EXHIBIT (8)(t)
PARTICIPATION AGREEMENT
AMONG
ML LIFE INSURANCE COMPANY OF NEW YORK,
AND
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
THIS AGREEMENT, dated as of the 11th day of October, 2002, by and among
ML Life Insurance Company of New York (the "Company"), a New York life insurance
company, on its own behalf and on behalf of each segregated asset account of the
Company set forth on Schedule A hereto as may be amended from time to time
(hereinafter referred to individually and collectively as the "Account"), and
Franklin Xxxxxxxxx Distributors, Inc. ("Distributor"), a New York corporation,
which serves as the principal Distributor for each of the investment companies
listed in Exhibit B (each a "Fund" and together the "Funds").
WHEREAS, the shares of beneficial interests of each 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, 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, Distributor, which serves as distributor to each 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 the
separate accounts of insurance companies ("Participating Insurance Companies")
to fund variable annuity contracts sold to certain qualified pension and
retirement plans;
WHEREAS, the Company intends to purchase shares of other open-end
management investment companies that offer shares to the general public to fund
the Contracts;
1
WHEREAS, Distributor knows of no reason why shares in any Portfolio may
not be sold to Participating Insurance Companies to fund variable annuity
contracts sold to certain qualified pension and retirement plans; and
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 Distributor 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 Distributor agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Distributor has exclusive authority to distribute the
Funds' shares, and shall Distributor 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 instructions, and subject to Article IX hereof and each Fund's
prospectus and statement of additional information, Distributor 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 Trustees of a 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.
The Company acknowledges that the Fund has certain policies
and restrictions on short-term or excessive trading activity and agrees to
cooperate with identifying and monitoring such activity, provide reasonable
cooperation in controlling such activity and take such action as reasonably
requested by Fund with respect to such activity.
1.2. Subject to the terms of each Fund's prospectus and statement
of additional information, each 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.
2
1.3. Purchase and Redemption Procedures
(a) 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"). Receipt of any such request (or relevant
transactional information therefor) 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") by the Company as such limited agent
of the Fund 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 constitute
receipt by the Fund on that same Business Day, provided that the Fund receives
notice of such request by 11 a.m. Eastern Time on the next following Business
Day. Company will provide to the Fund 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. ET on the prior Business Day for each of the Funds. If for any
reason Xxxxxxx Xxxxx is unable to transmit the file(s) with respect to any
Business Day, Xxxxxxx Xxxxx will notify the Fund or its designee by 11:00 a.m.
ET 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 4:30 p.m. Eastern Time on the day
the Fund is notified of the purchase request for Shares (unless the Fund
determines and so advises the Company 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 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 a method that is agreed upon by the
Company and the Distributor
(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 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
3
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.
1.4. In accordance with current operating procedures as agreed to
by the parties, distributor shall use its best efforts to make the closing net
asset value per Share for each Designated Portfolio available to the Company
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 dividend factor, in accordance with each
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, Distributor, 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 Distributor. Any material error in the
calculation or reporting of the closing net asset value, including any
applicable daily dividend factor 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, including any applicable daily dividend factor per
Share. Any error of a lesser amount shall be corrected in the next Business
Day's net asset value per Share.
1.5. Subject to the terms of each Fund's prospectus and statement
of additional information, Distributor 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, subject to the terms of each Fund's prospectus
and statement of additional information, no exchange fees will be applicable to
shares of the Funds purchased by the Company, on its behalf and on behalf of the
Account. Distributor shall furnish notice (via the mutual fund profile
service-price and rate) to the Company as soon as reasonably practicable of any
income dividends or capital gain distributions payable on any Shares. The form
of
4
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 Transfer 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
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.
(a) Distributor 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, Distributor 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. Distributor 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. Distributor shall notify Company with any change to the
CUSIP number or symbol 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 shall, if applicable, be delayed for a
reasonable time following notification hereunder.
(b) Notwithstanding anything to the contrary in this Agreement, upon
request, the Fund will provide Company with prospectuses, proxy materials,
financial statements, reports and other materials relating to each Fund in
sufficient quantity for each Contract owner invested in the Fund.
(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 Company 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 Distributor
or approved for distribution by Distributor upon Company's request.
5
1.8. 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 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. Distributor 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 each Fund is and shall remain registered under the 1940 Act.
Distributor shall amend the registration statement for each Fund's 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. Distributor 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 Distributor.
2.3. Distributor agrees to use reasonable efforts to comply 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.
6
2.4. Distributor represents that each Fund is lawfully organized
and validly existing and that it does and will comply in all material respects
with the 1940 Act.
2.5. Distributor represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
Distributor further represents that it will sell and distribute the Fund shares
in accordance with any applicable state and federal securities laws.
2.6. Distributor represents and warrants on behalf of itself and
the Funds that all of their trustees/directors, officers, employees, investment
advisers, and other individuals or entities dealing with the money and/or
securities of the Fund are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Fund in an
amount not less than the minimum coverage as required currently by Rule 17g-1 of
the 1940 Act or related provisions as may be promulgated from time to time. The
aforesaid bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. Distributor shall provide the Company with as many copies of
the Fund's current prospectus of the Designated Portfolios listed on Schedule B
as the Company may reasonably request. The Fund or Distributor shall bear the
expense of printing copies of the current prospectus and profiles 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
and profiles that are used in connection with offering the Contracts issued by
the Company.
3.2. The Fund's prospectus shall state that the current Statement
of Additional Information ("SAI") for the Fund is available, and Distributor (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. Distributor 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 Distributor'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;
7
(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 Distributor is named or describes a Fund
other than as set forth in the Fund prospectus or the material listed on Part I
of Schedule C attached hereto. The parties understand and agreethat the
Distributor has reviewed and approved a description of Fund(s) for use in
Contract rollout sales materials. No such material shall be used until approved
by Distributor or its designee. Distributor 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. Distributor 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 Distributor is named, and no such material
shall be used if Distributor 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 Distributor 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 Distributor,
except with the permission of the Fund or Distributor or the designee of either.
4.3. The Fund and Distributor, or their designee, shall furnish, or
cause to be furnished, to the Company, each piece of sales literature or other
promotional material that it develops and in which the Company, and/or its
Account, is named. No such material shall be used until approved by the Company.
The Company will be deemed to have approved such sales literature or promotional
material unless the Company objects or provides comments to the Fund,
8
Distributor, 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 Distributor 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. Upon request, Distributor will provide to the Company at least
one complete copy of each Fund's registration statements, prospectuses, SAIs,
reports, proxy statements, sales literature and other promotional material..
4.6. The Company will provide to Distributor at least one complete
copy of all registration statements, prospectuses (which shall include an
offering memorandum, if any, if the Contracts issued by the Company or interests
therein are not registered under the 1933 Act), SAIs, reports, solicitations for
voting instructions, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Contracts or the Account, promptly after
the filing of such document(s) with the SEC or other regulatory authorities. The
Company shall provide to Distributor any complaints received from the Contract
owners pertaining to the Fund or the Designated Portfolio.
4.7. Distributor 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 a Fund's registration statement, particularly any
change resulting in a change to the registration statement or prospectus for any
Account. Distributor 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
9
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 Distributor under this
Agreement shall be paid by Distributor. Distributor shall see to it that all
Fund shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by Distributor
, 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. Diversification and Qualification
6.1. Distributor represents that each Fund is or will be qualified
as a Regulated Investment Company under Subchapter M of the Code, and will
maintain such qualification (under Subchapter M or any successor or similar
provisions) and Distributor will notify the Company immediately upon having a
reasonable basis for believing that a Fund has ceased to so qualify or might not
so qualify in the future.
10
ARTICLE VII. Indemnification
7.1. Indemnification By the Company
7.1(a). The Company agrees to indemnify and hold harmless the
Funds and Distributor and each of its trustees/directors and officers, and each
person, if any, who controls the Funds or Distributor within the meaning of
Section 15 of the 1933 Act or who is under common control with Distributor
(collectively, the "Indemnified Parties" for purposes of this Section 7.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements:
(i) arise out of or are based upon any untrue statement
or alleged untrue statements of any material fact contained in
the registration statement, prospectus (which shall include a
written description of a Contract that is not registered under
the 1933 Act), or SAI for the Contracts or contained in sales
literature for the Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of
Distributor or a 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 a Fund 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 a 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 Distributor or a Fund
by or on behalf of the Company; or
11
(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);
(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; or
(vi) arise out of any violation of law, rule or regulation
by the Company in connection with the performance of its
services hereunder.
as limited by and in accordance with the provisions of Sections 7.1(b) and
7.1(c) hereof.
7.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of its obligations or
duties under this Agreement.
7.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
7.1(d). The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of Fund shares or the Contracts or the
operation of a Fund.
12
7.2. Indemnification by Distributor
7.2(a). Distributor 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 Distributor) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in
the registration statement or profile or prospectus or SAI or
sales literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to Distributor 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 Distributor
or persons under their control) or wrongful conduct of the
Fund or Distributor 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 a Fund or
Distributor; or
(iv) arise as a result of any failure by aDistributor to
provide the services and furnish the materials under the terms
of this Agreement (including a failure of a
13
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 Distributor in this
Agreement or arise out of or result from any other material
breach of this Agreement by Distributor; or
(vii) arise out of or result from the materially incorrect
or untimely calculation or reporting of the daily net asset
value per share or dividend or capital gain distribution rate;
or
(viii) arise out of any violation of law, rule or regulation
by the Distributor in connection with the performance of its
services hereunder.
as limited by and in accordance with the provisions of Sections 7.2(b) and
7.2(c) hereof.
7.2(b). Distributor 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). Distributor 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 Distributor 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 Distributor of any
such claim shall not relieve Distributor 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, Distributor will be entitled to participate, at
its own expense, in the defense thereof. Distributor also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from Distributor to such party of Distributor's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and Distributor 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.
14
7.2(d). The Indemnified Party will promptly notify Distributor
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 Distributor 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 Distributor 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 Distributor 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
Distributor 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
15
(e) termination by the Company in the event that formal
administrative proceedings are instituted against a
Fund or Distributor 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 Distributor to perform its obligations
under this Agreement; or
(f) termination by the Company by written notice to
Distributor 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 Distributor by written notice to the
Company, if Distributor shall determine, in its 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
Distributor, if the Company shall determine, in its
sole judgment exercised in good faith, that the
Funds, the Adviser, or Distributor has suffered a
material adverse change in its business, operations,
financial condition, or prospects since the date of
this Agreement or is the subject of material adverse
publicity; or
(i) termination by the Company upon any substitution of
the shares of another investment company or series
thereof for Shares in accordance with the terms of
the Contracts, provided that the Company has given at
least 45 days prior written notice to the Fund and
Distributor of the date of substitution.
9.2. Notwithstanding any termination of this Agreement, Distributor
shall, at the option of the Company and subject to the terms of each Fund's
prospectus and statement of additional information, 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 Distributor 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. In the event that
Distributor requests that Company seek such an order permitting substitution of
other securities, Distributor and Company agree to reasonably cooperate in the
selection of replacement Shares and Distributor agrees to split the cost of
preparing and submitting the necessary application to the SEC. Specifically, the
owners of the
16
Existing Contracts may be permitted to reallocate investments in a Fund, redeem
investments in a Fund, and/or invest in a Fund upon the making of additional
purchase payments under the existing Contracts (subject to any such election by
Distributor). 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 Distributor, 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 Distributor 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 Distributor 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 Distributor: Xxxxx Xxxxx
President
Franklin Xxxxxxxxx Distributors, Inc.
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000-0000
17
ARTICLE XI. Miscellaneous
11.1. The parties agree that neither the Board, officers, agents, or
shareholders of any 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, each party hereto further
agrees to furnish the Arkansas Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable contract
operations of the Company are being conducted in a manner consistent with the
Arkansas variable annuity laws and regulations and any other applicable law or
regulations.
11.7. The rights, remedies, and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies,
and obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
11.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto.
18
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 & Secretary
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC
By its authorized officer
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
19
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
Xxxxxxxxx Growth Fund, Class A
Xxxxxxxxx Foreign Fund, Class A
Dated: October 11, 2002
21
SCHEDULE C
FUND MATERIALS
PART I. Fund Description
- The Fund 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 Fund will provide to Company a description of the Fund including
holdings, portfolio composition, largest sectors and geographical
allocation and a statement of objective in a mutually acceptable
format.
PART II. Fund Information and Materials
- A supply of materials relating to the Funds (prospectuses, quarterly
reports and other brochures) to include with contract application
sales, marketing and communication materials.
- Specific investment performance information that may be requested that
cannot be obtained from the prospectus. This would include specific
calculations on various performance parameters and will require an
aggressive turnaround time (usually 5 business days).
22
