Participation Agreement (American Funds)
PARTICIPATION AGREEMENT
among
ML LIFE INSURANCE COMPANY OF NEW YORK, AMERICAN FUNDS SERVICE
COMPANY, and
AMERICAN FUNDS DISTRIBUTORS, INC.
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”), a New York life insurance company, on its own behalf and on
behalf of each segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (hereinafter referred to individually and collectively as the “Account”),
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;
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.
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 ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇, 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 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 any of its affiliates 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 A 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
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, ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇, 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.
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.
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-l of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding company.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many copies of the Fund’s
current prospectus describing 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, |
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
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
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.
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
(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.
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 of a material fact
required to be stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Fund or the Underwriter;
or
(iv) arise as a result of any failure by the Fund or the Underwriter to provide
the services and furnish the materials under the terms of this Agreement (including
a failure of the Fund, whether unintentional or in good faith or
otherwise, to comply with the qualification requirements specified in Section 6.1 of
this Agreement); or
(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.
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 |
| (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
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 overnight courier or 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:
|
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. | |
| Senior Vice President and General Counsel | ||
| ML Life Insurance Company of New York | ||
| 1300 ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ | ||
| ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ |
If to the Fund, Transfer Agent, or Underwriter: |
||
| ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | ||
| President | ||
| American Funds Distributors, Inc. | ||
| ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ | ||
| ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
With a copy to: |
||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Counsel | ||
| American Funds Distributors, Inc. | ||
| ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ | ||
| ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
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
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: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Title: | Vice President and Secretary | |||
AMERICAN FUNDS SERVICE COMPANY
| By its authorized officer |
||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Title: | Vice President | |||
AMERICAN FUNDS DISTRIBUTORS, INC.
| By its authorized officer |
||||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ | |||
| Title: | Senior Vice President ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ |
|||
Schedule A
Dated: October 11, 2002
SEPARATE ACCOUNTS OF THE COMPANY
CONTRACTS
Contract # MLNY-VA-006
Schedule B
DESIGNATED PORTFOLIOS AND CLASSES
| Fund Name | Class | Fiscal Year End | ||
The Bond Fund of America, Inc.
|
A | December ▇▇ | ||
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, 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
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) |