FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 3rd day of April, 2000, between Xxxxxxxx
Portfolios, Inc., an open-end management investment company organized as a
Maryland Corporation (the "Fund"), Xxxxxxxx Advisors, Inc., a Delaware
corporation (the "Distributor") and ML Life Insurance Company of New York, a
life insurance company organized under the laws of the State of New York (the
"Company"), on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A, as may be amended from time to time (the
"Account").
W I T N E S S E T H :
WHEREAS, the Fund is a registered open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has filed a currently effective registration statement to offer and sell its
shares under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Fund desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Fund (the "Participating Insurance
Companies"); and
WHEREAS, the shares of the Fund are divided into several series of
shares, each series representing an interest in a particular managed portfolio
of securities and other assets (the "Portfolios"); and
WHEREAS, the Fund has applied for an order from the Securities and
Exchange Commission ("SEC") granting Participating Insurance Companies (as
defined in the Fund's application for such order) and their separate accounts
exemptions from the provisions of sections 9(a), 13(a), 15(a) and 15(b) of the
1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies and certain qualified pension and
retirement plans (the "Exemptive Order"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
and is a member in good standing of The National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Distributor currently serves as the distributor of the
Fund's shares; and
WHEREAS, the Company has registered or will register certain variable
life insurance policies and/or variable annuity contracts under the 1933 Act
(the "Contracts"); and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Company desires to utilize shares of one or more
Portfolios as an investment vehicle of the Accounts;
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
ARTICLE I.
SALE OF FUND SHARES
1.1. The Fund shall make shares of its Portfolios available to the
Accounts at the net asset value next computed after receipt of such purchase
order by the Fund (or its designee), as established in accordance with the
provisions of the then current prospectus of the Portfolio or Portfolios.
Shares of a particular Portfolio of the Fund shall be ordered in such
quantities and at such times as determined by the Company to be necessary to
meet the requirements of the Contracts. The Directors of the Fund (the
"Directors") may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio if such action
is required by law or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Directors acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary
in the best interests of the shareholders of such Portfolio.
1.2. The Fund will redeem any full or fractional shares of any
Portfolio when requested by the Company on behalf of an Account at the net
asset value next computed after receipt by the Fund (or its designee) of the
request for redemption, as established in accordance with the provisions of
the then current prospectus of the Fund.
1.3. For the purposes of Sections 1.1 and 1.2, the Fund hereby
appoints the Company as its designee for the limited purpose of receiving and
accepting purchase and redemption orders resulting from investment in and
payments under the Contracts. Receipt by the Company shall constitute receipt
by the Fund provided that (i) such orders are received by the Company in good
order prior to the time the net asset value of each Portfolio is priced in
accordance with its prospectus and (ii) the Fund receives notice of such
orders by 10:00 a.m. New York time on the next following Business Day.
"Business Day" shall mean any day on which 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.
2
1.4. For purposes of determining payment for purchase orders and
redemption orders, all such orders will be netted. Net purchase orders that are
transmitted to the Fund in accordance with Section 1.3 shall be paid for by the
Company by 2:00 p.m. EST on the same Business Day that the Fund receives notice
of the order. Net redemption orders that are transmitted to the Fund in
accordance with Section 1.3 shall be paid for by the Fund by 2:00 p.m. EST on
the same Business Day that the Fund receives notice of the order, to the extent
practicable, and in any event the Fund shall make such payment within five
calendar days after the date the order is transmitted to the Fund in accordance
with Section 1.3 or such shorter period of time as may be required by law.
Payments shall be made in federal funds transmitted by wire.
1.5. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Shares ordered from the Fund will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
1.6. The Fund shall furnish prompt notice to the Company of any income
dividends or capital gain distributions payable on the Fund's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Fund shall notify the Company of the number of shares so
issued as payment of such dividends and distributions.
1.7. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall us its
best efforts to make such net asset value per share available by 6 p.m. New York
time.
1.8. The Fund agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified pension
and retirement plans to the extent permitted by the Exemptive Order. No shares
of any Portfolio will be sold directly to the general public. The Company agrees
that Fund shares will be used only for the purposes of funding the Contracts and
Accounts listed in Schedule A, as amended from time to time.
1.9. The Fund and the Company agree that they shall amend any provision
of this Agreement to the extent that it is inconsistent with any condition
imposed by the SEC in the Exemptive Order.
ARTICLE II.
OBLIGATIONS OF THE PARTIES
2.1. The Fund shall prepare and be responsible for filing with the SEC
and any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of the Fund.
The Fund shall bear the cost of registration and qualification of its shares,
preparation and filing of the documents listed in this section 2.1 and all taxes
to which an issuer is subject on the issuance and transfer of its shares.
3
2.2. At the option of the Company, the Fund or the Distributor shall
either (i) provide the Company with as many copies of the Fund's or the relevant
Portfolio's current prospectus, statement of additional information, annual
reports, semi-annual reports and other shareholder communications, including any
amendments or supplements to any of the foregoing ("Fund Documents"), as the
Company shall reasonably request; or (ii) provide the Company with a camera
ready copy of such documents in a form suitable for printing. The Fund or the
Distributor shall provide the Company with a copy of the Fund's statement of
additional information in a form suitable for duplication by the Company. The
Fund shall provide the Company with copies of any Fund-sponsored proxy materials
in such quantity as the Company shall reasonably require for distribution to
Contract owners.
2.3. The Fund shall bear the costs of printing and distributing Fund
Documents and any Fund-sponsored proxy-materials to existing Contract owners
whose Contracts are funded by the Fund's shares. The Company shall bear the
costs of printing and distributing the Fund Documents to prospective purchasers
of Contracts for which the Fund is serving or is to serve as an investment
vehicle. With respect to any prospectuses of the Portfolios that are printed in
combination with any one or more Contract prospectus (the "Prospectus Booklet"),
the costs of printing Prospectus Booklets for distribution to existing Contract
owners shall be prorated to the Fund based on (a) the ratio of the number of
pages of the prospectuses for the Portfolios included in the Prospectus Booklet
to the number of pages in the Prospectus Booklet as a whole; and (b) the ratio
of the number of Contract owners with Contract value allocated to the Portfolios
to the total number of Contract owners; PROVIDED, however, that the Company
shall bear all printing expenses of such combined documents where used for
distribution to prospective purchasers or to owners of existing Contracts not
funded by the Portfolios. The Company shall bear the costs of distributing proxy
materials (or similar materials such as voting solicitation instructions) that
are not sponsored by the Fund to Contract owners. The Company assumes sole
responsibility for ensuring that all such materials are delivered to Contract
owners in accordance with applicable federal and state securities laws.
2.4 (a) The Company agrees and acknowledges that the Fund's manager, J.
& X. Xxxxxxxx & Co. Incorporated ("Xxxxxxxx"), is the sole owner of the name and
xxxx "Xxxxxxxx" and that all use of any designation comprised in whole or part
of Xxxxxxxx (a "Xxxxxxxx Xxxx") under this Agreement shall inure to the benefit
of Xxxxxxxx. Except as provided in section 2.5, the Company shall not use any
Xxxxxxxx Xxxx on its own behalf or on behalf of the Accounts or Contracts in any
registration statement, advertisement, sales literature or other materials
relating to the Accounts or Contracts without the prior written consent of
Xxxxxxxx. Upon termination of this Agreement for any reason, the Company shall
cease all use of any Xxxxxxxx Xxxx(s) as soon as reasonably practicable.
(b) The Fund and the Distributor agree and acknowledge that
the Company and its affiliates are the sole owner or owners of the name and the
xxxx "Xxxxxxx Xxxxx" and that all use of any designation comprised in whole or
part of Xxxxxxx Xxxxx (a "Xxxxxxx Xxxxx Xxxx") under this Agreement shall inure
to the benefit of Xxxxxxx Xxxxx. Except as provided in section 2.5, neither the
Fund nor the Distributor shall use any Xxxxxxx Xxxxx Xxxx on its own behalf or
4
on behalf of the Accounts or Contracts in any registration statement,
advertisement, sales literature or other materials relating to the Accounts or
Contracts without the prior written consent of Xxxxxxx Xxxxx, subject to the
last sentence of this Section 2.4(b). Upon termination of this Agreement for any
reason, the Fund and the Distributor shall cease all use of any Xxxxxxx Xxxxx
Xxxx(s) as soon as reasonably practicable, subject to the last sentence of this
Section 2.4(b). Nothing in this Section 2.4(b) shall prohibit the Distributor
from using any Xxxxxxx Xxxxx Xxxx in any documents or materials to the extent
that such use is permitted under any other agreement by and between the
Distributor and any affiliate of the Company or has been authorized by any such
affiliate of the Company.
2.5. (a) The Company shall furnish, or cause to be furnished, to the
Fund or the Distributor a copy of each Contract prospectus or statement of
additional information in which the Fund or Xxxxxxxx is named prior to the
filing of such document with the SEC. The Company shall furnish, or shall cause
to be furnished, to the Fund or its designee, each piece of advertising, sales
literature or other promotional material in which the Fund, the Portfolios or
Xxxxxxxx is named, at least ten Business Days prior to its use. No such material
shall be used if the Fund or the Distributor reasonably objects to such use
prior to such use.
(b) The Distributor will provide to the Company, within fifteen
(15) Business Days after the end of a calendar quarter, or as soon thereafter as
is reasonably practicable, the following information with respect to each
Portfolio as of the last day of such calendar quarter: the Portfolio's ten
largest portfolio holdings (based on the percentage of the Portfolio's net
assets); the five industry sectors in which the Portfolio's investments are most
heavily weighted; and year-to-date SEC standardized performance data. In
addition, the Distributor agrees to provide to the Company, within fifteen (15)
Business Days after a request is submitted to the Distributor by the Company,
the following information with respect to each Portfolio, each as of the date or
dates specified in such request: net asset value and net asset value per Share.
The Distributor acknowledges that such information may be furnished to the
Company's internal or independent auditors and to the insurance departments of
the various jurisdictions in which the Company does business. The information
referred to in this Section 2.5(b) will only be used in Company advertisements,
sales literature or other promotional material in accordance with Section
2.5(a).
(c) The Distributor shall furnish, or cause to be furnished, to
the Company a copy of each Fund or Portfolio prospectus or statement of
additional information in which the Company is named prior to the filing of such
document with the SEC. The Distributor shall furnish, or shall cause to be
furnished, to the Company each piece of advertising, sales literature or other
promotional material in which the Company is named, at least ten Business Days
prior to its use. No such material shall be used if the Company reasonably
objects to such use prior to such use.
2.6. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund or
Xxxxxxxx in connection with the sale of the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Fund shares (as such registration statement
5
and prospectus may be amended or supplemented from time to time), reports of the
Fund, Fund-sponsored proxy statements, or in any advertisements, sales
literature or other promotional material approved by the Fund or the
Distributor, except as required by legal process or regulatory authorities or
with the written permission of the Fund or the Distributor.
2.7. Neither the Fund nor the Distributor shall give any information or
make any representations or statements on behalf of the Company, or concerning
the Company, the Accounts or the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Contracts (as such registration statement and
prospectus may be amended or supplemented from time to time), or in materials
approved by the Company for distribution including advertisements, sales
literature or other promotional materials, except as required by legal process
or regulatory authorities or with the written permission of the Company.
2.8. The Fund 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.
2.9. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), SAIs, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Contracts or the Account, promptly after the filing of
such document(s) with the SEC or other regulatory authorities. The Company shall
provide to the Fund and the Distributor any complaints received from the
Contract owners pertaining to the Fund or the Portfolios.
2.10. The Fund will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any 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.
2.11. For purposes of this Article II, 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, or to the
Company, as the case may be: 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
6
published article), educational or training materials or other communications
distributed or made generally available to some or all agents or employees of
the Company, and registration statements, prospectuses, SAIs, shareholder
reports, proxy materials, and any other communications distributed or made
generally available to customers or the public with regard to the Fund.
2.12. The Distributor shall adopt and implement procedures reasonably
designed to ensure that information concerning the Company, any of its
affiliates, or the Contracts which is intended only for use only by brokers or
agents selling the shares (I.E., information that is not intended for
distribution to shareowners or prospective shareowners) is so used, and neither
the Company nor any of its affiliates shall be liable for any losses, damages,
or expenses relating to the improper use of such broker only materials.
2.13. The Company shall adopt and implement procedures reasonably
designed to ensure that information concerning the Fund which is intended only
for use by brokers or agents selling the Contracts (I.E., information that is
not intended for distribution to Contract owners or prospective Contract owners)
is so used, and neither the Fund nor the Distributor shall be liable for any
losses, damages, or expenses relating to the improper use of such broker only
materials. The parties hereto agree that this section is not intended to
designate or otherwise imply that the Company is an underwriter or distributor
of the Fund's shares.
2.14. The Fund hereby notifies the Company that it may be appropriate
to include in the prospectus pursuant to which Contracts are offered disclosure
regarding the potential risks of mixed- and shared-funding.
2.15. So long as, and to the extent that the SEC interprets the 1940
Act to require pass-through voting privileges for variable policyowners, the
Company will provide pass-through voting privileges to owners of policies whose
cash values are invested, through the Accounts, in shares of the Fund. The Fund
shall require all Participating Insurance Companies to calculate voting
privileges in the same manner and the Company shall be responsible for assuring
that the Accounts calculate voting privileges in the manner established by the
Fund. With respect to each Account, the Company will vote shares of the Fund
held by the Account and for which no timely voting instructions for policyowners
are received as well as shares it owns that are held by that Account, in the
same proportion as those shares for which voting instructions are received.
Subject to applicable law, the Company and its agents will in no way recommend
or oppose or interfere with the solicitation of proxies for Fund shares held by
Contract owners without the prior written consent of the Fund, which consent may
be withheld in the Fund's sole discretion.
2.16 The Company shall establish and disclose to Contract owners a
reasonable policy designed to discourage frequent and disruptive purchases and
redemptions of Fund shares by Contract owners and shall cooperate with the Fund
to minimize the impact on the Fund of such transactions.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
7
3.1. The Company represents and warrants that it is an insurance
company duly organized and in good standing under the laws of the State of New
York and that it has legally and validly established each Account as a
segregated asset account under such law on the date set forth in Schedule A.
3.2. The Company represents and warrants that it has registered or,
prior to any issuance or sale of the Contracts, will register each 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.
3.3. The Company represents that it has full power and authority under
applicable law and has taken all actions necessary, to enter into this
Agreement. The Company represents and warrants that the Contracts will be
registered under the 1933 Act prior to any issuance or sale of the Contracts;
the Contracts will be issued and sold in compliance in all material respects
with all applicable federal and state laws; and the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements.
3.4. The Fund represents and warrants that it is duly organized and
validly existing under the laws of the State of Maryland.
3.5. The Fund represents and warrants that the Fund shares offered and
sold pursuant to this Agreement will be registered under the 1933 Act and the
Fund shall be registered under the 1940 Act prior to any issuance or sale of
such shares. The Fund shall amend its registration statement under the 1933 Act
and the 1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Fund shall make notice or other filings in
accordance with the laws of the various states only if and to the extent deemed
necessary by the Fund.
3.6. The Fund represents that it has full power and authority under
applicable law and has taken all actions necessary, to enter into this
Agreement.
3.7. The Distributor represents and warrants that it is duly organized
and validly existing under the laws of the State of Delaware.
3.8. The Distributor represents that it has full power and authority
under applicable law and has taken all actions necessary, to enter into this
Agreement.
3.9. The Fund and the Distributor represent that the Fund's investment
policies, fees, and expenses are and shall at all times remain in compliance
with applicable state securities laws, if any. The Fund and the Distributor
represent that their respective operations are and shall at all times remain in
material compliance with applicable state securities laws, if any. The Fund and
Distributor also represent that the Fund or the Distributor, as the case may be,
will comply with any state insurance law restrictions, as provided in writing by
the Company to the Fund or the Distributor, as the case may be, including the
furnishing of information not otherwise available
8
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.
3.10. The Fund will invest its assets in such a manner as to ensure
that the Contracts will be treated as annuity or life insurance contracts,
whichever is appropriate, under the Code and the regulations issued thereunder
(or any successor provisions). Without limiting the scope of the foregoing, each
Portfolio has complied and will continue to comply with Section 817(h) of the
Code and Treasury Regulation Section 1.817-5, and any Treasury interpretations
thereof, relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts, and any amendments or other
modifications or successor provisions to such Section or Regulations. In the
event of a breach of this Section 3.7 by the Fund, it will (a) take all
reasonable steps to notify the Company of such breach and (b) immediately take
all necessary steps to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Regulation Section 1.817-5.
3.11. The Fund represents that it is or will be qualified as a
Regulated Investment Company under Subchapter M of the Code, and that it will
use its best efforts to maintain such qualification (under Subchapter M or any
successor or similar provisions) and that it will notify the Company immediately
upon having a reasonable basis for believing that it has ceased to so qualify or
that it might not so qualify in the future. The Fund acknowledges that
compliance with Subchapter M is an essential element of compliance with Section
817(h).
ARTICLE IV.
POTENTIAL CONFLICTS
4.1. The parties acknowledge that the Fund's shares may be made
available for investment to other Participating Insurance Companies and
qualified pension and retirement plans ("Qualified Plans"). In such event, the
Directors will monitor the Fund for the existence of any material irreconcilable
conflict between the interests of the contract owners of all Participating
Insurance Companies and of Qualified Plans. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Directors shall promptly inform the Company
if they determine that an irreconcilable material conflict exists and the
implications thereof.
4.2. The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Directors. The Company will assist the
Directors in carrying out their responsibilities under the Exemptive Order by
providing the Directors with all information
9
reasonably necessary for the Directors to consider any issues raised including,
but not limited to, information as to a decision by the Company to disregard
Contact owner voting instructions.
4.3 If it is determined by a majority of the Directors, or a majority
of its disinterested Directors, that a material irreconcilable conflict exists
that affects the interests of Contract owners, the Company shall, in cooperation
with other Participating Insurance Companies whose contract owners are also
affected, at its expense and to the extent reasonably practicable (as determined
by the Directors) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (i) withdrawing the
assets allocable to some or all of the Accounts from the Fund or any Portfolio
and reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Fund, or submitting the question of whether
or not such segregation should be implemented to a vote of all affected Contract
owners and, as appropriate, segregating the assets of any appropriate group
(i.e., variable annuity contract owners or variable life insurance contract
owners that votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (ii) establishing a new
registered management investment company or managed separate account.
4.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account if
requested by the Fund's Directors, terminate this Agreement with respect to such
Account within six months after the Directors inform the Company in writing that
it has determined that such decision has created a material irreconcilable
conflict; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested Directors. Until the end of
such six month period, the Fund shall continue to accept and implement orders by
the Company for the purchase and redemption of shares of the Fund.
4.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and, if requested by the Fund's
Directors, terminate this Agreement with respect to such Account within six
months after the Directors inform the Company in writing that it has determined
that such decision has created an irreconcilable material conflict; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested Directors. Until the end of such six month period,
the Fund shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Fund.
4.6. For purposes of Sections 4.3 through 4.6 of this Agreement, a
majority of the disinterested Directors shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Company be required to establish a new funding medium for the Contracts
if an offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
10
event that the Directors determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six (6)
months after the Directors inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested Directors.
4.7. The Company and Xxxxxxxx shall at least annually submit to the
Directors such reports, materials or data as the Directors may reasonable
request so that the Directors may fully carry out the duties imposed upon them
by the Exemptive Order, and said reports, materials and data shall be submitted
more frequently if deemed appropriate by the Directors.
4.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Exemptive Order) on terms and conditions materially
different from those contained in the Exemptive Order, then the Fund and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such rules are applicable.
ARTICLE V.
INDEMNIFICATION
5.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless the Fund, the Distributor, and each of their Directors,
officers, employees and agents and each person, if any, who controls the Fund or
the Distributor within the meaning of Section 15 of the 1933 Act (collectively,
the "Xxxxxxxx Indemnified Parties" for purposes of this Article V) against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company) or expenses (including the
reasonable costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses"), to which the Xxxxxxxx Indemnified Parties
may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
registration statement or prospectus for the Contracts or in the
Contracts themselves or in any advertising, sales literature or other
promotional literature generated or approved by the Company on behalf
of the Contracts or Accounts (or any amendment or supplement to any of
the foregoing) (collectively, "Company Documents" for the purposes of
this Article V), 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 indemnity shall not apply as to any Xxxxxxxx
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to the Company by or on
behalf of
11
the Fund or the Distributor for use in Company Documents or otherwise
for use in connection with the sale of the Contracts or Fund shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Fund Documents as defined in Section 5.2(a)) or wrongful
conduct of the Company or persons under its control, or subject to its
authorization or supervisions with respect to the sale or acquisition
of the Contracts or Fund shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Fund Documents
as defined in Section 5.2(a) 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
statement or omission was made in reliance upon and accurately derived
from written information furnished to the Fund or the Distributor by or
on behalf of the Company; or
(d) arise out of or result from any failure by the Company to
provide the services or furnish the materials required under the terms
of this Agreement; or
(e) 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.
5.2 INDEMNIFICATION BY THE FUND. The Fund agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees and agents
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act (collectively, the "Company Indemnified Parties" for purposes
of this Article V) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Fund) or
expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses"), to which the
Company Indemnified Parties may become subject under any statute or regulation,
or at common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus for the Fund (or any amendment or
supplement thereto), (collectively, "Fund Documents" for the purposes
of this Article V), 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 indemnity shall not apply as to any
Company Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to the Fund or the
Distributor by or on behalf of the Company for use in Fund Documents or
otherwise for use in connection with the sale of the Contracts or Fund
shares; or
12
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Company Documents) or wrongful conduct of the Fund or
persons under its control, or subject to its authorization or
supervision with respect to the sale or acquisition of the Contracts or
Fund shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statement therein not misleading if such statement or omission was made
in reliance upon and accurately derived from written information
furnished to the Company by or on behalf of the Fund; or
(d) arise out of or result from any failure by the Fund to
provide the services or furnish the materials required under the terms
of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Fund.
5.3 INDEMNIFICATION BY THE DISTRIBUTOR. The Distributor agrees to
indemnify and hold harmless each of the Company Indemnified Parties against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Distributor) or expenses (including
the reasonable costs of investigating or defending any alleged loss, claim,
damage, liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the Company Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in any
advertising, sales literature or other promotional literature generated
or approved by the Fund or the Distributor on behalf of the Fund or any
of the Portfolios (collectively, "Fund Sales Documents" for the
purposes of this Article V), 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 indemnity shall not apply as
to any Company Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and was
accurately derived from written information furnished to the Fund or
the Distributor by or on behalf of the Company for use in Fund Sales
Documents or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Company Documents) or wrongful conduct of the Distributor
or persons under its control, or
13
subject to its authorization or supervision with respect to the sale
or acquisition of the Contracts or Fund shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statement therein not misleading if such statement or omission was made
in reliance upon and accurately derived from written information
furnished to the Company by or on behalf of the Distributor; or
(d) arise out of or result from any failure by the Distributor
to provide the services or furnish the materials required under the
terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Distributor in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Distributor.
5.3. Neither the Company, the Fund nor the Distributor shall be liable
under the indemnification provisions of sections 5.1 or 5.2, as applicable, with
respect to any Losses incurred or assessed against a Xxxxxxxx Indemnified Party
or a Company Indemnified Party (collectively, the "Indemnified Parties") that
arise from 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 obligations or duties under this
Agreement.
5.4. Neither the Company, the Fund nor the Distributor shall be liable
under the indemnification provisions of sections 5.1 or 5.2, as applicable, with
respect to any claim made against any Indemnified Party unless such Indemnified
Party shall have notified the other party in writing within a reasonable time
after the summons, or other first written notification, giving information of
the nature of the claim shall have been served upon or otherwise received by
such Indemnified Party (or after such Indemnified Party shall have received
notice of service upon or other notification to any designated agent), but
failure to notify the party against whom indemnification is sought of any such
claim shall not relieve that party from any liability which it may have to the
Indemnified Party in the absence of sections 5.1 and 5.2.
5.5. In case any such action is brought against the Indemnified
Parties, the indemnifying party shall be entitled to participate, at its own
expense, in the defense of such action. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party named in the action. After notice from the indemnifying party to the
Indemnified Party of an election to assume such defense, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the indemnifying party will not be liable to the Indemnified 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
5.6 The obligations imposed on the Fund and the Distributor pursuant to
sections 5.2 shall be several obligations of the Fund and the Distributor,
respectively.
ARTICLE VI.
TERMINATION
6.1 This Agreement may be terminated by either party:
(a) for any reason by six months' advance written notice delivered
to the other party; or
(b) by the Company by written notice to the Fund and the
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) by the Company by written notice to the Fund and the
Distributor in the event shares of any of the Portfolios 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) by the Fund or the 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 Fund's shares; provided, however, that
the Fund or the 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
(e) by the Company in the event that formal administrative
proceedings are instituted against the Fund or the 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 the Distributor to perform its obligations under
this Agreement; or
(f) by the Company by written notice to the Fund and the
Distributor with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M or fails to comply with the Section 817(h) diversification
requirements specified in Sections 3.10 and 3.11 hereof, or if the
Company reasonably believes that such Portfolio may fail to so qualify
or comply; or
(g)by either the Fund or the Distributor by written notice to
the Company, if either one or both of the Fund or the Distributor
respectively, shall determine, in their sole judgment exercised in good
faith, that the Company has suffered a material adverse
15
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) by the Company by written notice to the Fund and the
Distributor, if the Company shall determine, in its sole judgment
exercised in good faith, that the Fund or the 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) by the Company upon any substitution of the shares of another
investment company or series thereof for shares of a Portfolio of the
Fund 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 Distributor of the date of substitution; or
(j) by any party in the event that the Fund's Board of Directors
determines that a material irreconcilable conflict exists as provided
in Article V; or
(k) at the option of any party upon another party's failure to
cure a material breach of any provision of this Agreement within 30
days after written notice thereof.
6.2. Notwithstanding any termination of this Agreement pursuant to
Section 6.2 (other than a termination pursuant to Section 6.2(j)), the Fund
shall, at the option of the Company, continue to make available additional
shares of the Fund (or any Portfolio) pursuant to the terms and conditions of
this Agreement for all Contracts in effect on the effective date of termination
of this Agreement (the "Initial Termination Date"), provided that the Company
continues to pay the costs set forth in section 2.3. This continuation shall
extend to the later of the date as of which an Account owns no shares of the
affected Portfolio or a date six months following the Initial Termination Date,
except that the Company may, by written notice, adjust said six month period in
the case of a termination made at its option.
6.3. The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.15 shall survive the
termination of this Agreement as long as shares of the Fund are held on behalf
of the Contract owners in accordance with section 6.2.
ARTICLE VII.
NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
16
If to the Fund:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel, Law & Regulation
If to the Company:
000 Xxxxxxxx Xxxx Xxxx - PCC 2I
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
ARTICLE VIII.
MISCELLANEOUS
8.1. 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.
8.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 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.
8.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of State of New York. Each
party hereto unconditionally submits to the jurisdiction of any New York state
court or federal court of the United States sitting in New York City, and any
appellate court thereof, in any action or proceeding arising out of or relating
to this Agreement.
8.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Fund arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Fund and that no Director, officer, agent or holder of shares of
beneficial interest of the Fund shall be personally liable for any such
liabilities.
8.6. Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
National Association of Securities Dealers 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.
17
8.7. 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.
8.8. The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the prior written approval of the other
party.
8.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
8.11 This Agreement constitutes the entire contract between the parties
relating to the subject matter hereof and supersedes any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof.
18
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year first
above written.
Xxxxxxxx Portfolios, Inc.
By: ________________________
Name: ______________________
Title: _______________________
Xxxxxxxx Advisors, Inc.
By: ________________________
Name: ______________________
Title: _______________________
ML Life Insurance Company of New York
By: ________________________
Name: ______________________
Title: _______________________
19
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Names of Separate Account and Contracts Funded
DATE ESTABLISHED BY BOARD OF DIRECTORS BY SEPARATE ACCOUNT
ML of New York Variable Annuity Xxxxxxx Xxxxx Retirement Power
Separate Account A - 8/14/91
00256.001 #125136
A-1
