If payment for a purchase Order is not
timely received, such Order will be executed at the net asset value next
computed following receipt of payment. Payments for net redemption transactions
shall be made by wire transfer by the Issuer to the account designated by the
Company within the time period set forth in the applicable Fund's then-current
prospectus; provided, however, Investors Research will use all reasonable
efforts to settle all redemptions on the Business Day next following the
Effective Trade Date. On any Business Day when the Federal Reserve Wire Transfer
System is closed, all communication and processing rules will be suspended for
the settlement of Orders. Orders will be settled on the next Business Day on
which the Federal Reserve Wire Transfer System is open and the Effective Trade
Date will apply.
<PAGE>
PAGE 3
4. Prospectus and Proxy Materials.
(a) Investors Research shall provide to the shareholder of record copies of
the Issuer's proxy materials, periodic reports to shareholders and other
materials that are required by law to be sent to the Issuer's shareholders. In
addition, Investors Research shall provide the Company copies of the Fund's
prospectuses and periodic reports to shareholders in sufficient quantity to
distribute to each Contract owner, together with such additional copies of the
Fund's prospectuses as may be reasonably requested by Company. If the Company
provides for pass-through voting by the Contract owners, Investors Research will
provide the Company with a sufficient quantity of proxy materials for each
Contract owner.
(b) The cost of preparing, typesetting, printing and shipping to the Company
the Fund's separate prospectuses, proxy materials, periodic reports to
shareholders and other materials shall be paid by Investors Research or its
agents or affiliates.
(c) The cost of mailing prospectuses, proxy materials, periodic fund
reports and other materials of the Issuer to the Contract owners and prospective
Contract owners shall be paid by the Company and shall not be the responsibility
of Investors Research or the Issuer.
5. Compensation and Expenses.
(a) Investors Research will pay no fee or other compensation
to the Company under this Agreement.
(b) All expenses incident to performance by the Issuer of its duties under
this Agreement, including, but not limited to, the cost of registration and
qualification of the Fund's shares, will be paid by Investors Research to the
extent permitted by law. All expenses incident to performance by the Company of
its duties under this Agreement, including, but not limited to, the cost of
providing the administrative services to Contract owners, shall be paid by the
Company.
6. Representations and Warranties.
(a) The Company represents and warrants that (i) this Agreement has been
duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has estabLished IDS
Life of New York Flexible Portfolio Annuity Account (the "Account"), which is a
separate account under New York Insurance law, and has registered each Account
as a unit investment trust under the Investment Company Act of 1940 (the "1940
Act") to serve as an investment vehicle for the Contracts; (iii) each Contract
provides for the allocation of net amounts received by the Company to an Account
for investment in the shares of one of more specified investment companies
selected among those companies available through the Account to act as
underlying investment media; (iv) selection of a particular investment company
is made by the Contract owner under a particular Contract, who may change such
selection from time to time in accordance with the terms of the applicable
Contract, and
<PAGE>
PAGE 4
(v) the activities of the Company contemplated by this Agreement comply in all
material respects with all provisions of federal and state insurance,
securities, and all laws applicable to such activities.
(b) Investors Research represents that: (i) this Agreement has been duly
authorized by all necessary corporate action and, when executed and delivered,
shall constitute the legal, valid and binding obligation of Investors Research
and Issuer, enforceable in accordance with its terms; and (ii) the investments
of the Funds will at all times be adequately diversified within the meaning of
Section 817(h) of the Internal Revenue Service Code of 1986, as amended (the
"Code"), and the regulations thereunder, and that at all times while this
Agreement is in effect, all beneficial interests in each of the Funds will be
owned by one or more insurance companies or by any other party permitted under
Section 1.817-5(f)(3) of the Regulations promulgated under the Code. In the
event of a breach, Investors Research will take reasonable steps to notify the
Company of such breach and to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Regulation 1.817-5.
(c) Investors Research represents that the Fund's investment objectives,
policies and restrictions comply in all material respects with applicable state
investment laws as they may apply to the Fund. Neither the Issuer nor Investors
Research makes any representation as to whether any aspect of the Fund's
operations (including, but not limited to, fees and expenses and investment
policies, objectives and restrictions) complies with the insurance laws and
regulations of any state. Investors Research agrees that it will use reasonable
effort to furnish such information regarding the Funds as may be reasonably
required by state insurance laws so that the Company may obtain the authority
needed to issue the Contracts in any applicable state.
7. Additional Covenants and Agreements.
(a) Each Party shall comply with all provisions of federal and state laws
applicable to its respective activities under this Agreement.
(b) Each party shall promptly notify the other parties in the event that it
is, for any reason, unable to perform any of its obligations under this
Agreement.
(c) The Company covenants and agrees that all Orders accepted and
transmitted by it hereunder with respect to each Account on any Business Day
will be based upon instructions that it received from the Contract owners in
proper form prior to the Close of Trading of the Exchange on the previous
Business Day.
(d) The Company covenants and agrees that all Orders transmitted to the
Issuer, whether by telephone, telecopy, or other electronic transmission
acceptable to Investors Research, shall be sent by or under the authority and
direction of a person designated by the Company as being duly authorized to act
on behalf of the owner of the Account. Absent actual knowledge to the contrary,
Investors Research shall be entitled to rely on the existence of
<PAGE>
PAGE 5
such authority and to assume that any person transmitting Orders for the
purchase, redemption or transfer of Fund shares on behalf of the Company is "an
appropriate person" as used in Sections 8-308 and 8-404 of the Uniform
Commercial Code with respect to the transmission of instructions regarding Fund
shares on behalf of the owner of such Fund shares. The Company shall maintain
the confidentiality of all passwords and security procedures issued, installed
or otherwise put in place with respect to the use of Remote Computer Terminals
and assumes full responsibility for the security therefor. The Company further
agrees to be solely responsible for the accuracy, propriety and consequences of
all data transmitted to Investors Research by the Company by telephone, telecopy
or other electronic transmission acceptable to Investors Research.
(e) The Company agrees to make every reasonable effort to market its
Contracts. It will use its best efforts to give equal emphasis and promotion to
shares of the Funds as is given to other underlying investments of the Account.
(f) The Company or its employees or agents will not give any information or
advice, or make any representations or statements on behalf of or concerning the
Issuer or the Fund, in connection with the sale of the Contracts unless based
upon information or representations contained in the registration statement for
the Fund's shares, as such registration statement may be amended or supplemented
from time to time, or in reports or proxy statements of the Fund, or in
published reports for the Fund that are published in reputable financial
publications or approved by Investors Research for distribution, or in sales
literature or other material provided by Investors Research. Investors Research
agrees to use reasonable efforts to respond to any request for approval on a
prompt and timely basis.
(g) Notwithstanding anything in Section 7(f) above, the Company will
furnish, or will cause to be furnished, to the Issuer or Investors Research,
each piece of sales literature or other promotional material in which the Fund
or the Issuer or Investors Research is named, at least ten (10) business days
prior to its use. No such material will be used if Investors Research reasonably
objects to such use. Investors Research agrees to use reasonable efforts to
respond to any request for approval on a prompt and timely basis.
(h) Investors Research 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 Account is named, at least ten (10)
business days prior to its use. No such material will be used if the Company
reasonably objects to such use. The Company agrees to use reasonable efforts to
respond to any request for approval on a prompt and timely basis.
(i) Investors Research will not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, the Account, or the Contracts unless based upon information or
representations contained in the registration
<PAGE>
PAGE 6
statement for the Contracts, as such registration statement may be amended or
supplemented from time to time, or in reports for the Contracts, or in published
reports for the Account or the Contracts that are published in reputable
financial publications or are approved by the Company for distribution, or in
sales literature or other material provided by the Company. The Company agrees
to use reasonable efforts to respond to any request for approval on a prompt and
timely basis.
(j) The Company will provide to Investors Research at least one complete
copy of all registration statements, annual and semi-annual reports, proxy
statements, and all amendments or supplements to any of the above that include a
description of or information regarding the Funds promptly after the filing of
such document with the SEC or other regulatory authority.
(k) For purposes of this Section 7, 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, 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.
8. Use of Names. Except as otherwise expressly provided for in this
Agreement, neither Investors Research nor the Funds shall use any trademark,
trade name, service mark or logo of the Company, or any variation of any such
trademark, trade name, service mark or logo, without the Company's prior written
consent, the granting of which shall be at the Company's sole option. Except as
otherwise expressly provided for in this Agreement, the Company shall not use
any trademark, trade name, service mark or logo of the Issuer or Investors
Research, or any variation of any such trademarks, trade names, service marks,
or logos, without the prior written consent of either the Issuer or Investors
Research, as appropriate, the granting of which shall be at the sole option of
Investors Research and/or the Issuer.
9. Proxy Voting.
(a) The Company shall provide pass-through voting privileges to all
Contract owners so long as the SEC continues to interpret the 1940 Act as
requiring such privileges. It shall be the responsibility of the Company to
assure that it and the separate accounts of the other Participating Companies
(as defined in Section 11(a) below) participating in any Fund calculate voting
privileges in a consistent manner.
<PAGE>
PAGE 7
(b) The Company will distribute to Contract owners all proxy material
furnished by Investors Research and will vote shares in accordance with
instructions received from such Contract owners. The Company shall vote Fund
shares for which no instructions have been received in the same proportion as
shares for which such instructions have been received. The Company and its
agents shall not oppose or interfere with the solicitation of proxies for Fund
shares held for such Contract owners.
10. Indemnity.
(a) Investors Research agrees to indemnify and hold harmless the Company
and each person, if any, who controls the Company within the meaning of the
Securities Act of 1933, and any officers, directors, employees, agents, and
affiliates of the foregoing (collectively, the "Indemnified Parties" for
purposes of this Section 10(a)) against any losses, claims, expenses, damages or
liabilities (including amounts paid in settlement thereof) or litigation
expenses (including reasonable legal and other expenses) (collectively,
"Losses"), to which the Indemnified Parties may become subject, insofar as such
Losses (i) result from a breach by Investors Research of a material provision of
this Agreement, including the incorrect calculation or reporting of the daily
net asset value per share or dividend or capital gain distribution rate, or (ii)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement or any prospectus
of the Fund or arise out of or are based upon 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. Investors Research will reimburse
any legal or other expenses reasonably incurred by the Indemnified Parties in
connection with investigating or defending any such Losses. Investors Research
shall not be liable for indemnification hereunder if such Losses are
attributable to the negligence or misconduct of the Company performing its
obligations under this Agreement or as a result of a breach of Section 21.
(b) The Company agrees to indemnify and hold harmless Investors Research
and the Issuer and each person, if any, who controls the Issuer or Investors
Research within the meaning of the Securities Act of 1933, and their respective
officers, directors, employees, agents, and affiliates of the foregoing
(collectively, the "Indemnified Parties" for purposes of this Section 10(b))
against any Losses to which the Indemnified Parties may become subject, insofar
as such Losses (i) result from a breach by the Company of a material provision
of this Agreement, or (ii) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the sales
literature of the Company or in a registration statement or any prospectus of
the Company regarding the Contracts or the Account, if any, or arise out of or
are based upon 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, or arise out of or as a result of conduct, statements or
representations of the Company or its agents (other than statements or
representations contained in the prospectuses or sales literature of the Fund),
<PAGE>
PAGE 8
with respect to the sale and distribution of Contracts for which the Fund's
shares serve as the underlying investment, or (iii) result from the use by any
person of a Remote Computer Terminal. The Company will reimburse any legal or
other expenses reasonably incurred by the Indemnified Parties in connection with
investigating or defending any such Losses. The Company shall not be liable for
indemnification hereunder if such Losses are attributable to the negligence or
misconduct of Investors Research or the Issuer in performing their obligations
under this Agreement.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party hereunder, notify the
indemnifying party of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which it may have
to any indemnified party otherwise than under this Section 10. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 10 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnifying party assumes the defense of any such action, the
indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or compromise the liability of the
indemnified parties in such action, or permit a default or consent to the entry
of any judgment in respect thereof, unless in connection with such settlement,
compromise or consent, each indemnified party receives from such claimant an
unconditional release from all liability in respect of such claim.
11. Potential Conflicts.
(a) The Company has received a copy of an application for exemptive relief,
as amended, filed by Investors Research on December 21, 1987, with the SEC and
the order issued by the SEC in response thereto (the "Shared Funding Exemptive
Order"). The Company has reviewed the conditions to the requested relief set
forth in such application for exemptive relief. As set forth in such
application, the Board of Directors of the Issuer (the "Board") will monitor the
Issuer for the existence of any material irreconcilable conflict between the
interests of the contract owners of all separate accounts ("Participating
Companies") investing in funds of the Issuer. An irreconcilable material
conflict may arise for a variety of reasons, including (i) an action by any
state insurance regulatory authority; (ii) 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
actions by
<PAGE>
PAGE 9
insurance, tax or securities regulatory authorities; (iii) an administrative or
judicial decision in any relevant proceeding; (iv) the manner in which the
investments of any portfolio are being managed; (v) a difference in voting
instructions given by variable annuity contract owners and variable life
insurance contract owners; or (vi) a decision by an insurer to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof.
(b) The Company will report any potential or existing conflicts of which it
is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order by providing the Board
with all information reasonably necessary for the Board to consider any issues
raised. This includes, but is not limited to, an obligation by the Company to
inform the Board whenever contract owner voting instructions are disregarded.
(c) If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists with regard
to contract owner investments in a Fund, the Board shall give prompt notice to
all Participating Companies. If the Board determines that the Company is
responsible for causing or creating said conflict, the Company shall at its sole
cost and expense, and to the extent reasonably practicable (as determined by a
majority of the disinterested Board members), take such action as is necessary
to remedy or eliminate the irreconcilable material conflict. Such necessary
action may include but shall not be limited to:
(i) withdrawing the assets allocable to the Account from
the Fund and reinvesting such assets in a different
investment medium or submitting the question of
whether such segregation should be implemented to a
vote of all affected contract owners and as
appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners,
life insurance contract owners, or variable contract
owners of one or more Participating Companies) that
votes in favor of such segregation, or offering to
the affected contract owners the option of making
such a change; and/or
(ii) establishing a new registered management investment
company or managed separate account.
(d) If a material irreconcilable conflict arises as a result of a decision
by the Company to disregard its contract owner voting instructions and said
decision represents a minority position or would preclude a majority vote by all
of its contract owners having an interest in the Issuer, the Company at its sole
cost, may be required, at the Board's election, to withdraw an Account's
investment in the Issuer and terminate this Agreement, provided, however, that
such withdrawal and termination shall be limited to
<PAGE>
PAGE 10
the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
(e) For the purpose of this Section 11, a majority of the disinterested
Board members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will the Issuer
be required to establish a new funding medium for any Contract. The Company
shall not be required by this Section 11 to establish a new funding medium for
any Contract if an offer to do so has been declined by vote of a majority of the
Contract owners materially adversely affected by the irreconcilable material
conflict.
12. Term and Termination. This Agreement shall terminate as
to the sale and issuance of new Contracts:
(a) at the option of either the Company, Investors Research or the Issuer
upon six months' advance written notice, except that if exemptive relief or an
exemptive order from the SEC is required in connection with such termination, at
such later date as may be necessary to obtain such exemptive relief;
(b) at the option of the Company if the Funds' shares are not
available for any reason to meet the requirement of Contracts as
determined by the Company. Reasonable advance notice of election
to terminate shall be furnished by Company;
(c) at the option of either the Company, Investors Research or the Issuer,
upon institution of formal proceedings against the broker-dealer or
broker-dealers marketing the Contracts, the Account, the Company, or the Issuer
by the National Association of Securities Dealers, Inc. (the "NASD"), the SEC or
any other regulatory body;
(d) upon termination of the Management Agreement between the Issuer and
Investors Research. Notice of such termination shall be promptly furnished to
the Company. This Section 12(d) shall not be deemed to apply if
contemporaneously with such termination a new contract of substantially similar
terms is entered into between the Issuer and Investors Research;
(e) upon the requisite vote of Contract owners having an interest in the
Issuer to substitute for the Issuer's shares the shares of another investment
company in accordance with the terms of Contracts for which the Issuer's shares
had been selected to serve as the underlying investment medium. The Company will
give 60 days' written notice to the Issuer and Investors Research of any
proposed vote to replace the Funds' shares;
(f) upon assignment of this Agreement unless made with the
written consent of all other parties hereto;
(g) if the Issuer's shares are not registered, issued or sold
in conformance with Federal law or such law precludes the use of
<PAGE>
PAGE 11
Fund shares as an underlying investment medium of Contracts issued or to be
issued by the Company. Prompt notice shall be given by either party should such
situation occur,
(h) at the option of the Issuer, if the Issuer reasonably determines in
good faith that the Company is not offering shares of the Fund in conformity
with the terms of this Agreement or applicable law;
(i) at the option of any party hereto upon a determination that continuing
to perform under this Agreement would, in the reasonable opinion of the
terminating party's counsel, violate any applicable federal or state law, rule,
regulation or judicial order;
(j) at the option of the Company, if the Company determines, in its sole
judgment exercised in good faith, that Investors Research 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 that
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
Investors Research of written notice of the Company's election to terminate this
Agreement, or
(k) at the option of Investors Research, if Investors Research 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 that
is likely to have a material adverse impact upon the business and operations of
the Fund or Investors Research, such termination to be effective sixty (60)
days' after receipt by the Company of written notice of Investors Research's
election to terminate this Agreement.
13. Continuation of Agreement. Termination as the result of any cause
listed in Section 12 shall not affect the Issuer's obligation to furnish, under
the terms of this Agreement, its shares to Contracts then in force for which its
shares serve or may serve as the underlying medium (unless such further sale of
Fund shares is proscribed by law or the SEC or other regulatory body).
14. Non-Exclusivity. Each of the parties acknowledges and
agrees that this Agreement and the arrangement described herein are
intended to be non-exclusive and that each of the parties is free
to enter into similar agreements and arrangements with other
entities.
15. Survival. The provisions of Section 8 (use of names) and
Section 10 (indemnity) of this Agreement shall survive termination
of this Agreement.
16. Amendment. Neither this Agreement, nor any provision
hereof, may be amended, waived, discharged or terminated orally,
but only by an instrument in writing signed by all of the parties
hereto.
<PAGE>
PAGE 12
17. Notices. All notices and other communications hereunder shall be given
or made in writing and shall be delivered personally, or sent by telex,
telecopier, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Company:
IDS Life Insurance Company of New York
IDS Tower 10
Minneapolis, Minnesota 55440-0010
Attention: Wendell Halvorson
(612) 671-3095 (office number)
(612) 671-2269 (telecopy number)
With a simultaneous copy to:
IDS Life Insurance Company of New York
IDS Tower 10
Minneapolis, Minnesota 55440
Attention: Mary Ellyn Minenko, Counsel
(612) 671-3678 (office number)
(612) 671-3767 (telecopy number)
To the Issuer or Investors Research:
Twentieth Century Mutual Funds
4500 Main Street
Kansas City, Missouri 64111
Attention: Charles A. Etherington, Esq.
(816) 340-4051 (office number)
(816) 340-4964 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
Section 17 shall be deemed to have been delivered on receipt.
18. Successors and Assigns. This Agreement may not be
assigned without the written consent of all parties to the
Agreement at the time of such assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective permitted successors and assigns.
19. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one agreement, and any party hereto may execute this
Agreement by signing any such counterpart.
20. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
<PAGE>
PAGE 13
21. Confidentiality.
(a) Investors Research acknowledges that the identities of the customers of
the Company or any of its affiliates (collectively, the "Protected Parties" for
purposes of this Section 21), information maintained regarding those customers,
and all computer programs and procedures or other confidential 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. Investors Research agrees
that if in connection with the performance of its duties under this Agreement it
comes into possession of any list or compilation of the identities of or other
confidential information about the Protected Parties' customers, or any other
confidential information or property of the Protected Parties, other than such
information as may be independently developed, compiled or obtained by Investors
Research, whether from information supplied by the Protected Parties' customers
who also maintain accounts directly with the Issuer or another affiliate of
Investors Research or otherwise, Investors Research 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 the Company's prior
written consent, or (b) as required by law or judicial process. Investors
Research acknowledges that any breach of this Section 21(a) would result in
immediate and irreparable harm to the Protected Parties for which there would be
no adequate or quantifiable remedy at law. As a result, the parties agree that
in the event of a breach, as their sole remedy, the Protected Parties will be
entitled to equitable relief by way of temporary and permanent injunctions, as
well as such other equitable relief as a court of competent jurisdiction deems
appropriate.
(b) The parties acknowledge that it is not contemplated that any
confidential information of the Protected Parties is necessary for the
performance by Investors Research or the Issuer of their respective duties under
this Agreement. If the parties determine that the communication of such
confidential information is necessary or desirable, the parties agree to
cooperate in the establishment of procedures to identify such information as
confidential in order to ensure its protection.
22. Access to Books and Records. Each party to this Agreement agrees to
cooperate with each other party and all appropriate government authorities
(including without limitation the SEC, the NASD and state insurance regulators)
and will permit each other and such authorities reasonable access to its books
and records in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby. Each party agrees to permit
the other party or the appropriate governmental authority to make copies of
portions of its books and records that relate to the party's performance of its
duties under this Agreement and which are the subject matter of the
investigation or inquiry.
<PAGE>
PAGE 14
23. Entire Agreement. This Agreement, including the Attachments hereto,
constitutes the entire agreement between the parties with respect to the matters
dealt with herein, and supersedes all previous agreements, written or oral, with
respect to such matters.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
INVESTORS RESEARCH CORPORATION IDS LIFE INSURANCE COMPANY
OF NEW YORK
By: /s/ William M. Lyons By: /s/ Richard W. Kling
William M. Lyons Name: Richard W. Kling
Executive Vice President Title: Chairman of the Board
and President
TCI PORTFOLIOS, INC. Attest:
By: /s/ William M. Lyons By: /s/ William A. Stolzman
William M. Lyons Name: William A. Stolzman
Executive Vice President Title: Counsel
<PAGE>
PAGE 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our reports dated February 7, 1997 on the financial statements
and schedules of IDS Life Insurance Company of New York and our report dated
March 21, 1997 on the financial statements of the Flexible Portfolio Annuity
Account in Post-Effective Amendment No. 1 to the Registration Statement (Form
N-4, No. 333-03867) and related Prospectus for the registration of the Flexible
Portfolio Annuity Account to be offered by IDS Life Insurance Company of New
York.
Ernst & Young LLP
Minneapolis, Minnesota
April 21, 1997
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1996
- -----------------------------------------------------------------------------
Column A Column B Column C Column D
Type of Investment Cost Value Amount at which
shown in the
balance sheet
- -----------------------------------------------------------------------------
Fixed maturities:
Held to maturity:
United States Government and
government agencies and
authorities (a) $ 62,005 $ 60,732 $ 62,005
All other corporate bonds 523,807 543,903 523,807
---------- ----------- ----------------
Total held to maturity 585,812 604,635 585,812
Available for sale:
United States Government and
government agencies and
authorities (b) 308,587 311,541 311,541
States, municipalities and
political subdivisions 105 115 115
All other corporate bonds 281,916 289,967 289,967
---------- ----------- ----------------
Total available for sale 590,608 601,623 601,623
Mortgage loans on real estate 160,017 XXXXXXXXX 160,017
Policy loans 20,077 XXXXXXXXX 20,077
Other investments 1,374 XXXXXXXXX 1,374
---------- ----------------
Total investments $ 1,357,888 $ XXXXXXXXX $ 1,368,903
========== ================
(a) - Includes mortgage-backed securities with a cost and market value of
$57,507 and $56,090, respectively.
(b) - Includes mortgage-backed securities with a cost and market value of
$308,587 and $311,541, respectively.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1996
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other Premium Net Benefits, Amortization Other Premiums
policy policy premiums policy revenue investment claims, of deferred operating written
acquisition benefits, claims income* losses and policy expenses*
cost losses, and settlement acquisition
claims and benefits expenses costs
loss payable
expenses
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $67,568 $1,054,954$ - $ 1,055 $ - $ 93,319 $ 80 $ 11,257 $ 3,923 N/A
Life, DI and
Long-term Care
Insurance 51,615 187,616 - 2,100 10,931 16,149 10,835 4,814 5,049 N/A
- -----------------------------------------------------------------------------------------------------------
Total $119,183 $1,242,570$ - $ 3,155 $10,931 $109,468 $10,915 $ 16,071 $ 8,972 N/A
- ------------------------------------------------------------------------------------------------------------
</TABLE>
*Allocations of net investment income and other operating expenses are based on
various assumptions and estimates.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1995
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other Premium Net Benefits, Amortization Other Premiums
policy policy premiums policy revenue investment claims, of deferred operating written
acquisition benefits, claims income* losses and policy expenses*
cost losses, and settlement acquisition
claims and benefits expenses costs
loss payable
expenses
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 65,283 $1,109,167$ - $ 2,222 $ - $ 95,323 $ 171 $ 9,138 $ 6,908 N/A
Life, DI and
Long-term Care
Insurance 44,517 178,952 - 1,422 9,280 15,601 9,689 3,947 566 N/A
- -----------------------------------------------------------------------------------------------------------------
Total $ 109,800 $1,288,119$ - $ 3,644 $ 9,280 $110,924 $ 9,860 $ 13,085 $ 7,474 N/A
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
*Allocations of net investment income and other operating expenses are based on
various assumptions and estimates.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1994
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income* losses and policy expenses*
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $61,442 $1,087,367$ - $ 1,348 $ - $92,583 $ 81 $ 9,392 $ 4,765 N/A
Life, DI and
Long-term Care
Insurance 38,636 168,417 - 1,869 7,846 15,560 10,214 3,602 3,594 N/A
- --------------------------------------------------------------------------------------------------------------------
Total $100,078 $1,255,784$ - $ 3,217 $ 7,846 $108,143 $ 10,295 $ 12,994 $ 8,359 N/A
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
*Allocations of net investment income and other operating expenses are based on
various assumptions and estimates.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE IV - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- ---------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
Gross amount Ceded to other Assumed from Net % of amount
companies other companies Amount assumed to net
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
Life insurance in force $ 3,707,618 $ 203,963 $ 345,943 $ 3,849,598 8.99%
===================================================================================================
Premiums:
Life insurance & annuities $ 2,634 $ 222 $ -- $ 2,412 0.00%
DI & long-term care insurance 8,651 132 -- 8,519 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 11,285 $ 354 $ 0 $ 10,931 0.00%
===================================================================================================
For the year ended
December 31, 1995
Life insurance in force $ 3,110,745 $ 163,462 $ 392,106 $ 3,339,389 11.74%
===================================================================================================
Premiums:
Life insurance & annuities $ 2,327 $ 185 $ -- $ 2,142 0.00%
DI & long-term care insurance 7,221 83 -- 7,138 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 9,548 $ 268 $ 0 $ 9,280 0.00%
===================================================================================================
For the year ended
December 31, 1994
Life insurance in force $ 3,602,888 $ 162,956 $ 447,317 $ 3,887,249 11.51%
===================================================================================================
Premiums:
Life insurance & annuities $ 2,219 $ 209 $ -- $ 2,010 0.00%
DI & long-term care insurance 5,919 83 -- 5,836 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 8,138 $ 292 $ 0 $ 7,846 0.00%
===================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- -----------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------
Balance at Charged to
Description Beginning Charged to Other Accounts-Deductions- Balance at End
of Period Costs & Expenses Describe Describe of Period
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
- ------------------------------
Reserve for Mortgage Loans $445 $855 $0 $0 $1,300
Reserve for Fixed Maturities $26 $23 $0 $0 $49
For the year ended
December 31, 1995
- ------------------------------
Reserve for Mortgage Loans $445 $0 $0 $0 $445
Reserve for Fixed Maturities $0 $26 $0 $0 $26
For the year ended
December 31, 1994
- ------------------------------
Reserve for Mortgage Loans $445 $0 $0 $0 $445
Reserve for Fixed Maturities $1,652 ($1,652) $0 $0 $0
</TABLE>
<PAGE>
PAGE 1
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company of New York
We have audited the financial statements of IDS Life Insurance Company of New
York (a wholly-owned subsidiary of IDS Life Insurance Company) as of December
31, 1996 and 1995, and for each of the three years in the period ended December
31, 1996, and have issued our report thereon dated February 7, 1997 (included
elsewhere in this Registration Statement). Our audits also included the
financial statement schedules listed in Item 24(b) of this Registration
Statement. These schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Ernst & Young LLP
Minneapolis, Minnesota
February 7, 1997
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<PAGE>
PAGE 1
IDS LIFE INSURANCE COMPANY OF NEW YORK
POWER OF ATTORNEY
City of Albany
State of New York
Each of the undersigned, as officers and/or directors of IDS Life Insurance
Company of New York on behalf of the below listed registrants previously have
filed registration statements and amendments thereto pursuant to the
requirements of the Securities Act of 1933 and the Investment Company Act of
1940 with the Securities and Exchange Commission:
1933 Act 1940 Act
Reg. Number Reg. Number
IDS Life of New York 4, 5, 6, 9, 10, 11, 12, 13 and 14
IDS Life of New York Employee Benefit
Annuity 33-52567 811-3500
IDS Life of New York 4, 5, 6, 9, 10,
11, 12, 13 and 14
IDS Life of New York Flexible Annuity 33-4174 811-3500
IDS Life of New York 4, 5, 6, 9, 10, 11, 12, 13 and 14
IDS Life of New York Variable
Retirement and Combination Retirement
Annuity 2-78194 811-3500
IDS Life of New York Flexible Portfolio
Annuity Account
IDS Life of New York Flexible Portfolio
Annuity
IDS Life of New York Account 8
Flexible Premium Variable Life
Insurance Policy 33-15290 811-5213
IDS Life of New York Account SBS
Symphony Annuity 33-45776 811-6560
IDS Life of New York Account 7
Single Premium Variable Life
Insurance Policy 33-10334 811-4913
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn Minenko,
Eileen J. Newhouse, Sherilyn K. Beck, Colin Lancaster and Timothy S. Meehan or
any one of them, as her or his attorney-in-fact and agent, to sign for her or
him in her or his name, place and stead any and all filings, applications
(including applications for exemptive relief), periodic reports, registration
statements (with all exhibits and other documents required or desirable in
connection therewith) other documents, and amendments thereto and to file such
filings, applications, periodic reports, registration statements other
documents, and amendments thereto with the Securities and Exchange Commission,
and any necessary states, and grants to any or all of them the full power and
authority to do and perform each and every act required or necessary in
connection therewith.
<PAGE>
PAGE 2
Dated the 26th day of March, 1997.
/s/ John C. Boeder /s/ Thomas V. Nicolosi
John C. Boeder Thomas V. Nicolosi
Director Director
/s/ Roger C. Corea /s/ Stephen P. Norman
Roger C. Corea Stephen P. Norman
Director Director
/s/ Charles A. Cuccinello /s/ Carl N. Platou
Charles A. Cuccinello Carl N. Platou
Director Director
/s/ Darlene S. Farron /s/ Gordon H. Ritz
Darlene S. Farron Gordon H. Ritz
Treasurer Director
/s/ Robert A. Hatton /s/ Richard M. Starr
Robert A. Hatton Richard M. Starr
Director, Vice President Director
and Chief Operating Officer
/s/ Richard W. Kling /s/ Michael R. Woodward
Richard W. Kling Michael R. Woodward
Director, Chairman of the Director
Board and President
/s/ Edward Landes
Edward Landes
Director
