EXHIBIT (8)(l)
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the _____ day of __________,
1996 ("Agreement"), by and among ML Life Insurance Company of New York, a New
York life insurance company ("Insurer") (on behalf of itself and its "Separate
Account," defined below); Alliance Capital Management L.P., a Delaware limited
partnership ("Adviser"), the investment adviser of the Fund referred to below;
and Alliance Fund Distributors, Inc., a Delaware corporation ("Distributor"),
the Fund's principal underwriter (collectively, the "Parties"),
WITNESSETH THAT:
WHEREAS Insurer, the Distributor, and Alliance Variable Products Series
Fund, Inc. (the "Fund") desire that shares of the Fund's Portfolio(s) as set
forth on Schedule A hereto as may be modified from time to time (each a
"Portfolio"; reference herein to the "Fund" includes reference to the
Portfolio(s) to the extent the context requires) be made available to serve as
the underlying investment medium for variable annuity contracts of Insurer (the
"Contracts"), and
WHEREAS the Contracts provide for the allocation of net amounts received by
Insurer to separate series (the "Divisions"; reference herein to the "Separate
Account" includes reference to each Division to the extent the context requires)
of the Separate Account for investment in the shares of corresponding underlying
investment media, such as the Portfolio;
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Fund and Distributor will make shares of the Portfolio
available to Insurer for this purpose at net asset value and with no sales
charges, all subject to the following provisions:
Section 1. Additional Portfolios
---------------------------------
The Fund has and may, from time to time, add additional Portfolios, which
will become subject to this Agreement, if, upon the written consent of each of
the Parties hereto, they are made available as investment media for the
Contracts and, in accordance with such written consent, Schedule A hereto is
modified.
2
Section 2. Processing Transactions
-----------------------------------
2.1 Timely Pricing and Orders.
-------------------------
The Adviser or its designated agent will provide closing net asset value,
dividend and capital gain information for the Portfolio to Insurer (usually as
of the close of the New York Stock Exchange) as soon as reasonably practicable
after calculation on each day (a "Business Day") on which (a) the New York Stock
Exchange is open for regular trading, (b) the Fund calculates the Portfolio's
net asset value pursuant to rules of the SEC and (c) Insurer is open for
business. The Fund or its designated agent will use its best efforts to provide
this information by 6:30 p.m., New York time. Insurer will use these data to
calculate unit values, which in turn will be used to process transactions that
receive that same Business Day's Separate Account Division's unit values. Such
Separate Account processing will be done the same evening, and corresponding
orders with respect to Fund shares will be placed by facsimile the morning of
the following Business Day. Insurer will use its best efforts to place such
orders with the Fund by 9:00 a.m., New York time.
3
2.2 Timely Payments.
---------------
Insurer will transmit orders for purchases and redemptions of Fund shares
to Distributor, and will wire payment for net purchases to a custodial account
designated by the Fund on the day the order for Fund shares is placed to the
extent practicable. Payment for net redemptions will be in federal funds wired
by the Fund to an account designated by Insurer on the same day as the order is
placed, to the extent practicable, and in any event be made within five calendar
days after the date the order is placed in order to enable Insurer to pay
redemption proceeds within the time specified in Section 22(e) of the Investment
Company Act of 1940, as amended (the "1940 Act") or such shorter period of time
as may be required by law.
2.3 Applicable Price.
----------------
The Parties agree that Portfolio share purchase and redemption orders
resulting from Contract owner purchase payments, surrenders, partial
withdrawals, routine withdrawals of charges, or other transactions under
Contracts will be executed at the net asset values as determined as of the close
of regular trading on the New York Stock Exchange on the Business Day that
Insurer receives such orders and processes such transactions, which, Insurer
agrees, shall occur not earlier than the Business Day prior to Distributor's
receipt of the corresponding orders for purchases and redemptions of Portfolio
shares. For the purposes of this section, Insurer shall be deemed to be the
designee of the Fund for receipt of such orders from holders of or applicants
for Contracts, and receipt by Insurer shall constitute receipt by the Fund. All
other purchases and redemptions of Portfolio shares by Insurer will be effected
at the net asset values next computed after receipt by Distributor of the order
therefor, and such orders will be irrevocable. The
4
Adviser or its designee shall furnish same day notice (by facsimile followed by
written confirmation) to the Insurer of all purchases or redemptions by the
Insurer. If the Adviser provides materially incorrect net asset value
information, the Insurer shall be entitled to an adjustment to the number of
Shares purchased or redeemed to reflect the correct net asset value per Share
(and, if and to the extent necessary, the Insurer shall make adjustments to the
number of units credited or and/or unit values for the Contracts for the periods
affected). Any error in the calculation or reporting of net asset value per
Share, dividend or capital gains information greater than or equal to $.01 per
share shall be reported immediately upon discovery to the Insurer. The Adviser
or its designee shall furnish same day notice (by facsimile followed by written
confirmation) to the Insurer of all dividends or capital gains distributions
paid by the Portfolio(s). Insurer hereby elects to reinvest all dividends and
capital gains distributions in additional shares of the corresponding Portfolio
at the record-date net asset values until Insurer otherwise notifies the Adviser
in writing, it being agreed by the Parties that the record date and the payment
date with respect to any dividend or distribution will be the same Business Day.
Section 3. Costs and Expenses
------------------------------
3.1 General.
-------
Except as otherwise specifically provided herein, each Party will bear all
expenses incident to its performance under this Agreement.
5
3.2 Registration.
------------
The Fund will bear the cost of its registering as a management investment
company under the 1940 Act and registering its shares under the Securities Act
of 1933, as amended (the "1933 Act"), and keeping such registrations current and
effective; including, without limitation, the preparation of and filing with the
Securities and Exchange Commission (the "SEC") of Forms N-SAR and Rule 24f-2
Notices respecting the Fund and its shares and payment of all applicable
registration or filing fees with respect to any of the foregoing. Insurer will
bear the cost of registering the Separate Account as a unit investment trust
under the 1940 Act and registering units of interest under the Contracts under
the 1933 Act and keeping such registrations current and effective; including,
without limitation, the preparation and filing with the SEC of Forms N-SAR and
Rule 24f-2 Notices respecting the Separate Account and its units of interest and
payment of all applicable registration or filing fees with respect to any of the
foregoing.
6
3.3 Disclosure Documents.
--------------------
The Fund will bear the costs of preparing, filing with the SEC and setting
for printing the Fund's prospectus, statement of additional information and any
amendments or supplements thereto (collectively, the "Fund Prospectus"),
periodic reports to shareholders, Fund proxy material and other shareholder
communications and any related requests for voting instructions from
Participants (as defined below). The Fund or the Distributor will bear the
costs of printing in quantity and delivering to existing Participants the Fund
Prospectus and other documents set forth above in this Section 3.3. Insurer
will bear the costs of preparing, filing with the SEC and setting for printing,
the Separate Account's prospectus, statement of additional information and any
amendments or supplements thereto (collectively, the "Separate Account
Prospectus"), any periodic reports to owners, annuitants or participants under
the Contracts (collectively, "Participants"), and other Participant
communications. The Fund will deliver camera ready copy of its documents to
Insurer. If requested by Insurer, the Fund will provide text to Insurer on
diskette to facilitate printing and binding with the Separate Account documents.
In the event that such documents are printed and bound together, the expenses of
such printing shall be apportioned between the Insurer, and the Fund or the
Distributor, in proportion to the number of pages of the Separate Account
Prospectus and the Fund Prospectus, taking into account other relevant factors
affecting the expense of printing, such as covers, columns, graphs and charts;
the Fund or the Distributor to bear the cost of printing the Fund Prospectus
portion of such document for distribution to owners of existing Contracts funded
by the Portfolio(s) and the Insurer to bear the expenses of printing the
Separate Account Prospectus; provided, however, that the Insurer shall bear all
printing expenses of such combined documents where used for distribution to
7
prospective purchasers of Contracts or to owners of existing Contracts not
funded by the Portfolio(s).
3.4 Distribution Expenses.
---------------------
Expenses of distributing the Contracts will be paid by Insurer.
3.5 Parties to Cooperate.
--------------------
The Adviser, Insurer and Distributor each agrees to cooperate with the
others, as applicable, in arranging to print, mail and/or deliver combined or
coordinated prospectuses or other materials of the Fund and Separate Account.
Section 4. Legal Compliance
----------------------------
4.1 Tax Laws.
----
(a) The Adviser will qualify and maintain qualification of the Portfolio as
a regulated investment company ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and the Adviser or Distributor
will notify Insurer immediately upon having a reasonable basis for believing
that the Portfolio has ceased to so qualify or that it might not so qualify in
the future.
(b) Subject to Sections 4.1(a) and 4.1(c) hereof, Insurer represents that
it believes, in good faith, that the Contracts will be treated as annuity
contracts under applicable provisions of
8
the Code and that it will make every effort to maintain such treatment. Insurer
will notify the Fund and Distributor immediately upon having a reasonable basis
for believing that any of the Contracts have ceased to be so treated or that
they might not be so treated in the future.
(c) The Fund and the Adviser will comply and maintain the Portfolio's
compliance with the diversification requirements set forth in Section 817(h) of
the Code and Section 1.817-5(b) of the regulations under the Code, and the Fund,
Adviser or Distributor will notify Insurer immediately upon having a reasonable
basis for believing that a Portfolio has ceased to so comply or that a Portfolio
might not so comply in the future. In the event that a Portfolio is not so
diversified at the end of any applicable quarter, the Adviser and Distributor
will make every effort to adequately diversify the Portfolio so as to achieve
compliance within the grace period afforded by Treas. Reg. 1.817.5, and notify
Insurer in accordance with this Section 4.1(c).
(d) Subject to Sections 4.1(a) and 4.1(c) hereof, Insurer represents that
it believes, in good faith, that the Separate Account is a "segregated asset
account" and that interests in the Separate Account are offered exclusively
through the purchase of or transfer into a "variable contract," within the
meaning of such terms under Section 817(h) of the Code and the regulations
thereunder. Insurer will make every effort to continue to meet such
definitional requirements, and it will notify the Fund and Distributor
immediately upon having a reasonable basis for believing that such requirements
have ceased to be met or that they might not be met in the future.
9
(e) The Adviser will manage the Fund as a RIC in compliance with Subchapter
M of the Code and will manage the Fund to ensure its in compliance with Section
817(h) of the Code and regulations thereunder. The Fund has adopted and will
maintain procedures for ensuring that the Fund is managed in compliance with
Subchapter M and Section 817(h) and regulations thereunder.
(f) Should the Distributor or Adviser become aware of a failure of Fund, or
a Portfolio, to be in compliance with Subchapter M of the Code or Section 817(h)
of the Code and regulations thereunder, they represent and agree that they will
immediately notify Insurer of such in writing.
4.2 Insurance and Certain Other Laws.
--------------------------------
(a) Insurer represents and warrants that (i) it is an insurance company
duly organized, validly existing and in good standing under the laws of the
State of New York and has full corporate power, authority and legal right to
execute, deliver and perform its duties and comply with its obligations under
this Agreement, (ii) it has legally and validly established and maintains the
Separate Account as a segregated asset account under New York State law, and
(iii) the Contracts comply in all material respects with all other applicable
federal and state laws and regulations.
(b) Insurer represents and warrants that Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated ("Contracts Distributor"), the principal underwriter with
respect to the Contracts, is
10
a business corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware and has full corporate power, authority
and legal right to execute, deliver, and perform its duties.
(c) Distributor represents and warrants that it is a business corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and has full corporate power, authority and legal right to
execute, deliver, and perform its duties and comply with its obligations under
this Agreement.
(d) Adviser represents and warrants that it is a limited partnership, duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full power, authority, and legal right to execute, deliver, and
perform its duties and comply with its obligations under this Agreement.
(e) The Adviser and the Distributor represent and warrant that the Fund is
a corporation duly organized, validly existing, and in good standing under the
laws of Maryland and has full power, authority and legal right to execute,
deliver, and perform its duties.
(f) The Adviser 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, and with the insurance laws of the
states of New York and California, and that their respective operations are and
shall at all times remain in material compliance with applicable state
11
securities laws and with the insurance laws of the states of New York and
California to the extent required to perform this Agreement. In addition, the
Portfolio(s) will comply with any additional applicable state insurance laws or
regulations to the extent specifically requested in writing by the Insurer.
4.3 Securities Laws.
---------------
(a) Insurer represents and warrants that (i) interests in the Separate
Account pursuant to the Contracts will be registered under the 1933 Act to the
extent required by the 1933 Act and the Contracts will be duly authorized for
issuance and sold in compliance with applicable law, (ii) the Separate Account
is and will remain registered under the 1940 Act, to the extent required by the
1940 Act, (iii) the Separate Account does and will comply in all material
respects with the requirements of the 1940 Act and the rules thereunder, (iv)
the Separate Account's 1933 Act registration statement relating to the
Contracts, together with any amendments thereto, will at all times comply in all
material respects with the requirements of the 1933 Act and the rules
thereunder, and (v) the Separate Account Prospectus will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder.
(b) The Adviser and Distributor represent and warrant that (i) Fund shares
sold pursuant to this Agreement will be registered under the 1933 Act to the
extent required by the 1933 Act and duly authorized for issuance and sold in
compliance with applicable law, (ii) the Fund is and will remain registered
under the 1940 Act to the extent required by the 1940 Act, (iii) the Fund will
amend the registration statement for its shares under the 0000 Xxx and for
itself
12
under the 1940 Act from time to time as required in order to effect the
continuous offering of its shares, (iv) the Fund does and will comply in all
material respects with the requirements of the 1940 Act and the rules
thereunder, (v) the Fund's 1933 Act registration statement, together with any
amendments thereto, will at all times comply in all material respects with the
requirements of the 1933 Act and rules thereunder, and (vi) the Fund Prospectus
will at all times comply in all material respects with the requirements of the
1933 Act and the rules thereunder.
(c) Distributor represents and warrants that it is registered as a broker-
dealer with the SEC under the Securities Exchange Act of 1934, as amended, and
is a member in good standing of the National Association of Securities Dealers,
Inc. (the "NASD").
(d) Insurer represents and warrants that Contracts Distributor is
registered as a broker-dealer with the SEC under the Securities Exchange Act of
1934, as amended, and is a member in good standing of the NASD.
13
4.4 Notice of Certain Proceedings and Other Circumstances.
-----------------------------------------------------
(a) Distributor or the Fund shall immediately notify Insurer of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to the Fund's registration statement
under the 1933 Act or the Fund Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or Fund Prospectus, (iii) the
initiation of any proceedings for that purpose or for any other purpose relating
to the registration or offering of the Fund's shares, or (iv) any other action
or circumstances that may prevent the lawful offer or sale of Fund shares in any
state or jurisdiction, including, without limitation, any circumstances in which
(x) the Fund's shares are not registered and, in all material respects, issued
and sold in accordance with applicable state and federal law or (y) such law
precludes the use of such shares as an underlying investment medium of the
Contracts issued or to be issued by Insurer. Distributor and the Fund will make
every reasonable effort to prevent the issuance of any such stop order, cease
and desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(b) Insurer shall immediately notify the Fund of (i) the issuance by any
court or regulatory body of any stop order, cease and desist order, or other
similar order with respect to the Separate Account's registration statement
under the 1933 Act relating to the Contracts or the Separate Account Prospectus,
(ii) any request by the SEC for any amendment to such registration statement or
Separate Account Prospectus, (iii) the initiation of any proceedings for that
purpose or for any other purpose relating to the registration or offering of the
Separate Account interests pursuant to the Contracts, or (iv) any other action
or circumstances that may prevent the lawful
14
offer or sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. Insurer will make every reasonable effort to prevent the issuance
of any such stop order, cease and desist order or similar order and, if any such
order is issued, to obtain the lifting thereof at the earliest possible time.
4.5 Insurer to Provide Documents.
----------------------------
Upon request, Insurer will provide to the Fund and the Distributor one
complete copy of SEC registration statements, Separate Account Prospectuses,
reports, any preliminary and final voting instruction solicitation material,
applications for exemptions, requests for no-action letters, and amendments to
any of the above, that relate to the Separate Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
4.6 Fund to Provide Documents.
-------------------------
Upon request, the Adviser or the Fund will provide to Insurer one complete
copy of SEC registration statements, Fund Prospectuses, reports, any preliminary
and final proxy material, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or its
shares, contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
The Adviser or its designee shall provide the Insurer with as much notice
as is reasonably practicable of any proxy solicitation for a Portfolio (but in
any event, such notice shall be
15
provided at least forty-five days prior to the anticipated date of such
solicitation), and of any material change in the Fund Prospectus or registration
statement, particularly any change resulting in a change to the Separate Account
Prospectus or registration statement relating to the Contracts.
The Adviser or its designee shall also provide to the Insurer, within five
Business Days after the end of a calendar month, the following information with
respect to each Portfolio, each as of the last Business Day of such calendar
month: the Portfolio's ten largest portfolio holdings (based on percentage of
the Portfolio's net assets); the five industry sectors in which the Portfolio's
investments are most heavily weighted; the relative proportion of the
Portfolio's net assets invested in equity, bond, and cash instruments,
respectively; the geographic regions in which the Portfolio's investments are
most heavily weighted; and year-to-date SEC standard performance data. In
addition, the Adviser or its designee agrees to provide to the Insurer, within
fifteen Business Days after the end of a calendar quarter, the following
information with respect to each Portfolio, each as of the last Business Day of
such quarter: a market commentary from the portfolio manager of such Portfolio;
a complete list of the Portfolio's portfolio holdings; and access to the
portfolio manager of such Portfolio for the purposes of preparing audio and
video tapes relating to the Portfolio's management and performance. Also, the
Adviser or its designee agrees to provide to the Insurer within fifteen Business
Days after a request is submitted to the Adviser by the Insurer, the following
information with respect to each Portfolio, each as of the date or dates
specified in such request: net asset value; net asset value per Share; and
other Share information. The Fund, the Adviser, and the Distributor acknowledge
that such information may be furnished to the Insurer's internal or independent
auditors and to the insurance departments
16
of the various jurisdictions in which the Insurer does business.
4.7 Sales Material and Information.
------------------------------
(a) The Insurer shall furnish, or shall cause to be furnished, to the
Distributor or its designee, each piece of sales literature or other promotional
material in which the Fund, the Adviser, or the Distributor, or any affiliate
thereof, are named, at least ten (10) Business Days prior to its use. No such
material shall be used if the Distributor or its designee reasonably objects to
such use within ten (10) Business Days after receipt of such material.
(b) The Insurer shall not give any information or make any representations
or statements on behalf of the Fund, the Adviser, or any affiliate thereof or
concerning the Fund or any other such entity in connection with the sale of the
Contracts other than the information or representations contained in the
registration statement, prospectus or statement of additional information for
the Fund, as such registration statement, prospectus and statement of additional
information 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 Distributor or its designee, except with the permission
of the Distributor or its designee. The Distributor and its respective
designees each agrees to respond to any request for approval on a prompt and
timely basis.
(c) The Adviser, the Distributor, or their respective designees shall
furnish, or shall cause to be furnished, to the Insurer or its designee, each
piece of sales literature or other
17
promotional material in which the Insurer, the Contracts Distributor, or any
affiliate thereof, are named, at least ten (10) Business Days prior to its use.
No such material shall be used if the Insurer or its designee reasonably objects
to such use within ten (10) Business Days after receipt of such material.
(d) The Adviser and the Distributor shall not give any information or make
any representations or statements on behalf of the Insurer, the Contracts
Distributor, or any affiliate thereof or concerning the Insurer or any other
such entity in connection with the sale of shares of the Portfolio(s) or the
Contracts other than the information or representations contained in the
registration statement, prospectus or statement of additional information for
the Separate Account, as such registration statement, prospectus and statement
of additional information may be amended or supplemented from time to time, or
in reports for the Separate Account, or in sales literature or other promotional
material approved by the Insurer or its designee, except with the permission of
the Insurer or its designee. The Insurer and its respective designees each
agrees to respond to any request for approval on a prompt and timely basis.
(e) The parties hereto agree that this Section 4.7 is not intended to
designate or otherwise imply that the Insurer is an underwriter or distributor
of the Fund's shares.
18
Section 5. Mixed and Shared Funding
------------------------------------
5.1 General.
-------
The Fund has obtained an order exempting it from certain provisions of the
1940 Act and rules thereunder so that the Fund is available for investment by
certain other entities, including, without limitation, separate accounts funding
variable life insurance policies and separate accounts of insurance companies
unaffiliated with Insurer ("Mixed and Shared Funding").
5.2 Disinterested Directors.
-----------------------
The Fund agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not interested
persons of Adviser or Distributor within the meaning of Section 2(a)(19) of the
1940 Act.
5.3 Monitoring for Material Irreconcilable Conflicts.
------------------------------------------------
The Fund agrees that its Board of Directors will monitor for the existence
of any material irreconcilable conflict between the interests of the
participants in all separate accounts of life insurance companies utilizing the
Fund, including the Separate Account. Insurer agrees to inform the Board of
Directors of the Fund of the existence of or any potential for any such material
irreconcilable conflict of which it is aware. The concept of a "material
irreconcilable conflict" is not defined by the 1940 Act or the rules thereunder,
but the Parties recognize that such a conflict may arise for a variety of
reasons, including, without limitation:
19
(a) an action by any state insurance or other 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 participants or by participants of
different life insurance companies utilizing the Fund; or a decision by a life
insurance company utilizing the Fund to disregard the voting instructions of
participants.
Insurer will assist the Board of Directors in carrying out its
responsibilities by providing the Board of Directors with all information
reasonably necessary for the Board of Directors to consider any issue raised,
including information as to a decision by Insurer to disregard voting
instructions of Participants.
20
5.4 Conflict Remedies.
-----------------
(a) It is agreed that if it is determined by a majority of the members of
the Board of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, Insurer and the other life insurance
companies utilizing the Fund will, at their own expense and to the extent
reasonably practicable (as determined by a majority of the Disinterested
Directors), take whatever steps are necessary to remedy or eliminate the
material irreconcilable conflict, which steps may include, but are not limited
to:
(i) withdrawing the assets allocable to some or all of the separate
accounts from the Fund or any Portfolio and reinvesting such assets in
a different investment medium, including another Portfolio of the
Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected participants and, as
appropriate, segregating the assets of any particular group (e.g.,
annuity contract owners or participants, life insurance contract
owners or all contract owners and participants of one or more life
insurance companies utilizing the Fund) that votes in favor of such
segregation, or offering to the affected contract owners or
participants the option of making such a change; and
(ii) establishing a new registered investment company of the type defined
as a "Management Company" in Section 4(3) of the 1940 Act or a new
separate account that is operated as a Management Company.
(b) If the material irreconcilable conflict arises because of Insurer's
decision to
21
disregard Participant voting instructions and that decision represents a
minority position or would preclude a majority vote, Insurer may be required, at
the Fund's election, to withdraw the Separate Account's investment in the Fund.
No charge or penalty will be imposed as a result of such withdrawal. Any such
withdrawal must take place within six months after the Fund gives notice to
Insurer that this provision is being implemented, and until such withdrawal
Distributor and the Fund shall continue to accept and implement orders by
Insurer for the purchase and redemption of shares of the Fund.
(c) Insurer agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense and with a
view only to the interests of Participants. Insurer understands that the Fund
reserves the right to pay any portion of a redemption in kind of portfolio
securities if the Board of Directors determines that it would be detrimental to
the best interests of shareholders to make a redemption wholly in cash.
(d) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will the Fund or Distributor be
required to establish a new funding medium for any Contracts. Insurer will not
be required by the terms hereof to establish a new funding medium for any
Contracts if an offer to do so has been declined by vote of a majority of
Participants materially adversely affected by the material irreconcilable
conflict.
22
5.5 Notice to Insurer.
-----------------
The Fund will promptly make known in writing to Insurer the Board of
Directors' determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
5.6 Information Requested by Board of Directors.
-------------------------------------------
Insurer and the Fund will at least annually submit to the Board of
Directors of the Fund such reports, materials or data as the Board of Directors
may reasonably request so that the Board of Directors may fully carry out the
obligations imposed upon it by the provisions hereof, and said reports,
materials and data will be submitted at any reasonable time deemed appropriate
by the Board of Directors. All reports received by the Board of Directors of
potential or existing conflicts, and all Board of Directors actions with regard
to determining the existence of a conflict, notifying life insurance companies
utilizing the Fund of a conflict, and determining whether any proposed action
adequately remedies a conflict, will be properly recorded in the minutes of the
Board of Directors or other appropriate records, and such minutes or other
records will be made available to the SEC upon request.
23
5.7 Compliance with SEC Rules.
-------------------------
If, at any time during which the Fund is serving an investment medium for
variable life insurance policies, 1940 Act Rules 6e-3(T) or, if applicable, 6e-2
are amended or Rule 6e-3 is adopted to provide exemptive relief with respect to
Mixed and Shared Funding, the Parties agree that they will comply with the terms
and conditions thereof and that the terms of this Section 5 shall be deemed
modified if and only to the extent required in order also to comply with the
terms and conditions of such exemptive relief that is afforded by any of said
rules that are applicable.
Section 6. Termination
-----------------------
6.1 Events of Termination.
---------------------
Subject to Section 6.4 below, this Agreement will terminate as to a
Portfolio:
(a) at the option of Insurer or Distributor upon at least six (6) months
advance written notice to the other Parties, or
(b) at the option of the Distributor upon institution of formal proceedings
against Insurer or Contracts Distributor by the NASD, the SEC, any state
insurance regulator or any other regulatory body regarding Insurer's obligations
under this Agreement or related to the sale of the Contracts, the operation of
the Separate Account, or the purchase of the Fund shares, if, in each case, the
Distributor reasonably determines that such proceedings, or the facts on which
such proceedings would be based, have a material likelihood of imposing material
adverse
24
consequences on the Portfolio to be terminated; or
(c) at the option of Insurer upon institution of formal proceedings against
the Fund, Adviser, Distributor, or their affiliates by the NASD, the SEC, or any
state insurance regulator or any other regulatory body regarding the Fund's,
Adviser's, Distributor's, or affiliate's obligations under this Agreement or
related to the operation or management of the Fund or the purchase of Fund
shares, if, in each case, Insurer reasonably determines that such proceedings,
or the facts on which such proceedings would be based, have a material
likelihood of imposing material adverse consequences on Insurer, Separate
Account, Contracts Distributor or the Division corresponding to the Portfolio to
be terminated; or
(d) at the option of any Party in the event that (i) the Portfolio's shares
are not registered and, in all material respects, issued and sold in accordance
with any applicable state and federal law or (ii) such law precludes the use of
such shares as an underlying investment medium of the Contracts issued or to be
issued by Insurer; or
(e) upon termination of the corresponding Division's investment in the
Portfolio pursuant to Section 5 hereof; or
(f) at the option of Insurer if the Portfolio ceases to qualify as a RIC
under Subchapter M of the Code or under successor or similar provisions or the
Insurer reasonably believes that the Portfolio may fail to so comply; or
25
(g) at the option of Insurer if the Portfolio fails to comply with Section
17(h) of the Code or with successor or similar provisions or the Insurer
reasonably believes that the Portfolio may fail to so comply; or
(h) at the option of any party to this Agreement, upon another party's
failure to cure a material breach of any provision of this Agreement within
thirty (30) days after written notice thereof; or
(i) at the option of the Insurer upon receipt of any necessary regulatory
approvals and/or the vote of owners of Contracts having an interest in the
Separate Account to substitute the shares of another investment company for
shares of the corresponding Portfolio in accordance with the terms of the
Contracts for which those Portfolio shares serve as underlying funding media.
The Insurer will give thirty (30) days' prior written notice to the Distributor
of the date of any proposed vote or other action taken to substitute shares of
the Portfolio; or
(j) at the option of the Fund, the Adviser or the Distributor by written
notice to the Insurer, if the Fund, the Adviser, and/or the Distributor shall
conclude, in their sole judgment exercised in good faith, that the Insurer 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
(k) at the option of the Insurer by written notice to the Fund, if the
Insurer shall
26
conclude, in its sole judgment exercised in good faith, that the Fund, Adviser,
or Distributor has suffered a material adverse change in its business,
operations, financial condition, or prospects since the date of this Agreement
or is the subject of material adverse publicity; or
(l) upon the assignment of this Agreement, unless made with the written
consent of each party hereto.
6.2 Funds to Remain Available.
-------------------------
Except (i) as necessary to implement Participant-initiated transactions,
(ii) as required by state insurance laws or regulations, (iii) as required
pursuant to Section 5 of this Agreement, or (iv) with respect to any Portfolio
as to which this Agreement has terminated, Insurer shall not (x) redeem Fund
shares attributable to the Contracts, or (y) prevent Participants from
allocating payments to or transferring amounts from a Portfolio that was
otherwise available under the Contracts, until thirty (30) days after Insurer
shall have notified the Fund or Distributor of its intention to do so.
6.3 Survival of Warranties and Indemnifications.
-------------------------------------------
All warranties and indemnifications will survive the termination of this
Agreement.
27
6.4 Continuance of Agreement for Certain Purposes.
---------------------------------------------
Notwithstanding any termination of this Agreement, the Distributor shall
continue to make available shares of the Portfolios pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective date
of termination of this Agreement (the "Existing Contracts"), except as otherwise
provided under Section 5 of this Agreement. Specifically, and without
limitation, the Distributor shall facilitate the sale and purchase of shares of
the Portfolios as necessary in order to process premium payments, surrenders and
other withdrawals, and transfers or reallocations of values under Existing
Contracts.
Section 7. Parties to Cooperate Respecting Termination
-------------------------------------------------------
The other Parties hereto agree to cooperate with and give reasonable
assistance to Insurer in taking all necessary and appropriate steps for the
purpose of ensuring that the Separate Account owns no shares of a Portfolio
after the Final Termination Date with respect thereto.
Section 8. Assignment
---------------------
This Agreement may not be assigned by any Party, except with the written
consent of each other Party.
28
Section 9. Notices
-------------------
Notices and communications required or permitted by Section 2 hereof will
be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given to
the following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
Xxxxxxx Xxxxx Insurance Group, Inc.
Administrative Offices
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
Alliance Fund Distributors. Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx XX 00000
Attn.: Xxxxxx X. Xxxxxx
FAX: (000) 000-0000
Alliance Capital Management L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx XX 00000
Attn: Xxxxxx X. Xxxxxx
FAX: (000) 000-0000
29
Section 10. Voting Procedures
------------------------------
Insurer will distribute all proxy material furnished by the Fund to
Participants and will vote Fund shares in accordance with instructions received
from Participants. Insurer will vote Fund shares that are (a) not attributable
to Participants or (b) attributable to Participants, but for which no
instructions have been received, in the same proportion as Fund shares for which
said instructions have been received from Participants. Insurer agrees that it
will disregard Participant voting instructions only to the extent it would be
permitted to do so pursuant to Rule 6e-3(T)(b)(15)(iii) under the 1940 Act if
the Contracts were variable life insurance policies subject to that rule. Other
participating life insurance companies utilizing the Fund will be responsible
for calculating voting privileges in a manner consistent with that of Insurer,
as prescribed by this Section 10.
30
Section 11. Indemnification
----------------------------
11.1 Of Fund, Distributor and Adviser by Insurer.
-------------------------------------------
(a) Except to the extent provided in Sections 11.1(b) and 11.1(c), below,
Insurer agrees to indemnify and hold harmless the Fund, Distributor and Adviser,
and each of their directors and officers, (collectively, the "Indemnified
Parties" for purposes of this Section 11.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of Insurer) or actions in respect thereof (including, to the extent
reasonable, legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise,
insofar as such losses,. claims, damages, liabilities or actions are related to
the sale, acquisition, or holding of the Fund's shares and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Separate Account's
1933 Act registration statement, the Separate Account Prospectus or,
to the extent prepared by Insurer or Contracts Distributor, sales
literature or advertising for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to Insurer or
31
Contracts Distributor by or on behalf of the Fund, Distributor or
Adviser for use in the Separate Account's 1933 Act registration
statement, the Separate Account Prospectus, the Contracts, or sales
literature or advertising (or any amendment or supplement to any of
the foregoing); or
(ii) arise out of or as a result of any other statements or representations
(other than statements or representations contained in the Fund's 1933
Act registration statement, Fund Prospectus, sales literature or
advertising of the Fund, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of Insurer or
Contracts Distributor) or the negligent, illegal or fraudulent conduct
of Insurer or Contracts Distributor or persons under their control
(including, without limitation, their employees and "Associated
Persons," as that term is defined in paragraph (m) of Article I of the
NASD's By-Laws), in connection with the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Fund's 1933 Act
registration statement, Fund Prospectus, sales literature or
advertising of the Fund, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if such a statement or omission was
made in reliance upon and in conformity with information furnished to
the Fund, Adviser
32
or Distributor by or on behalf of Insurer or Contracts Distributor for
use in the Fund's 1933 Act registration statement, Fund Prospectus,
sales literature or advertising of the Fund, or any amendment or
supplement to any of the foregoing; or
(iv) arise as a result of any failure by Insurer or Contracts Distributor
to perform the obligations, provide the services and furnish the
materials required of them under the terms of this Agreement.
(b) Insurer shall not be liable under this Section 11.1 with respect to any
losses, claims, damages, liabilities or actions to which an Indemnified Party
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance by that Indemnified Party of its duties or by
reason of that Indemnified Party's reckless disregard of obligations or duties
under this Agreement or to Distributor or to the Fund.
(c) Insurer shall not be liable under this Section 11.1 with respect to any
action against an Indemnified Party unless the Fund, Distributor or Adviser
shall have notified Insurer in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
action 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 Insurer of any such action shall not relieve
Insurer from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of this
33
Section 11.1. In case any such action is brought against an Indemnified Party,
Insurer shall be entitled to participate, at its own expense, in the defense of
such action. Insurer also shall be entitled to assume the defense thereof, with
counsel approved by the Indemnified Party named in the action, which approval
shall not be unreasonably withheld. After notice from Insurer to such
Indemnified Party of Insurer's election to assume the defense thereof, the
Indemnified Party will cooperate fully with Insurer and shall bear the fees and
expenses of any additional counsel retained by it, and Insurer will not be
liable to such Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof, other than reasonable costs of
investigation.
11.2 Of Insurer and Contracts Distributor by Adviser.
-----------------------------------------------
(a) Except to the extent provided in Sections 11.2(c) and 11.2(d), below,
Adviser agrees to indemnify and hold harmless Insurer and Contracts Distributor,
each of their directors and officers, and each person, if any, who controls
Insurer or Contracts Distributor within the meaning of Section 15 of the 1933
Act (collectively, the "Indemnified Parties" for purposes of this Section 11.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of Adviser) or actions in respect thereof
(including, to the extent reasonable, legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or actions are
related to the sale, acquisition, or holding of the Fund's shares and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of
34
any material fact contained in the Fund's 1933 Act registration
statement, Fund Prospectus, sales literature or advertising of the
Fund or, to the extent not prepared by Insurer or Contracts
Distributor, sales literature or advertising for the Contracts (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished to
Distributor, Adviser or the Fund by or on behalf of Insurer or
Contracts Distributor for use in the Fund's 1933 Act registration
statement, Fund Prospectus, or in sales literature or advertising (or
any amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or representations
(other than statements or representations contained in the Separate
Account's 1933 Act registration statement, Separate Account
Prospectus, sales literature or advertising for the Contracts, or any
amendment or supplement to any of the foregoing, not supplied for use
therein by or on behalf of Distributor, Adviser, or the Fund) or the
negligent, illegal or fraudulent conduct of the Fund, Distributor,
Adviser or persons under their control (including, without limitation,
their employees and Associated Persons), in connection with the sale
or distribution of the Contracts
35
or Fund shares; or
(iii) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Separate Account's
1933 Act registration statement, Separate Account Prospectus, sales
literature or advertising covering the Contracts, or any amendment or
supplement to any of the foregoing, 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 in conformity
with information furnished to Insurer or Contracts Distributor by or
on behalf of the Fund, Distributor or Adviser for use in the Separate
Account's 1933 Act registration statement, Separate Account
Prospectus, sales literature or advertising covering the Contracts, or
any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by the Fund, Adviser or Distributor
to perform the obligations, provide the services and furnish the
materials required of them under the terms of this Agreement;
(b) Except to the extent provided in Sections 11.2(c) and 11.2(d) hereof,
Adviser agrees to indemnify and hold harmless the Indemnified Parties from and
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement thereof with the written
36
consent of Adviser) or actions in respect thereof (including, to the extent
reasonable, legal and other expenses) to which the Indemnified Parties may
become subject directly or indirectly under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or actions
directly or indirectly result from or arise out of the failure of any Portfolio
to operate as a regulated investment company in compliance with (i) Subchapter M
of the Code and regulations thereunder and (ii) Section 817(h) of the Code and
regulations thereunder (except to the extent that such failure is caused by
Insurer), including, without limitation, any income taxes and related penalties,
rescission charges, liability under state law to Contract owners or Participants
asserting liability against Insurer or Contracts Distributor pursuant to the
Contracts, the costs of any ruling and closing agreement or other settlement
with the Internal Revenue Service, and the cost of any substitution by Insurer
of shares of another investment company or portfolio for those of any adversely
affected Portfolio as a funding medium for the Separate Account that Insurer
deems necessary or appropriate as a result of the noncompliance.
(c) Adviser shall not be liable under this Section 11.2 with respect to any
losses, claims, damages, liabilities or actions to which an Indemnified Party
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance by that Indemnified Party of its duties or by
reason of such Indemnified Party's reckless disregard of its obligations and
duties under this Agreement or to Insurer, Contracts Distributor or the Separate
Account.
(d) Adviser shall not be liable under this Section 11.2 with respect to any
action
37
against an Indemnified Party unless Insurer or Contracts Distributor shall have
notified Adviser in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the action 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 Adviser of any such action shall not relieve Adviser from any liability
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this Section 11.2. In case any such action is
brought against an Indemnified Party, Adviser will be entitled to participate,
at its own expense, in the defense of such action. Adviser also shall be
entitled to assume the defense thereof (which shall include, without limitation,
the conduct of any ruling request and closing agreement or other settlement
proceeding with the Internal Revenue Service), with counsel approved by the
Indemnified Party named in the action, which approval shall not be unreasonably
withheld. After notice from Adviser to such Indemnified Party of Adviser's
election to assume the defense thereof, the Indemnified Party will cooperate
fully with Adviser and shall bear the fees and expenses of any additional
counsel retained by it, and Adviser will not be liable to such Indemnified Party
under this Agreement for any legal or other expenses subsequently incurred by
such Indemnified Party independently in connection with the defense thereof,
other than reasonable costs of investigation.
38
11.3 Effect of Notice.
----------------
Any notice given by the indemnifying party to an Indemnified Party referred
to in Section 11.1(c) or 11.2(d) above of participation in or control of any
action by the indemnifying party will in no event be deemed to be an admission
by the indemnifying party of liability, culpability or responsibility, and the
indemnifying party will remain free to contest liability with respect to the
claim among the Parties or otherwise.
Section 12. Applicable Law
---------------------------
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with New York law, without regard for that state's
principles of conflict of laws.
Section 13. Execution in Counterparts
--------------------------------------
This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
Section 14. Severability
-------------------------
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
39
Section 15. Rights Cumulative
------------------------------
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, that the Parties are entitled to under federal and state
laws.
Section 16. Restrictions on Sales of Fund Shares
-------------------------------------------------
Insurer agrees that the Fund will be permitted (subject to the other terms
of this Agreement) to make its shares available to separate accounts of other
life insurance companies.
Section 17. Headings
---------------------
The headings used in this Agreement are for purposes of reference only and
shall not limit or define the meaning of the provisions of this Agreement.
40
Section 18. Trademarks, Etc.
-----------------------------
Except as otherwise expressly provided in this Agreement, neither the
Adviser, the Distributor, or any affiliate thereof shall use any trademark,
trade name, service xxxx or logo of Insurer or any of its affiliates, or any
variation of any such trademark, trade name, service xxxx or logo, without
Insurer's prior written consent, the granting of which shall be at Insurer's
sole option. Except as otherwise expressly provided in this Agreement, neither
Insurer nor any affiliate thereof shall use any trademark, trade name, service
xxxx or logo of the Fund, the Adviser, the Distributor or any of their
affiliates, or any variation of any trademark, trade name, service xxxx or logo,
without the prior written consent of the Adviser or the Distributor, the
granting of which shall be at the sole option of the Adviser or the Distributor,
as applicable.
41
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
ML LIFE INSURANCE COMPANY OF NEW YORK
By
-----------------------------------
Title
--------------------------------
ALLIANCE CAPITAL MANAGEMENT L.P.
By
-----------------------------------
Title
--------------------------------
ALLIANCE FUND DISTRIBUTORS, INC.
By
-----------------------------------
Title
--------------------------------
42
As of
------------
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
--------------------------------------
Name of Separate
Account and Date Policies Funded Portfolios
Established by Board of Directors by Separate Account Applicable to Policies
--------------------------------------------------------------------------------------
ML of New York Variable Xxxxxxx Xxxxx Fund's Premier Growth Portfolio
Annuity Separate Retirement Plus
Account A Variable Annuity
(8/14/91)
--------------------------------------------------------------------------------------
43
