Exhibit 8(o)
PARTICIPATION AGREEMENT
AMONG
ML LIFE INSURANCE COMPANY OF NEW YORK
AND
MFS FUND DISTRIBUTORS, INC.
THIS AGREEMENT, dated as of the _____ day of _________, 2002, by and among
ML Life Insurance Company of New York (the "Company"), an 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 MFS Fund Distributors, Inc. (the "Underwriter"), a Delaware
company.
WHEREAS, the shares of beneficial interests of the Funds listed on
Schedule B, attached hereto ("Funds"), 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, each 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, Massachusetts Financial Services Company (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;
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;
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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 I. Sale of Fund Shares
1.1. The Underwriter agrees to make shares of the Designated Portfolios
and classes thereof listed on Schedule B to this Agreement (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 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 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
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"). 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 Underwriter at the net asset value determined as of the close of
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trading on that same Business Day, provided that the Underwriter receives notice
of such request by 9:00 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 and Fund understand that it is the intent of the parties that Fund
receive such purchase and redemption requests from Company on behalf of the
Account by 6:30 a.m. Eastern Time on the next following Business Day. Company
will provide to the Underwriter 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 or its affiliate is unable to transmit the file(s) with
respect to any Business Day, Company or its affiliate will notify the
Underwriter or its designee by 11:00 a.m. Eastern Time on the next following
Business Day.
(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 via the NSCC Fund/SERV DCC&S platform to
be received by the Fund by 6:30 p.m. Eastern Time on the day the Fund is
notified of the purchase request for Shares. Upon receipt of federal funds
transmitted via the NSCC Fund/SERV DCC&S platform, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of the
Fund. Notwithstanding any provision of this Agreement to the contrary, for
purchase and redemption instructions with respect to any Shares, Company and the
Fund will settle the purchase and redemption transactions referred to herein,
via the NSCC Fund/SERV platform settlement process on the next Business Day
following the effective trade date. The Fund will provide to Company a daily
transmission of positions and trading activity taking place in the Omnibus
Accounts using Company's affiliate's proprietary Inventory Control System
("ICS").
(c) Payment for Shares redeemed by the Account or the Company shall be
made in federal funds transmitted via the NSCC Fund/SERV DCC&S platform to the
Company on the next Business Day after the Fund is properly notified of the
redemption order of such Shares, 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.
1.4. The Fund shall, subject to availability, 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 via the NSCC Profile 1
platform, 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, including any applicable daily
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dividend factor, in accordance with the Fund's Prospectus In the event the Fund
is unable to make the 6:30 p.m. deadline stated herein, it shall provide
additional time for the Company to place orders for the purchase and redemption
of Shares. Such additional time shall be equal to the additional time that the
Fund takes to make the closing net asset value available to the Company. 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, as determined under the Fund's NAV
error correction policy (the "NAV Error Correction Policy" attached hereto as
Schedule D) including any applicable daily dividend factor per Share shall be
reported promptly 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, including any applicable daily
dividend factor per Share to the extent provided under the NAV Error Correction
Policy.
1.5. Notwithstanding anything to the contrary contained in this Agreement,
the Fund will make available for purchase by the Company, on its behalf and on
behalf of the Account a class of shares available at net asset value which are
not subject to a contingent deferred sales charge or redemption fee. In
addition, no exchange fees will be applicable to shares of the Funds purchased
by the Company, on its behalf and on behalf of the Account. The Fund shall
furnish notice (via the NSCC Profile II platform to the Company as soon as
reasonably practicable of any income dividends or capital gain distributions
payable on any Shares. The form of payment of dividends and capital gains
distributions will be determined in accordance with the Company's operational
procedures in effect at the time of the payment of such dividend or
distribution. At this time 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. Company will reinvest the additional Shares of that Designated Fund
through a trade processed via the NSCC platform. 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 the form of cash.
The parties understand and agree that all transactions of Account shares
contemplated herein shall be executed through the Omnibus Account and that
Company's affiliate, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx, Inc. will receive
all such dividends and distributions in the form of cash which Company, in turn,
will immediately reinvest in the form of additional Shares of that Designated
Portfolio. The Underwriter 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 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.
1.7 Fund Information.
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(a) The Underwriter 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 Underwriter hereby
agrees that Company may use such information in communications prepared for the
Contracts, including, but not limited to, application, marketing, sales and
other communications materials. The Underwriter will provide timely notification
to Company of any change to the information described in Part I of Schedule C
including without limitation any change to the CUSIP number or symbol
designation of a Fund. Such notification shall be given to Company at least ten
(10) Business Days prior to the effective date of the change or the effect of
the change with respect to transactions by the Account in any affected Fund and,
if applicable, shall be delayed for a reasonable time following notification
hereunder.
(b) Notwithstanding anything to the contrary in this Agreement, upon
request, the Underwriter 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.
(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.
1.8. The parties hereto acknowledge that: (1) the arrangement contemplated
by this Agreement is not exclusive(2) the Fund's shares may be sold to other
investors and the cash value of the Contracts may be invested in other
investment companies; (3) the Funds and Portfolios are management investment
companies generally sold to retail investors and not insurance-dedicated funds;
and (4) the Funds are not diversified or qualified to be sold exclusively to
insurance companies as provided by IRC Section 817(h).
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ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are, or prior
to issuance will be, registered under the 1933 Act, or 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 New York
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 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, the Adviser, or the Underwriter.
2.3 To the extent possible, Underwriter agrees to cooperate with Company
in complying 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.. The Underwriter represents
that each Fund 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.
2.5. 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.
2.6. The Underwriter represent and warrant that all of its and the Funds'
trustees/directors, officers, employees, investment advisers, and other
individuals or entities
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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 describing the Classes of the Designated Portfolios
listed on Schedule B as the Company may reasonably request. The Fund or the
Underwriter shall bear the expense of printing copies of the current prospectus
for the Fund that will be distributed to existing Contract owners, and the
Company shall bear the expense of printing copies of the Contract 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
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 for existing Contract owners to be at the Fund's or Underwriter's
expense) In the event that Company determines to have the prospectus and/or
periodic shareholder reports for the Contracts and the Fund's prospectus and/or
periodic reports to shareholders printed together in one document the Fund or
its designee shall reimburse the Company for the pro-rata share of the printing
costs (excluding any non-printing costs such as composition and document layout
costs) for those pages that contain the Funds' prospectus or periodic reports to
shareholders that the Company may reasonably print for distribution to existing
and prospective Contract owners whose Contracts are funded by Shares of the
Fund.
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. 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;
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(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. As set forth in Section 1.7 (a) herein, the Company shall furnish, or
shall cause to be furnished, to the Underwriter, sales literature or other
promotional material that the Company develops and in which a Fund (or a
Designated Portfolio thereof) or the Underwriter is named or describes a Fund or
the Underwriter other than as set forth in the Fund prospectus or the materials
listed on Part I of Schedule C attached hereto. The parties understand and agree
that the Underwriter has reviewed and approved a description of Fund(s) for use
in Contract prospectus and initial Contract rollout sales materials No such
material shall be used until approved by the Underwriter or its designee. The
Underwriter or its designee 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 Underwriter 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 prospectus or SAI for the Fund shares, as such registration
statement 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
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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.
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 Underwriter will provide to the Company at least one complete
copy of all registration statements, prospectuses, SAIs, reports, proxy
statements, sales literature and other promotional materials, 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, 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.
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 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
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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 Fund shall see to it that all
its shares are registered and authorized for issuance in accordance with
applicable federal law and, it 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 issued by the Company and of distributing the
Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. 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 the Underwriter 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.
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:
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(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
(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,
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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.
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 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
12
behalf of the Company for use in the registration statement,
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 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
(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 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
13
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. 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.
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
14
(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
(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 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 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
15
days prior written notice to the Fund and the Underwriter of
the date of substitution.
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 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 that this Section 9.2 shall not apply to any terminations under
Section 9.1(i) 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 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.
16
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: MFS Fund Distributors, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: President
With copies to: Massachusetts Financial Services Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: General Counsel
ARTICLE XI. Miscellaneous
11.1. 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.
11.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
11.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.4. 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.
11.5. 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 New York Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request
17
in order to ascertain whether the variable contract operations of the Company
are being conducted in a manner consistent with the New York variable annuity
laws and regulations and any other applicable law or regulations.
11.6. 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.
11.7. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party, except to an affiliate, 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: Xxxx X. Xxxxx
Title: Vice President & Secretary
Date:
------------------------------------
MFS FUND DISTRIBUTORS, INC.
By its authorized officer
By:
------------------------------------
Title:
------------------------------------
Date:
------------------------------------
18
SCHEDULE A
SEPARATE ACCOUNTS OF THE COMPANY
Dated: , 2002
------------
Xxxxxxx Xxxxx Life Variable Annuity Separate Account D
19
SCHEDULE B
DESIGNATED FUNDS, PORTFOLIOS AND CLASSES
MFS Series Trust I
- MFS Core Growth Fund Class A
- MFS Research International Fund Class A
MFS Series Trust IV
- MFS Mid Cap Growth Fund Class A
Dated: , 2002
------------
20
SCHEDULE C
FUND MATERIALS
PART I. Fund Description
- The Underwriter will provide to Company or a common service provider
designated by Company within ten (10) days of the end of each month, the
Fund's average annual return for the 1, 5, and 10 year periods ending the
current month on a Net Asset Value basis.
- The Underwriter will provide to Company a description of the Fund
including top 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 Underwriter 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 in quantities mutually agreeable to
the Company and the Underwriter.
- Specific investment performance information that may be requested that
cannot be obtained from the prospectus, to the extent consistent with the
Fund's policies relating to disclosure of such information. This would
include specific calculations on various performance parameters and will
require an aggressive turnaround time (usually 5 business days).
SCHEDULE D
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MFS Fund Distributors, Inc.
NAV Error Correction Policy
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