Participation Agreement (MFS)
AMONG
MFS VARIABLE INSURANCE TRUST,
ML LIFE INSURANCE COMPANY OF NEW YORK
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into this 29th day of November 1996, by and among
MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the “Trust”), ML LIFE INSURANCE
COMPANY OF NEW YORK, a New York company (the “Company”), on its own behalf and on behalf of each of
the segregated asset accounts of the Company set forth in Schedule A hereto, as may be amended from
time to time (the “Accounts”), and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation
(“MFS”).
WHEREAS, the Trust is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the “1940 Act”), and its shares are registered or will
be registered under the Securities Act of 1933, as amended (the “1933 Act”);
WHEREAS, shares of beneficial interest of the Trust are divided into several series of
shares, each representing the interests in a particular managed pool of securities and other
assets;
WHEREAS, the series of shares of the Trust offered by the Trust to the Company and the
Accounts are set forth on Schedule A attached hereto (each, a “Portfolio,” and, collectively, the
“Portfolios”);
WHEREAS, MFS is duly registered as an investment adviser under the Investment Advisers Act of
1940, as amended, and any applicable state securities law, and is the Trust’s investment adviser;
WHEREAS, the Company will issue certain variable annuity and/or variable life insurance
contracts (individually, the “Policy” or, collectively, the “Policies”) which, if required by
applicable law, 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 variable annuity and/or variable life insurance contracts that are
allocated to the Accounts (the Policies and the Accounts covered by this Agreement, and each
corresponding Portfolio 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, the Company has registered or will register the Accounts as unit investment trusts
under the 1940 Act (unless exempt therefrom);
WHEREAS, MFS Fund Distributors, Inc. (the “Underwriter”) 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, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (“MLPF&S”) the underwriter for
the individual variable annuity and the variable life policies, is registered as a broker-dealer
with the SEC under the 1934 Act and is a member in good standing of the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations, the
Company intends to purchase shares in one or more of the Portfolios specified in Schedule A
attached hereto (the “Shares”) on behalf of the Accounts to fund the Policies, and the Trust
intends to sell such Shares to the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust, MFS, and the Company
agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Trust 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 the Trust or its designee of the order for
the Shares. For purposes of this Section 1.1, the Company shall be the designee of the
Trust for receipt of such orders from Policy owners and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust receives notice of such
orders by 9:30 a.m. New York 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 Trust calculates its net asset value pursuant to the rules of the SEC.
1.2. The Trust 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 Trust calculates its net asset value pursuant to rules of the SEC and the Trust shall
calculate such net asset value on each day which the NYSE is open for trading.
Notwithstanding the foregoing, the Board of Trustees of the Trust (the “Board”) 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 is, in the sole discretion of the Board acting in good faith and in light
of its fiduciary duties under federal and any applicable state laws, necessary in the best
interest of the Shareholders of such Portfolio.
1.3. The Trust and MFS agree that the Shares will be sold only to insurance companies which
have entered into participation agreements with the Trust and MFS (the “Participating
Insurance Companies”) and their separate accounts, qualified pension and retirement plans
and MFS or its affiliates. The Trust and MFS will not sell Trust shares to any insurance
company or separate account unless an agreement containing provisions substantially the
same as Articles III and VII of this Agreement is in effect to govern such sales. The
Company will not resell the Shares except to the Trust or its agents.
1.4. The Trust 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 owners on that Business Day),
executing such requests on a daily basis at the net asset value next computed after receipt
by the Trust or its designee of the request for redemption. For purposes of this Section
1.4, the Company shall be the designee of the Trust for receipt of requests for redemption
from Policy owners and receipt by such designee shall constitute receipt by the Trust;
provided that the Trust receives notice of such request for redemption by 9:30 a.m. New
York time on the next following Business Day.
1.5. Each purchase, redemption and exchange order placed by the Company shall be placed
separately for each Portfolio and shall not be netted with respect to any Portfolio.
However, with respect to payment of the purchase price by the Company and of redemption
proceeds by the Trust, the Company and the Trust shall net purchase and redemption orders
with respect to each Portfolio and shall transmit one net payment for all of the Portfolios
in accordance with Section 1.6 hereof.
1.6. In the event of net purchases, the Company shall pay for the Shares by 2:00 p.m. New
York time on the next Business Day after an order to purchase the Shares is deemed to be
received in accordance with the
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provisions of Section 1.1. hereof. In the event of net redemptions, the Trust shall pay the
redemption proceeds by 2:00 p.m. New York time on the next Business Day after an order to
redeem the shares is deemed to be received in accordance with the provisions of Section 1.4.
hereof. All such payments shall be in federal funds transmitted by wire.
1.7. 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 the Trust will
be recorded in an appropriate title for the Accounts or the appropriate subaccounts of the
Accounts.
1.8. The Trust shall furnish same day notice (by wire, facsimile 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 Portfolio’s Shares in additional Shares of that Portfolio. The Trust shall
notify the Company of the number of Shares so issued as payment of such dividends and
distributions.
1.9. The Trust or its custodian shall make the net asset value per share for each Portfolio
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. New York time. In the event that the Trust 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 the Trust takes to make the net asset value available to
the Company. If the Trust provides materially incorrect share net asset value information,
the Trust 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.
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. The Company represents and warrants that the Policies are or will be registered under
the 1933 Act or are exempt from or not subject to registration thereunder, and that the
Policies will be issued, sold, and distributed in compliance in all material respects with
all applicable state and federal laws, including without limitation the 1933 Act, the
Securities Exchange Act of 1934, as amended (the “1934 Act”), and the 1940 Act. 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 and has registered or, prior to any
issuance or sale of the Policies, will register the Accounts as unit investment trusts in
accordance with the provisions of the 1940 Act (unless exempt therefrom) to serve as
segregated investment accounts for the Policies, and that it will maintain such
registration for so long as any Policies are outstanding. The Company shall amend the
registration statements under the 1933 Act for the Policies and the registration statements
under the 1940 Act for the Accounts from time to time as required in order to effect the
continuous offering of the Policies or as may otherwise be required by applicable law. The
Company shall register and qualify the Policies for sales in accordance with the securities
laws of the various states only if and to the extent deemed necessary by the Company.
2.2. Subject to Article VI hereof, 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 maintain such treatment and that it will notify the
Trust or 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. The Company represents and warrants that MLPF&S, the underwriter for the individual
variable annuity and the variable life policies, is a member in good standing of the NASD
and is a registered broker-
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dealer with the SEC. The Company represents and warrants that the Company and MLPF&S will
sell and distribute such policies 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.
2.4. The Trust and MFS represent and warrant 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 Trust is and shall remain registered under the 1940 Act. The
Trust shall amend the registration statement for its Shares under the 1933 Act and the 1940
Act from time to time as required in order to effect the continuous offering of its Shares.
The Trust 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 the Trust.
2.5. MFS represents and warrants that the Underwriter is a member in good standing of the
NASD and is registered as a broker-dealer with the SEC. The Trust and MFS represent that
the Trust and the Underwriter 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.
2.6. The Trust represents that it is lawfully organized and validly existing under the laws
of The Commonwealth of Massachusetts and that it does and will comply in all material
respects with the 1940 Act and Subchapter M of the Code and any applicable regulations
thereunder.
2.7. MFS represents and warrants that it is and shall remain duly registered under all
applicable federal securities laws and that it shall perform its obligations for the Trust
in compliance in all material respects with any applicable federal securities laws and with
the securities laws of The Commonwealth of Massachusetts. MFS represents and warrants that
it is not subject to state securities laws other than the securities laws of The
Commonwealth of Massachusetts and that it is exempt from registration as an investment
adviser under the securities laws of The Commonwealth of Massachusetts.
2.8. No less frequently than annually, the Company shall submit to the Board such reports,
material or data as the Board may reasonably request so that it may carry out fully the
obligations imposed upon it by the conditions contained in the exemptive application
pursuant to which the SEC has granted exemptive relief to permit mixed and shared funding
(the “Mixed and Shared Funding Exemptive Order”).
2.9 The Trust and MFS represent that they have used their best efforts to maintain the
Trust’s investment policies, fees and expenses in compliance with the insurance laws and
regulations of the state of California; and the Trust and MFS further represent and warrant
that they shall use their best efforts to comply in all material respects with the
insurance laws and regulations of the states of Arkansas, New York, California, and any
additional state, to the extent that such laws or regulations are specifically provided to
the Trust or MFS in writing by the Company.
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1. At least annually, the Trust or its designee shall provide the Company, free of
charge, with as many copies of the current prospectus (describing only the Portfolios
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. The Trust
or its designee shall provide the Company, at the Company’s 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, the Trust 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
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Company and (b) the Trust 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; the Trust 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
the Trust or its designee provides the Trust’s prospectus in a “camera ready” or diskette format,
the Trust 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 the Trust or its designee. The Trust or its designee, at its expense,
shall print and provide such 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. The Trust 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. The Trust or its designee shall provide the Company free of charge copies, if and to the
extent applicable to the Shares, of the Trust’s 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 printing or 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. The Trust hereby notifies the Company that it may be appropriate to include in the prospectus
pursuant to which a Policy is offered disclosure regarding the potential risks of mixed and shared
funding.
3.6. 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 Portfolio 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. Subject to applicable law, 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.
Participating Insurance Companies shall be responsible for assuring that each of their separate
accounts holding Shares calculates voting privileges in the manner required by the Mixed and
Shared Funding Exemptive Order. The Trust and MFS will notify the Company of any changes of
interpretations or amendments to the Mixed and Shared Funding Exemptive Order.
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ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the Trust or its
designee, each piece of sales literature or other promotional material in which the Trust,
MFS, any other investment adviser to the Trust, or any affiliate of MFS are named, at least
seven (7) Business Days prior to its use. No such material shall be used if the Trust, MFS,
or their respective designees reasonably objects to such use within seven (7) 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 Trust, MFS, any other investment adviser to the Trust, or any affiliate of MFS
or concerning the Trust 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 the Trust, or in sales literature
or other promotional material approved by the Trust, MFS or their respective designees,
except with the permission of the Trust, MFS or their respective designees. The Trust, MFS
or their respective 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 Trust, 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 owners or prospective Policy owners) is so
used, and neither the Trust, 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 by agents of
the Company or its affiliates who are unaffiliated with the Trust or MFS. The parties hereto
agree that this Section 4.2 is not intended to designate nor otherwise imply that the
Company is an underwriter or distributor of the Trust’s shares.
4.3. The Trust or its designee shall furnish, or shall cause to be furnished, to the
Company or its designee, each piece of sales literature or other promotional material in
which the Company and/or the Accounts is named, at least seven (7) Business Days prior to
its use. No such material shall be used if the Company or its designee reasonably objects
to such use within seven (7) Business Days after receipt of such material.
4.4. The Trust and MFS shall not give, and agree that the Underwriter shall not give, any
information or make any representations on behalf of the Company or concerning the Company,
the Accounts, or the Policies in connection with the sale of the Policies other than the
information or representations contained in a registration statement, prospectus, or
statement of additional information for the Policies, as such registration statement,
prospectus and statement of additional information may be amended or supplemented from time
to time, or in reports for the Accounts, or in sales literature or other promotional
material approved by the Company or its designee, except with the permission of the
Company. The Company or its designee agrees to respond to any request for approval on a
prompt and timely basis. The Trust and MFS shall xxxx information produced by or on behalf
of the Trust “FOR BROKER USE ONLY” 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 Policyholders), and neither the Company, nor MLPF&S nor any of their
affiliates shall be liable for any losses, damages or expense arising on account of the use
by brokers of such information with third parties in the event that it is not so marked.
The parties hereto agree that this Section 4.4. is neither intended to designate nor
otherwise imply that MFS is an underwriter or distributor of the Policies.
4.5. The Company and the Trust (or its designee in lieu of the Company or the Trust, as
appropriate) will each provide to the other at least one complete copy of all registration
statements, prospectuses, statements of additional information, reports, proxy statements,
sales literature and other promotional materials, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate to the Policies, or
to the Trust or its Shares, prior to or contemporaneously with the filing
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of such document with the SEC or other regulatory authorities. The Company and the
Trust shall also each promptly inform the other of the results of any examination by the
SEC (or other regulatory authorities) that relates to the Policies, the Trust or its
Shares, and the party that was the subject of the examination shall provide the other party
with a copy of relevant portions of any “deficiency letter” or other correspondence or
written report regarding any such examination.
4.6. The Trust and MFS will provide the Company with as much notice as is reasonably
practicable of any proxy solicitation for any Portfolio (but in any event, such notice shall
be provided at least forty-five days prior to the anticipated date of such solicitation),
and of any material change in the Trust’s registration statement, particularly any change
resulting in change to the registration statement or prospectus or statement of additional
information for any Account. The Trust and MFS will cooperate with the Company so as to
enable the Company to solicit proxies from Policy owners or to make changes to its
prospectus, statement of additional information or registration statement, in an orderly
manner. The Trust and MFS will make reasonable efforts to attempt to have changes affecting
Policy prospectuses become effective simultaneously with the annual updates for such
prospectuses.
4.7. For purpose of this Article IV and Article VIII, 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 of 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.
4.8. The Trust and MFS agree to provide to the Company, within five (5) Business Days after
the end of a calendar month, the following information with respect to each Portfolio of
the Trust set forth on Schedule A, each as of the last Business Day of such calendar month:
the Portfolio’s ten largest portfolio holdings (based on the percentage of the Portfolio’s
net assets); the five industry sectors in which the Portfolio’s investments are most
heavily weighted; 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 standardized performance data.
In addition, the Trust and MFS agree to provide to the Company, within fifteen (15)
Business Days after the end of a calendar quarter, the following information with respect
to each Portfolio of the Trust set forth on Schedule A, each as of the last Business Day of
such quarter: a market commentary from the portfolio manager of such Portfolio; and a
complete list of portfolio holdings (which will not be audited or reconciled against the
Portfolio’s books and records). Also, the Trust and MFS agree to provide to the Company,
within fifteen (15) Business Days after a request is submitted to the Trust or to MFS by
the Company, the following information with respect to each Portfolio of the Trust set
forth on Schedule A, each as of the date or dates specified in such request: net asset
value; net asset value per Share; and other Share information. The Trust and MFS
acknowledge that such information may be furnished to the Company’s internal or independent
auditors and to the insurance departments of the various jurisdictions in which the Company
does business.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust shall pay no fee or other compensation to the Company under this Agreement,
and the Company shall pay no fee or other compensation to the Trust, except that if the
Trust or any Portfolio adopts and implements a plan pursuant to Rule 12b-1 under the 1940
Act to finance distribution and Shareholder servicing expenses, then, subject to obtaining
any required exemptive orders or regulatory approvals, the Trust may make payments to the
Company or to the underwriter for the Policies if and in amounts agreed to by the Trust in
writing. Each party, however, 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
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perform, and arranging for appropriate compensation for, other services relating to the
Trust and/or to the Accounts.
5.2. The Trust 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 Trust’s registration statement, and payment of filing fees and
registration fees; preparation and filing of the Trust’s proxy materials and reports to
Shareholders; setting in type and printing its prospectus and statement 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 Trust by any federal or state law with respect
to its Shares; all taxes on the issuance or transfer of the Shares; and the costs of
distributing the Trust’s prospectuses and proxy materials to owners of Policies funded by
the Shares and any expenses permitted to be paid or assumed by the Trust pursuant to a plan,
if any, under Rule 12b-1 under the 1940 Act. The Trust shall not bear any expenses of
marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Shares’ prospectus or
prospectuses in connection with new sales of the Policies and of distributing the Trust’s
Shareholder reports to Policy owners. The Company shall bear all expenses associated with
the registration, qualification, and filing of the Policies under applicable federal
securities and state insurance laws; the cost of preparing, printing and distributing the
Policy prospectus and statement of additional information; 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
6.1. The Trust and MFS represent and warrant that each Portfolio of the Trust will meet the
diversification requirements of Section 817(h)(1) of the Code and Treas. Reg. 1.817-5,
relating to the diversification requirements for variable annuity, endowment, or life
insurance contracts, as they may be amended from time to time (and any revenue rulings,
revenue procedures, notices, and other published announcements of the Internal Revenue
Service interpreting these sections). In the event that any Portfolio is not so diversified
at the end of any applicable quarter, the Trust and MFS will make every effort to (a)
adequately diversify the Portfolio so as to achieve compliance within the grace period
afforded by Treas. Reg. 1.817.5 and (b) notify the Company.
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
7.1. The Trust agrees that the Board, constituted with a majority of disinterested
trustees, will monitor each Portfolio of the Trust for the existence of any material
irreconcilable conflict between the interests of the variable annuity contract owners and
the variable life insurance policy owners of the Company and/or affiliated companies
(“contract owners”) investing in the Trust. The Board shall have the sole authority to
determine if a material irreconcilable conflict exists, and such determination shall be
binding on the Company only if approved in the form of a resolution by a majority of the
Board, or a majority of the disinterested trustees of the Board. The Board will give prompt
notice of any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the Board in carrying out
its responsibilities under the conditions set forth in the Trust’s exemptive application
pursuant to which the SEC has granted the Mixed and Shared Funding Exemptive Order by
providing the Board, as it may reasonably request, with all information necessary for the
Board to consider any issues raised and agrees that it will be responsible for promptly
reporting any potential or existing conflicts of which it is aware to the Board including,
but not limited to, an obligation by the Company to inform the Board whenever contract
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owner voting instructions are disregarded. The Company also agrees that, if a material
irreconcilable conflict arises, it will at its own cost remedy such conflict up to and
including (a) withdrawing the assets allocable to some or all of the Accounts from the Trust
or any Portfolio and reinvesting such assets in a different investment medium, including
(but not limited to) another Portfolio of the Trust, or submitting to a vote of all affected
contract owners whether to withdraw assets from the Trust or any Portfolio and reinvesting
such assets in a different investment medium and, as appropriate, segregating the assets
attributable to any appropriate group of contract owners that votes in favor of such
segregation, or offering to any of the affected contract owners the option of segregating
the assets attributable to their contracts or policies, and (b) establishing a new
registered management investment company and segregating the assets underlying the Policies,
unless a majority of Policy owners materially adversely affected by the conflict have voted
to decline the offer to establish a new registered management investment company.
7.3. A majority of the disinterested trustees of the Board shall determine whether any
proposed action by the Company adequately remedies any material irreconcilable conflict. In
the event that the Board determines that any proposed action does not adequately remedy any
material irreconcilable conflict, the Company will withdraw from investment in the Trust
each of the Accounts designated by the disinterested trustees and terminate this Agreement
within six (6) months after the Board informs the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination
shall be limited to the extent required to remedy any such material irreconcilable conflict
as determined by a majority of the disinterested trustees of the Board.
7.4. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is
adopted, to provide exemptive relief from any provision of the 1940 Act or the rules
promulgated thereunder with respect to mixed or shared funding (as defined in the Mixed and
Shared Funding Exemptive Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order, then (a) the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may be
necessary to comply with Rule 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to
the extent such rules are applicable; and (b) Sections 3.5, 3.6, 7.1, 7.2, 7.3, and 7.4 of
this Agreement shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. Indemnification by the Company
The Company agrees to indemnify and hold harmless the Trust, MFS, any affiliates of
MFS, and each of their respective directors/trustees, officers and each person, if any, who
controls MFS 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 8.1) 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 any 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 or alleged untrue statement of any material fact contained in the registration statement, prospectus or statement of additional information for the Policies or contained in 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 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 |
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| such statement or omission or such alleged 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 the Trust or MFS for use in the registration statement, prospectus or statement of additional information for the Policies or 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 Trust 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 or alleged 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 Trust, or any amendment thereof or supplement thereto, or the omission or alleged 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 Trust 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; |
as limited by and in accordance with the provisions of this Article VIII.
8.2. Indemnification by the Trust
The Trust 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 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with the written
consent of the Trust) 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 or alleged 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 Trust (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 statement 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 reasonable reliance upon and in conformity with information furnished to the Trust, MFS, the Underwriter 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 Trust or in sales literature or |
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| other promotional material for the Trust (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 for the Policies not supplied by the Trust, MFS, the Underwriter or any of their respective designees or persons under their respective control and on which any such entity has reasonably relied) or wrongful conduct of the Trust 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 or alleged untrue statement of a material fact contained in the registration statement, prospectus, statement of additional information, or sales literature or other promotional literature for the Policies, or any amendment thereof or supplement thereto, or the omission or alleged 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 Trust or MFS; or | ||
| (d) | arise out of or result from any material breach of any representation and/or warranty made by the Trust in this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in Article VI of this Agreement) or arise out of or result from any other material breach of this Agreement by the Trust; or | ||
| (e) | arise out of or result from the materially incorrect or untimely calculation or reporting of the daily net asset value per share or dividend or capital gain distribution rate; or | ||
| (f) | arise as a result of any failure by the Trust 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 VIII.
8.3. In no event shall the Trust be liable under the indemnification provisions contained in this
Agreement to any individual or entity, including without limitation, the Company, or any
Participating Insurance Company or any Policy holder, 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 the Company hereunder or by any Participating Insurance Company
under an agreement containing substantially similar representations, warranties and covenants;
(ii) the failure by the Company or any Participating Insurance Company to maintain its segregated
asset account (which invests in any Portfolio) as a legally and validly established segregated
asset account under applicable state law and as a duly registered unit investment trust under the
provisions of the 1940 Act (unless exempt therefrom); or (iii) subject to the Trust’s compliance
with the diversification requirements specified in Article VI, the failure by the Company or any
Participating Insurance Company to maintain its variable annuity and/or variable life insurance
contracts (with respect to which any Portfolio serves as an underlying funding vehicle) as life
insurance, endowment or annuity contracts under applicable provisions of the Code.
8.4. Neither the Company nor the Trust 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.
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8.5. Promptly after receipt by an Indemnified Party under this Section 8.5. of notice
of commencement of any 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.
8.6. 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.
8.7. A successor by law of the parties to this Agreement shall be entitled to the benefits
of the indemnification contained in this Article VIII. The indemnification provisions
contained in this Article VIII shall survive any termination of this Agreement.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof interpreted under and in
accordance with the laws of The Commonwealth of Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 Acts, and
the rules and regulations and rulings thereunder, including such exemptions from those
statutes, rules and regulations as the SEC may grant and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE X. NOTICE OF FORMAL PROCEEDINGS
The Trust, 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 the NASD, 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 XI. TERMINATION
11.1. This Agreement shall terminate with respect to the Accounts, or one, some, or all
Portfolios:
| (a) | at the option of any party upon six (6) months’ advance written notice to the other parties; or | ||
| (b) | at the option of the Company to the extent that the Shares of Portfolios 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 Portfolio would not be “appropriate funding vehicles” if, for example, such Shares did not meet the diversification or other |
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| requirements referred to in Article VI hereof; or if 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 the Trust by the Company; or | |||
| (c) | at the option of the Trust or MFS upon institution of formal proceedings against the Company by the NASD, 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 the Trust by the NASD, the SEC, or any state securities or insurance department or any other regulatory body regarding the Trust’s or MFS’ duties under this Agreement or related to the sale of the Shares; or | ||
| (e) | at the option of the Company, the Trust 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 Portfolio Shares in accordance with the terms of the Policies for which those Portfolio Shares had been selected to serve as the underlying investment media. The Company will give thirty (30) days’ prior written notice to the Trust of the Date of any proposed vote or other action taken to replace the Shares; or | ||
| (f) | termination by either the Trust or MFS by written notice to the Company, if either one or both of the Trust or MFS respectively, shall determine, in their sole judgment exercised in good faith, that the Company has suffered a material adverse change in its business, operations, financial condition, or prospects since the date of this Agreement or is the subject of material adverse publicity; or | ||
| (g) | termination by the Company by written notice to the Trust and MFS, if the Company shall determine, in its sole judgment exercised in good faith, that the Trust or MFS has suffered a material adverse change in this business, operations, financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity; 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 days after written notice thereof; or | ||
| (i) | upon assignment of this Agreement, unless made with the written consent of the parties hereto. |
11.2. The notice shall specify the Portfolio or Portfolios, Policies and, if applicable, the
Accounts as to which the Agreement is to be terminated.
11.3. It is understood and agreed that the right of any party hereto to terminate this Agreement
pursuant to Section 11.1(a) may be exercised for cause or for no cause.
11.4. Except as necessary to implement Policy owner initiated transactions, or as required by
state insurance laws or regulations, 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), and
the Company shall not prevent Policy owners from allocating payments to a Portfolio that was
otherwise available under the Policies, until thirty (30) days after the Company shall have
notified the Trust of its intention to do so.
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11.5. Notwithstanding any termination of this Agreement, the Trust and MFS shall, at
the option of the Company, continue to make available additional shares of the Portfolios
pursuant to the terms and conditions of this Agreement, for all Policies in effect on the
effective date of termination of this Agreement (the “Existing Policies”), except as
otherwise provided under Article VII of this Agreement. Specifically, without limitation,
the owners of the Existing Policies shall be permitted to transfer or reallocate investment
under the Policies, redeem investments in any Portfolio and/or invest in the Trust upon the
making of additional purchase payments under the Existing Policies.
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or certified mail, overnight
courier or facsimile 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 Trust:
MFS Variable Insurance Trust
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Secretary
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Secretary
If to the Company:
Xxxxxxx Xxxxx Insurance Group, Inc.
Administrative Offices
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xx. Xxxxx X. Xxxxxxxx , Esq.
Senior Vice President and
General Counsel
Administrative Offices
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xx. Xxxxx X. Xxxxxxxx , Esq.
Senior Vice President and
General Counsel
If to MFS:
Massachusetts Financial Services Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, General Counsel
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, General Counsel
ARTICLE XIII. MISCELLANEOUS
13.1. 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.
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13.2. 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.
13.3. This Agreement may be executed simultaneously in one or more counterparts, each of which
taken together shall constitute one and the same instrument.
13.4. 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.
13.5. The Schedule attached hereto, as modified from time to time, is incorporated herein by
reference and is part of this Agreement.
13.6. Each party hereto shall cooperate with each other party in connection with inquiries by
appropriate governmental authorities (including without limitation the SEC, the NASD, and state
insurance regulators) relating to this Agreement or the transactions contemplated hereby.
13.7. 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.
13.8. A copy of the Trust’s Declaration of Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts. The Company acknowledges that the obligations of or arising out of
this instrument are not binding upon any of the Trust’s trustees, officers, employees, agents or
shareholders individually, but are binding solely upon the assets and property of the Trust in
accordance with its proportionate interest hereunder. The Company further acknowledges that the
assets and liabilities of each Portfolio are separate and distinct and that the obligations of or
arising out of this instrument are binding solely upon the assets or property of the Portfolio on
whose behalf the Trust has executed this instrument. The Company also agrees that the obligations
of each Portfolio hereunder shall be several and not joint, in accordance with its proportionate
interest hereunder, and the Company agrees not to proceed against any Portfolio for the
obligations of another Portfolio.
13.9. Except as otherwise expressly provided in this Agreement, neither the Trust nor MFS nor any
affiliate thereof shall use any trademark, trade name, service xxxx or logo of the Company or any
of its affiliates, or any variation of any such trademark, trade name, service xxxx or logo,
without the Company’s prior written consent, the granting of which shall be at the Company’s sole
option. Except as otherwise expressly provided in this Agreement, neither the Company nor any
affiliate thereof shall use any trademark, trade name, service xxxx or logo of the Trust or of
MFS, or any variation of any such trademark, trade name, service xxxx or logo, without the prior
written consent of either the Trust or of MFS, as appropriate, the granting of which shall be at
the sole option of the Trust or of MFS, as applicable.
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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.
| ML LIFE INSURANCE COMPANY OF NEW YORK By its authorized officer, |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Xxxxx X. Xxxxxxxx | ||||
| Title: | Senior Vice President and General Counsel | |||
| MFS VARIABLE INSURANCE TRUST, on behalf of the Portfolios By its authorized officer and not individually, |
||||
| By: | /s/ A. Xxxxx Xxxxxxx | |||
| A. Xxxxx Xxxxxxx | ||||
| Title: | Chairman | |||
| Chairman | ||||
| MASSACHUSETTS FINANCIAL SERVICES COMPANY By its authorized officer, |
||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Xxxxxx X. Xxxxx | ||||
| Title: | Senior Executive Vice President | |||
| Senior Executive Vice President | ||||
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As of November , 1996
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
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 | ||
Xxxxxxx Xxxxx Life Variable
|
Xxxxxxx Xxxxx Fund’s | MFS Emerging Growth Series | ||
Annuity Separate
|
Retirement Plus | MFS Research Series | ||
Account A
|
Variable Annuity | |||
(8/6/91) |
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