EXHIBIT (8)(i)
PARTICIPATION AGREEMENT
BETWEEN
ML LIFE INSURANCE COMPANY OF NEW YORK
AND
AMERICAN CENTURY INVESTMENT SERVICES, INC.
THIS AGREEMENT, dated as of the 11th day of October, 2002, by and
between 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"), and American Century Investment Services, Inc. (the "Underwriter"),
a Missouri company, and principal underwriter of American Century Capital
Portfolios, Inc. (the "Fund").
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, American Century Investment Management, Inc. (the "Adviser"),
a Delaware company, which serves as investment adviser to the Fund, is duly
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended;
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 National Association of Securities
Dealers, Inc. (the "NASD");
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 to
other investment vehicles which may be used to fund variable annuity contracts
sold to certain qualified pension and retirement plans;
1
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, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Advisor Class of the
Portfolios 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
and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund has granted to the Underwriter exclusive authority to
distribute the Fund's shares, and has granted the Underwriter authority to make
available to the Company, for purchase on behalf of the Account, Fund shares of
the Designated Portfolios and classes thereof listed on Schedule B to this
Agreement (the "Shares"). Pursuant to such authority, 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 Section 1.3 of this Agreement. Notwithstanding the
foregoing, the Board of Directors 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 Section 1.3 of this
Agreement. 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. Purchase and Redemption Procedures
(a) The Underwriter 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
2
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. Any such request (or relevant
transactional information therefor) received by the Company on any day 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 (a "Business Day") prior to the
time that the Fund ordinarily calculates its net asset value as described from
time to time in the Fund Prospectus (which as of the date of execution of this
Agreement is 4:00 p.m. Eastern Time) shall be executed by the Transfer Agent at
the net asset value determined as of the close of trading on that same Business
Day, provided that the Transfer Agent receives notice of such request by 10 a.m.
Eastern Time on the next following Business Day, or in the event of systems
issues necessitating later delivery of such purchase and redemption requests by
11 a.m. Eastern Time on the next following Business Day. Company will provide to
the Transfer Agent or its designee via the NSCC Fund SERV DCC & S platform
(which utilizes the "as of" record layout within Fund/SERV) one or more files
detailing the instructions received with respect to each Plan prior to 4:00 p.m.
Eastern Time on the prior Business Day for each of the Funds. If for any reason
Company is unable to transmit the file(s) with respect to any Business Day,
Company will notify the Transfer Agent or its designee by 11:00 a.m. Eastern
Time on the next following Business Day. The Company shall maintain records that
will enable the Company to demonstrate the time each order is received.
(b) The Company shall pay for Shares on the same day that
it notifies the Fund of a purchase request for such Shares. Payment for Shares
shall be made in federal funds transmitted to the Fund by wire to be received by
the applicable Fund custodial account by 4:00 p.m. Eastern Time on the day the
Fund is notified of the purchase request for Shares (unless the Company
determines that sufficient proceeds are available from redemption of Shares of
other Designated Portfolios effected pursuant to redemption requests tendered by
the Company on behalf of the Account). Upon receipt of federal funds so wired,
such funds shall cease to be the responsibility of the Company and shall become
the responsibility of the Fund.
(c) Payment for Shares redeemed by the Account or the
Company shall be made in federal funds transmitted by wire to the Company or any
other designated person on the next Business Day after the Fund is properly
notified of the redemption order of such Shares (unless redemption proceeds are
to be applied to the purchase of Shares of other Designated Portfolios in
accordance with Section 1.3(b) of this Agreement), except that the Fund reserves
the right to redeem Shares in assets other than cash and to delay payment of
redemption proceeds to the extent permitted under Section 22(e) of the 1940 Act
and any Rules thereunder, and in accordance with the procedures and policies of
the Fund as described in the then current prospectus. The Fund shall not bear
any responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds by the Company; the Company alone shall be responsible for
such action.
(d) Any purchase or redemption request for Shares held or
to be held in the Company's general account shall be effected at the closing net
asset value per share next
3
determined after the Fund's receipt of such request, provided that, in the case
of a purchase request, payment for Shares so requested is received by the Fund
in federal funds prior to close of business for determination of such value, as
defined from time to time in the Fund Prospectus. If payment is not timely
received, such order will be, at Underwriter's option, either (i) executed at
the net asset value determined on the trade date, and the Company shall be
responsible for all costs to the Underwriter or the Fund resulting from such
delay, or (ii) executed at the net asset value next computed following receipt
of payment.
1.4. The Underwriter (or its agent) shall use its best efforts to
make the closing net asset value per Share for each Designated Portfolio
available to the Company by 6:30 p.m. Eastern Time each Business Day, and in any
event, as soon as reasonably practicable after the closing net asset value per
Share for such Designated Portfolio is calculated, and shall calculate such
closing net asset value in accordance with the Fund's Prospectus. In the event
that a Designated Portfolio's net asset value per Share is not made available to
the Company by such time on a given Business Day ("Day 1"), and the Company is
unable to calculate purchase and redemption orders for the Portfolio's Shares
received on Day 1 ("Day 1 Trades") for transmission to the Fund or its transfer
agent within the timeframes identified in Section 1.3, as applicable, the
Company agrees to calculate such Day 1 Trades in the next cycle based on the
Designated Portfolio's net asset value per Share when received and transmit such
orders to the Fund or its transfer agent, either separately or along with the
purchase and redemption orders received on the next Business Day ("Day 2
Trades"), within the timeframes identified in Section 1.3 for Day 2 Trades. In
such event, provided that Day 1 Trades are segregated from Day 2 Trades when
transmitted to the Fund or its transfer agent, the Fund agrees to effect Day 1
Trades at the Designated Portfolio's net asset value per Share for Day 1.
Neither the Fund, any Designated Portfolio, the Underwriter, nor any of their
affiliates shall be liable for any information provided to the Company pursuant
to this Agreement which information is based on incorrect information supplied
by the Company to the Fund or the Underwriter. Any material error in the
calculation or reporting of the closing net asset value per Share shall be
reported immediately upon discovery to the Company. In such event the Company
shall be entitled to an adjustment to the number of Shares purchased or redeemed
to reflect the correct closing net asset value per Share and the Fund shall bear
the cost of correcting such errors in accordance with its error correction
policy as set forth in the Fund prospectus as may be amended from time to time
in accordance with current SEC operating procedures. Any error of a lesser
amount shall be corrected in the next Business Day's net asset value per Share.
1.5. The Underwriter (or its agent) shall furnish notice (by wire
or telephone followed by written confirmation) to the Company as soon as
reasonably practicable of any income dividends or capital gain distributions
payable on any Shares. The Company, on its behalf and on behalf of the Account,
hereby elects to receive all such dividends and distributions as are payable on
any Shares in the form of additional Shares of that Designated Portfolio. The
Company reserves the right, on its behalf and on behalf of the Account, to
revoke this election and to receive all such dividends and capital gain
distributions in cash. The Underwriter (or its
4
agent) shall notify the Company promptly of the number of Shares so issued as
payment of such dividends and distributions.
1.6. Issuance and transfer of Shares shall be by book entry only.
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.
1.7. 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.
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, and all of its activities hereunder
will be undertaken, 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 Underwriter represents and warrants that Shares sold
pursuant to this Agreement shall be registered under the 1933 Act, 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 shares shall be registered and qualified
for sale in accordance with the laws of the various states only if and to the
extent deemed advisable by the Fund, the Adviser, or the Underwriter, and such
registration and/or qualification may be discontinued at any time upon a
determination by any of them.
5
2.3. The Fund and the Underwriter agree to assist the Company in
its compliance 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.
2.4. The Underwriter represents that the Fund is lawfully organized
and validly existing under the laws of the State of Maryland and that it does
and will comply in all material respects with 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 accordance with any applicable state and federal securities laws.
2.7. The Underwriter represents and warrants that all of the
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
Underwriter shall bear the expense of printing copies of the current prospectus
for the Fund that will be distributed to prospective and existing Contract
owners and the Company shall bear the expense of printing copies of the
Contract's prospectus 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 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.
3.2. The Fund's prospectus shall state that the current Statement
of Additional Information ("SAI") for the Fund is available, and the
Underwriter, 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, as requested by the Company.
6
3.3. The Underwriter (or its agent) 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, as reasonably requested by the
Company.
3.4. The Underwriter (or its agent), at its 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
(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 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 or its designee, each piece of sales literature or other promotional
material that the Company develops and in which the Fund (or a Designated
Portfolio thereof) or the Adviser or the Underwriter is named. No such material
shall be used until approved by the Fund or its designee within ten (10)
Business Days after receipt of such material. The Fund or its designee reserves
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 or its designee 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
7
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 within ten (10) 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.
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, reports and
proxy statements 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 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 and solicitations
for voting instructions, sales literature and other promotional materials, 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 Underwriter 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 Underwriter (or its agent) 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. The Underwriter will make reasonable efforts to attempt to have changes
affecting Contract prospectuses become effective simultaneously with the annual
updates for such prospectuses.
8
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.
ARTICLE V. Fees and Expenses
5.1. All expenses incident to performance by the Underwriter under
this Agreement shall be paid by the Underwriter. The Underwriter shall see to it
that all of the Fund's shares are registered and authorized for issuance in
accordance with applicable federal law and, if and to the extent deemed
advisable by the Underwriter, in accordance with applicable state laws prior to
their sale. The Underwriter 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) (so long as such printing is done by the Underwriter or its
agent), 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 issued by the Company and of distributing the
Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Diversification and Qualification
6.1. The Underwriter represents that the Fund is or will be
qualified as a Regulated Investment Company under Subchapter M of the Code, and
that it will maintain such qualification (under Subchapter M or any successor or
similar provisions) and that it will notify the Company immediately upon having
a reasonable basis for believing that the Fund has ceased to so qualify or that
it might not so qualify in the future.
9
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 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
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 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 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 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 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
10
(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. If the
Company assumes the defense of any such action, the Company 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.
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.
11
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
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 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 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 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
12
(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;
(vi) arise out of or resulting from the materially
incorrect 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. If the Underwriter assumes the defense of any such action, the
Underwriter 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.
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.
13
ARTICLE VIII. Applicable Law.
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
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
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 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
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
14
Fund or the Underwriter to perform its obligations
under this Agreement; or
(f) termination by the Company by written notice to 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 Underwriter by written notice to
the Company, if the Underwriter respectively, shall
determine, in their sole judgment exercised in good
faith, that the Company 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
(h) termination by the Company by written notice to 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 Underwriter
of the date of substitution; or
(j) termination by the Underwriter upon the vote of a
majority of the independent directors of the Fund.
9.2. 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"), unless the
Underwriter requests that the Company seek or the Company determines to seek an
order pursuant to Section 26(c) of the 1940 Act to permit the substitution of
other securities for the Shares. In such event, each party agrees that it shall
reasonably cooperate with the other in seeking 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 that this Section 9.2 shall not apply to any terminations under
Section 9.1(i) of this Agreement.
15
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, or such lesser amount as is reasonably practicable, 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 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.
If to the Company: Xxxxx X. Xxxxxxxx, Esq.
Senior Vice President and General Counsel
ML Life Insurance Company of New York
0 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
If to the Underwriter: Xxxxx X. Xxxx, Esq.
Vice President and Assistant General Counsel
American Century Investment Services, Inc.
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
16
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, 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.
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, the underwriter further agrees
to assist the Company, as necessary, in furnishing 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.
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 and shall terminate automatically in the event
of any attempted assignment.
17
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: _____________________________________
Name: Xxxx X. Xxxxx
Title: Vice President and Secretary
AMERICAN CENTURY INVESTMENT SERVICES, INC.
By its authorized officer
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
18
SCHEDULE A
Dated: October 11, 2002
SEPARATE ACCOUNTS OF THE COMPANY
Xxxxxxx Xxxxx Life Variable Annuity Separate Account D
XXXXXXXXX
Xxxxxxxx # XXXX-XX-000
00
XXXXXXXX X
DESIGNATED PORTFOLIOS AND CLASSES
American Century Equity Income Fund Advisor Class
Dated: October 11, 2002
20
