PARTICIPATION AGREEMENT
THIS AGREEMENT is made this th day of , 1998, by and
between Mutual Fund Variable Annuity Trust (the "Trust"), an open-end
management investment company organized as a Massachusetts business trust and
Allmerica Financial Life Insurance and Annuity Company, a life insurance
company organized as a corporation under the laws of the State of Delaware
(the "Company"), on its own behalf and on behalf of each segregated asset
account of the Company set forth in Schedule A, as may be amended from time
to time (the "Accounts").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "Commission") as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and
has an effective registration statement relating to the offer and sale of the
various series of its shares under the Securities Act of 1933, as amended
(the "1933 Act");
WHEREAS, the Trust desires that Trust shares be used as an
investment vehicle for separate accounts established for variable life
insurance policies and variable annuity contracts to be offered by life
insurance companies which have entered into fund participation agreements
with the Trust (the "Participating Insurance Companies");
WHEREAS, shares of beneficial interest in the Trust are divided
into the following series which are available for purchase by the Company for
the Accounts: Asset Allocation Portfolio, Capital Growth Portfolio, Growth
and Income Portfolio, International Equity Portfolio, Money Market Portfolio
and U.S. Government Income Portfolio (the "Portfolios");
WHEREAS, the Trust has received an order from the Commission, dated
September 4, 1997 (File No. 812-10680), granting Participating Insurance
Companies and their separate accounts exemptions from the provisions of
Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15)
and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of
the Portfolios of the Trust to be sold to and held by (i) variable annuity
and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies and (ii) qualified pension and
retirement plans ("Plans") as permitted by regulations and rulings of the
United States Department of Treasury (the "Shared Funding Exemptive Order");
WHEREAS, the Company has registered or will register under the 1933
Act certain variable life insurance policies and variable annuity contracts
to be issued by the Company under which the Portfolios are to be made
available as investment vehicles (the "Contracts");
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WHEREAS, the Company desires to use shares of one or more
Portfolios as investment vehicles for the Accounts;
NOW THEREFORE, in consideration of their mutual promises, the
parties agree as follows:
ARTICLE I.
Purchase and Redemption of Trust Portfolio Shares
1.1. Trust shares to be made available to the respective Accounts
shall be sold by each of the respective Portfolios of the Trust and purchased
by the Company for that Account at the net asset value next computed after
receipt of each order, as established in accordance with the provisions of
the then current prospectus of the Trust. Shares of a particular Portfolio
of the Trust shall be ordered in such quantities and at such times as
determined by the Company to be necessary to meet the requirements of those
Contracts having amounts allocated to the Account (or subaccount thereof) for
which the Trust Portfolio shares serve as the underlying investment medium.
Orders and payments for shares purchased will be sent promptly to the Trust
and will be made payable in the manner established from time to time by the
Trust for the receipt of such payments. The Trust has the obligation to
ensure that its shares to be made available to the appropriate Accounts are
registered at all times under the 1933 Act.
1.2. The Trust will redeem the shares of the various Portfolios
when requested by the Company on behalf of the corresponding Accounts at the
net asset value next computed after receipt of each request for redemption,
as established in accordance with the provisions of the then current
prospectus of the Trust. The Trust will make payment in the manner
established from time to time by the Trust for the receipt of such redemption
requests, but in no event shall payment be delayed for a greater period than
is permitted by the 1940 Act. The Trust reserves the right to suspend the
right of redemption, consistent with Section 22(e) of the 1940 Act and any
rules thereunder.
1.3. For purposes of Sections 1.1 and 1.2 above, the Company shall
be the agent of the Trust for the receipt of (i) orders to purchase, and (ii)
requests to redeem shares of the Portfolios of the Trust on behalf of the
Accounts, the receipt of such orders and requests by such agent shall
constitute receipt thereof by the Trust, provided that the Trust receives
actual notice of such order or request by 9:30 a.m. (at the Trust's offices)
on the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange (and, with respect to the Money Market
Portfolio, the New York Stock Exchange and the Federal Reserve Bank of New
York) is open for trading and on which the Trust calculates its net asset
value pursuant to the rules of the Commission and the Trust's currently
effective registration statement.
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1.4. Issuance and transfer of the Trust's Portfolio shares will be
by book entry only. Stock certificates will not be issued to the Company or
the Accounts. Portfolio Shares purchased from the Trust will be recorded in
the appropriate title for each Account or the appropriate subaccount of each
Account.
1.5. The Trust shall furnish same day notice to the Company of any
dividend or distribution payable on the shares of any Portfolio of the Trust
held by an Account. The Company hereby elects to receive all such income
dividends and capital gain 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.
1.6. The Trust shall calculate the net asset value of each
Portfolio on each Business Day, as defined in Section 1.3. The Trust shall
make the net asset value per share for each Portfolio available to the
Company or its designated agent on a daily basis 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 to the Company
by 6:00 p.m. Eastern time each Business Day.
1.7. The Trust agrees that its Portfolio shares will be sold only
to Participating Insurance Companies and their segregated asset accounts and
to such other entities, including qualified pension and retirement plans, as
may be permitted by Section 817(h) of the Code, the regulations hereunder, or
judicial or administrative interpretations thereof. No shares of any
Portfolio will be sold directly to the general public.
1.8. The Trust agrees that all Participating Insurance Companies
shall have the obligations and responsibilities regarding pass-through voting
and conflicts of interest corresponding materially to those contained in
Article III and Article V of this Agreement.
ARTICLE II.
Registration Statements, Sales Material
and Other Information
2.1. At least annually, the Trust shall provide the Company copies
of its prospectus in such quantities as the Company and the distributor for
the Accounts' shall reasonably require for distribution to Contract Owners
and prospective Contract Owners. Copies of prospectuses for distribution to
existing Contract owners shall be provided to the Company at the Trust's
expense. At the request of the Company, the Trust or its designee shall
provide the Company, free of charge, with camera ready copy of the Trust's
new prospectus as set in type, or as a
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diskette in the form sent to a 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 Trust is supplemented or amended) to
have the prospectus for the Contracts and the prospectus for the shares
printed together in one document. The Trust or its designee shall bear the
cost of printing and of mailing the Trust's prospectus portion of such
Contracts, and the Company shall bear the expenses of printing Contracts;
PROVIDED, HOWEVER, that the Company shall bear all printing expenses of such
combined document where used for distribution to prospective purchasers.
The Trust's prospectus shall state that the current Statement of Additional
Information ("SAI") for the Trust is available from the Trust or its
designee, and the Trust, at its expense, shall print, or otherwise reproduce,
and provide a copy of such SAI free of charge to the Company for itself and
for any Contract owner who requests such SAI.
The Trust, at its expense, shall provide the Company with copies of its proxy
material, reports to shareholders, and other communications to shareholders
in such quantity as the Company shall reasonably require for distribution to
Contract owners. The Trust or its designee shall bear the cost for such
documents used for such purposes other than distribution to current Contract
owners.
2.2 The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Trust shares, as such documents 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, except with the
permission of the Trust.
2.3 The Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Accounts or the Contracts other than the information or representations
contained in the registration statement or prospectus for the Contracts, as
such registration statement and prospectus may be amended or supplemented
from time to time, or in published rpeorts for the Accounts which are in the
public domain or approved by the Company for distribution to Contract owners,
or in sales literature or other promotional material approved by the Company,
except with the permission of the Company.
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2.4 The Trust will provide to the Company 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 Trust or
its shares, contemporaneously with, or promptly after, the filing of such
document with the Commission or other regulatory authorities.
2.5. The Company will provide to the Trust at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, request for
no-action letters, and all amendments to any of the above, that relate to the
Contracts or the Accounts, contemporaneously with, or promptly after, the
filing of such document with the Commission or other regulatory authorities.
2.6. For purposes of this Article II, 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, the
Internet or other public media), sales literature (i.e., any written
communication distributed or made generally available to customers or the
public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published articles), educational or training materials
or other communications distributed or made generally available to some or
all agents or employees, and registration statements, prospectuses,
Statements of Additional Information, shareholder reports, and proxy
materials.
2.7. The Company agrees and acknowledges that the Trust is an owner
of the name and xxxx "Vista" and that all use of any designation comprised
in whole or part of such name or xxxx under this Agreement shall inure to the
benefit of the Trust. The Company shall not use any such name or xxxx on its
own behalf or on behalf of the Accounts or Contracts in any registration
statement, advertisement, sales literature or other materials relating to the
Accounts or Contracts without the prior written consent of the Trust. Upon
termination of this Agreement for any reason, the Company shall cease all use
of any such name or xxxx as soon as reasonably practicable.
2.8. The Company shall not bear any of the expenses of the cost of
registration and qualification of the Trust shares under Federal and any
state securities law, preparation and filing of the Trust Prospectus and the
Trust Registration
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Statement, Trust proxy materials and reports, setting the Trust Prospectus in
type, setting in type and printing and distributing the Trust proxy materials
and reports to shareholders (including the costs of printing a prospectus
that constitutes an annual report), the preparation of all statements and
notices required by any Federal or state securities law, all taxes on the
issuance or transfer of Trust shares, and any expenses permitted to be paid
or assumed by the Trust pursuant to a plan, if any, under Rule 12b-l under
the 1940 Act.
ARTICLE III.
VOTING
3.1. So long as, and to the extent that, the Commission interprets
the 1940 Act to require pass-through voting privileges for Contract owners,
the Company will provide pass-through voting privileges to Contract owners
whose cash values are invested, through the registered Accounts, in shares of
one or more Portfolios of the Trust. The Trust shall require all
Participating Insurance Companies to calculate voting privileges in the same
manner and the Company shall be responsible for assuring that the Accounts
calculate voting privileges in the manner established by the Trust. With
respect to each registered Account, the Company will vote shares of each
Portfolio of the Trust held by a registered Account and for which no timely
voting instructions from Contract owners are received in the same proportion
as those shares for which voting instructions are received. With respect to
each Account, the Company will vote shares of each Portfolio of the Trust
held by the Company in its own behalf or on behalf of such Account that are
not attributable to Contract owners in the same proportion as those shares
for which voting instructions are received. The Company and its agents will
in no way recommend or oppose or interfere with the solicitation of proxies
for Portfolio shares held to fund the Contacts without the prior written
consent of the Trust, which consent may be withheld in the Trust's sole
discretion.
ARTICLE IV.
Representations and Warranties
4.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act and have been duly authorized for
issuance. The Company further represents and warrants that the Contracts
will be issued and sold in compliance in all material respects with all
applicable federal and state laws; and the Company will require all persons
involved in the sale of the Contracts to comply in all material respects with
any applicable investor suitability requirements under state insurance laws.
4.2. The Company represents and warrants that it is an insurance
company duly organized and in good standing under the
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laws of the State of Delaware and that it has legally and validly established
each Account prior to any issuance or sale of the Contracts as a segregated
asset account under such law and has registered or, prior to any issuance or
sale of the Contracts, will register the Accounts as unit investment trusts
in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts and that the Accounts will comply in all
material respects with the 1940 Act, and that Allmerica Investments, Inc.,
the principal underwriter for the Contracts, is registered and will remain
registered during the term of this Agreement as a broker-dealer under the
Securities Exchange Act of 1934 and will remain during the term of this
Agreement a member in good standing of the National Association of Securities
Dealers, Inc.
4.3. The Trust represents and warrants that Trust shares sold
through this Agreement shall be registered under the 1933 Act, shall be duly
authorized for issuance and sold in compliance with 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 represents
that it is lawfully organized and validly existing as a business Trust under
the laws of the Commonwealth of Massachusetts and that it does and will
comply in all material respects with the 1940 Act.
4.4. The Trust represents and warrants that it will at all times be
operated and managed (a) in compliance with all applicable federal and state
laws; (b) in compliance with the policies and procedures of the Trust and in
compliance with the objectives, policies and limitations for the Portfolio(s)
set forth in the Trust's current prospectus and statement of additional
information; and (c) to minimize any taxes and/or penalties payable by the
Trust or such Portfolio.
4.5. The Trust represents and warrants that the investments of each
Portfolio currently and will continue to comply with the diversification
requirements for variable annuity, endowment or life insurance contracts set
forth in Section 817(h) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the rules and regulations thereunder, including without
limitation Treasury Regulation 1.817-5, and the Trust will notify the Company
immediately upon having a reasonable basis for believing any Portfolio has
ceased to comply or might not so comply and will immediately take all
reasonable steps to adequately diversify the Portfolio to achieve compliance
within the grace period afforded by Regulation 1.817-5.
4.6. The Trust represents and warrants that it is currently qualified
as a "regulated investment company" under Subchapter M of the Code, that it will
make every effort to
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maintain such qualification and will notify the Company immediately upon
having a reasonable basis for believing it has ceased to so qualify or might
not so qualify in the future.
4.7. The Trust represents and warrants that all of its Trustees,
officers, employees, investment advisers, and other persons dealing with the
money or securities of the Trust are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Trust in an amount not less than the minimal coverage as required currently
by Section 17(g) of the 1940 Act or related provisions as may be promulgated
from time to time. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
ARTICLE V.
Potential Conflicts
5.1. The parties acknowledge that a Portfolio's shares may be made
available for investment to other Participating Insurance Companies. In such
event, the Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. A material irreconcilable conflict may
arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative
or judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity Contract owners, variable life
insurance Contract owners and trustees of Plans; (f) a decision by a
Participating Insurance Company to disregard the voting instructions of
Contract owners; or (g) if applicable, a decision by a Plan to disregard
voting instructions of Plan participants. The Trust shall promptly inform
the Company in writing of any determination by the Trustees that a material
irreconcilable conflict exists and of the implications thereof.
5.2. The Company agrees to report promptly any potential or
existing conflicts of which it is aware to the Trustees. The Company will
assist the Trustees in carrying out their responsibilities under the Shared
Funding Exemptive Order by providing the Trustees with all information
reasonably necessary for and requested by the Trustees to consider any issues
raised including, but not limited to, information as to a decision by the
Company to disregard Contract owner voting instructions. All communications
from the Company to the Trustees may be made in care of the Trust.
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5.3. If it is determined by a majority of the Trustees, or a
majority of the disinterested Trustees, that a material irreconcilable
conflict exists that affects the interests of Contract owners, the Company
shall, in cooperation with other Participating Insurance Companies whose
Contract owners are also affected, at its own expense and to the extent
reasonably practicable (as determined by the Trustees) take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict,
which steps could include: (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 the question of whether or not
such segregation should be implemented to a vote of all affected Contract
owners and, as appropriate, segregating the assets of any appropriate group
(i.e., variable annuity Contract owners or variable life insurance Contract
owners of one or more Participating Insurance Companies) that votes in favor
of such segregation, or offering to the affected Contract owners the option
of making such a change; and (b) establishing a new registered management
investment company or managed separate account.
5.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract owner voting instructions and
that decision represents a minority position or would preclude a majority
vote, the Company may be required, at the Trust's election, to withdraw the
affected Account's investment in the Trust and terminate this Agreement with
respect to such Account; provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Trustees. Any such withdrawal and termination must take place within six (6)
months after the Trust gives written notice that this provision is being
implemented. Until the end of such six (6) month period, the Trust may, if
appropriate, continue to accept and implement orders by the Company for the
redemption of shares of the Trust.
5.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Trust and terminate this
Agreement with respect to such Account within six (6) months after the
Trustees inform the Company in writing that the Trust has determined that
such decision has created a material irreconcilable conflict; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested Trustees. Until the end of such six (6) month
period, the Trust may, if appropriate, continue to
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accept and implement orders by the Company for the redemption of shares of
the Trust.
5.6. For purposes of Section 5.3 through 5.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any material irreconcilable conflict, but in no
event will the Trust be required to establish a new funding medium for any
Contract. The Company shall not be required to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the material
irreconcilable conflict. In the event that the Trustees determine that any
proposed action does not adequately remedy any material irreconcilable
conflict, then the Company will withdraw the Account's investment in the
Trust and terminate this Agreement within six (6) months after the Trustees
inform the Company in writing of the foregoing determination; provided,
however, that such withdrawal and termination shall be limited to the extent
required by any such material irreconcilable conflict as determined by a
majority of the disinterested Trustees.
5.7. The Company shall at least annually submit to the Trustees
such reports, materials or data as the Trustees may reasonably request so
that the Trustees may fully carry out the duties imposed upon them by the
Shared Funding Exemptive Order, and said reports, materials and data shall be
submitted more frequently if deemed appropriate by the Trustees.
5.8. If and to the extent that Rule 6e-3(T) is 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 Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then the Trust and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rule
6e-3(T), as amended, or Rule 6e-3, as adopted, to the extent such rules are
applicable.
ARTICLE VI.
Indemnification
6.1. The Company agrees to indemnify and hold harmless the Trust
and each of its Trustees and officers and each person, if any, who controls
the Trust within the meaning of Section 15 of the 1933 Act against any and
all losses, claims, damages, liabilities or litigation (including reasonable
legal and other expenses) to which the Trust or such Trustees, officers or
controlling person may become subject under the 1933 Act, under any other
statute, at common law or otherwise, arising out of the acquisition of the
Contracts by any person which (i) may be based upon any breach of this
Agreement by the Company, any of its
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employees or representatives (other than an insurance agent), (ii) may be
based upon a breach of the representations and warranties made by the Company
in this Agreement, (iii) may be based on any untrue statement or alleged
untrue statement of a material fact contained in a registration statement or
prospectus covering the Contracts, or any amendment 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 statements therein not misleading,
unless such statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Trust, or (iv) may be based
on any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering the Trust, or
any amendment 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; provided, however, that in no case (a) is the
Company's indemnity in favor of a Trustee or officer or any other person
deemed to protect such Trustee or officer or other person against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
or her duties or by reason of his or her reckless disregard of obligations
and duties under this Agreement, or (b) is the Company to be liable under its
indemnity agreement contained in this Section 6.1 with respect to any claim
made against the Trust or any person indemnified unless the Trust or such
person, as the case may be, shall have notified the Company in writing
pursuant to Article VIII of this Agreement within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon the Trust or upon such other person (or
after the Trust or such person shall have received notice of such service on
any designated agent), but failure to notify the Company of any such claim
shall not relieve the Company from any liability which it may have to the
Trust or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this Section 6.1. The Company
shall be entitled to participate, at its own expense, in the defense, or, if
it so elects, to assume the defense of any suit which could result in
liability to it under this Section 6.1, but if the Company elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
reasonably satisfactory to the Trust and to such of its officers, Trustees
and controlling person or persons as may be defendants in the suit. In the
event that the Company elects to assume the defense of any such suit and
retain such counsel, the Trust, such officers, Trustees and controlling
person or persons shall bear the fees and expenses of any additional counsel
retained by them, but, in the case the Company does not elect to assume the
defense of any such suit, the Company will reimburse the Trust, such
officers, Trustees and controlling person or persons for the reasonable
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fees and expenses of any counsel retained by them. The Trust agrees promptly
to notify the Company pursuant to Article VIII of this Agreement of the
commencement of any litigation or proceedings against it or its officers or
Trustees in connection with the issue and sale of any Contracts.
6.2. The Trust agrees to indemnify and hold harmless the Company
and its affiliates and each of their Directors and officers and each person,
if any, who controls the Company within the meaning of Section 15 of the 1933
Act against any and all losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses) to which it or such
Directors, officers or controlling person may become subject under the 1933
Act, under any other statute, at common law or otherwise, arising out of the
acquisition of any shares of the Trust by any person which (i) may be based
upon any breach of this Agreement by the Trust or any of its employees or
representatives, (ii) may be based upon any breach of the representations and
warranties made by the Trust in this Agreement, (iii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in
a registration statement or prospectus covering shares 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 statements therein not misleading, unless such statement or
omission was made in reliance upon information furnished to the Trust by the
Company, or (iv) may be based on any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or
prospectus covering the Contracts, or any amendment 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; provided,
however, that in no case (a) is the Trust's indemnity in favor of a Director
or officer or any other person deemed to protect such Director or officer or
other person against any liability to which any such person would otherwise
be subject by reason of willful misfeasance, bad faith, or gross negligence
in the performance of his or her duties or by reason of his or her reckless
disregard of obligations and duties under this Agreent or (b) is the Trust to
be liable under its indemnity agreement contained in this Section 6.2 with
respect to any claims made against the Company or such person indemnified
unless the Company or such person, as the case may be, shall have notified
the Trust in writing pursuant to Article VIII of this Agreement within a
reasonable time after the sununons or the first legal process giving
information of the nature of the claim shall have been served upon the
Company or such other person (or after the Company or such person shall have
received notice of such service on any designated agent), but failure to
notify the Trust of any claim shall not relieve it from any liability which
it may
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have to the Company or any person against whom such action is brought
otherwise than on account of its indemnity agreement contained in this
Section 6.2. The Trust will be entitled to participate, at its own expense,
in the defense, or, if it so elects, to assume the defense of any suit which
could result in liability to it under this Section 6.2, but if the Trust
elects to assume the defense, such defense shall be conducted by counsel
chosen by it and reasonably satisfactory to the Company and to such of its
Directors, officers and controlling person or persons as may be defendants in
the suit. In the event that the Trust elects to assume the defense of any
such suit and retain such counsel, the Company, such Directors, officers and
controlling person or persons shall bear the fees and expenses of any
additional counsel retained by them, but, in the case the Trust does not
elect to assume the defense of any such suit, the Trust will reimburse the
Company, such Directors, officers and controlling person or persons for the
reasonable fees and expenses of any counsel retained by them. The Company
agrees promptly to notify the Trust pursuant to Article VIII of this
Agreement of the commencement of any litigation or proceedings against it or
any of its officers or Directors in connection with the issue and sale of any
shares of the Trust.
ARTICLE VII.
Termination
7.1. This Agreement shall terminate:
(a) by mutual written consent of the Company and the
Trust;
(b) at the option of any party upon 60 days advance written notice
to the other parties, unless a shorter time is agreed to by the parties;
(c) at the option of the Trust if the Contracts issued by the
Company cease to qualify as annuity contracts or life insurance contracts,
as applicable, under the Code or if the Contracts are not registered,
issued or sold in accordance with applicable state and/or federal law; or
(d) at the option of any party upon a determination by a majority
of the Trustees of the Trust, or a majority of its disinterested Trustees,
that a material irreconcilable conflict exists; or
(e) at the option of the Company upon institution of formal
proceedings against the Trust by the Commission or any other regulatory
body; or
(f) at the option of the Trust upon institution of formal
proceedings against the Company or with respect to
14
the Accounts by the Commission or any other regulatory body; or
(g) at the option of the Company if the Trust or a Portfolio fails
to meet the diversification requirements specified in Section 4.5 hereof;
or
(h) at the option of the Company if shares of any of the Portfolios
are not reasonably available to meet the requirements of the Contracts
funded in the Accounts, as determined by the Company; or
(i) at the option of the Company in the event any of the shares of
the Portfolios are not registered, issued or sold in accordance with
applicable state and/or federal law, or such law precludes the use of such
shares as the underlying investment media of the Contracts; provided,
however, that such termination shall only affect this Agreement's
applicability to such Portfolio; or
(j) at the option of the Company, if any Portfolio fails to qualify
as a Regulated Investment Company under Subchapter M of the Code or under
any successor or similar provision; or
(k) upon the vote of the Contract owners having an interest in the
Accounts (or any subaccounts) to substitute the shares of another
investment company for the corresponding Trust shares in accordance with
the terms of the Contracts for which the Trust 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 Trust's shares; or
(l) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(m) at the option of the Trust, without payment of any amount, for
cause on not less than 60 days' prior written notice to the Company,
unless such cause has been cured within 30 days of receiving such notice,
for any one of the following reasons:
(i) the acquisition of more than 50% of the common stock, par
value $1.00 per share, of First Allmerica Financial Life
Insurance Company by a national bank holding company (as such
term is defined under the Bank Holding Company Act) or an asset
management company which acts as an investment adviser with
respect to mutual funds aggregating more than $15 billion in
assets (in
15
each case where such entity is not controlled by of First
Allmerica Financial Life Insurance Company prior to such
acquisition);
(ii) other than as required by law, a material change in, or
other material revision to the Contracts not previously accepted
in writing by the Trust's investment adviser; or
(iii) any material suspension or withdrawal, or revision
downward, of the Company's published claims paying ratings below
"A-" (or in the case of Xxxxx'x Investor Services, below Baa3)
by (A) any two of the following rating agencies: Standard &
Poor's Corporation, Duff & Xxxxxx and Best's Insurance Reports
and (B) Xxxxx'x Investor Services.
Prompt notice shall be given by each party to all other parties in
the event that the conditions stated in subsections (c), (d), (e), (f), (g),
(h), (i), (j), (l) or (m) of this Section 7.1 should occur.
7.2. Notwithstanding any termination of this Agreement under
Section 7.1 other than a termination under Section 7.1(d), the Trust shall,
at the option of the Company, continue to make available additional shares of
the Trust pursuant to the terms and conditions of this Agreement for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts") for a period of at least 2
years. The owners of the Existing Contracts shall be permitted to reallocate
investments in the Trust, redeem investments in the Fund or invest in the
Trust upon the making of additional purchase payments under the Existing
Contracts.
7.3. Notwithstanding any termination of this Agreement under
Section 7.1, the provisions of Sections 6.1 and 6.2 (Indemnification) shall
survive any termination of this Agreement, and the provisions of Article III
and Article V shall survive the termination of this Agreement as long as
shares of the Trust are held on behalf of Contract owners in accordance with
Section 7.2.
ARTICLE VIII.
Notices
Any notice shall be sufficiently given when sent by registered or
certified mail, postage prepaid, return receipt requested, or by nationally
recognized overnight courier, charges prepaid with evidence of delivery 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, and such notice shall be effective upon delivery.
16
If to the Trust or its Distributor:
Vista Fund Distributors, Inc.
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Secretary, Vista Family of Mutual Funds
If to the Company:
First Allmerica Financial Life Insurance Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx St. Xxxxxxx
ARTICLE IX.
Miscellaneous
9.1. The Company acknowledges the following limitation of liability:
The terms "Mutual Fund Variable Annuity Trust" and "Trustees of
Mutual Fund Variable Annuity Trust" refer, respectively, to the trust created
and the Trustees, as trustees but not individually or personally, acting from
time to time under the Declaration of Trust, to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State
of the State of Massachusetts, such reference being inclusive of any and all
amendments thereto so filed or hereafter filed. The obligations of "Mutual
Fund Variable Annuity Trust" entered into in the name or on behalf thereof by
any of the Trustees, representatives or agents are made not individually, but
in such capacities and are not binding upon any of the Trustees, shareholders
or representatives of the Trust personally, but bind only the assets of the
Trust, and all persons dealing with the Trust or a Portfolio must look solely
to the assets of the Trust or Portfolio for the enforcement of any claims
against the Trust or Portfolio.
9.2. 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.
9.3. This Agreement may be executed in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
9.4. 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.
17
9.5. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
It shall also be subject to the provisions of the federal securities laws and
the rules and regulations thereunder and to any orders of the Commission
granting exemptive relief therefrom and the conditions of such orders.
Copies of any such orders shall be promptly forwarded by the Trust to the
Company.
9.6. Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the NASD and state insurance regulators) and shall permit such
authorities reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
9.7. 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 herto are entitled to
under state and federal laws.
9.8. This Agreement shall not be exclusive in any respect.
9.9. Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the prior written approval
of the other party.
9.10. No provisions of this Agreement may be amended or modified
in any manner except by a written agreement properly authorized and executed
by both parties.
9.11. Each party hereto shall, except as required by law or
otherwise permitted by this Agreement, treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto, and shall
not disclose such confidential information without the written consent of the
affected party unless such information has become publicly available.
18
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year
first above written.
MUTUAL FUND VARIABLE ANNUITY TRUST
By: /s/
------------------------
Name:
Title:
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
By: /s/
------------------------
Name:
Title:
SCHEDULE A
To
PARTICIPATION AGREEMENT
Between
MUTUAL FUND VARIABLE ANNUITY TRUST
and
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
The segregated asset accounts of First Allmerica Financial Life
Insurance Company that are included under this Participation Agreement are:
The Group VEL Account, established November 22, 1993.
