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EXHIBIT 8(a)(iv)
PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
SAGE LIFE ASSURANCE OF AMERICA, INC.
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into this __ day of October 1998, by
and among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the
"Trust"), SAGE LIFE ASSURANCE OF AMERICA, INC., a Delaware 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
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amended (hereinafter the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD");
WHEREAS, Sage Distributors, 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
closing net asset value next computed after receipt by the Trust or
its designee of the order for the Shares. For purposes of this
Section 1.1, the Company shall be the designee of the Trust for
receipt of such orders from Policy owners and receipt by such
designee shall constitute receipt by the Trust; provided that the
Trust receives notice of such orders by 9:30 a.m. New York time on
the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange, Inc. (the "NYSE") is open for
trading and on which the Trust calculates its net asset value
pursuant to the rules of the SEC.
1.2. The Trust agrees to make the Shares available indefinitely for
purchase at the applicable net asset value per share by the Company
and the Accounts on those days on which the Trust calculates its net
asset value pursuant to rules of the SEC and the Trust shall
calculate such net asset value on each day which the NYSE is open for
trading. Notwithstanding the foregoing, the Board of Trustees of the
Trust (the "Board") may refuse to sell any Shares to the Company and
the Accounts, or suspend or terminate the offering of the Shares if
such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board acting in
good faith and in light of its fiduciary duties under federal and any
applicable state laws, necessary in the best interest of the
Shareholders of such Portfolio.
1.3. The Trust and MFS agree that the Shares will be sold only to
insurance companies which have entered into participation agreements
with the Trust and MFS (the "Participating Insurance Companies") and
their separate accounts, qualified pension and retirement plans and
MFS or its affiliates. The Trust and MFS will not sell Trust shares
to any insurance company or separate account unless an agreement
containing provisions substantially the same as Articles III and VII
of this Agreement is in effect to govern such sales. The Company will
not resell the Shares except to the Trust or its agents.
1.4. The Trust agrees to redeem for cash, on the Company's request,
any full or fractional Shares held by the Accounts (based on orders
placed by Policy owners on that Business Day), executing such
requests on a daily basis at the closing net asset value next
computed after receipt
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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 Company reserves the right to revoke this election
and to receive all such dividends or capital gains distributions in
cash. 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 closing net asset
value per share for each Portfolio available to the Company on each
Business Day as soon as reasonably practical after the closing net
asset value per share is calculated and shall use its best efforts
to make such closing 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 closing 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 closing 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
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federal laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act. The Company further represents and warrants
that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established
the Account as a segregated asset account under applicable law and
has registered or, prior to any issuance or sale of the Policies,
will register the Accounts as unit investment trusts in accordance
with the provisions of the 1940 Act (unless exempt therefrom) to
serve as segregated investment accounts for the Policies, and that it
will maintain such registration for so long as any Policies are
outstanding. The Company shall amend the registration statements
under the 1933 Act for the Policies and the registration statements
under the 1940 Act for the Accounts from time to time as required in
order to effect the continuous offering of the Policies or as may
otherwise be required by applicable law. The Company shall register
and qualify the Policies for sales in accordance with the securities
laws of the various states only if and to the extent deemed necessary
by the Company.
2.2. Subject to Article VI hereof, the Company represents and
warrants that the Policies are currently and at the time of issuance
will be treated as life insurance, endowment or annuity 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 Sage Distributors,
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 Sage Distributors, 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 Subchapter M of the Code and any applicable regulations
thereunder.
2.7. MFS represents and warrants that it is and shall remain duly
registered under all applicable federal securities laws and that it
shall perform its obligations for the Trust in compliance in all
material respects with any applicable federal securities laws and
with the securities laws of The Commonwealth of Massachusetts. MFS
represents and warrants that it is not subject to state
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securities laws other than the securities laws of The Commonwealth of
Massachusetts and that it is exempt from registration as an
investment adviser under the securities laws of The Commonwealth of
Massachusetts.
2.8. No less frequently than annually, the Company shall submit to
the Board such reports, material or data as the Board may reasonably
request so that it may carry out fully the obligations imposed upon
it by the conditions contained in the exemptive application pursuant
to which the SEC has granted exemptive relief to permit mixed and
shared funding (the "Mixed and Shared Funding Exemptive Order").
2.9. The Trust and MFS represent that they will comply with state
insurance law restrictions applicable to them in connection with
rendering services to the Company under this Agreement, as determined
and provided in writing and described to them by the Company,
including the furnishing of information not otherwise available to
the Company which is required by state insurance law to enable the
Company to obtain the authority needed to issue the Contracts in any
applicable state.
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
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funded by the Shares. The Trust or its designee, at the Company's
expense, shall print and provide such statement to the Company (or a
master of such statement suitable for duplication by the Company) for
distribution to a prospective purchaser who requests such statement
or to an owner of a Policy not funded by the Shares.
3.3. The Trust or its designee shall provide the Company free of
charge copies, if and to the extent applicable to the Shares, of the
Trust's proxy materials, reports to Shareholders and other
communications to Shareholders in such quantity as the Company shall
reasonably require for distribution to Policy owners.
3.4. Notwithstanding the provisions of Sections 3.1, 3.2, and 3.3
above, or of Article V below, the Company shall pay the expense of
printing or providing documents to the extent such cost is considered
a distribution expense. Distribution expenses would include by way of
illustration, but are not limited to, the printing of the Shares'
prospectus or prospectuses for distribution to prospective purchasers
or to owners of existing Policies not funded by such Shares.
3.5. The Trust hereby notifies the Company that it may be appropriate
to include in the prospectus pursuant to which a Policy is offered
disclosure regarding the potential risks of mixed and shared funding.
3.6. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Policy owners;
(b) vote the Shares in accordance with instructions
received from Policy owners; and
(c) vote the Shares for which no instructions have been
received in the same proportion as the Shares of such
Portfolio for which instructions have been received
from Policy owners;
so long as and to the extent that the SEC continues to interpret the
1940 Act to require pass through voting privileges for variable
contract owners. Subject to applicable law, the Company will in no way
recommend action in connection with or oppose or interfere with the
solicitation of proxies for the Shares held for such Policy owners.
The Company reserves the right to vote shares held in any segregated
asset account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts holding Shares calculates voting
privileges in the manner required by the Mixed and Shared Funding
Exemptive Order. The Trust and MFS will notify the Company of any
changes of interpretations or amendments to the Mixed and Shared
Funding Exemptive Order.
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.
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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.
The parties hereto agree that this Section 4.2 is not intended to
designate or 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. If
the Trust or MFS produces information concerning the Company, any of
its affiliates, or the Policies which is intended for use only by
brokers or agents (i.e., information that is not intended for
distribution to Policy owners or prospective Policy owners), the Trust
or MFS shall add an appropriate legend on the cover designating the
materials as "broker only" and not intended for distribution to
members of the public. Neither the Company nor any of its affiliates
shall be liable for any losses, damages, or expenses relating to the
improper use of "broker only" materials produced by the Trust or MFS
which does not include such a legend. 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
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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 (but in any event, such notice shall be
provided at least thirty days prior to the anticipated date of such
solicitation or change) 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 12b-1 under the 1940 Act
to finance distribution and Shareholder servicing expenses, then,
subject to obtaining any required exemptive orders or regulatory
approvals, the Trust may make payments to the Company or to the
underwriter for the Policies if and in amounts agreed to by the Trust
in writing. Each party, however, shall, in accordance with the
allocation of expenses specified in Articles III and V hereof,
reimburse other parties for expenses initially paid by one party but
allocated to another party. In addition, nothing herein shall prevent
the parties hereto from otherwise agreeing to 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
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any, under Rule 12b-l under the 0000 Xxx. The Trust shall not bear
any expenses of marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Shares'
prospectus or prospectuses in connection with new sales of the
Policies and of distributing the Trust's Shareholder reports to Policy
owners. The Company shall bear all expenses associated with the
registration, qualification, and filing of the Policies under
applicable federal securities and state insurance laws; the cost of
preparing, printing and distributing the Policy prospectus and
statement of additional information; and the cost of preparing,
printing and distributing annual individual account statements for
Policy owners as required by state insurance laws.
ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS
6.1. The Trust and MFS represent and warrant that each Portfolio of
the Trust meets and will continue to meet the diversification
requirements of Section 817 (h) (1) of the Code and Treas. Reg.
1.817-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts, as they may be
amended from time to time (and any revenue rulings, revenue
procedures, notices, and other published announcements of the Internal
Revenue Service interpreting these sections), as if those requirements
applied directly to each such Portfolio. 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.
6.2. The Trust and MFS represent that each Portfolio is 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 its 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
Trust's 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
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medium, including (but not limited to) another Portfolio of the
Trust, or submitting to a vote of all affected contract owners
whether to withdraw assets from the Trust or any Portfolio and
reinvesting such assets in a different investment medium and, as
appropriate, segregating the assets attributable to any appropriate
group of contract owners that votes in favor of such segregation, or
offering to any of the affected contract owners the option of
segregating the assets attributable to their contracts or policies,
and (b) establishing a new registered management investment company
and segregating the assets underlying the Policies, unless a majority
of Policy owners materially adversely affected by the conflict have
voted to decline the offer to establish a new registered management
investment company.
7.3. A majority of the disinterested trustees of the Board shall
determine whether any proposed action by the Company adequately
remedies any material irreconcilable conflict. In the event that the
Board determines that any proposed action does not adequately remedy
any material irreconcilable conflict, the Company will withdraw from
investment in the Trust each of the Accounts designated by the
disinterested trustees and terminate this Agreement within six (6)
months after the Board informs the Company in writing of the
foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required to remedy any
such material irreconcilable conflict as determined by a majority of
the disinterested trustees of the Board.
7.4. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules promulgated thereunder with
respect to mixed or shared funding (as defined in the Mixed and
Shared Funding Exemptive Order) on terms and conditions materially
different from those contained in the Mixed and Shared Funding
Exemptive Order, then (a) the Trust and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be
necessary to comply with Rule 6e-2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable; and (b)
Sections 3.5, 3.6, 7.1, 7.2, 7.3 and 7.4 of this Agreement shall
continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless the Trust,
MFS, any affiliates of MFS, and each of their respective
directors/trustees, officers and each person, if any, who controls 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 sales literature or other
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11
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 or the
Underwriter for use in the registration statement,
prospectus or statement of additional information
for the Policies or sales literature or other
promotional material (or any amendment or
supplement) or otherwise for use in connection with
the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus, statement of additional
information or sales literature or other
promotional material of the Trust not supplied by
the Company or its designee, or persons under its
control and on which the Company has reasonably
relied) or wrongful conduct of the Company or
persons under its control, with respect to the sale
or distribution of the Policies or Shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the
registration statement, prospectus, statement of
additional information, or sales literature or
other promotional literature of the Trust, or any
amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statement or statements
therein not misleading, if such statement or
omission was made in reliance upon information
furnished to the Trust by or on behalf of the
Company; or
(d) arise out of or result from any material breach of
any representation and/or warranty made by the
Company in this Agreement or arise out of or result
from any other material breach of this Agreement by
the Company; or
(e) arise as a result of any failure by the Company to
provide the services and furnish the materials
under the terms of this Agreement;
as limited by and in accordance with the provisions of this Article
VIII.
8.2. INDEMNIFICATION BY THE TRUST
The Trust agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act,
and any agents or employees of the foregoing (each an "Indemnified
Party," or collectively, the "Indemnified Parties" for purposes of
this Section 8.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Trust) or expenses (including reasonable counsel fees)
to which any Indemnified Party may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Shares or the Policies
and:
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12
(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 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
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13
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. In no event shall the Company be liable under the
indemnification provisions contained in this Agreement to any
individual or entity, including without limitation, the Trust or
MFS, or any other 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 Trust or MFS
hereunder or by any other Participating Insurance Company under an
agreement containing substantially similar representations,
warranties and covenants; (ii) the failure by any other
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
Company's compliance with Section 2.2 hereof, the failure by any
other 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.
8.5. 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.
8.6. 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.
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14
8.7. 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.
8.8. 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, without giving effect to conflict of laws
principles.
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
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15
(c) at the option of the Trust or MFS upon institution
of formal proceedings against the Company by the
NASD, the SEC, or any insurance department or any
other regulatory body regarding the Company's
duties under this Agreement or related to the sale
of the Policies, the operation of the Accounts, or
the purchase of the Shares; or
(d) at the option of the Company upon institution of
formal proceedings against the Trust by the NASD,
the SEC, or any state securities or insurance
department or any other regulatory body regarding
the Trust's or MFS' duties under this Agreement or
related to the sale of the Shares; or
(e) at the option of the Company, the Trust or MFS
upon receipt of any necessary regulatory approvals
and/or the vote of the Policy owners having an
interest in the Accounts (or any subaccounts) to
substitute the shares of another investment company
for the corresponding Portfolio Shares in
accordance with the terms of the Policies for which
those Portfolio Shares had been selected to serve
as the underlying investment media. The Company
will give thirty (30) days' prior written notice to
the Trust of the Date of any proposed vote or other
action taken to replace the Shares; or
(f) termination by either the Trust or MFS by written
notice to the Company, if either one or both of the
Trust or MFS respectively, shall determine, in
their sole judgment exercised in good faith, that
the Company has suffered a material adverse change
in its business, operations, financial condition,
or prospects since the date of this Agreement or is
the subject of material adverse publicity; or
(g) termination by the Company by written notice to the
Trust and MFS, if the Company shall determine, in
its sole judgment exercised in good faith, that the
Trust or MFS has suffered a material adverse
change in this business, operations, financial
condition or prospects since the date of this
Agreement or is the subject of material adverse
publicity; or
(h) at the option of any party to this Agreement, upon
another party's failure to cure a material breach
of any provision of this Agreement within thirty
days after written notice thereof; or
(i) upon assignment of this Agreement, unless made with
the written consent of the parties hereto; or
(j) at the option of the Company if a Portfolio ceases
to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or
similar provisions, or if the Company reasonably
believes that a Portfolio may fail to so qualify.
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.
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16
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.
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17
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:
SAGE LIFE ASSURANCE OF AMERICA, INC.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx, Esquire
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.
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.
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18
13.5. The schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
13.6. Each party hereto shall cooperate with each other party in
connection with inquiries by appropriate governmental authorities
(including without limitation the SEC, the NASD, and state insurance
regulators) relating to this Agreement or the transactions
contemplated hereby.
13.7. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights,
remedies and obligations, at law or in equity, which the parties
hereto are entitled to under state and federal laws.
13.8. A copy of the Trust's Declaration of Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. The Company
acknowledges that the obligations of or arising out of this
instrument are not binding upon any of the Trust's trustees,
officers, employees, agents or shareholders individually, but are
binding solely upon the assets and property of the Trust in
accordance with its proportionate interest hereunder. The Company
further acknowledges that the assets and liabilities of each
Portfolio are separate and distinct and that the obligations of or
arising out of this instrument are binding solely upon the assets or
property of the Portfolio on whose behalf the Trust has executed this
instrument. The Company also agrees that the obligations of each
Portfolio hereunder shall be several and not joint, in accordance
with its proportionate interest hereunder, and the Company agrees not
to proceed against any Portfolio for the obligations of another
Portfolio.
13.9 Except as otherwise expressly provided in this Agreement, neither
the Trust nor MFS, nor any affiliate thereof shall use any trademark,
trade name, service xxxx or logo of the Company or any of its
affiliates, or any variation of any such trademark, trade name,
service xxxx or logo, without the Company's prior written consent, the
granting of which shall be at the Company's sole option. Except as
otherwise expressly provided in this Agreement, neither the Company
nor any of its affiliates shall use any trademark, trade name, service
xxxx or logo of the Trust or of MFS, or any variation of any such
trademark, Trade name, service xxxx or logo, without the prior written
consent of either the Trust or MFS, as appropriate, the granting of
which shall be at the sole option of the Trust or MFS, as applicable.
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19
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.
SAGE LIFE ASSURANCE OF AMERICA, INC.
By its authorized officer,
By:
-----------------------------------
Title:
--------------------------------
MFS VARIABLE INSURANCE TRUST,
ON BEHALF OF THE PORTFOLIOS
By its authorized officer and not individually,
By: /s/ XXXXX X. XXXXXXXXX, XX.
--------------------------------------
Xxxxx X. Xxxxxxxxx, Xx.
Assistant Secretary
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By: /s/ XXXXXX X. XXXXX
--------------------------------------
Xxxxxx X. Xxxxx
Senior Executive Vice President
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As of ________________
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
The Sage Variable Annuity Deferred Variable Annuity MFS Growth with Income Series
Account A (with Surrender Charge) MFS Research Series
December 3, 1997 ASSET I MFS Total Return Series
MFS High Income Series
Deferred Variable Annuity MFS Value Series
(without Surrender Charge)
ASSET II
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