PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
THE UNION CENTRAL LIFE INSURANCE COMPANY
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into this 27th day of October 1995, by and
among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust
(the "Trust"), THE UNION CENTRAL LIFE INSURANCE COMPANY, an Ohio 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, 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, Carillon Investments, Inc., 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 holders
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.
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 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 hereto, 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 contract 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 Carillon Investments, Inc., 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 Carillon
Investments, Inc. 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 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.
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 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 holders or
prospective Policy holders) 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. The parties hereto agree that
this Section 4.2 is neither 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 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 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 or 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, 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 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 if the Trust or any Portfolio adopts and implements a plan pursuant
to Rule 1 2b- 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
expense 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.
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 1 2b- 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 and proxy materials 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 quarterly 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 in the Trust, equal to 0.10% of the aggregate net assets of the
Trust attributable to such Policy owners. 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 81 7(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 owner voting instructions are
disregard. The Company also agrees that, if a material
irreconcilable conflict arises, it will at is 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 shares funding (as defined in the Mixed
and Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Mixed 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, 7.4 and 7.5
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
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 an Indemnified Party may become subject under any
statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or
acquisition of the Shares or the Policies and:
(a) arise out of or are based upon any untrue statement 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 commission 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 this 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,
Carillon Investments, Inc., any affiliates of the Company, and each
of their respective directors and officers and each person, if any,
who controls the Company or Carillon Investments, Inc. 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, 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, 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 statement 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 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
(d) 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
(e) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of the
Agreement; or
(f) 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 covering 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; 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.
8.5. Promptly after receipt by an Indemnified Party under this
Section 8.5. of commencement of action, such Indemnified Party
will, if a claim in respect thereof is to be made against the
indemnifying party under this section, notify the indemnifying
party of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which
it may have to any Indemnified Party otherwise than under this
section. In case any such action is brought against any Indemnified
Party, and it notified the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, assume the defense
thereof, with counsel satisfactory to such Indemnified Party. After
notice from the indemnifying party of its intention to assume the
defense of an action, the Indemnified Party shall bear the expenses
of any additional counsel obtained by it, and the indemnifying
party shall not be liable to such Indemnified Party under this
section for any legal or other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation.
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 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 any material breach of any provision of
this Agreement within 30 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.
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 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
Attn: Xxxxxxx X. Xxxxx, Secretary
If to the Company:
The Union Central Life Insurance Company
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attn: Xxxx X. Xxxxxxxx, Associate General Counsel
If to MFS:
Massachusetts Financial Services Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
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.
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
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, Carillon
Investments, Inc. nor any affiliate thereof shall use any
trademark, trade name, service xxxx or logo or 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.
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.
THE UNION CENTRAL LIFE INSURANCE COMPANY
By its authorized officer,
By: /s/ Xxxxxxxxx X. Xxxxxxx
Xxxxxxxxx X. Xxxxx..
Title: Second Vice President
MFS VARIABLE INSURANCE TRUST, on behalf of the Portfolios
By its authorized officer and not individually,
By: /s/ A. Xxxxx Xxxxxxx
A. Xxxxx Xxxxxxx
Chairman and President
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Senior Executive Vice President
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
Name of Separate
Account and Date Policies Funded Portfolios
Established by Board of Directors by Separate Account Applicable to Policies
--------------------------------- --------------------------- -----------------------
Carillon Life Account Variable Universal Life MFS High Income Series
(Est. 1995) MFS Growth With Income Series
Carillon Account Variable Annuity MFS High Income Series
(Est. 1984) MFS Growth With Income Series
Mutual Fund Separate Account VI Group Annuity MFS High Income Series
Mutual Fund Separate Account VII (funding 401(k) Plans) MFS Growth With Income Series
Mutual Fund Separate Account VII MFS Emerging Growth Series
(Est. 1995)
