1
Exhibit 14(vi)
PARTICIPATION AGREEMENT
Among
NEW ENGLAND ZENITH FUND,
NEW ENGLAND INVESTMENT MANAGEMENT, INC.,
NEW ENGLAND SECURITIES CORPORATION
and
NEW ENGLAND LIFE INSURANCE COMPANY
AGREEMENT, made and entered into as of the 1st day of May, 2000 by and
among NEW ENGLAND ZENITH FUND, a business trust organized under the laws of the
Commonwealth of Massachusetts ( the "Fund"), New England Life Insurance Company
(the "Company") on its own behalf and on behalf of New England Variable Life
Separate Account, New England Variable Annuity Separate Account, Variable Life
Separate Account P of New England Life Insurance Company, certain separate
accounts of the Company established for the pooling of contributions under
certain tax-qualified group annuity contracts, and any other current or future
separate account which invests in the Fund (each an "Account"), each a separate
account of the Company, NEW ENGLAND INVESTMENT MANAGEMENT, INC. (the "Adviser")
and NEW ENGLAND SECURITIES CORPORATION (the "Underwriter").
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and its shares are registered under the Securities Act of 1933, as amended
(hereinafter the "1933 Act"); and
WHEREAS, the Fund serves as an investment vehicle underlying variable life
insurance policies and variable annuity contracts (collectively, "Variable
Insurance Products") offered by insurance companies ("Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC") granting Participating Insurance Companies and variable
annuity and variable life insurance separate accounts exemptions from certain
provisions of the 1940 Act and certain rules and regulations thereunder, to the
extent necessary to permit shares of the Fund to be sold to and held by both
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies (hereinafter the "Shared
Funding Exemptive Order"); and
WHEREAS, the Adviser acts as the investment adviser and/or administrator or
subadministrator to each series of the Fund and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Company has registered or will register certain variable life
and/or variable annuity contracts under the 1933 Act, if required;
1
2
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act, if required;
WHEREAS, the Underwriter is registered as a broker dealer with the SEC
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a
member in good standing of the National Association of Securities Dealers, Inc.
(the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of certain series of the
Fund (the "Series") on behalf of each Account to fund certain variable life and
variable annuity contracts (each, a "Contract") and the Underwriter is
authorized to sell such shares to each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree as follows:
1. SALE OF FUND SHARES.
1.1 Subject to the terms of the Distribution Agreement in effect from time to
time between the Fund and the Underwriter, the Underwriter agrees to sell
to the Company those shares of each Series which each Account orders,
executing such orders on a daily basis at the net asset value next computed
after receipt by the Fund or its designee of the order for the shares of
the Fund. For purposes of this Section 1.1 and Section 1.4, the Company is
the Fund's designee. "Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the Fund calculates
the net asset value of shares of the Series. The Company shall use
commercially reasonable efforts to communicate notice of orders for the
purchase of Shares of each Series to the Fund's custodian by 10:00 a.m.
Eastern time on the following Business Day (the "Next Business Day"), and
the 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. of the Next
Business Day.
1.2 The Fund agrees to make its shares available for purchase at the applicable
net asset value per share by the Company and its Accounts on those days on
which the Fund calculates its net asset value. The Fund agrees to use
reasonable efforts to calculate such net asset value on each day which the
New York Stock Exchange is open for trading. Notwithstanding the foregoing,
the Board of Trustees of the Fund (hereinafter the "Board" or the
"Trustees") may refuse to sell shares of any Series to any person, or
suspend or terminate the offering of shares of any Series, if such action
is required by law or by regulatory authorities having jurisdiction or is,
in the sole discretion of the Trustees acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, in the
best interests of the shareholders of such Series.
1.3 The Fund and the Underwriter agree that shares of the Fund will be sold
only to Participating Insurance Companies and their separate accounts, or
to other purchasers of
2
3
the kind specified in Treas. Reg. Section 1.817-5 (f)(3) (or any successor
regulation) as from time to time in effect.
1.4 The Fund agrees to redeem, on the Company's request, any full or fractional
shares of the Fund held by the Company, executing such requests on a daily
basis at the net asset value next computed after receipt by the Fund or its
designee of the request for redemption. The Company shall use commercially
reasonable efforts to communicate notice of orders for the redemption of
Shares of each Series to the Fund's custodian by 10:00 a.m. Eastern time on
the Next Business Day, and the 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. of the Next Business Day.
1.5 The Company agrees that all purchases and redemptions by it of the shares
of each Series will be in accordance with the provisions of the then
current prospectus and statement of additional information of the Fund for
the respective Series and in accordance with any procedures that the Fund,
the Underwriter or the Fund's transfer agent may have established governing
purchases and redemptions of shares of the Series generally.
1.6 The Company shall pay for Fund shares on the next Business Day after an
order to purchase Fund shares is made in accordance with the provisions of
Section 1.1. hereof. Payment shall be in federal funds transmitted by wire
to the Fund's custodian.
1.7 Issuance and transfer of the Funds' shares will be by book entry only.
Share certificates will not be issued. Shares ordered from the Fund will be
recorded on the transfer records of the Fund in an appropriate title for
each Account or the appropriate subaccount of each Account.
1.8 The Fund shall furnish same day notice (by e-mail, fax or telephone,
followed by written confirmation) to the Company of any income, dividends
or capital gain distributions payable on the shares of any Series. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Series shares in additional shares of
that Series. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash.
The Fund shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.9 The Fund shall make the net asset value per share for each Series available
to the Company 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 by 7:00 p.m. Eastern time.
The Fund shall furnish the Company's daily share balance to the Company as
soon as reasonably practicable.
2. REPRESENTATIONS AND WARRANTIES.
3
4
2.1 The Company represents and warrants that each Contract shall be either (i)
registered, or prior to the purchase of shares of any Series in connection
with the funding of such Contract, will be registered under the 1933 Act or
(ii) exempt from such registration; that the Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws, including all applicable customer suitability requirements. 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 each Account as a separate account pursuant
to relevant state insurance law prior to any issuance or sale of any
Contract by such Account and that each Account shall be either (i)
registered or, prior to any issuance or sale of the Contracts, will
register each Account as a unit investment trust in accordance with the
provisions of the 1940 Act; or (ii) exempt from such registration.
2.2 The Fund represents and warrants that Fund 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 Fund is and shall remain registered under the 1940 Act. The Fund agrees
that it will amend the registration statement for its shares under the 1933
Act and the 1940 Act from time to time as required in order to permit the
continuous public offering of its shares in accordance with the 1933 Act.
The Fund shall register and qualify the shares for sale in accordance with
the laws of the various states only if and to the extent deemed advisable
by the Fund or the Underwriter.
2.3 The Fund represents that each Series is currently qualified as a "regulated
investment company" under subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and agrees that it will make every effort to
maintain such qualification (under Subchapter M or any successor or similar
provision) and that it will notify the Company promptly upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.4 Subject to Section 6.1, the Company represents that the Contracts are
currently treated as endowment, annuity or life insurance contracts under
applicable provisions of the Code and agrees that it will make every effort
to maintain such treatment and that it will notify the Fund and the
Underwriter immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be so
treated in the future.
2.5 The Fund makes no representation as to whether any aspect of its operations
(including, but not limited to, fees and expenses and investment policies)
complies with the insurance laws or regulations of the various states.
2.6 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
4
5
2.7 The Underwriter further represents that it will sell and distribute the
Fund shares in accordance with all applicable state and federal securities
laws, including without limitation the 1933 Act, the 1934 Act and the 0000
Xxx.
2.8 The Fund represents that it is lawfully organized and validly existing
under the laws of the Commonwealth of Massachusetts and that it does and
will comply in all material respects with the 1940 Act.
2.9 Each of the Fund, the Adviser and the Underwriter represent and warrant
that all of their directors, officers and employees dealing with the money
and/or securities of the Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage in an amount, in the
case of the Adviser and the Underwriter, of not less than $5,000,000 and,
in the case of the Fund, not less than the minimal coverage as required by
Rule 17g-1 under the 1940 Act or any successor regulations as may be
promulgated from time to time. Each aforesaid bond shall include coverage
for larceny and embezzlement of Fund assets and shall be issued by a
reputable bonding company.
2.10 The Company represents and warrants that all of its directors, officers,
employees and other individuals/entities dealing with the money and/or
securities representing amounts intended for the purchase of shares of the
Fund or proceeds of the redemption of shares of the Fund are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage in an amount not less than $5,000,000. The aforesaid Bond shall
include coverage for larceny and embezzlement of Fund assets and shall be
issued by a reputable bonding company.
2.11 The Company represents and warrants that it will not, without the prior
written consent of the Fund and the Adviser, purchase Fund shares with
Account assets derived from the sale of Contracts to individuals or
entities which would cause the investment policies of any Series to be
subject to any limitations not in the Fund's then current prospectus or
statement of additional information with respect to any Series.
3. PROSPECTUSES AND PROXY STATEMENTS; VOTING.
3.1 The Underwriter (or the Fund) shall provide the Company with as many copies
of the Fund's current prospectus as the Company may reasonably request (at
the Company's expense with respect to other than existing Contract owners).
If requested by the Company in lieu thereof, the Underwriter (or the Fund)
shall provide such documentation (including a final copy of the new
prospectus as set in type at the Fund's expense) and other assistance as is
reasonably necessary in order for the Company once each year (or more
frequently if the prospectus for the Fund is amended) to have the
prospectus for the Contracts and the Fund's prospectus printed together in
one document (such printing to be at the Company's expense with respect to
other than existing Contract owners).
5
6
3.2 The Underwriter (or the Fund), at its expense, shall print and provide the
Fund's then current statement of additional information free of charge to
the Company and to any owner of a Contract or prospective owner who
requests such statement.
3.3 The Fund, 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 (at the Fund's expense) to Contract owners.
3.4 So long as and to the extent that the SEC or its staff continues to
interpret the 1940 Act to require pass-through voting privileges for
variable contract owners, or if and to the extent required by law, the
Company shall: (i) solicit voting instructions from Contract owners; (ii)
vote the Fund shares in accordance with instructions received from Contract
owners; and (iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such Series for which
instructions have been received. The Company reserves the right to vote
Fund shares held in any Account in its own right, to the extent permitted
by law. The Company shall be responsible for assuring that each Account
participating in the Fund calculates voting privileges in a manner
consistent with the standards set forth on Schedule A hereto, which
standards will also be provided to the other Participating Insurance
Companies.
4. SALES MATERIAL AND INFORMATION.
4.1 The Company shall be solely responsible for sales literature or other
promotional material, in which the Fund, a Series, the Adviser, any
subadviser to any Series, or the Underwriter (in its capacity as
distributor of the Fund) is named, the substance of which is contained in
the then current prospectus or statement of additional information of the
Fund. Other sales literature or other promotional material may also be used
by the Company if such sales literature or other promotional material (or
the substance thereof) has been previously approved by the Fund or its
designee. All other sales literature or other promotional material shall
not be used by the Company until it has been approved by the Fund or its
designee. The Company shall deliver such draft sales literature or other
promotional material to the Fund or its designee at least thirty Business
days prior to its use. The Fund or such designee shall use commercially
reasonable efforts to review sales literature so delivered within ten days.
4.2 The Company shall not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement, prospectus or statement of
additional information for the Fund shares, as such registration statement
and prospectus or statement of additional information may be amended or
supplemented from time to time, or in reports or proxy statements for the
Fund, or in sales literature or other promotional material approved by the
Fund or its designee or by the Underwriter, except with the approval of the
Fund or the Underwriter or the designee of either.
6
7
4.3 The obligations set forth in Section 4.1 herein shall apply MUTATIS
MUTANDIS to the Fund and the Underwriter with respect to each piece of
sales literature or other promotional material in which the Company and/or
any Account is named.
4.4 The Fund and the Underwriter shall not give any information or make any
representations on behalf of the Company or concerning the Company, any
Account or the Contracts other than the information or representations
contained in a 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 reports for each Account 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 or its designee, except with the permission of the Company.
4.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional
information, shareholder annual, semi-annual or other reports, proxy
statements, applications for exemptions, requests for no-action letters and
any amendments to any of the above, that relate to any Series, promptly
after the filing of each such document with the SEC or any other regulatory
authority.
4.6 The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional
information, shareholder annual, semi-annual or other reports,
solicitations for voting instructions, applications for exemptions,
requests for no-action letters and any amendments to any of the above, that
relate to the Contracts or any Account, promptly after the filing of such
document with the SEC or any other regulatory authority. Each party hereto
will provide to each other party, to the extent it is relevant to the
Contracts or the Fund, a copy of any comment letter received from the staff
of the SEC or the NASD, and the Company's response thereto, following any
examination or inspection by the staff of the SEC or the NASD.
4.7 As used herein, 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), 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
article), educational or training materials or other communications
distributed or made generally available to some or all agents or employees.
5. FEES AND EXPENSES.
5.1 The Fund, the Adviser and the Underwriter shall pay no fee or other
compensation to the Company under this agreement, except that if the Fund
or any Series adopts and
7
8
implements a plan pursuant to Rule 12b-1 to finance distribution expenses,
then the Fund may make payments to the Underwriter or to the Company. Each
party acknowledges that the Adviser may pay service or administrative fees
to the Company and other Participating Insurance Companies pursuant to
separate agreements.
6. DIVERSIFICATION.
6.1 The Fund will at all times invest money from the Contracts in such a manner
as to ensure that the Contracts will be treated as variable contracts under
the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with Section 817(h) of
the Code and any Treasury Regulations thereunder relating to the
diversification requirements for variable annuity, endowment or life
insurance contracts, as from time to time in effect.
7. POTENTIAL CONFLICTS.
7.1 To the extent required by the Shared Funding Exemptive Order or by
applicable law, the Board of Trustees of the Fund (the "Board") will
monitor the Fund for the existence of any material irreconcilable conflict
between the interests of the contract owners of all separate accounts
investing in the Fund. An irreconcilable material 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 Series are being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners; or (f) a decision by an insurer to
disregard the voting instructions of contract owners. The Fund shall
promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
7.2 The Company will report to the Board any potential or existing conflicts
between the interests of contract owners of different separate accounts of
which the Company is or becomes aware. The Company will assist the Board in
carrying out its responsibilities under the Shared Funding Exemptive Order
and under applicable law, by providing the Board with all information
reasonably necessary for the Board to consider any issues raised. This
includes, but is not limited to, an obligation of the Company to inform the
Board whenever contract owner voting instructions are disregarded.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense
take whatever steps are necessary to remedy or eliminate the irreconcilable
material conflict, which steps could include: (1) withdrawing the assets
allocable to some or all of the separate accounts from the Fund
8
9
or any Series and reinvesting such assets in a different investment medium,
including (but not limited to) another series of the Fund, or submitting
the question of whether 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., annuity contract owners, life insurance
contract owners, or variable 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 (2)
establishing a new registered management investment company or managed
separate account.
7.4 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 Fund's election, to withdraw the relevant
Account's investment in the Fund and terminate this Agreement; provided,
however, that such withdrawal and termination shall be limited to the
extent required by such material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. Any such withdrawal and
termination will take place within six (6) months after the Fund gives
written notice that this provision is being implemented.
7.5 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 Fund and terminate this Agreement
within six months after the Board informs the Company in writing that it
has determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by such material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 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 irreconcilable material conflict. In the event that the Board
determines that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six
(6) months after the Board informs the Company in writing of the foregoing
determination, provided, however, that such withdrawal and termination
shall be limited to the extent required by any such material irreconcilable
conflict as determined by a majority of the disinterested members of the
Board.
7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) under the 1940 Act are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act or the rules promulgated thereunder with respect to
mixed or shared funding (as defined in the
9
10
Shared Funding Exemptive Order) on terms and conditions materially
different from those contained in the Shared Funding Exemptive Order, then
(a) the Fund and/or Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules
are applicable; and (b) Sections 3.4, 7.1, 7.2, 7.3, 7.4, and 7.5 of this
Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
8. INDEMNIFICATION.
8.1 Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless the Fund and each of
its Trustees and officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Company) or litigation (including legal and
other expenses), to which the Indemnified Parties 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
Fund's shares or the Contracts and: (i) arise out of or are based upon any
untrue statements or alleged untrue statements of any material fact
contained in the registration statement or prospectus or statement of
additional information (if applicable) for the Contracts or contained in
the Contracts or sales literature or other promotional material for the
Contracts (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company by or on behalf
of the Fund for use in the registration statement or prospectus or
statement of additional information (if applicable) for the Contracts or in
the Contracts or sales literature or other promotional material (or any
amendment or supplement) or otherwise for use in connection with the sale
of the Contracts or Fund shares; or (ii) arise out of or as a result of
statements or representations (other than statements or representations
contained in the registration statement, prospectus or statement of
additional information (if applicable) or sales literature or other
promotional material of the Fund not supplied by the Company, or persons
under its control) or wrongful conduct of the Company or persons under its
control, with respect to the sale or distribution of the Contracts or Fund
Shares; or (iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in any registration statement,
prospectus or statement of additional information (if applicable) or sales
literature or other promotional material of the Fund 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
10
11
to make the statements therein not misleading if such a statement or
omission was made in reliance upon information furnished to the Fund by or
on behalf of the Company; or (iv) arise as a result of any failure by the
Company to provide the services and furnish the materials under the terms
of this Agreement; or (v) 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, as limited by and in accordance with the provisions of
Section 8.1(b) and 8.1(c) hereof.
(b) The Company shall not be liable under this Section 8.1 with respect to
any losses, claims, damages, liabilities or litigation to which an
Indemnified Party would otherwise be subject if such loss, claim, damage,
liability or litigation is caused by or arises out of such Indemnified
Party's willful misfeasance, bad faith or gross negligence or by reason of
such Indemnified Party's reckless disregard of obligations or duties under
this Agreement or to the Fund, whichever is applicable.
(c) Each Indemnified Party shall notify the Company of any claim made
against an Indemnified Party in writing 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 such Indemnified Party (or after such
Indemnified Party 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
Indemnified Party against whom such action is brought under this
indemnification provision unless the Company's ability to defend against
the claim shall have been materially prejudiced by the Indemnified Party's
failure to give such notice and shall not in any way relieve the Company
from any liability which it may have to the Indemnified Party against whom
the action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against one or more
Indemnified Parties, the Company shall be entitled to participate, at its
own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to each
Indemnified Party named in the action. After notice from the Company to
such party of the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Company will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense thereof other
than reasonable costs of investigation. An Indemnified Party shall not
settle any claim involving a remedy other than monetary damages without the
prior written consent of the Company.
(d) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the
operation of the Fund.
8.2 Indemnification by the Adviser and the Underwriter
11
12
(a) The Adviser and the Underwriter agree 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
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Adviser and the
Underwriter) or litigation (including legal and other expenses) to which
the Indemnified Parties 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 Fund's shares or the Contracts
and: (i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement, prospectus or statement of additional information, or sales
literature or other promotional material of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Adviser, the Underwriter, or Fund by or on
behalf of the Company for use in the registration statement, prospectus or
statement of additional information for the Fund or in sales literature or
other promotional material (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration statement,
prospectus or statement of additional information or sales literature or
other promotional material for the Contracts not supplied by the Adviser,
the Underwriter or the Fund or persons under their control) or wrongful
conduct of the Adviser, the Underwriter or the Fund or persons under their
control, with respect to the sale or distribution of the Contracts or Fund
Shares; or (iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in any registration statement,
prospectus or statement of additional information or sales literature or
other promotional material covering the Contracts, 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, if such statement or omission was made
in reliance upon information furnished to the Company by or on behalf of
the Adviser, the Underwriter, or the Fund; or (iv) arise as a result of any
failure by the Adviser, the Underwriter or the Fund to provide the services
and furnish the materials under the terms of this Agreement (including a
failure, whether unintentional or in good faith or otherwise, to comply
with the diversification requirements specified in Article VI of this
Agreement); or (v) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser, the Underwriter, or the
Fund in this Agreement or arise out of or result from any other material
breach of this Agreement by the Adviser, the Underwriter, or the Fund; as
limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
12
13
(b) Neither the Adviser nor the Underwriter shall be liable under this
Section 8.2 with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject if such
loss, claim, damage, liability or litigation is caused by or arises out of
such Indemnified Party's willful misfeasance, bad faith or gross negligence
or by reason of such Indemnified Party's reckless disregard of obligations
and duties under this Agreement or to the Company or each Account,
whichever is applicable.
(c) Each Indemnified Party shall notify each of the Adviser, the
Underwriter, and the Fund of any claim made against the Indemnified Party
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
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify each
of the Adviser, the Underwriter, and the Fund of any such claim shall not
relieve the Adviser or the Underwriter from any liability which it may have
to the Indemnified Party against whom such action is brought under this
indemnification provision unless the Adviser or the Underwriter's ability
to defend against the claim shall have been materially prejudiced by the
Indemnified Party's failure to give such notice and shall not in any way
relieve the Adviser or the Underwriter from any liability which it may have
to the Indemnified Party against whom the action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against one or more Indemnified Parties, the Adviser and the
Underwriter will be entitled to participate, at their own expense, in the
defense thereof. The Adviser and/or the Underwriter shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from the Adviser and/or the Underwriter to such
party of the election of the Adviser and/or the Underwriter to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and the Adviser and/or the
Underwriter will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently
in connection with the defense thereof other than reasonable costs of
investigation. An Indemnified Party shall not settle any claim involving
any remedy other than monetary damages without the prior written consent of
the Adviser and/or the Underwriter.
(d) The Company agrees promptly to notify the Adviser, the Underwriter and
the Fund of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or sale of
the Contracts or the operation of each Account.
9. APPLICABLE LAW.
9.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may
grant (including, but not limited to, the
13
14
Shared Funding Exemptive Order) and the terms hereof shall be interpreted
and construed in accordance therewith.
10. TERMINATION.
10.1 This Agreement shall terminate:
(a) at the option of any party upon 180 days' advance written notice to the
other parties; provided, however, that such notice shall not be given
earlier than one year following the date of this Agreement; or
(b) at the option of the Company to the extent that shares of a Series are
not reasonably available to meet the requirements of the Contracts as
determined by the Company, provided however, that such termination shall
apply only to those Series the shares of which are not reasonably
available. Prompt notice of the election to terminate for such cause shall
be furnished by the Company; or
(c) at the option of the Fund in the event that formal administrative
proceedings are instituted against the Company by the NASD, the SEC, any
state insurance department or commissioner or similar insurance regulator
or any other regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Contracts, with respect to the
operation of any Account or the purchase by any Account of Fund shares,
provided, however, that the Fund determines in its sole judgment, exercised
in good faith, that any such administrative proceedings will have a
material adverse effect upon the ability of the Company to perform its
obligations under this Agreement; or
(d) at the option of the Company in the event that formal administrative
proceedings are instituted against the Fund, the Adviser or the Underwriter
by the NASD, the SEC or any state securities or insurance department or
commissioner or any other regulatory body, provided, however, that the
Company determines in its sole judgment exercised in good faith, that any
such administrative proceedings will have a material adverse effect upon
the ability of the Fund, the Adviser or the Underwriter to perform its
obligations under this Agreement; or
(e) with respect to any Account, upon requisite authority (by vote of the
Contract owners having an interest in such Account or any subaccount
thereof, or otherwise) to substitute the shares of another investment
company (or separate series thereof) for the shares of any Series in
accordance with the terms of the Contracts for which shares of that Series
had been selected to serve as the underlying investment medium. The Company
will give 90 days' prior written notice to the Fund of the date of any
proposed vote to replace the Fund's shares or of the filing by the Company
with the SEC of any application relating to any such substitution; or
(f) at the option of the Company, in the event any shares of any Series are
not registered, issued or sold in accordance with applicable state and/or
federal law or such law
14
15
precludes the use of such shares as the underlying investment medium of the
Contracts issued or to be issued by the Company; or
(g) at the option of the Company, if any Series ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code or under any
successor or similar provision, or if the Company reasonably believes that
any Series may fail to so qualify; or
(h) at the option of the Company, if the Fund fails to meet the
diversification requirements specified in Section 6 hereof; or
(i) at the option of the Fund, the Adviser or the Underwriter, if (1) the
Fund, the Adviser or the Underwriter, as the case may be, shall determine,
in its sole judgment reasonably exercised in good faith, that the Company
has suffered a material adverse change in its business or financial
condition or is the subject of material adverse publicity and such material
adverse change or material adverse publicity will have a material adverse
impact on the business and operations of the Fund, the Adviser or the
Underwriter, as the case may be, (2) the Fund, the Adviser or the
Underwriter shall notify the Company in writing of such determination and
its intent to terminate this Agreement, and (3) after considering the
actions taken by the Company and any other changes in circumstances since
the giving of such notice, such determination of the Fund, the Adviser or
the Underwriter shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be the
effective date of termination; or
(j) at the option of the Company, if (1) the Company shall determine, in
its sole judgment reasonably exercised in good faith, that the Fund, the
Adviser or the Underwriter has suffered a material adverse change in its
business or financial condition or is the subject of material adverse
publicity and such material adverse change or material adverse publicity
will have a material adverse impact upon the business and operations of the
Company, (2) the Company shall notify the Fund, the Adviser and the
Underwriter in writing of such determination and its intent to terminate
the Agreement, and (3) after considering the actions taken by the Fund, the
Adviser and/or the Underwriter and any other changes in circumstances since
the giving of such notice, such determination shall continue to apply on
the sixtieth (60th) day following the giving of such notice, which sixtieth
day shall be the effective date of termination; or
(k) in the case of an Account not registered under the 1933 Act or 1940
Act, the Company shall give the Fund 90 days' prior written notice if the
Company chooses to cease using any Series as an investment vehicle for such
Account.
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 any reason or for no
reason.
10.2 Notice Requirement. No termination of this Agreement shall be effective
unless and until the party terminating this Agreement gives prior written
notice to all other parties to this Agreement of its intent to terminate
which notice shall set forth the basis for such
15
16
termination. Furthermore, in the event that any termination is based upon
the provisions of Article VII, or the provision of Section 10.1(a), 10.1(i)
or 10.1(j) of this Agreement, such prior written notice shall be given in
advance of the effective date of termination as required by such
provisions; and
10.3 In the event that any termination is based upon the provisions of Section
10.1(c) or 10.1(d) of this Agreement, such prior written notice shall be
given at least ninety (90) days before the effective date of termination.
10.4 Effect of Termination. Notwithstanding any termination of this Agreement,
the Fund and the Underwriter shall, at the option of the Company, continue
to make available additional shares of each Series 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"). Specifically, without limitation, the owners of the
Existing Contracts shall be permitted to reallocate investments in the
Fund, redeem investments in the Fund and/or invest in the Fund upon the
making of additional purchase payments under the Existing Contracts. The
parties agree that this Section 10.4 shall not apply to any terminations
under Section 10.1(b) or Section 7, and in the case of terminations under
Section 7 terminations, the effect of such terminations shall be governed
by Section 7 of this Agreement.
11. 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 Fund or to the Adviser:
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Secretary
If to the Company:
New England Life Insurance Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Senior Vice President
16
17
If to the Underwriter:
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Secretary
12. MISCELLANEOUS.
12.1 A copy of the Agreement and Declaration of Trust establishing New England
Zenith Fund is on file with the Secretary of the Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed
on behalf of the Fund by officers of the Fund as officers and not
individually and that the obligations of or arising out of this Agreement
are not binding upon any of the trustees, officers or shareholders of the
Fund individually but are binding only upon the assets and property
belonging to the Series.
12.2 Subject to the requirements of legal process and regulatory authority, each
party hereto shall 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, except as permitted
by this Agreement, shall not disclose, disseminate or utilize such names
and addresses and other confidential information until such time as it may
come into the public domain without the express written consent of the
affected party.
12.3 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.
12.4 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
12.5 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.
12.6 Each party hereto shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, 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.
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.
17
18
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 below.
NEW ENGLAND LIFE INSURANCE COMPANY
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
Date: May 1, 2000
NEW ENGLAND ZENITH FUND
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxx
Title: Chairman and President
Date: May 1, 2000
NEW ENGLAND INVESTMENT MANAGEMENT, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxx
Title: Chairman and President
Date: May 1, 2000
NEW ENGLAND SECURITIES CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Secretary
Date: May 1, 2000
18
19
PARTICIPATION AGREEMENT
Among
NEW ENGLAND ZENITH FUND,
NEW ENGLAND INVESTMENT MANAGEMENT, INC.,
NEW ENGLAND SECURITIES CORPORATION
and
NEW ENGLAND LIFE INSURANCE COMPANY
SCHEDULE A
With respect to each Account, all shares of each Series attributable to such
policies and contracts for which no owner instructions have been received by the
Company and all shares of the Series attributable to charges assessed by the
Company against such policies and contracts will be voted for, voted against, or
withheld from voting on any proposal in the same proportions as are the shares
for which owner instructions have been received by the Company with respect to
policies or contracts issued by such Account. To the extent the Company has so
agreed with respect to an Account not registered with the SEC under the 1940
Act, all shares of each Series held by the Account will be voted for, voted
against or withheld from voting on any proposal in the same proportions as are
the shares of such Series for which contract owners' voting instructions have
been received. If the Company has not so agreed, the shares of each Series
attributable to such unregistered Account will be voted for, voted against, or
withheld from voting on any proposal in the same proportions as are all other
shares for which the Company has received voting instructions.
19
