Exhibit 1.A(8)(f)
PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
LIFE INVESTORS INSURANCE COMPANY OF AMERICA
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into this 31st day of January 2002,
by and among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the
"Trust"), LIFE INVESTORS INSURANCE COMPANY OF AMERICA, an Iowa corporation (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, certain series of shares of the Trust are divided into two
separate share classes, an Initial Class and a Service Class, and the Trust on
behalf of the Service Class has adopted a Rule 12b-1 plan under the 1940 Act
pursuant to which the Service Class pays a distribution fee;
WHEREAS, the series of shares of the Trust (each, a "Portfolio," and,
collectively, the "Portfolios") and the classes of shares of those Portfolios
(the "Shares") offered by the Trust to the Company and the Accounts are set
forth on Schedule A attached hereto;
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, AFSG SECURITIES CORPORATION, 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 the Shares of the Portfolios as
specified in Schedule A attached hereto 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 prior to
the close of regular trading on the New York Stock Exchange, Inc. (the
"NYSE") 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
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
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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 prior to the close of regular trading
on the NYSE 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 made in accordance with the 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 made 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 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.
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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. 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 AFSG SECURITIES
CORPORATION (and its assignees), 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-dealer with the SEC.
The Company represents and warrants that the Company and AFSG
SECURITIES CORPORATION 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
1940 Act.
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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 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").
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 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.
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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. 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.
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
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investment adviser to the Trust, or any affiliate of MFS are named, at
least three (3) 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 three (3) 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.
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 three (3) Business Days prior to its
use. No such material shall be used if the Company or its designee
reasonably objects to such use within three (3) 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 may not alter any
material so provided by the Company or its designee (including,
without limitation, presenting or delivering such material in a
different medium, e.g., electronic or internet) without the prior
written consent of the Company. 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 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
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copy of relevant portions of any "deficiency letter" or other
correspondence or written report regarding any such examination.
4.6. No party shall use any other party's names, logos, trademarks
or service marks, whether registered or unregistered, without the
prior written consent of such other party, or after written consent
therefor has been revoked, provided that separate consent is not
required under this Section 4.6 to the extent that consent to use a
party's name, logo, trademark or service xxxx in connection with a
particular piece of advertising or sales literature has previously
been giving by a party under Sections 4.2 and 4.4 of this Agreement.
The Company shall not use in advertising, publicly or otherwise the
name of the Trust, MFS or any of their affiliates nor any trade name,
trademark, trade device, servicemark, symbol or any abbreviation,
contraction or simulation thereof of the Trust, MFS, or their
affiliates without the prior written consent of the Trust or MFS in
each instance. The Trust and MFS shall not use in advertising,
publicly or otherwise the name of the Company or any of its affiliates
nor any trade name, trademark, trade device, servicemark, symbol or
any abbreviation, contraction or simulation thereof of the Company or
its affiliates without the prior written consent of the Company in
each instance.
4.7. The Trust and MFS will provide the Company with as much
notice as is reasonably practicable of any proxy solicitation for any
Portfolio, and of any material change in the 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.
4.8. 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 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. 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, to the extent the Trust
or any Portfolio has adopted and implemented a plan pursuant to Rule
12b-1 under the 1940 Act to finance distribution and for Shareholder
servicing expenses, then the Trust may make payments to the Company or
to the underwriter for the Policies in accordance with such plan. 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 perform, and arranging for appropriate
compensation for, other services relating to the Trust and/or to the
Accounts.
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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.
5.4. MFS will monthly reimburse the Company certain of the
administrative costs and expenses incurred by the Company as a result
of operations necessitated by the beneficial ownership by Policy
owners of shares of the Portfolios of the Trust, equal to 20% per
annum of the aggregate net assets of the Trust attributable to
variable life or variable annuity contracts offered by the Company or
its affiliates. In no event shall such fee be paid by the Trust, its
shareholders or by the Policy holders.
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), as if those requirements applied directly to each such
Portfolio.
6.2. The Trust and MFS represent that each Portfolio will elect to
be qualified as a Regulated Investment Company under Subchapter M of
the Code and that they will maintain such qualification (under
Subchapter M or any successor or similar provision).
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
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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 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.
-10-
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 the
Trust or 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 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 or the alleged omission to state
therein a material fact required to be stated
therein or necessary to make the statements therein
not misleading provided that this agreement to
indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in 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
-11-
(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 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 of the Accounts or relating
to the Policies, or any amendment thereof or
supplement thereto, or the
-12-
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, MFS or the Underwriter; 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) 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.
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
-13-
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 requirements referred
to in Article VI
-14-
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 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.
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.
-15-
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.
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
If to the Company:
LIFE INVESTORS INSURANCE COMPANY
OF AMERICA
0000 Xxxxxxxx XX XX
Xxxxx Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Individual Division, Law Department
If to MFS:
MASSACHUSETTS FINANCIAL SERVICES COMPANY
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, General Counsel
-16-
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.
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.
-17-
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.
LIFE INVESTORS INSURANCE COMPANY OF AMERICA
By its authorized officer,
By: s/Xxxx Xxxxxxx
----------------------------------------
Xxxx Xxxxxxx
Vice President
MFS VARIABLE INSURANCE TRUST,
ON BEHALF OF THE PORTFOLIOS
By its authorized officer and not
individually,
By: s/Xxxxx X. Xxxxxxxxx, Xx.
----------------------------------------
Xxxxx X. Xxxxxxxxx, Xx.
Assistant Secretary
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By: s/Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
Chairman and Chief Executive Officer
-18-
As of January 31, 2002
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
NAME OF SEPARATE
ACCOUNT AND DATE POLICIES FUNDED SHARE CLASS PORTFOLIOS
ESTABLISHED BY BY SEPARATE ACCOUNT (INITIAL OR SERVICE CLASS) APPLICABLE TO POLICIES
BOARD OF DIRECTORS
LIFE INVESTORS VARIABLE LIFE INVESTORS INSURANCE SERVICE CLASS MFS NEW DISCOVERY SERIES
LIFE ACCOUNT A COMPANY OF AMERICA MFL TOTAL RETURN SERIES
JULY 1, 1999 POLICY FORM NO. MFS UTILITIES SERIES
APUL0600 699 MFS MID CAP GROWTH SERIES
UNDER MARKETING NAME MFS INVESTORS GROWTH STOCK SERIES
VARIABLE PROTECTOR MFS VALUE SERIES
-19-
