Exhibit 99.b(k)
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this __ day of February, 2002, by
and between MFS FUND DISTRIBUTORS, INC., a Delaware corporation ("MFS"), and
American International Life Assurance Company of New York, a New York
corporation (the "Company"), on its own behalf and on behalf of each of the
segregated asset accounts of the Company listed in Schedule B (the "Account" or
the "Accounts");
WHEREAS, each of the funds which comprise the MFS Family of Funds (certain
of which may from time to time be listed on Schedule A attached hereto) (each, a
"Fund" and collectively, the "Funds") is registered as an open-end investment
company under the Investment Company Act of 1940 as amended (the "1940 Act"),
WHEREAS each Fund is comprised of multiple classes of shares which are or
will be registered under the Securities Act of 1933 as amended (the "1933 Act");
WHEREAS MFS is registered as a broker-dealer with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as
amended (hereinafter the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD");
WHEREAS, MFS serves as distributor for each of the Funds pursuant to the
terms of a Distribution Agreement between each of the Funds and MFS;
WHEREAS, the Company will issue certain group fixed and variable annuity
contracts (individually, the "Policy" or collectively, the "Policies") which, if
required, will be registered under the 1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated
asset accounts, established by resolution of the Board of Directors of the
Company, to set aside and invest assets attributable to the aforesaid group
fixed and/or variable annuity contracts that are allocated to the Accounts (the
Policies and the Accounts covered by this Agreement, and each corresponding Fund
covered by this Agreement in which the Accounts invest, is specified in Schedule
A attached hereto as may be modified from time to time);
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Class A shares in one or more of
the Funds specified in Schedule A attached hereto (the "Shares") on behalf of
the Accounts to fund the Policies, and MFS intends to sell such Shares to the
Accounts;
NOW, THEREFORE, in consideration of their mutual promises, MFS and the
Company agree as follows:
ARTICLE I. Sale of Trust Shares
1.1. MFS agrees to sell to the Company those Shares which the Accounts
order (based on orders placed by Policy holders on that Business Day, as
defined below) and which are available for purchase by such Accounts,
executing such orders on a daily basis at the net asset value next
computed after receipt by MFS or its designee of the order for the Shares.
For purposes of this Section 1.1, the Company shall be the designee of MFS
for receipt of such orders from Policy owners and receipt by such designee
shall constitute receipt by MFS; provided that MFS receives notice of such
orders by 9:00 a.m. Eastern Time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange,
Inc. (the "NYSE") is open for trading and on which the Funds calculate
their respective net asset values pursuant to the rules of the SEC.
1.2. MFS agrees to make the Shares available indefinitely for purchase at
the applicable net asset value per share by the Company and the Accounts
on those days on which the Funds calculate their respective net
asset value pursuant to rules of the SEC and each Fund shall calculate
such net asset value on each day which the NYSE is open for trading.
Notwithstanding the foregoing, MFS may refuse to sell any Shares to the
Company and the Accounts, or suspend or terminate the offering of the
Shares if such action is required by law or by regulatory authorities
having jurisdiction or, pursuant to a determination made by the Board of
Trustees of any Fund acting in good faith and in light of its fiduciary
duties under federal and any applicable state laws, that such action is
necessary in the best interest of the Shareholders of such Fund.
1.3. MFS agrees to redeem for cash, on the Company's request, any full or
fractional Shares held by the Accounts (based on orders placed by Policy
holders on that Business Day), executing such requests on a daily basis at
the net asset value next computed after receipt by MFS or its designee of
the request for redemption. For purposes of this Section 1.3, the Company
shall be the designee of MFS for receipt of requests for redemption from
Policy owners and receipt by such designee shall constitute receipt by
MFS; provided that MFS receives notice of such request for redemption by
9:00 a.m. Eastern Time on the next following Business Day.
1.4. Each purchase, redemption and exchange order placed by the Company
shall be placed separately for each Fund and shall not be netted with
respect to any Fund. However, with respect to payment of the purchase
price by the Company and of redemption proceeds by MFS, the Company and
MFS shall net purchase and redemption orders with respect to each Fund and
shall transmit one net payment for all of the Funds in accordance with
Section 1.5 hereof.
1.5. In the event of net purchases, the Company shall pay for the Shares
by 4:00 p.m. Eastern Time on the next Business Day after an order to
purchase the Shares is made in accordance with the provisions of Section
1.1. hereof. In the event of net redemptions, MFS shall pay the redemption
proceeds by 4:00 p.m. Eastern Time on the next Business Day after an order
to redeem the shares is made in accordance with the provisions of Section
1.3. hereof. All such payments shall be in federal funds transmitted by
wire.
1.6. Issuance and transfer of the Shares will be by book entry only. Stock
certificates will not be issued to the Company or the Accounts. The Shares
ordered from MFS will be recorded in an appropriate title for the Accounts
or the appropriate subaccounts of the Accounts.
1.7. MFS shall furnish same day notice (by wire or telephone followed by
written confirmation) to the Company of any dividends or capital gain
distributions payable on the Shares. The Company hereby elects to receive
all such dividends and distributions as are payable on a Fund's Shares in
additional Shares of that Fund. MFS shall notify the Company of the number
of Shares so issued as payment of such dividends and distributions. The
Company reserves the right to revoke this election and to receive all such
dividends and distributions in cash.
1.8. MFS or its designee shall make the net asset value per share for each
Fund available to the Company on each Business Day as soon as reasonably
practical after the net asset value per share is calculated and shall use
its best efforts to make such net asset value per share available by 6:30
p.m. Eastern Time. In the event that MFS is unable to meet the 6:30 p.m.
time stated herein, it shall provide additional time for the Company to
place orders for the purchase and redemption of Shares. Such additional
time shall be equal to the additional time which MFS takes to make the net
asset value available to the Company. If MFS provides materially incorrect
share net asset value information, MFS shall make an adjustment to the
number of shares purchased or redeemed for the Accounts to reflect the
correct net asset value per share. Any material error in the calculation
or reporting of net asset value per share, dividend or capital gains
information shall be reported promptly upon discovery to the Company.
1.9 The Fund shall transmit to the Company by 8:30 a.m. Eastern Standard
Time on each Business Day a confirmation of any net purchase or redemption
orders for shares of the Fund with a trade date of the second preceding
Business Day. However, on any Business Day that is the first Business Day
of the month,
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the Fund shall transmit such confirmation by 11:00 a.m. Eastern Standard
Time. On each Business Day, the Fund shall also transmit to the Company a
reconciliation of the number of shares in the Account.
1.10 Each business day the Company and the Fund will reconcile their
records so that an appropriate number of shares of each of the Fund is
credited to the Accounts invested in the Fund.
a. In the event of any error (other than a Pricing Error, as
hereinafter defined) or delay with respect to the procedures
outlined in this Section 3 which is caused by the Fund, the
Fund shall make any adjustments on its accounting system
necessary to correct such error or delay and shall reimburse
the Accounts for any losses or reasonable costs incurred
directly as a result of the error or delay.
b. In the event of any error or delay with respect to the
procedures outlined in this Section 3 which is caused by the
Company, the Company shall adjust its records accordingly in
order to correct such error or delay. The Company will notify
the Fund of the error and required correction and shall
reimburse Fund for any losses or reasonable costs incurred as
a result of the error or delay. In the event of an error or
delay caused by the Company, the Fund will process any
adjustment with the trade date of the day such error or delay
is identified by the Company to the Fund.
c. The Company and Fund, respectively, each agree to provide the
other prompt notice of any errors or delays of the type
referred to in this Section 3(a) and to use reasonable efforts
to take such action as may be appropriate to avoid or mitigate
any such costs or losses.
1.11 In the event of an error in the computation of a Fund's net asset
value per share which, in accordance with procedures adopted by the Fund's
Board of Directors consistent with views expressed by the staff of the
Securities and Exchange Commission regarding appropriate error correction
standards, as shall be in effect or amended from time to time, requires
adjustment to transactions previously effected on behalf of an Account (a
"Pricing Error"), the Fund shall notify the Company as soon as possible
after discovery of the Pricing Error. Such notification may be oral, but
shall be confirmed promptly in writing. In such event, the Fund shall
reimburse the affected Fund for any loss (without taking into
consideration any positive effect of such Pricing Error) and shall make
appropriate adjustments to the Company's accounts, which adjustments shall
net the impact of individual Contract gains and losses; this will result
in either a net payment to the Account from the Fund (in the event of net
Contract losses) or from the Account to the Fund (in the event of net
Contract gains), but only to the extent the Company is able to and does
subtract such gains from the Contract's Account Values. In addition, in
the event that the Pricing Error causes the Company to incur any direct
costs for re-processing Contract accounts under an Account, such as
preparing and mailing revised statements, the Fund shall reimburse the
Company for all such reasonable costs upon receipt from the Company of an
invoice or other statement documenting such costs in reasonable detail.
ARTICLE II. Certain Representations, Warranties and Covenants
2.1. The Company represents and warrants that the Policies are registered
group annuities. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law
and that it has legally and validly established the Account as a
segregated asset account under applicable law.
2.2. Subject to Article VI, the Company represents and warrants that the
Policies are currently and at the time of issuance will be treated as life
insurance, endowment or annuity contracts under applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), that it will
make every effort to maintain
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such treatment and that it will notify MFS immediately upon having a
reasonable basis for believing that the policies have ceased to be so
treated or that they might not be so treated in the future.
2.3. MFS represents and warrants that the Shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of The Commonwealth of
Massachusetts and all applicable federal and state securities laws and
that the Funds are and shall remain registered under the 1940 Act. MFS
shall amend, or cause to amend, the registration statements for Fund
Shares under the 1933 Act and the 1940 Act from time to time as required
in order to effect the continuous offering of Fund Shares. MFS shall
register and qualify the Shares for sale in accordance with the laws of
the various states only if and to the extent deemed necessary by MFS.
2.4. MFS represents and warrants that it is a member in good standing of
the NASD and is registered as a broker-dealer with the SEC. MFS represents
that it will sell and distribute the Shares in accordance in all material
respects with all applicable state and federal securities laws, including
without limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.5. MFS represents that the Funds are lawfully organized and validly
existing under the laws of The Commonwealth of Massachusetts and that each
Fund does and will comply in all material respects with the 1940 Act and
any applicable regulations thereunder.
2.6. MFS represents and warrants that the investment adviser to the Funds
(the "Adviser") is and shall remain duly registered under all applicable
federal securities laws and that it shall perform its obligations for the
Funds in compliance in all material respects with any applicable federal
securities laws.
ARTICLE III. Prospectus and Proxy Statements; Voting
3.1. At least annually, MFS or its designee shall provide the Company,
free of charge, with as many copies of the current prospectus (describing
only the Funds listed in Schedule A hereto) for the Shares as the Company
may reasonably request for distribution to existing Policy owners whose
Policies are funded by such Shares. MFS or its designee shall provide the
Company, at the MFS' expense, with as many copies of the current
prospectus for the Shares as the Company may reasonably request for
distribution to prospective purchasers of Policies. If requested by the
Company in lieu thereof, MFS or its designee shall provide such
documentation (including a "camera ready" copy of the new prospectus as
set in type or, at the request of the Company, as a diskette in the form
sent to the financial printer) and other assistance as is reasonably
necessary in order for the parties hereto once each year (or more
frequently if the prospectus for the Shares is supplemented or amended) to
have the prospectus for the Policies and the prospectus for the Shares
printed together in one document; the expenses of such printing to be
apportioned between (a) the Company and (b) MFS or its designee in
proportion to the number of pages of the Policy and Shares' prospectuses,
taking account of other relevant factors affecting the expense of
printing, such as covers, columns, graphs and charts; MFS or its designee
to bear the cost of printing the Shares' prospectus portion of such
document for distribution to owners of existing Policies funded by the
Shares and the Company to bear the expenses of printing the portion of
such document relating to the Accounts; provided, however, that the
Company shall bear all printing expenses of such combined documents where
used for distribution to prospective purchasers or to owners of existing
Policies not funded by the Shares. In the event that the Company requests
that MFS or its designee provides a Fund's prospectus in a "camera ready"
or diskette format, MFS shall be responsible for providing the prospectus
in the format in which it or MFS is accustomed to formatting prospectuses
and shall bear the expense of providing the prospectus in such format
(e.g., typesetting expenses), and the Company shall bear the expense of
adjusting or changing the format to conform with any of its prospectuses.
3.2. The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from MFS or its
designee. MFS or its designee, at its expense, shall print and provide
such
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statement of additional information to the Company (or a master of such
statement suitable for duplication by the Company) for distribution to any
owner of a Policy funded by the Shares. MFS or its designee, at the
Company's expense, shall print and provide such statement to the Company
(or a master of such statement suitable for duplication by the Company)
for distribution to a prospective purchaser who requests such statement or
to an owner of a Policy not funded by the Shares.
3.3. MFS or its designee shall provide the Company free of charge copies,
if and to the extent applicable to the Shares, of the Funds' proxy
materials, reports to Shareholders and other communications to
Shareholders in such quantity as the Company shall reasonably require for
distribution to Policy owners.
3.4. Notwithstanding the provisions of Sections 3.1, 3.2, and 3.3 above,
or of Article V below, the Company shall pay the expense of providing
documents to the extent such cost is considered a distribution expense.
Distribution expenses would include by way of illustration, but are not
limited to, the printing of the Shares' prospectus or prospectuses for
distribution to prospective purchasers or to owners of existing Policies
not funded by such Shares.
3.5. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Policy owners;
(b) vote the Shares in accordance with instructions received from
Policy owners; and
(c) vote the Shares for which no instructions have been received
in the same proportion as the Shares of such Fund for which
instructions have been received from Policy owners;
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. The Company will in no way recommend action in connection with or
oppose or interfere with the solicitation of proxies for the Shares held
for such Policy owners. The Company reserves the right to vote shares held
in any segregated asset account in its own right, 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 MFS or
its designee, each piece of sales literature or other promotional material
in which the Funds, MFS, any investment adviser to the Funds, or any
affiliate of MFS are named, at least five (5) Business Days prior to its
use. No such material shall be used if MFS or its designees reasonably
objects to such use within five (5) Business Days after receipt of such
material.
4.2. The Company shall not give any information or make any
representations or statement on behalf of the Funds, MFS, any investment
adviser to the Funds, or any affiliate of MFS or concerning MFS or any
other such entity in connection with the sale of the Policies other than
the information or representations contained in the registration
statement, prospectus or statement of additional information for the
Shares, 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 MFS, or in sales literature or other
promotional material approved by MFS or its designees, except with the
permission of MFS or its designees. MFS or its designees each agrees to
respond to any request for approval on a prompt and timely basis. The
Company shall adopt and implement procedures reasonably designed to ensure
that information concerning the Funds, MFS or any of their affiliates
which is intended for use only by brokers or agents selling the Policies
(i.e., information that is not intended for distribution to Policy holders
or prospective Policy holders) is so used,
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and neither the Funds, MFS nor any of their affiliates shall be liable for
any losses, damages or expenses relating to the improper use of such
broker only materials.
4. 3. MFS will provide the Company with as much notice as is reasonably
practicable of any proxy solicitation for any Fund, and of any material
change in a Fund's registration statement, particularly any change
resulting in change to the registration statement or prospectus or
statement of additional information for any Account. MFS will cooperate
with the Company so as to enable the Company to solicit proxies from
Policy owners or to make changes to its sales literature or other
promotional material in an orderly manner.
4.4. For purpose of this Article IV and Article VII, the phrase "sales
literature or other promotional material" includes but is not limited to
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), and sales literature (such as brochures,
circulars, reprints or excerpts or any other advertisement, sales
literature, or published articles), distributed or made generally
available to customers or the public, educational or training materials or
communications distributed or made generally available to some or all
agents or employees.
ARTICLE V. Fees and Expenses
5.1. MFS will reimburse the Company certain of the administrative costs
and expenses incurred by the Company as a result of the operations
necessitated by the beneficial ownership by Policy owners of Shares of the
Funds each quarter in an amount equal to _______% [TO BE DISCUSSED] of the
average daily net assets attributable to Policies sold by the Company or
its affiliates that are invested in each Fund, multiplied by a fraction
the numerator of which is the number of days in the quarter and the
denominator of which is 365. Each party, shall, in accordance with the
allocation of expenses specified in Articles III and V hereof, reimburse
other parties for expenses initially paid by one party but allocated to
another party. In addition, nothing herein shall prevent the parties
hereto from otherwise agreeing to perform, and arranging for appropriate
compensation for, other services relating to the Funds and/or to the
Accounts.
5.2. MFS or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable federal
and state laws, including preparation and filing of the Funds'
registration statements, and payment of filing fees and registration fees;
preparation and filing of the Funds' proxy materials and reports to
Shareholders; setting in type and printing Fund prospectuses and
statements of additional information (to the extent provided by and as
determined in accordance with Article III above); setting in type and
printing the proxy materials and reports to Shareholders (to the extent
provided by and as determined in accordance with Article III above); the
preparation of all statements and notices required of the Funds by any
federal or state law with respect to their Shares; all taxes on the
issuance or transfer of the Shares; and the costs of distributing the
Funds' prospectuses and proxy materials to owners of Policies funded by
the Shares and any expenses permitted to be paid or assumed by the Funds
pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act. MFS shall
not bear any expenses of marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Funds'
Shareholder reports and proxy materials to Policy owners. The Company
shall bear all expenses associated with the qualification and filing of
the Policies under applicable state insurance laws; and the cost of
preparing, printing and distributing annual individual account statements
for Policy owners as required by state insurance laws.
ARTICLE VI. Diversification and Related Limitations
MFS represents on behalf of each Fund that each Fund will elect to be
qualified as a Regulated Investment Company under Subchapter M of the Code
and that every effort will be made to maintain such qualification
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(under Subchapter M or any successor or similar provision) and that MFS or
its designee will notify the Company promptly upon having a reasonable
basis for believing that any Fund has ceased to so qualify or that any
Fund might not so qualify in the future. If MFS fails to maintain such
qualification, the Company will cooperate with MFS to cure such
qualification to the extent such cure is available. Failure by MFS to
maintain such qualification will be considered a material breach of a
representation under this Agreement.
ARTICLE VII. Indemnification
7.1. Indemnification by the Company
The Company agrees to indemnify and hold harmless MFS, the Funds,
any affiliates of MFS, and each of their respective directors/trustees,
officers and each person, if any, who controls MFS or the Funds within the
meaning of Section 15 of the 1933 Act, and any agents or employees of the
foregoing (each an "Indemnified Party," or 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 expenses (including reasonable
counsel fees) to which an Indemnified Party may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of the Shares or the
Policies and:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Policies or sales literature or
other promotional material for the Policies (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 reasonable reliance
upon and in conformity with information furnished to the
Company or its designee by or on behalf of MFS or the Funds
for use in the Policies or sales literature or other
promotional material (or any amendment or supplement) or
otherwise for use in connection with the sale of the Policies
or Shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional material
of the Funds not supplied by the Company or its designee, or
persons under its control and on which the Company has
reasonably relied) or wrongful conduct of the Company or
persons under its control, with respect to the sale or
distribution of the Policies or Shares; or
(c) arise out of any untrue statement of a material fact contained
in the registration statement, prospectus, statement of
additional information, or sales literature or other
promotional literature of the Funds, 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 statement or statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished to the Funds by or on behalf of the
Company; or
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company; or
(e) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement;
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as limited by and in accordance with the provisions of this Article VII.
7.2. Indemnification by MFS
MFS 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, and any agents
or employees of the foregoing (each an "Indemnified Party," or
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 Funds) or
expenses (including reasonable counsel fees) to which any Indemnified
Party may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Shares or the Policies and:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the registration statement,
prospectus, statement of additional information or sales
literature or other promotional material of the Funds (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
statement 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 reasonable
reliance upon and in conformity with information furnished to
the Funds, MFS or their respective designees by or on behalf
of the Company for use in the registration statement,
prospectus or statement of additional information for the
Funds or in sales literature or other promotional material for
the Funds (or any amendment or supplement) or otherwise for
use in connection with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
sales literature or other promotional material for the
Policies not supplied by MFS or any of its designees or
persons under their respective control and on which any such
entity has reasonably relied) or wrongful conduct of MFS or
persons under its control, with respect to the sale or
distribution of the Policies or Shares; or
(c) arise out of any untrue statement of a material fact contained
in the sales literature or other promotional literature of the
Accounts or relating to the Policies, 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 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
Funds or MFS; or
(d) arise out of or result from any material breach of any
representation and/or warranty made by MFS in this Agreement
or arise out of or result from any other material breach of
this Agreement by MFS; or
(e) arise as a result of any failure by MFS to provide the
services and furnish the materials under the terms of the
Agreement;
as limited by and in accordance with the provisions of this Article VII.
7.3. (a) In no event shall MFS be liable under the indemnification
provisions contained in this Agreement to any individual or entity,
including without limitation, the Company or any Policy holder, with
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respect to any losses, claims, damages, liabilities or expenses that arise
out of or result from (i) a breach of any representation, warranty, and/or
covenant made by the Company hereunder; (ii) the failure by the Company to
maintain its segregated asset account (which invests in any Fund) as a
legally and validly established segregated asset account under applicable
state law; or (iii) the failure by the Company to maintain its variable
annuity and/or variable life insurance contracts (with respect to which
any Fund serves as an underlying funding vehicle) as life insurance,
endowment or annuity contracts under applicable provisions of the Code.
7.3 (b) In no event shall the Company be liable under the indemnification
provisions contained in this Agreement to any individual or entity,
including without limitation, the Funds or MFS, with respect to any
losses, claims, damages, liabilities or expenses that arise out of or
result from (i) a breach of any representation, warranty and/or covenant
made by MFS hereunder; or (ii) the failure by any Fund to be qualified as
a Regulated Investment Company under Subchapter M of the Code.
7.4. Neither the Company nor MFS shall be liable under the indemnification
provisions contained in this Agreement with respect to any losses, claims,
damages, liabilities or expenses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful
misfeasance, willful misconduct, or gross negligence in the performance of
such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
7.5. Promptly after receipt by an Indemnified Party under this Section
7.5. of commencement of action, such Indemnified Party will, if a claim in
respect thereof is to be made against the indemnifying party under this
section, notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any Indemnified Party otherwise than
under this section. In case any such action is brought against any
Indemnified Party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such Indemnified Party.
After notice from the indemnifying party of its intention to assume the
defense of an action, the Indemnified Party shall bear the expenses of any
additional counsel obtained by it, and the indemnifying party shall not be
liable to such Indemnified Party under this section for any legal or other
expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof other than reasonable costs of investigation.
7.6. Each of the parties agrees promptly to notify the other parties of
the commencement of any litigation or proceeding against it or any of its
respective officers, directors, trustees, employees or 1933 Act control
persons in connection with the Agreement, the issuance or sale of the
Policies, the operation of the Accounts, or the sale or acquisition of
Shares.
7.7. A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article VII. The
indemnification provisions contained in this Article VII shall survive any
termination of this Agreement.
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 Commonwealth of
Massachusetts.
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.
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ARTICLE IX. Notice of Formal Proceedings
MFS and the Company agree that each such party shall promptly notify the
other parties to this Agreement, in writing, of the institution of any formal
proceedings brought against such party or its designees by NASD Regulation, Inc.
(the "NASDR"), the SEC, or any insurance department or any other regulatory body
regarding such party's duties under this Agreement or related to the sale of the
Policies, the operation of the Accounts, or the purchase of the Shares.
ARTICLE X. Termination
10.1. This Agreement shall terminate with respect to the Accounts,
or one, some, or all Funds:
(a) at the option of any party upon sixty (60) days' advance
written notice to the other parties; or
(b) at the option of the Company to the extent that the Shares of
the Funds are not reasonably available to meet the
requirements of the Policies or are not "appropriate funding
vehicles" for the Policies, as reasonably determined by the
Company. Without limiting the generality of the foregoing, the
Shares of a Fund would not be "appropriate funding vehicles"
if, for example, the Company would be permitted to disregard
Policy owner voting instructions pursuant to Rule 6e-2 or
6e-3(T) under the 1940 Act. Prompt notice of the election to
terminate for such cause and an explanation of such cause
shall be furnished to MFS by the Company; or
(c) at the option of MFS upon institution of formal proceedings
against the Company by the NASDR, the SEC, or any insurance
department or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale
of the Policies, the operation of the Accounts, or the
purchase of the Shares; or
(d) at the option of the Company upon institution of formal
proceedings against MFS by the NASDR, the SEC, or any state
securities or insurance department or any other regulatory
body regarding MFS' duties under this Agreement or related to
the sale of the shares; or
(e) at the option of the Company or MFS upon receipt of any
necessary regulatory approvals and/or the vote of the Policy
owners having an interest in the Accounts (or any subaccounts)
to substitute the shares of another investment company for the
corresponding Fund Shares in accordance with the terms of the
Policies for which those Fund Shares had been selected to
serve as the underlying investment media. The Company will
give thirty (30) day's prior written notice to MFS of the date
of any proposed vote or other action taken to replace the
Shares; or
(f) termination by MFS by written notice to the Company, if MFS
shall determine, in its sole judgment exercised in good faith,
that the Company has suffered a material adverse change in its
business, operations, financial condition, or prospects since
the date of this Agreement or is the subject of material
adverse publicity; or
(g) termination by the Company by written notice to MFS, if the
Company shall determine, in its sole judgment exercised in
good faith, that MFS or the Funds have 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
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(h) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(i) upon assignment of this Agreement, unless made with the
written consent of the parties hereto.
(j) termination by the Company upon termination of the investment
advisory agreement between any Fund and that Fund's Adviser.
Notice of such termination shall be promptly furnished to the
Company.
10.2. The notice shall specify the Fund or Funds, Policies and, if
applicable, the Accounts as to which the Agreement is to be terminated.
10.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for
cause or for no cause.
10.4. Except as necessary to implement Policy owner initiated
transactions, or as required by any applicable laws or regulations as
determined by the Company in its sole discretion exercised in good faith,
the Company shall not redeem the Shares attributable to the Policies (as
opposed to the Shares attributable to the Company's assets held in the
Accounts), until at least ten (10) days after the Company shall have
notified MFS of its intention to do so.
10.5 Termination as a result of any cause listed in the preceding
paragraphs shall not affect the Fund's obligation to furnish shares of the
Fund to Contracts then in force for which shares of the Fund serve or may
serve as the underlying investment medium unless such further sale of Fund
shares is proscribed by law or the SEC or other regulatory body.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Company:
American International Group, Inc.
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx, Pensions Department
If to MFS:
MFS Fund Distributors, Inc.
c/o Massachusetts Financial Services Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Senior Vice President and Associate
General Counsel
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ARTICLE XII. Miscellaneous
12.1. Subject to the requirement of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Policies and all information reasonably
identified as confidential in writing by any other party hereto and,
except as permitted by this Agreement or as otherwise required by
applicable law or regulation, 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 it may
come into the public domain.
12.2. 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.
12.3. This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the
same instrument.
12.4. 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.
12.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
12.6. Each party hereto shall cooperate with each other party in
connection with inquiries by appropriate governmental authorities
(including without limitation the SEC, the NASDR, and state insurance
regulators) relating to this Agreement or the transactions contemplated
hereby.
12.7. 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.
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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 above.
American International Life Assurance Company of
New York on its own behalf and on behalf of each
segregated asset account listed in Schedule B.
By its authorized officer,
By: _______________________________
Title: ____________________________
MFS FUND DISTRIBUTORS, INC. on its own behalf and on
behalf of each Fund listed in Schedule A.
By its authorized officer,
By: _______________________________
Xxxxxx X. Xxxxxxxx
President
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SCHEDULE A
Funds Subject to the Participation Agreement
MFS Emerging Growth Fund
MFS New Discovery Fund
MFS Research Fund
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SCHEDULE B
Separate Account A
