EXHIBIT 99-B.8.76
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this fifteenth day of September,
2000, by and between MFS FUND DISTRIBUTORS, INC., a Delaware corporation
("MFS"), and AETNA LIFE INSURANCE AND ANNUITY COMPANY, a Connecticut 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 "Account" or the "Accounts");
WHEREAS, each of the funds which comprise the MFS Family of Funds (certain
of which may from time to time be listed on Schedule A attached hereto) (each, a
"Fund" and collectively, the "Funds") is registered as an open-end investment
company under the Investment Company Act of 1940 as amended (the "1940 Act"),
WHEREAS each Fund is comprised of multiple classes of shares which are or
will be registered under the Securities Act of 1933 as amended (the "1933 Act");
WHEREAS MFS is registered as a broker-dealer with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as
amended (hereinafter the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD");
WHEREAS, MFS serves as distributor for each of the Funds pursuant to the
terms of a Distribution Agreement between each of the Funds and MFS;
WHEREAS, the Company will issue certain group fixed and variable annuity
contracts (individually, the "Policy" or collectively, the "Policies") which, if
required, 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 group fixed and/or
variable annuity contracts that are allocated to the Accounts (the Accounts
covered by this Agreement, and each corresponding Fund 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, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Class A shares in one or more of
the Funds specified in Schedule A attached hereto (the "Shares") on behalf of
the Accounts to fund the Policies, and MFS intends to sell such Shares to the
Accounts;
NOW, THEREFORE, in consideration of their mutual promises, MFS and the
Company agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. MFS agrees to sell to the Company those Shares which the Accounts
order (based on orders placed by Policy holders on that Business Day, as
defined below) and which are available for purchase by such Accounts,
executing such orders on a daily basis at the net asset value next computed
after receipt by MFS or its designee of the order for the Shares. For
purposes of this Section 1.1, the Company shall be the designee of MFS for
receipt of such orders from Policy owners and receipt by such designee
shall constitute receipt by MFS; PROVIDED that MFS receives notice of such
orders by 9:00 a.m. Eastern 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 Funds calculate
their respective net asset values pursuant to the rules of the SEC.
1.2. MFS 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 Funds calculate their respective net asset value
pursuant to rules of the SEC and each Fund shall calculate such net asset
value on each day which the NYSE is open for trading. Notwithstanding the
foregoing, MFS 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,
pursuant to a determination made by the Board of Trustees of any Fund
acting in good faith and in light of its fiduciary duties under federal and
any applicable state laws, that such action is necessary in the best
interest of the Shareholders of such Fund.
1.3. MFS agrees to redeem for cash, on the Company's request, any full or
fractional Shares held by the Accounts (based on orders placed by Policy
holders on that Business Day), executing such requests on a daily basis at
the net asset value next computed after receipt by MFS or its designee of
the request for redemption. For purposes of this Section 1.3, the Company
shall be the designee of MFS for receipt of requests for redemption from
Policy owners and receipt by such designee shall constitute receipt by MFS;
provided that MFS receives notice of such request for redemption by 9:00
a.m. Eastern Time on the next following Business Day.
1.4. Each purchase, redemption and exchange order placed by the Company
shall be placed separately for each Fund and shall not be netted with
respect to any Fund. However, with respect to payment of the purchase price
by the Company and of redemption proceeds by MFS, the Company and MFS shall
net purchase and redemption orders with respect to each Fund and shall
transmit one net payment for all of the Funds in accordance with Section
1.5 hereof.
1.5. In the event of net purchases, the Company's payment for net
purchases will be deposited by wire transfer by the Company no later than
4:00 p.m. Eastern 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, MFS shall pay the redemption
proceeds by 12:00 p.m. Eastern Time on the next Business Day after an order
to redeem the shares is made in accordance with the provisions of Section
1.3. hereof. All such payments shall be in federal funds transmitted by
wire.
1.6. 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 MFS will be recorded in an appropriate title for the
Accounts or the appropriate subaccounts of the Accounts.
1.7. MFS 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 Fund's Shares in
additional Shares of that Fund. MFS shall notify the Company of the number
of Shares so issued as payment of such dividends and distributions.
1.8. MFS or its designee shall make the net asset value per share for
each Fund available to the Company on each Business Day as soon as
reasonably practical after the net asset value per share is calculated and
shall use its best efforts to make such net asset value per share available
by 6:30 p.m. Eastern Time. In the event of an extraordinary event delaying
the provision of such information later than 7:00 p.m. on any Business Day,
MFS or its designee will notify the Company of the delay by no later than
7:00 p.m. on such Business Day. In addition, in the event that MFS 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 MFS takes to make the net asset value available to the Company.
If MFS provides materially incorrect share net asset value information, MFS
shall make an adjustment to the number of shares purchased or redeemed for
the Accounts to reflect the correct net asset value per share and shall
indemnify and hold harmless the Company against any amount the Company is
required to pay to Policy owners and participants (excluding consequential
damages) due to a materially incorrect or late reporting of the net asset
value. MFS and the Company agree that MFS shall not be
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responsible for earnings and/or appreciation that Policy owners or
participants would have realized on amounts that should have been but were
not invested (or withdrawn from) other funds under the Contracts (i.e.,
other funds that were not the subject of the pricing error) in accordance
with an instruction due to an error or delay with respect to the procedures
outlined in the Agreement which is caused by MFS.
In addition, MFS shall reimburse the Company for documented, direct out of
pocket costs, subject to the limits described below in this Section 1.8
below, incurred by the Company in making a Policy owner's or participant's
account whole, to the extent such costs or expenses are caused by MFS'
failure to provide timely or correct (as determined by the Fund) net asset
values, dividend and capital gains information, and if such information is
not corrected by 4:00 p.m. Eastern Time of the next business day after
releasing such incorrect information, provided the incorrect NAV as well as
the correct NAV for each day that the error occurred is provided. The
following limits shall apply to the liabilities of MFS to the Company for
such costs: (i) $1000 per day for each day that incorrect information
provided by MFS or an affiliate is not corrected, if such period does not
include a month-end or a fiscal quarter-end; (ii) $1500 per day for each
day that such incorrect information provided by MFS or an affiliate is not
corrected, if such period does include a month-end or fiscal quarter-end,
and (iii) up to $10,000 per occurrence in the aggregate under (i) and (ii)
above. Any incorrect information that has as a common nexus any single
error shall be deemed to be one occurrence for these purposes provided all
corrections are provided at the same time. 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.
1.9 In lieu of applicable provisions set forth in Sections 1.1 through
1.5 above, the parties may agree to provide pricing information, execute
orders and wire payments for purchases and redemptions though National
Securities Clearing Corporation's Fund/SERV system, in which case such
activities will be governed by the provisions set forth in Exhibit I to
this Agreement.
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. The Company represents and warrants that the Policies are either (i)
unregistered group annuities for investors whose policies do not need to
meet the diversification requirements of Internal Revenue Code 817(h) and
where such annuities are exempt from or not subject to registration under
the 1933 Act, or (ii) are registered group annuities for such investors.
The Company further represents and warrants that the Policies will be
issued, sold, and distributed in compliance in all material respects with
all applicable state and federal laws or exemptions therefrom, including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act, as may be
applicable, and the Conduct Rules of the NASD. 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.
2.2. Subject to Article VI, the Company represents and warrants that the
Policies are currently and at the time of issuance will be treated as life
insurance, endowment or annuity contracts under applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), that it will
make every effort to maintain such treatment and that it will notify 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. MFS represents and warrants 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 Funds are and shall remain registered under the 1940 Act. MFS shall
amend, or cause to amend, the registration statements for Fund Shares under
the 1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of Fund Shares. MFS 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 MFS.
2.4. MFS represents and warrants that it is a member in good standing of
the NASD and is registered as a broker-dealer with the SEC. MFS represents
that it will sell and distribute the Shares in accordance in all
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material respects with all applicable state and federal securities laws,
including without limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.5. MFS represents that the Funds are lawfully organized and validly
existing under the laws of The Commonwealth of Massachusetts and that each
Fund does and will comply in all material respects with the 1940 Act and
any applicable regulations thereunder.
2.6. MFS represents and warrants that the investment adviser to the Funds
(the "Adviser") is and shall remain duly registered under all applicable
federal securities laws and that it shall perform its obligations for the
Funds 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 the Adviser is not subject
to state securities laws other than the securities laws of The Commonwealth
of Massachusetts and that the Adviser is exempt from registration as an
investment adviser under the securities laws of The Commonwealth of
Massachusetts.
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1. At least annually, MFS or its designee shall provide the Company,
free of charge, with as many copies of the current prospectus (describing
only the Funds 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. MFS or its designee shall provide the
Company, at MFS' 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; provided, however, that if at any time
MFS or an affiliate reasonably deems the usage of such items to be
excessive, each may require that Aetna pay the cost of printing and mailing
any additional copies of such materials that are requested by Aetna.
3.2. The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from MFS or its
designee. MFS or its designee, at its expense, shall print and provide such
statement of additional information to the Company (or a master of such
statement suitable for duplication by the Company) for distribution to any
owner of a Policy funded by the Shares. MFS 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. MFS or its designee shall provide the Company free of charge copies,
if and to the extent applicable to the Shares, of the Funds' proxy
materials, reports to Shareholders and other communications to Shareholders
in such quantity as the Company shall reasonably require for distribution
to Policy owners. MFS shall make good faith efforts to provide notice of a
proxy as far in advance of the Funds' Record Date as is reasonably
practicable.
3.4. 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 Fund for which
instructions have been received from Policy owners;
so long as and to the extent that the SEC continues to interpret the 1940
Act to require pass through voting privileges for variable contract owners.
The Company will in no way recommend action in connection with or oppose or
interfere with the solicitation of proxies for the Shares held for such
Policy owners. The
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Company reserves the right to vote shares held in any segregated asset
account in its own right, to the extent permitted by law.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to MFS or
its designee, each piece of sales literature or other promotional material
in which the Funds, MFS, any investment adviser to the Funds, or any
affiliate of MFS are named, at least ten (10) Business Days prior to its
use. MFS shall advise the submitting party in writing within ten (10)
business days of receipt of such materials by MFS of its approval or
disapproval of such materials.
4.2. The Company shall not give any information or make any
representations or statement on behalf of the Funds, MFS, any investment
adviser to the Funds, or any affiliate of MFS or concerning MFS 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 MFS, or in sales literature or other promotional material
approved by MFS or its designees, except with the permission of MFS or its
designees. MFS or its 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 Funds, MFS or any of their affiliates which is intended for
use only by brokers or agents selling the Policies (I.E., information that
is not intended for distribution to Policy holders or prospective Policy
holders) is so used, and neither the Funds, MFS nor any of their affiliates
shall be liable for any losses, damages or expenses relating to the
improper use of such broker only materials.
4.3. The Company and MFS (or its designee in lieu of the Company or MFS,
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 Funds or their Shares, prior to or contemporaneously
with the filing of such document with the SEC or other regulatory
authorities.
4.4. MFS will provide the Company with as much notice as is reasonably
practicable of any proxy solicitation for any Fund, and of any material
change in a Fund's registration statement, particularly any change
resulting in change to the registration statement or prospectus or
statement of additional information for any Account. MFS will cooperate
with the Company so as to enable the Company to solicit proxies from Policy
owners or to make changes to its sales literature or other promotional
material in an orderly manner.
4.5. For purpose of this Article IV and Article VII, 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.
4.6. Within fourteen (14) calendar days following the end of each
calendar quarter, MFS will provide the Company, via Excel spreadsheet
diskette formula or in electronic transmission, with the portfolio
characteristics (including the top ten portfolio holdings) of each Fund,
which shall be used by the Company to update Fund profiles.
ARTICLE V. FEES AND EXPENSES
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5.1. MFS will reimburse the Company certain of the administrative costs
and expenses incurred by the Company as a result of the operations
necessitated by the beneficial ownership by Policy owners of Shares of the
Funds each quarter in an amount equal to the applicable per annum rate
listed on Schedule A attached hereto, of the average daily net assets
attributable to Policies sold by the Company or its affiliates that are
invested in each Fund, multiplied by a fraction the numerator of which is
the number of days in the quarter and the denominator of which is 365. Each
party, 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 Funds and/or to the Accounts.
5.2. MFS 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 Funds' registration
statements, and payment of filing fees and registration fees; preparation
and filing of the Funds' proxy materials and reports to Shareholders;
setting in type and printing Fund prospectuses and statements 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 Funds by any federal or state law with respect to
their Shares; all taxes on the issuance or transfer of the Shares; and the
costs of distributing the Funds' prospectuses and proxy materials to owners
of Policies funded by the Shares and any expenses permitted to be paid or
assumed by the Funds pursuant to a plan, if any, under Rule 12b-1 under the
1940 Act. MFS shall not bear any expenses of marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Funds'
Shareholder reports and proxy materials to Policy owners. The Company shall
bear all expenses associated with the qualification and filing of the
Policies under applicable state insurance laws; 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
MFS represents on behalf of each Fund that each Fund will elect to be
qualified as a Regulated Investment Company under Subchapter M of the Code
and that every effort will be made to maintain such qualification (under
Subchapter M or any successor or similar provision) and that MFS or its
designee will notify the Company promptly upon having a reasonable basis
for believing that any Fund has ceased to so qualify or that any Fund might
not so qualify in the future.
ARTICLE VII. INDEMNIFICATION
7.1. INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless MFS, the Funds,
any affiliates of MFS, and each of their respective directors/trustees,
officers and each person, if any, who controls MFS or the Funds 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 7.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Company) or expenses (including reasonable counsel
fees) to which an Indemnified Party may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Shares or the
Policies and:
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(a) arise out of or are based upon any untrue statement of any
material fact contained in the Policies or sales literature or
other promotional material for the Policies (or any amendment
or supplement to any of the foregoing), or arise out of or are
based upon the omission 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 was made in reasonable reliance
upon and in conformity with information furnished to the
Company or its designee by or on behalf of MFS or the Funds
for use in the Policies or sales literature or other
promotional material (or any amendment or supplement) or
otherwise for use in connection with the sale of the Policies
or Shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional material
of the Funds 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 of a material fact contained
in the registration statement, prospectus, statement of
additional information, or sales literature or other
promotional literature of the Funds, or any amendment thereof
or supplement thereto, or the 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 Funds 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 VII.
7.2. INDEMNIFICATION BY MFS
MFS 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 7.2) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Funds) or expenses (including
reasonable counsel fees) to which any Indemnified Party may become subject
under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Shares or the
Policies and:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the registration statement,
prospectus, statement of additional information or sales
literature or other promotional material of the Funds (or any
amendment or supplement to any of the foregoing), or arise out
of or are based upon the 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 was made in reasonable reliance
upon and in conformity with
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information furnished to the Funds, MFS 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 Funds or in sales literature or other
promotional material for the Funds (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
sales literature or other promotional material for the
Policies not supplied by MFS or any of its designees or
persons under their respective control and on which any such
entity has reasonably relied) or wrongful conduct of MFS 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 of a material fact contained
in the sales literature or other promotional literature of the
Accounts or relating to the Policies, or any amendment thereof
or supplement thereto, or the 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
Funds or MFS; or
(d) arise out of or result from any material breach of any
representation and/or warranty made by MFS in this Agreement
or arise out of or result from any other material breach of
this Agreement by MFS; or
(e) arise as a result of any failure by MFS 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 VII.
7.3. (a) In no event shall MFS be liable under the indemnification
provisions contained in this Agreement to any individual or entity,
including without limitation, the 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; (ii) the failure by the Company to
maintain its segregated asset account (which invests in any Fund) as a
legally and validly established segregated asset account under applicable
state law; or (iii) the failure by the Company to maintain its variable
annuity and/or variable life insurance contracts (with respect to which any
Fund serves as an underlying funding vehicle) as life insurance, endowment
or annuity contracts under applicable provisions of the Code.
7.3 (b) 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 Funds or MFS, 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 MFS hereunder; or (ii) the failure by any Fund to be qualified as a
Regulated Investment Company under Subchapter M of the Code.
7.4. Neither the Company nor MFS 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.
7.5. Promptly after receipt by an Indemnified Party under this Section
7.5. of commencement of action, such Indemnified Party will, if a claim in
respect thereof is to be made against the indemnifying party under this
section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the
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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.
7.6. Each of the parties agrees promptly to notify the other parties of
the commencement of any litigation or proceeding against it or any of its
respective officers, directors, trustees, employees or 1933 Act control
persons in connection with the Agreement, the issuance or sale of the
Policies, the operation of the Accounts, or the sale or acquisition of
Shares.
7.7. A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this Article
VII. The indemnification provisions contained in this Article VII shall
survive any termination of this Agreement.
ARTICLE VIII. APPLICABLE LAW
8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
8.2. 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 IX. NOTICE OF FORMAL PROCEEDINGS
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 NASD Regulation, Inc.
(the "NASDR"), 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 X. TERMINATION
10.1. This Agreement shall terminate with respect to the Accounts, or one,
some, or all Funds:
(a) at the option of any party upon sixty (60) days' advance
written notice to the other parties; or
(b) at the option of the Company to the extent that the Shares of
the Funds 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 Fund would not be "appropriate funding vehicles"
if, for example, 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 MFS by the Company; or
9
(c) at the option of MFS upon institution of formal proceedings
against the Company by the NASDR, 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 MFS by the NASDR, the SEC, or any state
securities or insurance department or any other regulatory
body regarding MFS' duties under this Agreement or related to
the sale of the shares; or
(e) at the option of the Company 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 Fund Shares in accordance with the terms of the
Policies for which those Fund Shares had been selected to
serve as the underlying investment media. The Company will
give thirty (30) day's prior written notice to MFS of the date
of any proposed vote or other action taken to replace the
Shares; or
(f) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(g) upon assignment of this Agreement, unless made with the
written consent of the parties hereto.
(h) termination by the Company upon termination of the investment
advisory agreement between any Fund and that Fund's Adviser.
Notice of such termination shall be promptly furnished to the
Company.
10.2. The notice shall specify the Fund or Funds, Policies and, if
applicable, the Accounts as to which the Agreement is to be terminated.
10.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for
cause or for no cause.
10.4. Notwithstanding any termination of this Agreement, MFS shall, at the
option of the Company, continue to make available additional shares of the
Funds 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"). Specifically, without limitation, the owners of
the Existing Policies shall be permitted to transfer or reallocate
investment under the Policies, redeem investments in any Fund and/or invest
in the Funds upon the making of additional purchase payments under the
Existing Policies.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Company:
AETNA LIFE INSURANCE AND ANNUITY COMPANY
10
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Counsel
If to MFS:
MFS FUND DISTRIBUTORS, INC.
c/o Massachusetts Financial Services Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Senior Vice President and Associate General
Counsel
ARTICLE XII. MISCELLANEOUS
12.1. 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.
12.2. 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.
12.3. This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the
same instrument.
12.4. 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.
12.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
12.6. Each party hereto shall cooperate with each other party in
connection with inquiries by appropriate governmental authorities
(including without limitation the SEC, the NASDR, and state insurance
regulators) relating to this Agreement or the transactions contemplated
hereby.
12.7. 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.
11
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.
AETNA LIFE INSURANCE AND ANNUITY COMPANY
By its authorized officer,
By: /s/ Xxxxxx X. Xxxxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxxxx
Title: Vice President
MFS FUND DISTRIBUTORS, INC.
By its authorized officer,
By: /s/ Xxxxxxx X. Xxxxx, Xx.
---------------------------------
Xxxxxxx X. Xxxxx, Xx.
President
12
As of September 15, 2000
SCHEDULE A
ACCOUNTS AND FUNDS
SUBJECT TO THE PARTICIPATION AGREEMENT
NAME OF SEPARATE
ACCOUNT AND DATE APPLICABLE
ESTABLISHED BY BOARD OF DIRECTORS APPLICABLE FUNDS PER ANNUM RATE
------------------------------------------------------------------------------------------------------
-MFS CAPITAL OPPORTUNITIES FUND-A ___%
SEPARATE ACCOUNTS B, C, D AND F -MFS EMERGING GROWTH FUND-A ___%
-MFS GLOBAL EQUITY FUND-A ___%
-MFS RESEARCH FUND-A ___%
-MASSACHUSETTS INVESTORS GROWTH STOCK FUND-A ___%
-MFS TOTAL RETURN FUND -A
-MASSACNUSETTS INVESTORS TRUST-A ___%
-MFS BOND FUND-A ___%
-MFS UTILITIES FUND-A ___%
AETNA LIFE INSURANCE AND ANNUITY COMPANY
By its authorized officer,
By: /s/ Xxxxxx X. Xxxxxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxxxxx
Title: Vice President
MFS FUND DISTRIBUTORS, INC.
By its authorized officer,
By: /s/ Xxxxxxx X. Xxxxx, Xx.
----------------------------------
Xxxxxxx X. Xxxxx, Xx.
President
13
EXHIBIT 1
TO
PARTICIPATION AGREEMENT
Procedures for Pricing and Order/Settlement Through National Securities Clearing
Corporation's Mutual Fund Profile System and Mutual Fund Settlement, Entry and
Registration Verification System
1. As provided in Section 2(e) of the Fund
Participation Agreement, the
parties hereby agree to provide pricing information, execute orders and wire
payments for purchases and redemptions of Fund shares through National
Securities Clearing Corporation ("NSCC") and its subsidiary systems as follows:
(a) Distributor or the Funds will furnish to the Company or its affiliate
through NSCC's Mutual Fund Profile Service ("MFPS") (1) the most current
net asset value information for each Fund, (2) a schedule of anticipated
dividend and distribution payment dates for each Fund, which is subject to
change without prior notice, ordinary income and capital gain dividend
rates on the Fund's ex-date, and (3) in the case of fixed income funds that
declare daily dividends, the daily accrual or the interest rate factor. All
such information shall be furnished to the Company or its affiliate by 6:30
p.m. Eastern Time on each business day that the Fund is open for business
(each a "Business Day") or at such other time as that information becomes
available. Changes in pricing information will be communicated to both NSCC
and the Company.
(b) Upon receipt of Fund purchase, exchange and redemption instructions for
acceptance as of the time at which a Fund's net asset value is calculated
as specified in such Fund's prospectus ("Close of Trading") on each
Business Day ("Instructions"), and upon its determination that there are
good funds with respect to Instructions involving the purchase of Shares,
the Company or its affiliate will calculate the net purchase or redemption
order for each Fund. Orders for net purchases or net redemptions derived
from Instructions received by the Company or its affiliate prior to the
Close of Trading on any given Business Day will be sent to the Defined
Contribution Interface of NSCC's Mutual Fund Settlement, Entry and
Registration Verification System ("Fund/SERV") by 5:00 a.m. Eastern Time on
the next Business Day. Subject to the Company's or its affiliate's
compliance with the foregoing, the Company or its affiliate will be
considered the agent of the Distributor and the Funds, and the Business Day
on which Instructions are received by the Company or its affiliate in
proper form prior to the Close of Trading will be the date as of which
shares of the Funds are deemed purchased, exchanged or redeemed pursuant to
such Instructions. Instructions received in proper form by the Company or
its affiliate after the Close of Trading on any given Business Day will be
treated as if received on the next following Business Day. Dividends and
capital gains distributions will be automatically reinvested at net asset
value in accordance with the Fund's then current prospectuses.
(c) The Company or its affiliate will wire payment for net purchase orders by
the Fund's NSCC Firm Number, in immediately available funds, to an NSCC
settling bank account designated by the Company or its affiliate no later
than 5:00 p.m. Eastern time on the same Business Day such
14
purchase orders are communicated to NSCC. For purchases of shares of daily
dividend accrual funds, those shares will not begin to accrue dividends
until the day the payment for those shares is received.
(d) NSCC will wire payment for net redemption orders by Fund, in immediately
available funds, to an NSCC settling bank account designated by the Company
or its affiliate, by 5:00 p.m. Eastern Time on the Business Day such
redemption orders are communicated to NSCC, except as provided in a Fund's
prospectus and statement of additional information.
(e) With respect to (c) or (d) above, if Distributor does not send a
confirmation of the Company's or its affiliate's purchase or redemption
order to NSCC by the applicable deadline to be included in that Business
Day's payment cycle, payment for such purchases or redemptions will be made
the following Business Day.
(f) If on any day the Company or its affiliate, or Distributor is unable to
meet the NSCC deadline for the transmission of purchase or redemption
orders, it may at its option transmit such orders and make such payments
for purchases and redemptions directly to Distributor or the Company or its
affiliate, as applicable, as is otherwise provided in the Agreement.
(g) These procedures are subject to any additional terms in each Fund's
prospectus and the requirements of applicable law. The Funds reserve the
right, at their discretion and without notice, to suspend the sale of
shares or withdraw the sale of shares of any Fund.
2. The Company or its affiliate, Distributor and clearing agents (if
applicable) are each required to have entered into membership agreements with
NSCC and met all requirements to participate in the MFPS and Fund/SERV systems
before these procedures may be utilized. Each party will be bound by the terms
of their membership agreement with NSCC and will perform any and all duties,
functions, procedures and responsibilities assigned to it and as otherwise
established by NSCC applicable to the MFPS and Fund/SERV system and the
Networking Matrix Level utilized.
3. Except as modified hereby, all other terms and conditions of the Agreement
shall remain in full force and effect. Unless otherwise indicated herein, the
terms defined in the Agreement shall have the same meaning as in this Exhibit.
15
