EXHIBIT 8(gg)
PARTICIPATION AGREEMENT
AMONG
ML LIFE INSURANCE COMPANY OF NEW YORK,
FEDERATED EQUITY FUNDS, AND
FEDERATED SECURITIES CORP.
THIS AGREEMENT, dated as of the 1st day of March, 2005, by and among ML
Life Insurance Company of New York (the "Company"), a New York life insurance
company, on its own behalf and on behalf of each segregated asset account of the
Company set forth on Schedule A hereto as may be amended from time to time
(hereinafter referred to individually and collectively as the "Account"),
Federated Equity Funds (the "Fund"), a Massachusetts business trust, and
Federated Securities Corp. (the "Underwriter"), a Pennsylvania corporation.
WHEREAS, the shares of beneficial interests of the Fund are divided into
several series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended, (the "1940 Act")
and shares of the Portfolios are registered under the Securities Act of 1933, as
amended (the "1933 Act");
WHEREAS, the Underwriter, which serves as distributor to the Fund, is
registered as a broker-dealer with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended (the "1934 Act"),
and is a member in good standing of the NASD, Inc.);
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to
variable annuity contracts set forth in Schedule A hereto, as it may be amended
from time to time by mutual written agreement (the "Contracts");
WHEREAS, each Portfolio issues shares to the general public and pursuant
to this Agreement will issue shares to the separate accounts of insurance
companies ("Participating Insurance Companies") to fund variable annuity
contracts issued in connection with certain qualified pension and retirement
plans;
WHEREAS, the Company intends to purchase shares of other open-end
management investment companies that offer shares to the general public to fund
the Contracts;
WHEREAS, the Fund and the Underwriter know of no reason why shares in any
Portfolio may not be sold to insurance companies to fund variable annuity
contracts sold to certain qualified pension and retirement plans; and
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WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios (and
classes thereof) listed in Schedule B hereto, as it may be amended from time to
time by mutual written agreement (the "Designated Portfolios") on behalf of the
Account to fund the aforesaid Contracts, and the Underwriter is authorized to
sell such shares in the Designated Portfolios, and classes thereof, to 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 1. Sale of Fund Shares
1.1. The Fund has granted to the Underwriter exclusive authority to
distribute the Fund's shares, and pursuant to a written agreement between the
Fund and the Underwriter, the Underwriter is authorized to make available to the
Company for purchase on behalf of the Account shares of the Designated
Portfolios and classes thereof listed on Schedule B to this Agreement (the
"Shares"). Pursuant to such authority and instructions, and subject to Article
IX hereof, the Underwriter agrees to make the Shares available to the Company
for purchase on behalf of the Account, such purchases to be effected at net
asset value in accordance with the Operational Guidelines included as Schedule C
in the Recordkeeping Agreement between the Company and Federated Shareholder
Services Company dated March 3, 2005 (the "Operational Guidelines").
Notwithstanding the foregoing, the Board of Trustees of the Fund (the "Board")
may suspend or terminate the offering of Shares of any Designated Portfolio or
class thereof, if such action is required by law or by regulatory authorities
having jurisdiction or if, in the sole discretion of the Board acting in good
faith and in light of its fiduciary duties under federal and any applicable
state laws, suspension or termination is necessary in the best interests of the
shareholders of such Designated Portfolio.
1.2. The Fund shall redeem, at the Company's request, any full or
fractional Shares held by the Company on behalf of the Account, such redemptions
to be effected at net asset value in accordance with the Operational Guidelines.
Notwithstanding the foregoing, (i) the Company shall not redeem Shares
attributable to Contract owners except in the circumstances permitted in Section
9.3 of this Agreement, and (ii) the Fund may delay redemption of Shares of any
Designated Portfolio to the extent permitted by the 1940 Act, and any rules,
regulations, or orders thereunder.
1.3. The Fund hereby appoints the Company as an agent of the Fund for the
limited purpose of receiving purchase and redemption requests on behalf of the
Account (but not with respect to any Fund shares that may be held in the general
account of the Company) for the Shares made available hereunder, based on
allocations of amounts to the Account or subaccounts thereof under the Contracts
and other transactions relating to the Contracts or the Account. All
transactions in Account shares shall be executed through the Omnibus Accounts of
Company's affiliate Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx, Inc. ("Omnibus
Accounts") in accordance with the Operational Guidelines.
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1.4. Issuance and transfer of Shares shall be by book entry only and
executed through the Omnibus Accounts. Stock certificates will not be issued to
the Company or the Account. Purchase and redemption orders for Fund shares shall
be recorded in an appropriate ledger for the Account or the appropriate
subaccount of the Account.
1.5 Fund Information.
(a) The Fund will provide (or cause to be provided) to Company the
information set forth in Schedule C hereto. In addition, notwithstanding
anything contained in this Agreement to the contrary, the Fund hereby agrees
that Company may, subject to the requirements of Section 4.1 hereof, use such
information in communications prepared for the Contracts, including, but not
limited to, application, marketing, sales and other communications materials.
The Fund will provide timely notification to Company of any change to the
information described in Part I of Schedule C and of any change to the CUSIP
number or symbol designation of a Fund. Such notification shall be given to
Company as soon as reasonably practicable prior to the effective date of the
change. If the notification is not given at least ten (10) Business Days prior
to the effective date of the change, the effect of the change with respect to
transactions by the Account in any affected Fund shall be delayed for a
reasonable time following notification hereunder.
(b) Notwithstanding anything to the contrary in this Agreement, upon
request, the Fund will provide Company with prospectuses, proxy materials,
financial statements, reports and other materials relating to each Fund in
sufficient quantity for each Contract owner invested in the Fund. Expenses
incurred in connection with this request will be paid pursuant to Section 3 of
this agreement.
(c) With the exception of (i) listings of product offerings; (ii)
materials in the public domain (e.g., magazine articles and trade publications);
and (iii) materials used by on an internal basis only, Company agrees not to
furnish or cause to be furnished to any third parties or to display publicly or
publish any information or materials relating to the Funds, except such
materials and information as may be distributed to Company by Fund or approved
for distribution by Fund upon Company's request, pursuant to Section 4.1 of this
agreement.
1.6. The parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
investors and the cash value of the Contracts may be invested in other
investment companies. The Company acknowledges that shares of the Fund are
offered and sold directly to members of the general public, and are not and will
not be sold directly to insurance companies and their separate accounts and
certain qualified retirement plus in accordance with Section 817 (h)(4) of the
Internal Revenue Code of 1986, as amended, and Treasury Regulation 1.817-5.
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ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts (a) are, or
prior to issuance will be, registered under the 1933 Act, or (b) are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company further represents and warrants
that the Contracts will be issued and sold in compliance in all material
respects with all applicable federal securities and state securities and
insurance laws and that the sale of the Contracts shall comply in all material
respects with 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, that it has legally and validly established
the Account prior to any issuance or sale thereof as a segregated asset account
under Arkansas insurance laws, and that it (a) has registered or, prior to any
issuance or sale of the Contracts, will register 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, or alternatively (b) has not
registered the Account in proper reliance upon an exclusion from registration
under the 1940 Act. The Company shall register and qualify the Contracts or
interests therein as securities in accordance with the laws of the various
states only if and to the extent deemed advisable by the Company.
2.2. The Fund represents and warrants that Shares sold pursuant to this
Agreement shall be registered under the 1933 Act and duly authorized for
issuance and sold in compliance with applicable state and federal securities
laws, and that the Fund is and shall remain registered under the 0000 Xxx. The
Fund shall 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 shall register and qualify the shares for sale
in accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund or the Underwriter.
2.3. The Fund and the Underwriter agree to comply in all material respects
with any applicable state insurance laws or regulations (including the
furnishing of information not otherwise available to the Company which is
required by state insurance law to enable the Company to obtain the authority
needed to issue the Contracts in any applicable state, and including cooperating
with the Company in any filings of sales literature for the Contracts), to the
extent notified thereof in writing by the Company; provided that such compliance
is not inconsistent with any other laws or regulations applicable to the Fund or
the Underwriter.
2.4. 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 the 1940 Act.
2.6. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in compliance with all material respects with any applicable state and federal
securities laws.
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2.7. The Fund represents and warrants that all of its trustees/directors,
officers, employees, investment advisers, and other individuals or entities
dealing with the money and/or securities of the Fund are and shall 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 minimum 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 shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many copies of the
Fund's current prospectus as the Company may reasonably request. The Fund or the
Underwriter shall bear the expense of printing copies of the current prospectus
and profiles for the Fund that will be distributed to existing Contract owners
whose contracts are funded by the Fund's shares, and the Company shall bear the
expense of printing copies of the Fund's prospectus and profiles that are used
in connection with offering the Contracts issued by the Company. If requested by
the Company in lieu thereof, the Fund shall provide such documentation
(including a final copy of the new prospectus on diskette at the Fund's or
Underwriter's expense) and other assistance as is reasonably necessary in order
for the Company once each year (or more frequently if the prospectus for the
Fund is amended) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document (such printing of the Fund's
prospectus and profiles for existing Contract owners whose contracts are funded
by the Fund's shares to be at the Fund's or Underwriter's expense).
3.2. The Fund's prospectus shall state that the current Statement of
Additional Information ("SAI") for the Fund is available, and the Underwriter
(or the Fund), at its expense, shall provide a reasonable number of copies of
such SAI free of charge to the Company for itself and for any owner of a
Contract who requests such SAI.
3.3. Upon the reasonable request of the Company, the Fund shall provide
the Company with information regarding the Fund's expenses, which information
may include a table of fees and related narrative disclosure for use in any
prospectus or other descriptive document relating to a Contract.
3.4. The Fund, at its or the Underwriter's expense, shall provide the
Company with copies of its proxy material, reports to shareholders, and other
communications to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Shares in accordance with instructions received from
Contract owners; and
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(iii) vote Shares for which no instructions have been received in
the same proportion as Shares of such portfolio for which
instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners or to the
extent otherwise required by law. The Company will vote Shares held in any
segregated asset account for its own account in the same proportion as Shares of
such portfolio for which voting instructions have been received from Contract
owners, to the extent permitted by law.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund, the Underwriter, or their designees, each piece of sales literature or
other promotional material that the Company develops and in which the Fund (or a
Designated Portfolio thereof) the Fund's investment adviser (the "Adviser") or
the Underwriter is named. No such material shall be used until approved by the
Fund, the Underwriter or their designees. The Fund, the Underwriter, or their
designees will be deemed to have approved such sales literature or promotional
material unless the Fund or its designee objects or provides comments to the
Company within ten (10) Business Days after receipt of such material. The Fund,
the Underwriter, or their designees reserve the right to reasonably object to
the continued use of any such sales literature or other promotional material in
which the Fund (or a Designated Portfolio thereof) or the Adviser or the
Underwriter is named, and no such material shall be used if the Fund, the
Underwriter or their designees so object.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund or
the Adviser or the Underwriter in connection with the sale of the Contracts
other than the information or representations contained in the registration
statement or profiles or prospectus or SAI for the Fund shares, as such
registration statement and profiles and prospectus or SAI may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund and the Underwriter, or their designee, shall furnish, or
cause to be furnished, to the Company, each piece of sales literature or other
promotional material that it develops and in which the Company, and/or its
Account, is named. No such material shall be used until approved by the Company.
The Company will be deemed to have approved such sales literature or promotional
material unless the Company objects or provides comments to the Fund, the
Underwriter, or their designee within ten Business Days after receipt of such
material. The Company reserves the right to reasonably object to the continued
use of any such sales literature or other promotional material in which the
Company and/or its Account is named, and no such material shall be used if the
Company so objects.
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4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement and prospectus (which shall include an
offering memorandum, if any, if the Contracts issued by the Company or interests
therein are not registered under the 1933 Act), or SAI for the Contracts, as
such registration statement, prospectus, or SAI may be amended or supplemented
from time to time, or in published reports for the Account which are in the
public domain or approved by the Company for distribution to Contract owners, or
in sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, profiles, prospectuses, SAIs, shareholder 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, promptly after the filing of such
document(s) with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund or the Underwriter at least one
complete copy of all registration statements, prospectuses (which shall include
an offering memorandum, if any, if the Contracts issued by the Company or
interests therein are not registered under the 1933 Act), SAIs, 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 the Account,
promptly after the filing of such document(s) with the SEC or other regulatory
authorities. The Company shall provide to the Fund and the Underwriter any
complaints received from the Contract owners pertaining to the Fund or the
Designated Portfolio.
4.7. The Fund will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Designated Portfolio,
and of any material change in the Fund's registration statement, particularly
any change resulting in a change to the registration statement or prospectus for
any Account. The Fund will work with the Company so as to enable the Company to
solicit proxies from Contract owners, or to make changes to its prospectus or
registration statement, in an orderly manner.
4.8. For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: 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), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, 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, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Fund.
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ARTICLE V. Fees and Expenses
5.1. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law, and all taxes on the issuance
or transfer of the Fund's shares.
5.2. The Company shall bear the expenses of distributing the Fund's
prospectus to owners of Contracts in connection with the offer of Contracts,
issued by the Company and of distributing the Fund's proxy materials and
reports to such Contract owners.
5.3 The Company agrees to respond to the reasonable inquiries and requests
of any Contract owner relating to their investment in the Fund. As compensation
for such shareholder services, the Company is entitled to service fees, paid by
the Underwriter, as agent for the Fund, at an annual rate of [redacted] % of
each Portfolio's average net assets. The Underwriter and the Fund shall pay any
amounts owed under this Agreement in accordance with their regular payment
schedules and in no event less frequently than quarterly. For the payment period
in which this Agreement becomes effective or terminates, there will be an
appropriate pro-ration of all payments, on the basis of the number of days that
this Agreement is in effect during the quarter. In connection with such
payments, the Underwriter and the Fund may provide a statement setting forth the
calculation of amounts paid to the Company. Absent manifest error, any such
calculations will be final unless either party objects thereto within sixty (60)
days of the date of the statement.
ARTICLE VI. Qualification under Subchapter M
6.1. The Fund represents that it is or will be qualified as a Regulated
Investment Company under Subchapter M of the Code, and that it will use its best
efforts to maintain such qualification (under Subchapter M or any successor or
similar provisions) 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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ARTICLE VII. Indemnification
7.1. Indemnification By the Company
7.1(a). The Company agrees to indemnify and hold harmless the Fund
and the Underwriter and each of its trustees/directors and officers, and each
person, if any, who controls the Fund or the Underwriter within the meaning of
Section 15 of the 1933 Act or who is under common control with the Underwriter
(collectively, the "Indemnified Parties" for purposes of this Section 7.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements:
(i) arise out of or are based upon any untrue statement or alleged
untrue statements of any material fact contained in the registration
statement, prospectus (which shall include a written description of
a Contract that is not registered under the 1933 Act), or SAI for
the Contracts or contained in sales literature 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 the Company by or on behalf of the Fund for use in the
registration statement, prospectus or SAI 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
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI, or sales literature of the
Fund not supplied by the Company or persons under its control) or
wrongful conduct of the Company or its agents or persons under the
Company's authorization or control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, SAI, or sales literature of the Fund or any amendment
thereof or supplement thereto 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 information
furnished to the Fund by or on behalf of the Company; or
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(iv) arise as a result of any material failure by the Company 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 qualification
requirements specified in Section 6.1 of this Agreement); or
(v) arise out of or result from 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 of this
Agreement by the Company;
as limited by and in accordance with the provisions of Sections 7.1(b) and
7.1(c) hereof.
7.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of its obligations or duties under this Agreement.
7.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim 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 the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company 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.
7.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Contracts or the operation
of the Fund.
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7.2. Indemnification by the Underwriter
7.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 7.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or profile or prospectus or SAI or sales literature 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 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 the Underwriter or the Fund by or on
behalf of the Company for use in the registration statement,
profile, prospectus or SAI for the Fund or in sales literature (or
any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature for the
Contracts not supplied by the Underwriter or persons under their
control) or wrongful conduct of the Fund or the Underwriter or
persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, SAI or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Fund or
the Underwriter; or
(iv) 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 of the Fund, whether
unintentional or in good faith or otherwise, to comply with the
qualification requirements specified in Section 6.1 of this
Agreement); or
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(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or the Underwriter
in this Agreement or arise out of or result from any other material
breach of this Agreement by the Fund or the Underwriter; or
(vi) arise out of or result from the materially incorrect or
untimely calculation or reporting of the daily net asset value per
share or dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 7.2(b) and
7.2(c) hereof.
7.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
7.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim 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 the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter 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.
7.2(d). The Indemnified Party will promptly notify the Underwriter
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of the Account.
ARTICLE VIII. Applicable Law
8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
12
8.2. This Agreement shall be subject to the provisions of the 1933, 1934,
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules, and regulations as the SEC may grant
and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE IX. Termination
9.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party, for any reason with respect to some
or all Designated Portfolios, by three (3) months advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and
the Underwriter based upon the Company's determination that
shares of the Fund are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and
the Underwriter in the event any of the 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 the Company; or
(d) termination by the Fund or the Underwriter in the event that
formal administrative proceedings are instituted against the
Company by the NASD, the SEC, the Insurance Commissioner, or
like official 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 operation of any Account, or
the purchase of the Shares; provided, however, that the Fund
or the Underwriter determines in its sole judgment exercised
in good faith, that any such administrative proceedings will
have a material adverse effect upon the ability of the Company
to perform its obligations under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund or
the Underwriter by the NASD, the SEC, or any state securities
or insurance department, or any other regulatory body;
provided, however, that the Company determines in its sole
judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the
ability of the Fund or the Underwriter to perform its
obligations under this Agreement; or
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(f) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Designated Portfolio in
the event that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M as specified in Section
6.1 hereof, or if the Company reasonably believes that such
Portfolio may fail to so qualify or comply; or
(g) termination by the Fund or the Underwriter by written notice
to the Company, if the Fund or the Underwriter respectively,
shall determine, in their sole judgment exercised in good
that the Company has suffered a material adverse change in its
faith, business, operations, financial condition, or prospects
since the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that the Fund, the Adviser,
or the Underwriter has suffered a material adverse change in
its business, operations, financial condition, or prospects
since the date of this Agreement or is the subject of material
adverse publicity; or
(i) termination by the Company upon any substitution of the shares
of another investment company or series thereof for Shares in
accordance with the terms of the Contracts, provided that the
Company has given at least 45 days prior written notice to the
Fund and the Underwriter of the date of substitution; or
(j) transaction by any party upon another party's failure to cure
a material breach of any provision of this Agreement within 30
days after written notice thereof.
9.2. (a) Notwithstanding any termination of this Agreement, the Fund and
the Underwriter shall, at the option of the Company, continue to
make available additional Shares 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"), provided the Company continues
to pay the costs set forth in Section 3.1 and 5.2 and unless the
Underwriter requests that the Company seek an order pursuant to
Section 26(c) of the 1940 Act to permit the substitution of other
securities for the Shares. The Underwriter agree to split the cost
of seeking such an order, and the Company agrees that it shall
reasonably cooperate with the Underwriter and seek such an order
upon request. Specifically, the owners of the Existing Contracts may
be permitted to reallocate investments in the Fund, redeem
investments in the Fund, and/or invest in the Fund upon the making
of additional purchase payments under the existing Contracts
(subject to any such election by the Underwriter). The parties agree
14
that this Section 9.2 shall not apply to any terminations under
Section 9.1(i) of this Agreement.
(b) In the event of a termination of this agreement pursuant to Section
9.1 (other than 9.1(i)), the Company shall promptly notify the Fund
and the Underwriter whether the Fund and the Underwriter will be
required to continue to make shares available after such
termination; in such circumstances, the provisions of this Agreement
shall remain in effect except for Section 9.1 hereof, and thereafter
any party may terminate the Agreement (the "Final Termination"), as
so continued pursuant to this Section 9.2,upon prior written notice
to the other parties, such notice to be for a period reasonable
under the circumstances but, if given by the Fund or the
Underwriter, need not be greater than six months.
(c) The Company, the Fund and the Underwriter agree to cooperate in
respect of the measures that are necessary or appropriate to effect
the Final Termination of this Agreement, and will give reasonable
assistance to each other in that regard, including steps necessary
or appropriate to ensure that an Account owns no shares of the Fund
after the Final Termination of this Agreement.
9.3 The Company shall not redeem Shares attributable to the Contracts (as
opposed to Shares attributable to the Company's assets held in the Account)
except (i) as necessary to implement Contract owner initiated or approved
transactions, (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally Required Redemption"), (iii) upon 45 days prior written notice
to the Fund and Underwriter, as permitted by an order of the SEC pursuant to
Section 26(c) of the 1940 Act, but only if a substitution of other securities
for the Shares is consistent with the terms of the Contracts, or (iv) as
permitted under the terms of the Contract. Upon request, the Company will
promptly furnish to the Fund and the Underwriter reasonable assurance that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contacts,
the Company shall not prevent Contract owners from allocating payments to a
Portfolio that was otherwise available under the Contracts without first giving
the Fund or the Underwriter 45 days notice of its intention to do so.
9.4. Notwithstanding any termination of this Agreement, each party's
obligation under Article VII to indemnify the other parties and the Company's
obligation under Section 3.5 regarding pass-through voting shall survive.
ARTICLE X. Notices
Any notice shall be sufficiently 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 party.
15
If to the Fund:
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attn: General Counsel
If to the Company:
ML Life Insurance Company of New York
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Xx.
Vice President & Senior Counsel
If to the Underwriter:
0000 Xxxxxxx Xxxxxx Xxxxxxxxxx,
XX 00000
Attn: General Counsel
ARTICLE XI. Miscellaneous
11.1. All persons dealing with the fund must look solely to the property
of the Fund, and in the case of a series company, the respective Designated
Portfolios listed on Schedule B hereto as though each such Designated Portfolio
had separately contracted with the Company and the Underwriter for the
enforcement of any claims against the Fund. The parties agree that neither the
Board nor any member thereof, officers, agents, or shareholders of the Fund
assume any personal liability or responsibility for obligations entered into by
or on behalf of the Fund.
11.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information has come into the
public domain.
11.3. 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.
11.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
16
11.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit 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.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Arkansas Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable contract
operations of the Company are being conducted in a manner consistent with the
Arkansas variable annuity laws and regulations and any other applicable law or
regulations. The Company agrees to pay the reasonable costs and expenses
incurred by the Fund or the Underwriter in connection with responding to such a
request.
11.7. The rights, remedies, and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies, and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
11.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
ML LIFE INSURANCE COMPANY OF NEW YORK:
By its authorized officer
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Title: Xxxxxx X. Xxxxxx, Xx., VP & Sr. Counsel
Date: March 3, 2005
FEDERATED EQUITY FUNDS
By its authorized officer
By: ________________________________________
Title: _____________________________________
Date: ______________________________________
FEDERATED SECURITIES CORP.
By its authorized officer
By: ________________________________________
Title: _____________________________________
Date: ______________________________________
17
SCHEDULE A
SEPARATE ACCOUNTS OF THE COMPANY
Dated: March 3, 2005
ML of New York Variable Annuity Separate Account D
SCHEDULE B
DESIGNATED PORTFOLIOS AND CLASSES
FEDERATED XXXXXXXX FUND - CLASS A
FEDERATED CAPITAL APPRECIATION FUND - CLASS A
Dated: March 3, 2005
SCHEDULE C
FUND MATERIALS
PART I. Fund Description
The Fund will provide to Company or a common service provider designated
by Company as soon as reasonably practicable following the end of each
calendar quarter:
- the Fund's average annual returns for the 1, 5, and 10 year periods
as of the end of the calendar quarter on a Net Asset Value basis.
- a description of the Fund including holdings, portfolio composition,
largest sectors and geographical allocation and a statement of
objective in a mutually acceptable format.
PART II. Fund Information and Materials
The Fund will provide to Company the following information and materials
on an as needed basis, as requested by Company:
- A supply of materials relating to the Funds (prospectuses, quarterly
reports and other brochures) to include with contract application
sales, marketing and communication materials.
- Specific investment performance information that may be requested
that cannot be obtained from the prospectus. This would include
specific calculations on various performance parameters which must
be provided on a time-sensitive basis (usually within 5 Business
Days).
