AMENDMENT
TO
PARTICIPATION AGREEMENT
This amendment (the "Amendment") is made and entered into as of September 3,
2002 by and among Principal Life Insurance Company, an Iowa corporation (the
"Company"), MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the
"Trust") and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation
("MFS") (Trust, MFS, and Company collectively, the "Parties") in order to modify
that certain Participation Agreement entered into by the Parties as of May 17,
2002 (the "Agreement").
The Parties agree to amend the Agreement as follows:
1. Schedule A of this Agreement is also hereby amended to include the new
Benefit Variable Universal Life (BVUL) product.
3. Except as modified hereby, all other terms and conditions of the Agreement
shall remain in full force and effect.
Acknowledged and agreed by:
PRINCIPAL LIFE INSURANCE
COMPANY
By: \s\Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Assistant Director Product Management
MFS VARIABLE INSURANCE
TRUST,
On behalf of the Portfolios
By: \s\Xxxxx X. Xxxxxxxxx Xx
Name: Xxxxx X. Xxxxxxxxx, Xx
Title: Assistant Secretary
Massachusetts FINanCIAL SERVICES COMPANY
By: Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
67860
AMENDMENT NO. 1 TO
PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
PRINCIPAL LIFE INSURANCE COMPANY
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AMENDMENT NO. 1 TO THE PARTICIPATION AGREEMENT dated March 26, 2002,
made and entered into this 17 day of May, 2002, by and among MFS VARIABLE
INSURANCE TRUST, a Massachusetts business trust (the "Trust"), PRINCiPAL LIFE
INSURANCE COMPANY, 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 to the Participation Agreement, as may be amended from time to time
(the "Accounts"), and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware
corporation ("MFS"). Defined terms have the same meaning as in the Participation
Agreement.
WHEREAS, the Participation Agreement provides that the Company will place
purchase, redemption and exchange orders for shares of the Portfolios;
WHEREAS, the Company has engaged Delaware Charter Guarantee & Trust
Company ("Trustar") on its behalf to place purchase, redemption and exchange
orders for shares of the Portfolios;
WHEREAS, the Trust and MFS agree to accept such orders placed by Trustar,
subject to the terms of this Amendment;
NOW, THEREFORE, in consideration of their mutual promises, the Trust, MFS
and the Company agree as follows:
1. Placement of Orders -- The Trust and MFS will accept purchase,
redemption and exchange orders for shares of the Portfolios
placed by Trustar on behalf of the Company pursuant to the terms
of the Agreement as if those orders had been placed directly by
the Company.
2. Company Responsibility -- The Company shall assume responsibility
for the acts and omissions of Trustar in placing such orders and
otherwise for its activities undertaken on the Company's behalf
to the same extent as if those acts were committed or omitted by
the Company directly, and shall provide indemnification for such
acts and omissions in accordance with Section 8.1 of the
Agreement.
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3. Miscellaneous -- This Amendment shall be construed and the
provisions hereof interpreted under and in accordance with the
laws of The Commonwealth of Massachusetts. This Amendment may be
executed simultaneously in one or more counterparts, each of
which taken together shall constitute one and the same
instrument. 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.
IN WiTNESS WHEREOF, each of the parties hereto has caused this Amendment
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.
PRINCIPAL LIFE INSURANCE COMPANY
By its authorized officer,
By: \s\Xxxxx Xxxxx
Title: Assistant Director
MFS VARIABLE INSURANCE TRUST,
on behalf of the Portfolios
By its authorized officer and not individually,
\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
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PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
PRINCIPAL LIFE INSURANCE COMPANY
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into this 26th day of March, 2002, by and
among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the
"Trust"), PRINCIPAL LIFE INSURANCE COMPANY, 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);
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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, Princor Financial Services, 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 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
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
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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 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 Princor, 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 Princor
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 and in good standing 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.
The Trust will provide such copies to the Company in timely manner so as
to enable the Company to print and distribute such materials within the
time required by law. 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 investment adviser to the
Trust, or any affiliate of MFS are named, at least three (3) Business Days
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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 copy of relevant portions of any "deficiency letter" or other
correspondence or written report regarding any such examination.
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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 phase "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 1 2b- I 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.
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
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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 111 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 0.20% 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. 1.8 17-5, 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 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
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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.
ARTICLE VIII. INDEMNIFICATION
8.1. Indemnification by the Company
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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
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company; or
(e) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of
this Agreement;
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as limited by and in accordance with the provisions of this Article 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 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
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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 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
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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 Xl. 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
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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.
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
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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:
Principal Life Insurance Company
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxx, Counsel
If to MFS:
Massachusetts Financial Services Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, General Counsel
ARTICLE XIII. MISCELLANEOUS
13.1. Subject to the requirement of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Policies and all information reasonably
identified as confidential in writing by any other party hereto and,
except as permitted by this Agreement or as otherwise required by
applicable law or regulation, shall not disclose, disseminate or utilize
such names and addresses and other confidential information without the
express written consent of the affected party until such time as it may
come into the public domain.
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13.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
13.3. This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the
same instrument.
13.4. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
13.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
13.6. Each party hereto shall cooperate with each other party in
connection with inquiries by appropriate governmental authorities
(including without limitation the SEC. the NASD, and state insurance
regulators) relating to this Agreement or the transactions contemplated
hereby.
13.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
13.8. A copy of the Trust's Declaration of Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. The Company
acknowledges that the obligations of or arising out of this instrument are
not binding upon any of the Trust's trustees, officers, employees, agents
or shareholders individually, but are binding solely upon the assets and
property of the Trust in accordance with its proportionate interest
hereunder. The Company further acknowledges that the assets and
liabilities of each Portfolio are separate and distinct and that the
obligations of or arising out of this instrument are binding solely upon
the assets or property of the Portfolio on whose behalf the Trust has
executed this instrument. The Company also agrees that the obligations of
each Portfolio hereunder shall be several and not joint, in accordance
with its proportionate interest hereunder, and the Company agrees not to
proceed against any Portfolio for the obligations of another Portfolio.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified above.
PRINCIPAL LIFE INSURANCE COMPANY
By its authorized officer,
By:\s\Xxxxx X. House
Xxxxx X. House
Assistant Director
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 office
\s\Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Chairman and Chief Executive Officer
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As of May 2002
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
Principal Life Insurance Company
Company Separate Account B
(1) The Principal(R) Variable Annuity
(2) Principal Freedom Variable Annuity
Principal Life Insurance
Variable Life Separate Account
(1) PrinFlex Life(R) Variable
Life Insurance
(2) Survivorship Variable
Universal Life Insurance
(3) Flexible Variable Life
Insurance
(4) Principal Variable Universal
Life Accumulator (VUL)
(5) Executive Variable Universal
Life Accumulator (EVUL)
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EXHIBIT A-i
1. MFS VIT Emerging Growth Series-Service Class
2. MFS VIT Mid Cap Growth Series-Service Class
3. MFS VIT New Discovery Series-Service Class
4. MFS VIT Value Series-Service Class
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FUND/SERV AND NETWORKING
AGREEMENT
BY AND AMONG
Delaware Charter Guarantee & Trust Company
(dba Trustar Retirement Services)
MFS VARIABLE INSURANCE TRUST
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
This Fund/SERV and Networking Supplement, is dated as of May 20,2002 (the
"Agreement") by and among Delaware Charter Guarantee & Trust Company (dba
Trustar Retirement Services) ("Trustar"), Principal Life Insurance Company (the
"Company"), MFS Fund Distributors, Inc. ("MFD"), MFS Variable Insurance Trust
(the "Trust"), and Massachusetts Financial Services Company ("MFS").
WHEREAS, MFD, a wholly-owned subsidiary of MFS, is registered as a broker-
dealer with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934 (the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc.;
WHEREAS, MFD serves as the Distributor of the Trust pursuant to a
Distribution Agreement between MFD and the Trust;
WHEREAS, MFD and Trustar are members in good standing of the National
Securities Clearing Corporation (the "NSCC") or otherwise have access to the
facilities of the NSCC;
WHEREAS, the Company, which indirectly controls Trustar, entered into a
Participation Agreement with the Trust and MFS, dated as of March 26, 2002 (the
"Participation Agreement");
WHEREAS, the parties intend to make provisions to permit the transmission
of transaction, registration and other data via NSCC Facilities, which may
include Fund/SERV, Networking, the Mutual Fund Profile Service and the Defined
Contribution Clearing and Settlement Service;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
which consideration is full and complete, the parties hereby agree as follows:
1. Definitions. All capitalized terms used and not defined herein shall have
the meaning given them in the Participation Agreement which is attached hereto
and incorporated herein by reference.
#65826
2. Placement of Orders. The Trust and MFS will accept purchase, redemption and
exchange orders for shares of the Portfolios placed by Trustar on behalf of the
Company pursuant to the terms of the Agreement as if those orders had been
placed directly by the Company.
3. Company Responsibility. The Company shall assume responsibility for the acts
and omissions of Trustar in placing such orders and otherwise for its activities
undertaken on the Company's behalf to the same extent as if those acts were
committed or omitted by the Company directly, and shall provide indemnification
for such acts and omissions in accordance with Section 8.1 of the Participation
Agreement.
4. Joinder of Additional Parties. The parties to the Participation Agreement
agree to the joinder of MFD and Trustar as parties to the Participation
Agreement, as supplemented and amended from time to time, but solely for the
purposes expressly set forth herein. MFD shall be entitled to all of the rights
and benefits, and subject to all of the obligations, of the Participation
Agreement, as modified from time to time. The respective obligations of MFD, the
Trust and MFS shall be several and not joint. Trustar shall be entitled to all
of the rights and benefits of the Participation Agreement, but shall only be
responsible for the obligations specified in this Agreement.
5. Transactions Subject to Fund/SERV and Networking. (a) On each business day
that the New York Stock Exchange is open for business on which the Portfolios
determine their per share net asset values (each, a "Business Day"), MFD or its
designee shall accept, and effect changes in its records upon receipt of,
purchase, redemption, exchange, and registration instructions from Trustar
electronically through Fund/SERV without supporting documentation.
(b) Each party hereby agrees to participate in Networking with the other
party pursuant to a mutually agreeable matrix or trust level established by the
NSCC, in accordance with the terms and conditions of the Standard or Trust
Networking Agreement, as applicable, as filed with the NSCC (the "Standard
Networking Agreement"), as amended by this Agreement. In the event of any
conflict between the terms of the Standard Networking Agreement and the terms of
this Agreement, the terms of this Agreement shall govern.
6. Procedures for Order and Settlement. (a) MFD shall, subject to availability,
furnish Trustar and the Company, for each Portfolio, by 7:00 p.m. Eastern Time,
the following: (1) net asset value information as of the close of trading
(currently 4:00 p.m. Eastern Time, the "Close of Trading") on each business day
that the New York Stock Exchange is open for business (each a "Business Day") or
at such other time as the net asset value of a Portfolio is calculated; and (2)
as applicable, the daily accrual or distribution rate factor as it becomes
available. All such notifications will be communicated via the NSCC's Networking
or Mutual Fund Profile services.
(b) Upon receipt of purchase and redemption instructions from the Policy
holders for acceptance as of the Close of Trading on each Business Day
("Instructions"), the Company shall calculate the net purchase or redemption
order for each Portfolio for
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each omnibus account it maintains (the "Accounts"). Orders for net purchases
and/or net redemptions received by the Company prior to the Close of Trading on
any given Business Day shall be transmitted by Trustar to MFD via the NSCC by
10:00 a.m. Eastern Time on the next Business Day. Subject to the Company's
compliance with the foregoing, the Business Day on which Instructions are
received by the Company in proper form prior to the Close of Trading shall be
the date as of which shares of the Portfolios are deemed purchased or redeemed
pursuant to such Instructions. Instructions received in proper form by Principal
Life after the Close of Trading on any given Business Day shall be treated as if
received on the next following Business Day. Dividends and capital gains
distributions shall be automatically reinvested at net asset value in accordance
with the Portfolios' then current prospectuses.
(c) Trustar and MFD shall settle net purchase and redemption transactions
pursuant to, and in accordance with, NSCC rules and procedures.
7. Dividends and Distributions. Upon the declaration of each dividend and each
capital gain distribution by the Trustees of the Trust with respect to shares of
the Portfolios, MFD shall furnish, or cause to be furnished to, the Company and
Trustar information setting forth the date of the declaration of such dividend
or distribution, the ex-dividend date, the date of payment thereof, the record
date as of which shareholders are entitled to payment, the amount payable per
share to the shareholders of record as of that date, and the total amount
payable on the payment date. All such notifications will be communicated via the
NSCC's Networking or Mutual Fund Profile Services.
8. Verification. Each party shall notify the other of any errors, omissions or
interruptions in, or delay or unavailability of, any such transmission as
promptly as possible.
9. Trade Corrections. Processing errors which result from any delay or error
caused by the Company or Trustar may be adjusted through Fund/SERV by Trustar by
the necessary transactions on an as-of basis and the cost to the Portfolio or
MFD of such transactions shall be borne by Trustar; provided however, prior
authorization must be obtained from MFD if the transaction is back dated more
than five days or to a previous calendar year.
10. Adjustments. In the event an adjustment is made to the computation of the
net asset value of any Portfolio's shares as reported in Section 6(a), if
required by the Trust's net asset value error correction policy (the "NAy Error
Correction Policy"), MFD shall notify Trustar and the Company promptly after
discovering the need for any such adjustment. Notification may be made by
facsimile or by electronic transmission, and will include, for each day on which
an adjustment has occurred, the incorrect Portfolio net asset value and the
correct net asset value. MFD agrees that Trustar or the Company may send this
notification or a derivation thereof to Policy holders whose accounts may be
affected by the adjustment. In the event that MFD provides an incorrect net
asset value and said error cause a monetary loss to an Account, then MFD shall
be responsible for compensating the Account so that such loss shall be made
whole in accordance with the NAY Error Correction Policy. If an Account receives
an amount greater than the
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amount which it otherwise would have been entitled prior to a net asset value
adjustment, MFD shall adjust the Account in accordance with the NAV Error
Correction Policy; provided, however, that if Policy holders received
distributions during the time period affected by an overstated price, MFD and
Trustar agree to evaluate the situation on a case-by-case basis with the goal
towards pursuing an appropriate course of action, which may include making
reasonable efforts to recover overpayments from Policy holders. In no event,
however, shall Trustar or the Company be liable to MFD or the Trust for any such
amounts.
11. Representations and Warranties. MFD and Trustar each represents, warrants,
and covenants that:
(i) it shall perform any and all duties, functions, procedures and
responsibilities assigned to it under this Agreement and as otherwise
established by the NSCC in a competent manner and in compliance with (a) all
applicable laws, rules and regulations, including NSCC rules and procedures
relating to Fund/SERV, and; (b) the then current prospectuses and statements of
additional information of the Trust's Portfolios;
(ii) it shall maintain facilities, equipment and skilled personnel
sufficient to perform the foregoing activities and to otherwise comply with the
terms of this Agreement;
(iii). all trades, confirmations and other information provided by one
party to the other party through Fund/SERV and pursuant to this Agreement shall
be accurate, complete and, in the format prescribed by the NSCC. Each party
shall adopt, implement and maintain procedures reasonably designed to ensure the
accuracy of all transmissions through Fund/SERV and to limit the access to, and
the inputting of data into, Fund/SERV to persons specifically authorized by such
party; and
(iv) it has duly executed and delivered the Standard Networking Agreement,
and has filed such Agreement with the NSCC.
12. Indemnification. (a) MFD shall indemnify and hold harmless Trustar and the
Company, and each of their divisions, subsidiaries, directors, officers, agents,
employees and assigns of each of the foregoing (collectively, "Indemnified
Company Parties"), against and from any and all demands, damages, liabilities,
and losses, or any pending or completed actions, claims, suits, complaints,
proceedings, or investigations (including reasonable attorneys fees and other
costs, including all expenses of litigation or arbitration, judgments, fines or
amounts paid in any settlement consented to by MFD) to which any of them may be
or become subject to as a result or arising out of (i) any negligent act or
omission by MFD relating to Fund/SERV provided neither Trustar nor the Company
has acted negligently; (ii) any breach of MFD's representations or warranties
contained in this Agreement; or (iii) MFD's failure to comply with any of the
terms of this Agreement.
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(b) The Company and Trustar shall indemnify and hold harmless the Trust,
MFS, MFD, the Trust's custodian, the Trust's shareholder servicing agent, each
of their affiliated companies, and all of the divisions, subsidiaries,
directors, trustees, officers, agents, employees and assigns of each of the
foregoing (collectively, "Indemnified MFS Parties"), against and from any and
all demands, damages, liabilities, and losses, or any pending or completed
actions, claims, suits, complaints, proceedings, or investigations (including
reasonable attorneys fees and other costs, including all expenses of litigation
or arbitration, judgments, fines or amounts paid in any settlement consented to
by the Company) to which any of them may be or become subject to as a result or
arising out of (i) any negligent act or omission by Trustar, or its agents
relating to Fund/SERV provided MFD has not acted negligently; (ii) any breach of
Trustar's representations or warranties in this Supplement; (iii) the failure of
Trustar or its agents to comply with any of the terms of this Supplement; or
(iv) MFD's acceptance of any transaction or account maintenance information from
Trustar through Fund/SERV including any fraudulent or unauthorized transaction.
(c) If any action, suit, proceeding, or investigation is initiated, or any claim
or demand is made, against any party indemnified hereto with respect to which
such party ("Indemnified Party") may make a claim against any other party hereto
("Indemnifying Party") pursuant to this Section 12, then the Indemnified Party
shall give prompt written notice of such action, suit, proceeding,
investigation, claim or demand to the Indemnifying Party. Thereafter, the
Indemnifying Party shall have the opportunity, at its own expense and with its
own counsel, to defend or settle such action, suit, proceeding, investigation,
claim or demand; provided, however, that: (i) the Indemnifying Party shall keep
the Indemnified Party informed of all material developments and events relating
to such action, suit, proceeding, investigation, claim or demand; (ii) the
Indemnified Party shall have the right to participate, at its own expense in the
defense of such action, suit, proceeding, investigation, claim or demand and
shall cooperate as reasonably requested by the Indemnifying Party in the defense
thereof; and (iii) the Indemnifying Party shall not settle such action, suit,
proceeding, investigation, claim or demand without the prior written consent of
the Indemnified Party, which consent shall not be unreasonably withheld.
13. Termination of Agreement. This Agreement may be terminated at any time by
any party upon ninety (90) prior days written notice to the other parties.
Notwithstanding the foregoing, this Agreement shall be terminated immediately
upon either (i) a material breach of this Agreement by any party not cured
within thirty (30) days after notice from at least one other party, or (ii) upon
termination of the Participation Agreement. The provisions of Section 12 shall
survive any termination of this Agreement.
14. Notice. Unless otherwise specified, all notices and other communications
hereunder shall be in writing and shall be hand delivered, sent by express
delivery, mailed by certified mail or sent via facsimile to the other party at
the address specified in the Participation Agreement.
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15. Amendment, Assignment and Other Matters. This Agreement may not be amended
except by a writing signed by each of the parties. This Agreement shall not be
assigned by either party without the reasonable written consent of the other
party. This Agreement may be executed in several counterparts, each of which
shall be an original but all of which together shall constitute one and the same
instrument. The headings in this Agreement are for reference only and shall not
affect the interpretation or construction of this Agreement. This Agreement,
together with the Participation Agreement, set forth the entire agreement and
understanding of the parties relating to the subject matter hereof and
supersedes all other prior agreements, arrangements and understandings, written
or oral, among the parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first listed above.
DELAWARE CHARTER GUARANTEE & TRUST COMPANY (dba TRUSTAR
RETIREMENT SERVICES)
By: \s\Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Second Vice President
PRINCIPAL LIFE INSURANCE COMPANY
By: \s\Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: Controller, Life & Disability Division
MFS VARIABLE INSURANCE TRUST
By: \s\ Xxxxx X. Xxxxxxxxx, Xx.
Name: Xxxxx X. Xxxxxxxxx, Xx.
Title: Assistant Secretary
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: \s\ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Secretary
MFS FUND DISTRIBUTORS, INC.
By: \s\Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: President
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