Exhibit 8(j)
PARTICIPATION AGREEMENT
AMONG
ML LIFE INSURANCE COMPANY OF NEW YORK, AMERICAN FUNDS SERVICE
COMPANY, AND
AMERICAN FUNDS 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"), an Arkansas 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"),
American Funds Service Company (the "Transfer Agent"), a California corporation,
and American Funds Distributors, Inc. (the "Underwriter"), a California
corporation on its behalf and on behalf of the funds identified on Schedule B of
this Agreement (the "Fund" or "Funds").
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 its shares are registered under the Securities Act of 1933, as amended (the
"1933 Act");
WHEREAS, Capital Research and Management Company (the "Adviser"), a
Delaware corporation, 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 Transfer Agent, which services as the transfer and
shareholder servicing agent for the Fund, is registered as a transfer agent with
the SEC under the 1934 Act;
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 Fund issues shares to the general public and may also issue
shares to the separate accounts of insurance companies ("Participating Insurance
Companies") to fund variable annuity contracts sold to certain qualified pension
and retirement plans;
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WHEREAS, the Company intends to purchase shares of other open-end
management investment companies that offer shares to the general public to fund
the Contracts;
WHEREAS, the Underwriter knows of no reason why the Funds' shares may not
be sold to Participating Insurance Companies to fund variable annuity contracts
sold to certain qualified pension and retirement plans that operate in
compliance with applicable tax laws and regulations; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Funds (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 and
the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. Each Fund has granted to the Underwriter exclusive authority to
distribute the Fund's shares, and accordingly the Underwriter is authorized to
make available to the Company for purchase on behalf of the Account Fund shares
of the Designated Portfolios and classes thereof listed on Schedule B to this
Agreement (the "Shares"). Pursuant to such authority, and subject to Article IX
hereof, the Underwriter agrees to make the Shares available to the Company for
purchase on behalf of the Account, such purchases to be effected at net asset
value in accordance with Section 1.3 of this Agreement. Notwithstanding the
foregoing, the Board of each 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. Each Fund or its Transfer Agent 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.
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1.3. Purchase and Redemption Procedures
(a) The Transfer Agent hereby appoints the Company as its agent 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 Transfer Agent at the net asset value
determined as of the close of trading on that same Business Day, provided that
the Transfer Agent receives notice of such request by 8 a.m. Eastern Time on the
next following Business Day, or in the event of systems issues necessitating
later delivery of such purchase and redemption requests by 11 a.m. Eastern Time
on the next following Business Day. Company will provide to the Transfer Agent
or its designee via the NSCC Fund SERV DCC & S platform (which utilizes the "as
of" record layout within Fund/SERV) one or more files detailing the instructions
received with respect to each Plan prior to 4:00 p.m. Eastern Time on the prior
Business Day for each of the Funds.
(b)The Company shall pay for Shares on the same day that it notifies the
Transfer Agent of a purchase request for such Shares. 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 Transfer Agent 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 or any other designated person on the next Business Day after the
Transfer Agent is properly notified of the redemption order of such Shares
(unless redemption proceeds are to be applied to the purchase of Shares of other
Designated Funds 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.
Neither the Fund nor the Transfer Agent shall
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bear any responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds by the Company; the Company alone shall be responsible for
such action.
(d) Any purchase or redemption request for Shares held or to be held in
the Company's general account shall be effected at the closing net asset value
per share next determined after the Transfer Agent's receipt of such request as
set forth in Section 1.3(a) herein.
1.4. The Transfer Agent shall use its best efforts to make the closing net
asset value per Share for each Designated Fund 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 Fund is calculated, and shall calculate such closing
net asset value, including any applicable daily dividend factor, in accordance
with the Fund's Prospectus. In the event that a Fund's net asset value per Share
is not made available to the Company by 6:30 p.m. Eastern Time on a given
Business Day ("Day 1"), and the Company is unable to calculate purchase and
redemption orders for the Fund's Shares received on Day 1 ("Day 1 Trades") for
transmission to the Fund or its designee within the timeframes identified in
Section 1.3(a), as applicable, the Company agrees to provide the Fund with
estimates of trade orders prior to the trade order deadline identified in
Section 1.3(a) and to calculate such Day 1 Trades in the next cycle based on the
Fund's net asset value per Share when received and transmit such orders to the
Fund or its designee, either separately or along with, but separately identified
from, the purchase and redemption orders received on the next Business Day ("Day
2 Trades"), within the timeframes identified in Section 1.3(a) for Day 2 Trades.
In such event, provided that Day 1 Trades are segregated and separately
identified from Day 2 Trades when transmitted to the Fund or its designee, the
Fund agrees to effect Day 1 Trades at the Fund's net asset value per Share for
Day 1. Neither the Fund, any Designated Fund, 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 or its affiliate MLPF&S to the Transfer Agent or the Underwriter.
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 and the Transfer Agent or the Fund shall bear the
reasonable and demonstrable cost of correcting such errors.
1.5. Notwithstanding anything to the contrary contained in this Agreement,
the Underwriter will make available for purchase by the Company, on its behalf
and on behalf of the Account the Class F shares of each Fund, which are
purchased at net asset value and 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 Transfer Agent 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
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payable on any Shares. The form of payment of dividends and capital gain
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. 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) 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. Notification of a change to the CUSIP number or symbol
designation of a Fund 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 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 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 the
Underwriter or approved for distribution by the Underwriter upon Company's
request.
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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. 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 1940 Act. The
Underwriter shall ensure that the Fund will amend the registration statement for
its shares under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The Underwriter shall
ensure that the Fund will 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. The Underwriter agrees 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.
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2.4. The Underwriter represents that each Fund is lawfully organized and
validly existing under the laws of its State of incorporation and that it does
and will comply in all material respects with the 1940 Act.
2.6. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with any applicable state and federal securities laws.
2.7. The Underwriter and Transfer Agent represent and warrant 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.
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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 only 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, if any, for the Fund that will be distributed to existing and
prospective 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 and profiles for existing
Contract owners to be at the Fund's or Underwriter's expense, provided, however,
that such expense shall not exceed the cost the Fund or the Underwriter
otherwise would incur to print the prospectuses).
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 Transfer Agent, 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 invested in the Fund.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Shares in accordance with instructions received from
Contract owners; and
(iii) vote Shares for which no instructions have been received in the same
proportion as Shares of such portfolio for which instructions have
been received,
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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
Underwriter, each piece of sales literature or other promotional material that
the Company develops and in which the Fund (or a Designated Portfolio thereof)
or the Adviser or the Underwriter is named. No such material shall be used until
approved by the Underwriter. The Underwriter will be deemed to have approved
such sales literature or promotional material unless it objects or provides
comments to the Company within ten (10) Business Days after receipt of such
material. The Underwriter 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 Underwriter so
objects.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund or
the Adviser or the Underwriter in connection with the sale of the Contracts
other than the information or representations contained in the registration
statement or profiles or prospectus or SAI for the Fund shares, as such
registration statement and profiles and prospectus or SAI may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Underwriter or
the designee of either.
4.3. The Fund and the Underwriter, or their designee, shall furnish, or
cause to be furnished, to the Company, each piece of sales literature or other
promotional material that it develops and in which the Company, and/or its
Account, is named. No such material shall be used until approved by the Company.
The Company will be deemed to have approved such sales literature or promotional
material unless the Company objects or provides comments to the Fund, the
Underwriter, or their designee within ten Business Days after receipt of such
material. The Company reserves the right to reasonably object to the continued
use of any such sales literature or other promotional material in which the
Company and/or its Account is named, and no such material shall be used if the
Company so objects.
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
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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, profiles, prospectuses, SAIs, reports,
proxy statements, sales literature and other promotional materials, applications
for exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Fund or its shares, promptly after the filing of such
document(s) with the SEC or other regulatory authorities.
4.6. The Company will provide to the Underwriter at least one complete
copy of all registration statements, prospectuses (which shall include an
offering memorandum, if any, if the Contracts issued by the Company or interests
therein are not registered under the 1933 Act), SAIs, reports, solicitations for
voting instructions, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Contracts or the Account, promptly after
the filing of such document(s) with the SEC or other regulatory authorities. The
Company shall provide to the Underwriter any complaints received from the
Contract owners pertaining to the Fund or the Designated Portfolio.
4.7. The Fund will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Designated Portfolio,
and of any material change in the Fund's registration statement, particularly
any change resulting in a change to the registration statement or prospectus for
any Account. The Fund will work with the Company so as to enable the Company to
solicit proxies from Contract owners, or to make changes to its prospectus or
registration statement, in an orderly manner. The Fund will make reasonable
efforts to attempt to have changes affecting Contract prospectuses become
effective simultaneously with the annual updates for such prospectuses. The
Company understands that, in the ordinary course, the Funds update their
registration statements, including their prospectuses, 60 days following the
close of their fiscal year ends, which are disclosed on Schedule B.
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
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training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, SAIs, shareholder reports, proxy materials, and any other
communications distributed or made generally available with regard to the Fund.
ARTICLE V. Fees and Expenses
5.1. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law applicable to the Fund, and all
taxes on the issuance or transfer of the Fund's shares. To the extent the
Company arranges for any of the foregoing functions to be performed, the Fund
shall pay only the reasonable cost of such functions.
5.2. The Company shall bear the expenses of distributing the Fund's
prospectus to owners of Contracts issued by the Company and of distributing the
Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Diversification and Qualification
6.1. The Underwriter represents that each Fund is or will be qualified as
a Regulated Investment Company under Subchapter M of the Code, and that it will
maintain such qualification (under Subchapter M or any successor or similar
provisions) and that it will notify the Company immediately upon having a
reasonable basis for believing that a Fund has ceased to so qualify or that it
might not so qualify in the future.
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ARTICLE VII. Indemnification
7.1. Indemnification By the Company
7.1(a). The Company agrees to indemnify and hold harmless the Fund,
the Transfer Agent, and the Underwriter and each of their respective
trustees/directors and officers, and each person, if any, who controls the Fund,
the Transfer Agent, or the Underwriter within the meaning of Section 15 of the
1933 Act or who is under common control with the Underwriter (collectively, the
"Indemnified Parties" for purposes of this Section 7.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any statute
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement of any
material fact contained in the registration statement, prospectus
(which shall include a written description of a Contract that is not
registered under the 1933 Act), or SAI for the Contracts or
contained in sales literature for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission was
made in reliance upon and in conformity with information furnished
to the Company by or on behalf of the Fund for use in the
registration statement, prospectus or SAI for the Contracts or in
the Contracts or sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the Contracts or
Fund shares; or (ii) arise out of or as a result of statements or
representations (other than statements or representations contained
in the registration statement, prospectus, SAI, or sales literature
of the Fund not supplied by the Company or persons under its
control) or wrongful conduct of the Company or its agents or persons
under the Company's authorization or control, with respect to the
sale or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement of a material fact contained
in a registration statement, prospectus, SAI, or sales literature of
the Fund or any amendment thereof or supplement thereto or the
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading
if such a statement or omission was made in reliance upon
information furnished to the Fund by or on behalf of the Company; or
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(iv) arise as a result of any material failure by the Company to
provide the services and furnish the materials under the terms of
this Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the qualification
requirements specified in Section 6.1 of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company;
as limited by and in accordance with the provisions of Sections 7.1(b) and
7.1(c) hereof.
7.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of its obligations or duties under this Agreement.
7.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
7.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Contracts or the operation
of the Fund.
13
7.2. Indemnification by the Underwriter
7.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 7.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(i) arise out of or are based upon any untrue statement of any
material fact contained in the registration statement or profile or
prospectus or SAI or sales literature of the Fund (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission was
made in reliance upon and in conformity with information furnished
to the Underwriter or the Fund by or on behalf of the Company for
use in the registration statement, prospectus or SAI for the Fund or
in sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund shares;
or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature for the
Contracts not supplied by the Underwriter or persons under their
control) or wrongful conduct of the Fund or the Underwriter or
persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement of a material fact contained
in a registration statement, prospectus, SAI or sales literature
covering the Contracts, or any amendment thereof or supplement
thereto, or the omission a material fact required to be stated
therein or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Fund or
the Underwriter; or
(iv) arise as a result of any failure by the Fund or the Underwriter
to provide the services and furnish the materials under the terms of
this Agreement (including a failure of the Fund, whether
unintentional or in good faith or
14
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, the Transfer Agent,
or the Underwriter in this Agreement or arise out of or result from
any other material breach of this Agreement by the Fund, the
Transfer Agent, or the Underwriter; or
(vi) arise out of or result from the materially incorrect or
untimely calculation or reporting of the daily net asset value per
share or dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 7.2(b) and
7.2(c) hereof.
7.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
7.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.2(d). The Indemnified Party will promptly notify the Underwriter
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of the Account.
15
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
(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; 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; or
16
(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 days prior written notice to the
Fund and the Underwriter of the date of substitution; or
(j) termination by the Fund or the Underwriter in the event the
Fund terminates its Distribution Agreement with the
Underwriter, provided that Fund or Underwriter give Company
written notice of termination of Distribution Agreement within
five (5) business days of the Fund notifying the Underwriter
of it terminating the Distribution Agreement.
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. In the event
Underwriter requests that Company seek such an order to substitute a Fund(s) in
Existing Contracts due to Company's termination of this Agreement for a reason
other than investment results, the Underwriter agrees to split equally among the
Company and each Fund Company that is the subject of the order the cost of
seeking such an order, and the Company agrees that it shall reasonably cooperate
with the
17
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) or Section 9.1(j) 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 Contracts,
the Company shall not prevent Contract owners from allocating payments to a
Portfolio that was otherwise available under the Contracts without first giving
the Fund or the Underwriter 45 days notice of its intention to do so.
9.4. Notwithstanding any termination of this Agreement, each party's
obligation under Article VII to indemnify the other parties shall survive.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Company: Xxxxx X. Xxxxxxxx, Esq.
Senior Vice President and General Counsel
ML Life Insurance Company of New York
0 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
If to the Fund, Transfer Agent, or Underwriter:
Xxxxx X. Xxxxxxxx
President
American Funds Distributors, Inc.
000 Xxxxx Xxxx Xxxxxx, 00xx Floor
18
Xxx Xxxxxxx, XX 00000
With a copy to:
Xxxxxxx X. Xxxxxxxxxx, Counsel
American Funds Distributors, Inc.
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
ARTICLE XI. Miscellaneous
11.1. All persons dealing with the Fund must look solely to the property
of the Fund, and in the case of a series company, the respective Designated
Portfolios listed on Schedule B hereto as though each such Designated Portfolio
had separately contracted with the Company and the Underwriter for the
enforcement of any claims against the Fund. The parties agree that neither the
Board, officers, agents, or shareholders of the Fund assume any personal
liability or responsibility for obligations entered into by or on behalf of the
Fund.
11.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information has come into the
public domain.
11.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
11.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
11.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Arkansas Insurance Commissioner with any information or
reports in
19
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.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
ML LIFE INSURANCE COMPANY OF NEW YORK:
By its authorized officer
By:
Name: Xxxx X. Xxxxx
Title: Vice President and Secretary
AMERICAN FUNDS SERVICE COMPANY
By its authorized officer
By: _________________________________
Name: _________________________________
Title: Vice President
AMERICAN FUNDS DISTRIBUTORS, INC.
By its authorized officer
By: _________________________________
Title: President
Date: _________________________________
20
SCHEDULE A
Dated: October 11, 2002
SEPARATE ACCOUNTS OF THE COMPANY
Xxxxxxx Xxxxx Life Variable Annuity Separate Account D
XXXXXXXXX
Xxxxxxxx # XX-XX-000
00
XXXXXXXX X
DESIGNATED PORTFOLIOS AND CLASSES
FUND NAME CLASS FISCAL YEAR END
--------- ----- ---------------
The Bond Fund of America, Inc. A December 00
Xxx Xxxxxx Xxxx xx Xxxxxxx, Inc. A August 31
The Income Fund of America, Inc. A July 31
The Investment Company of America A December 31
Dated: October 11, 2002
22
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,
each 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 each Fund
including holdings, portfolio composition, largest sectors and
geographical allocation and a statement of objective in a mutually
acceptable format.
Part II. Fund Information and Materials
The Underwriter will provide to Company the following information and
materials on an as needed basis, as reasonably requested by Company:
- A supply of materials relating to the Funds (prospectuses, quarterly
reports and other brochures) to include with contract application
sales, marketing and communication materials.
- Specific investment performance information that may be requested
that cannot be obtained from the prospectus or the Underwriter's web
site. This would include specific calculations on various
performance parameters and will require an aggressive turnaround
time (usually 5 business days).
23
