FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is entered into as of the 29th day of April, 2003 among
METLIFE INVESTORS USA INSURANCE COMPANY ("Company"), a life insurance company
organized under the laws of the State of Delaware (on behalf of itself and
certain of its separate accounts); AMERICAN FUNDS INSURANCE SERIES ("Series"),
an open-end management investment company organized under the laws of the
Commonwealth of Massachusetts, and CAPITAL RESEARCH AND MANAGEMENT COMPANY
("CRMC"), a corporation organized under the laws of the State of Delaware.
WITNESSETH:
WHEREAS, Company proposes to issue certain multi-manager variable life
insurance policies that provide certain funds ("Funds") of the Series as
investment options (the "Contracts");
WHEREAS, Company has established pursuant to Delaware insurance law one or
more separate accounts (each, an "Account") for purposes of issuing the
Contracts and has or will register each Account (unless the Account is exempt
from such registration) with the United States Securities and Exchange
Commission (the "Commission") as a unit investment trust under the Securities
Act of 1933 (the "1933 Act") and the Investment Company Act of 1940 (the "1940
Act");
WHEREAS, the Contracts, which are or will be registered by Company with the
Commission for offer and sale, will be in compliance with all applicable laws
prior to being offered for sale;
WHEREAS, the Series has received a "Mixed and Shared Funding Order" from
the Commission granting relief from certain provisions of the 1940 Act and the
rules thereunder to the extent necessary to permit shares of the Series to be
sold to variable annuity and life insurance separate accounts of unaffiliated
insurance companies;
WHEREAS, the Series is divided into various Funds, each Fund being subject
to certain fundamental investment policies which may not be changed without a
majority vote of the shareholders of such Fund;
WHEREAS, certain Funds listed in Attachment A to this Agreement will serve
------------
as certain of the underlying investment mediums for the Contracts; and
WHEREAS, CRMC is the investment adviser for the Series.
NOW, THEREFORE, in consideration of the foregoing and of mutual covenants
and conditions set forth herein and for other good and valuable consideration,
Company the Series and CRMC hereby agree as follows:
1. The Series and CRMC each represents and warrants to Company that: (a) a
registration statement under the 1933 Act and under the 1940 Act with respect to
the Series has been filed with the Commission in the form previously delivered
to Company, and copies of any and all amendments thereto will be forwarded to
Company at the time that they are filed with the Commission; (b) the Series is,
and shall be at all times while this Agreement is in force, lawfully organized,
validly existing, and properly qualified as an open-end management investment
company in accordance with the laws of the Commonwealth of Massachusetts; and
(c) the Series' registration statement and any further amendments thereto will,
when they become effective, and all definitive prospectuses and statements of
additional information and any further supplements thereto (the "Prospectus")
shall, conform in all material respects to the requirements of the 1933 Act and
the 1940 Act and the rules and regulations of the Commission thereunder, and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statement
therein not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Series by Company
expressly for use therein.
2. The Series will furnish to Company such information with respect to the
Series in such form and signed by such of its officers as Company may reasonably
request, and will warrant that the statements therein contained when so signed
will be true and correct. The Series will advise Company immediately of: (a) the
issuance by the Commission of any stop order suspending the effectiveness of the
registration statement of the Series or the initiation of any proceeding for
that purpose; (b) the institution of any proceeding, investigation or hearing
involving the offer or sale of the Contracts or the Series of which it becomes
aware; or (c) the happening of any material event, if known, which makes untrue
any statement made in the registration statement of the Series or which requires
the making of a change therein in order to make any statement made therein not
misleading.
3. The Series will use best efforts to register for sale under the 1933 Act
and, if required, under state securities laws, such additional shares of the
Series as may reasonably be necessary for use as the funding vehicle for the
Contracts.
4. The Series agrees to make the Funds listed on Attachment A hereto
------------
available to the Contracts. Company will be entitled to a Rule 12b-1 service fee
to be accrued daily and paid monthly at an annual rate of 0.25% of the average
daily net assets of the Class 2 shares of each Fund attributable to the
Contracts for personal services and account maintenance services for Contract
owners with investments in subaccounts corresponding to the Class 2 shares of
each Fund (each, a "Subaccount") for as long as the Series' Plan of Distribution
pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 plan") remains in effect.
Fund shares to be made available to Accounts for the Contracts shall be sold by
the Series and purchased by Company for a given Account at the net asset value
of the respective class of the respective Fund (without the imposition of a
sales load) next computed after receipt of each order by the Series or its
designee, as established in accordance with the provisions of the then current
Prospectus of the Series. For purposes of this Paragraph 4, Company shall be a
designee of the Series for receipt of such orders from each Account, and receipt
by such designee by 4:00 p.m. Eastern time (or other such time the Board of
Trustees of the Series shall so designate) shall constitute receipt by the
Series; provided that the Series receives notice of such order by 10:00 a.m.
Eastern time on the
2
following Business Day ("Next Business Day"). "Business Day" shall mean any day
on which the New York Stock Exchange ("NYSE") is open for trading and on which
the Series calculates the net asset values of each class of shares of each Fund
pursuant to the rules of the Commission. The Series will make the shares of each
class of each Fund available indefinitely for purchase at the applicable net
asset value per share by Company and its Accounts on those days on which the
Series calculates the net asset values of each such class pursuant to the rules
of the Commission, and the Series shall use its best efforts to calculate such
net asset values on each day on which the NYSE is open for trading. The Series
shall make the net asset value per share for each class of each Fund available
to Company on a daily basis as soon as reasonably practical after the Series
calculates such net asset values per share, and the Series shall use its best
efforts to make such net asset values per share available by 6:30 p.m. Eastern
time. If the Series provides incorrect net asset values to Company with respect
to any class of shares of any Fund on any Business Day, Company shall be
entitled (on behalf of each affected Account) to an adjustment to the number of
shares purchased or redeemed of such class of shares to reflect the correct net
asset value per share. Any error in the calculation or reporting of net asset
values per share, dividends, or capital gain information shall be reported
promptly to Company. Any costs incurred by Company with respect to correcting
Contract owner accounts, including, but not limited to, amounts paid to Contract
owners and administrative expenses, shall be promptly reimbursed by CRMC. The
Series and CRMC are responsible for maintaining net asset values for each class
of each Fund in accordance with the requirements of the 1940 Act and the Series'
then current Prospectus. Payments for shares purchased will be made in federal
funds transmitted by wire on the Next Business Day, and Company and the Fund
shall each use commercially reasonable efforts to wire (or cause to be wired)
funds to the other, for the purpose of settling net purchase orders or orders of
redemption, by 3:00 p.m. Eastern time on the Next Business Day.
The Series reserves the right to temporarily suspend sales if the
Board of Trustees of the Series deems it appropriate and in the best
interests of the Series or in response to the order of an appropriate
regulatory authority. Company reserves the right to refuse, to impose
limitations on, or to limit any transaction request if the request would
tend to disrupt Contract administration or is not in the best interest of
the Contract holders or an Account or Subaccount.
5. The Contracts funded through each Account will provide for the
allocation of net amounts among certain Subaccounts for investment in shares of
a class of the Funds as may be offered from time to time in the Contracts. The
selection of the particular Subaccount is to be made by the Contract owner and
such selection may be changed in accordance with the terms of the Contracts.
6. Transfer of the Series' shares will be by book entry only. No stock
certificates will be issued to the Account. Shares ordered from a particular
Fund will be recorded by the Series as instructed by Company in an appropriate
title for the corresponding Account or Subaccount.
7. The Series shall furnish notice promptly to Company of any dividend or
distribution payable on any shares underlying Subaccounts. Company hereby elects
to receive
3
all such dividends and distributions as are payable on shares of a Fund recorded
in the title for the corresponding Subaccount in additional shares of that Fund.
The Series shall notify Company of the number of shares so issued. Company
reserves the right to revoke this election and to receive all such income
dividends and capital gain distributions in cash.
8. The Series shall redeem its shares in accordance with the terms of its
then current Prospectus. For purposes of this Paragraph 8, Company shall be a
designee of the Series for receipt of requests for redemption from each Account,
and receipt by such designee by 4:00 p.m. Eastern time (or other such time the
Board of Trustees of the Series shall so designate) shall constitute receipt by
the Series; provided that the Series receives notice of such request for
redemption by 10:00 a.m. Eastern time on the Next Business Day. Company shall
purchase and redeem the shares of Funds offered by the then current Prospectus
of the Series in accordance with the provisions of such Prospectus.
9. The Series shall pay all expenses incidental to its performance under
this Agreement. The Series shall see to it that all of its shares are registered
and authorized for issue in accordance with applicable federal and state laws
prior to their purchase for the Account. The Series shall bear the expenses for
the cost of registration of its shares, preparation of prospectuses and
statements of additional information to be sent to existing Contract owners
(upon request in the case of the statement of additional information), proxy
statements and related materials and annual and semi-annual shareholder reports,
the printing and distribution of such items to each Contract owner who has
allocated net amounts to any Subaccount, the preparation of all statements and
notices required from it by any federal or state law, and taxes on the issue or
transfer of the Series' shares subject to this Agreement. The Series will
provide Company, at least once a year, with enough copies of its Statement of
Additional Information to be able to distribute one to each Contract owner or
prospective Contract owner who requests such Statement of Additional
Information.
10. Company shall bear the expenses for the cost of preparation and
delivery of Series prospectuses (and supplements thereto) to be sent to
prospective Contract owners. The Series shall provide, at its expense, such
documentation (in camera-ready or other mutually agreeable form) and other
assistance as is reasonably necessary in order for Company once each year (or
more frequently if the prospectus for the Series is amended), and twice each
year in the case of the annual and semi-annual shareholder reports, to have the
prospectus or prospectuses, and the annual and semi-annual shareholder reports
for the Contracts and the Series, printed together in one or more documents
(such printing to be done at Company's expense with respect to prospective
investors).
11. Company represents and warrants to the Series that any information
furnished in writing by Company to the Series for use in the registration
statement of the Series will not result in the registration statement's failing
to conform in all respects to the requirements of the 1933 Act and the 1940 Act
and the rules and regulations thereunder or containing any untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.
12. Company and its affiliates shall make no representations concerning the
Series' shares except those contained in the then current Prospectus of the
Series, in such printed
4
information subsequently issued on behalf of the Series or other funds managed
by CRMC as supplemental to the Series' Prospectus, in information published on
the Series' or CRMC's internet site, or in materials approved by AFD, as
provided in the Business Agreement in effect among Company, AFD, and CRMC dated
as of April 29, 2002 (the "Business Agreement").
13. Shares of the Series may be offered to separate accounts of various
insurance companies in addition to Company. The Series and the Company each
represents, warrants and covenants that no shares of the Series shall be sold to
the general public in contravention of Section 817 of the Internal Revenue Code
of 1986 as amended and the regulations thereunder (the "Code") ("Section 817").
The Series agrees that each Fund will comply with the diversification
requirements of Section 817. The Series also agrees to maintain each Fund's
qualification as a "regulated investment company" ("RIC") under the Code. The
Series will provide Company with securities holdings reports for each Fund
within ten days after each calendar quarter.
14. The parties to this Agreement recognize that due to differences in tax
treatment or other considerations, the interests of various Contract owners
participating in one or more Funds might, at some time, be in conflict. Each
party shall report to the other party any potential or existing conflict of
which it becomes aware. The Board of Trustees of the Series shall promptly
notify Company of the existence of irreconcilable material conflict and its
implications. If such a conflict exists, Company will, at its own expense, take
whatever action it deems necessary to remedy such conflict; in any case,
Contract owners will not be required to bear such expenses.
15. Company agrees to indemnify and hold the Series harmless against, any
and all losses, claims, damages, liabilities or litigation (including legal and
other expenses) to which the Series may be 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 arising as a result of
Company's: (a) making untrue statements of material facts or omitting material
facts in a Contract's registration statement, prospectus, statement of
additional information, semi-annual or annual reports to Contract owners or
sales literature for the Contracts; (b) making untrue statements of material
facts that the Series includes in the same materials of the Series, provided
that Series relies on information supplied by Company; (c) unlawful conduct, bad
faith, willful malfeasance, or gross negligence by Company with respect to the
sale of the Contracts or Fund shares; and (d) breaching this Agreement or a
representation or warranty.
16. The Series and CRMC each agrees to indemnify and hold Company harmless
against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses) which Company may be 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 arising
as a result of the Series', or CRMC's: (a) making untrue statements of material
facts or omitting material facts in the Series' registration statement,
prospectuses or statements of additional information, semi-annual and annual
reports to shareholders, and sales literature; (b) making untrue statements of
material facts that the Series includes in its materials, provided Company
relies on information supplied by the Series; (c) unlawful conduct, bad faith,
willful malfeasance, or gross negligence by the Series with respect to the sale
of the Contracts or Fund shares or the operation of the Series or a Fund; (d)
failure of the Series to comply with any
5
Fund's investment objectives, policies and restrictions; and (e) breaching this
Agreement or a representation or warranty, including, but not limited to, the
representations, warranties and covenants in Section 13.
17. Company shall be responsible for assuring that the Account calculates
pass-through voting privileges of Contract owners in a manner consistent with
the method of calculating pass-through voting privileges set forth in the
current Contract.
18. The parties understand that there is no intention to create a joint
venture in the subject matter of this Agreement. Accordingly, the right to
terminate this Agreement and to engage in any activity not inconsistent with
this Agreement is absolute. This Agreement will terminate:
(a) by mutual agreement at any time; or
(b) any party at any time upon six months written notice to the other
parties; or
(c) at the option of Company or the Series upon ten calendar days prior
written notice to the other party if a final non-appealable
administrative or judicial decision is entered against the other party
which has a material impact on the Contracts;
(d) at the option of Company, upon ten calendar days prior written notice,
if shares of the Series are not reasonably available;
(e) at the option of Company, immediately upon written notice, if the
Series or CRMC fails to meet the requirements for either
diversification under Section 817 or RIC status under the Code, or if
the Board of the Series terminates the 12b-1 plan; or
(f) in the event the Series' shares 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 an underlying investment for the
Contracts issued or to be issued by Company; in such event prompt
notice shall be given by Company or the Series to the other party.
The effective date for termination pursuant to any notice given under this
Paragraph shall be calculated beginning with the date of receipt of such notice.
19. All notices, consents, waivers, and other communications under this
Agreement must be in writing, and will be deemed to have been duly received: (a)
when delivered by hand (with written confirmation of receipt); (b) when sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested; or (c) the day after it is
sent by a nationally recognized overnight delivery service, in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and facsimile numbers as a party may designate by notice to the other
parties):
6
IF TO COMPANY:
MetLife Investors USAInsurance Company
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General counsel
Facsimile No.: ▇▇▇ ▇▇▇ ▇▇▇▇
WITH A COPY TO:
MetLife Investors USAInsurance Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
IF TO SERIES:
American Funds Insurance Series
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
WITH A COPY TO:
Capital Research and Management Company
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President and Senior Counsel,
Fund Business Management Group
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
IF TO CRMC:
Capital Research and Management Company
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President and Legal Counsel,
Fund Business Management Group, and Secretary
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
WITH A COPY TO:
Capital Research and Management Company
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President and Senior Counsel,
Fund Business Management Group
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
20. If this Agreement terminates, any provision of this Agreement necessary
to the
7
orderly windup of business under it will remain in effect as to that business,
after termination.
21. If this Agreement terminates, the Series, at Company's option, will
continue to make additional shares of the Series available for all existing
Contracts as of the effective date of termination (under the same terms and
conditions as were in effect prior to termination of this Agreement with respect
to existing Contract owners), unless the Series liquidates or applicable laws
prohibit further sales. Company agrees not to redeem shares unless (i) the
Agreement is terminated pursuant to Section 18(e) or 18(f); (ii) legitimately
required to do so according to a Contract owner's request; or (iii) under an
order from the Commission or pursuant to vote of Contract owners.
22. The obligations of the Series under this Agreement are not binding upon
any of the Trustees, officers, employees, or shareholders (except CRMC if it is
a shareholder) of the Series individually, but bind only the Series' assets.
When seeking satisfaction for any liability of the Series in respect of this
Agreement, Company and the Account agree not to seek recourse against said
Trustees, officers, employees, or shareholders, or any of them, or any of their
personal assets for such satisfaction. Notwithstanding the foregoing, if Company
seeks satisfaction for any liability of the Series in respect of this Agreement,
Company (on behalf of itself or any Account) may seek recourse against CRMC.
23. This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
24. This Agreement and the parties' rights, duties, and obligations under
this Agreement are not transferable or assignable by any of them without the
express, prior written consent of the other party hereto. Any attempt by a party
to transfer or assign this Agreement or any of its rights, duties or obligations
under this Agreement without such consent is void; provided, however, that a
merger of, reinsurance arrangement by, or change of control of a party shall not
be deemed to be an assignment for purposes of this Agreement.
25. The following Paragraphs shall survive any termination of this
Agreement: 4, 15, 16, 17, 20, 21-26.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested as of the date first above written.
METLIFE INVESTORS USA INSURANCE
COMPANY (ON BEHALF OF ITSELF
AND EACH ACCOUNT)
Attest:
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Its: Executive Vice President
-----------------------------------
8
AMERICAN FUNDS INSURANCE SERIES
Attest:
By: /s/ Authorized Officer
-------------------------------------
Its: Senior Vice President
-----------------------------------
CAPITAL RESEARCH AND MANAGEMENT COMPANY
Attest:
By: /s/ Authorized Officer
-------------------------------------
Its: Senior Vice President, Fund Business
----------------------------------- Management Group, Legal Counsel
and Secretary
9
Attachment A
------------
American Funds Insurance Series:
. Global Small Capitalization Fund (Class 2)
. Growth Fund (Class 2)
. Growth-Income Fund (Class 2)