PARTICIPATION AGREEMENT
Among
BRIGHTHOUSE FUNDS TRUST I,
BRIGHTHOUSE INVESTMENT ADVISERS, LLC,
BRIGHTHOUSE SECURITIES, LLC
And
BRIGHTHOUSE LIFE INSURANCE COMPANY OF NY
This AGREEMENT is made and entered into as of the 6th day of March, 20, 2017,
by and among BRIGHTHOUSE FUNDS TRUST I, a statutory trust organized under the
laws of the State of Delaware (the "Fund"), BRIGHTHOUSE LIFE INSURANCE COMPANY
OF NY (the "Company") on its own behalf and on behalf of any current or future
separate accounts of the Company that invest in the Fund (each an "Account"),
BRIGHTHOUSE INVESTMENT ADVISERS, LLC (the "Adviser") and
BRIGHTHOUSE SECURITIES, LLC (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
portfolios of shares, each representing the interest in a particular managed
portfolio of securities and other assets; and
WHEREAS, the Fund has received 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 to each portfolio 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; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act, if required; and
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 Financial Industry Regulatory Authority
("FINRA"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of one or more portfolios of
the Fund (the "Portfolios") 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
Adviser, the Fund and the Underwriter agree as follows:
1. Sale of Fund Shares.
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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 Portfolio 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
Portfolios. The Company shall use commercially reasonable efforts to
communicate notice of orders for the purchase of Shares of each
Portfolio 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 Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio, 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 Portfolio.
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 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
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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.
1.5 The Company agrees that all purchases and redemptions by it of the
shares of each Portfolio will be in accordance with the provisions of
the then current prospectus and statement of additional information of
the Fund for the respective Portfolio 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 Portfolio 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
Portfolio. The Company hereby elects to receive all such income
dividends and capital gain distributions as are payable on the
Portfolio shares in additional shares of that Portfolio. 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 Portfolio
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.
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2.1 The Company represents and warrants that each Contract shall be either
(i) registered, or prior to the purchase of shares of any Portfolio 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
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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 State of Delaware
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 Portfolio is currently qualified or will
elect to qualify 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 FINRA and is registered as a broker-dealer with the SEC.
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 State of Delaware and that it does and will
comply in all material respects with the 1940 Act.
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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 Portfolio to
be subject to any limitations not in the Fund's then current prospectus
or statement of additional information with respect to any Portfolio.
2.12 The Fund and the Adviser each represents and warrants that the Summary
Prospectuses, as defined in Rule 498 of the 1933 Act ("Rule 498"), and
the hosting of such Summary Prospectuses will comply with the
requirements of Rule 498 applicable to the Fund and its Portfolio. The
Fund further represents and warrants that it has appropriate policies
and procedures in place to ensure that such website continuously
complies with Rule 498.
2.13 The Fund and the Adviser represent and warrant that they will be
responsible for compliance with the provisions of Rule 498(f)(i)
involving Contract owner requests for additional Fund documents made
directly to the Fund, the Adviser or one of their affiliates. The Fund
and the Adviser further represent and warrant that any information
obtained about Contract owners will be used solely for the purposes of
responding to requests for additional Fund documents.
2.14 The Company represents and warrants that it will respond to requests
for additional Fund documents made by Contract owners directly to the
Company or one of its affiliates.
2.15 The Company represents and warrants that any bundling of Summary
Prospectuses and Statutory Prospectuses, as defined in Rule 498, will
be done in compliance with Rule 498.
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2.16 The Fund and the Adviser represent and warrant that they have
reasonable safeguards in place to prevent the documents contained on
the web page, and the documents provided to the Company for purposes of
electronic delivery, from containing any virus.
3. Prospectuses and Proxy Statements; Voting.
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3.1 Unless otherwise noted, any reference to a "prospectus" shall mean any
Statutory Prospectus and Summary Prospectus and any amendments or
supplements thereto filed with the SEC.
3.2 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).
3.3 The Fund and the Adviser each agrees that the URL indicated on each
Summary Prospectus will lead Contract owners directly to the web page
used for hosting Summary Prospectuses, that such web page will contain
the current Fund documents required to be posted in compliance with
Rule 498, and that such web page will not contain any additional
materials not required by Rule 498. The Fund shall immediately notify
the Company of any unexpected interruptions in the availability of this
web page.
3.4 At the Company's request, the Fund and the Adviser will provide the
Company with URLs to the Fund's current documents for use with
Company's electronic delivery of Fund documents or on the Company's
website. The Fund and the Adviser will be responsible for ensuring the
integrity of the URLs and for maintaining the Fund's current documents
on the site to which such URLs originally navigate to.
3.5 If the Fund determines that it will end its use of the Summary
Prospectus delivery option, the Fund and the Adviser will provide the
Company with at least 60 days' advance notice of its intent.
3.6 The parties agree that the Company is not required to distribute
Summary Prospectuses to its Contract owners, but rather use of the
Summary Prospectus will be at the discretion of the Company. The
Company agrees that it will give the Fund and the Adviser sufficient
notice of its intended use of the Summary Prospectuses or the Statutory
Prospectus.
3.7 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.
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3.8 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.
3.9 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
Portfolio 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 with respect to each Account participating in the
Fund, all shares of each Portfolio attributable to policies and
contracts for which no owner instructions have been received by the
Company and all shares of the Portfolio 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 Portfolio 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 Portfolio for which contract
owners' voting instructions have been received. If the Company has not
so agreed, the shares of each Portfolio 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. Such foregoing
standards will also be applied to the other Participating Insurance
Companies. The Fund shall pay for the costs of soliciting and
tabulating such voting instructions.
4. Sales Material and Information.
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4.1 The Company shall be solely responsible for sales literature or other
promotional material, in which the Fund, a Portfolio, the Adviser, any
subadviser to any Portfolio, 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.
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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.
4.3 The obligations set forth in Section 4.1 herein shall apply mutatis
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mutandis to the Fund and the Underwriter with respect to each piece of
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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 Portfolio,
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 FINRA, and the Company's response
thereto, following any examination or inspection by the staff of the
SEC or FINRA.
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
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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.
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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 Portfolio adopts and implements a plan pursuant to Rule
12b-1 to finance distribution expenses or to provide personal account
services to the owners of the Contracts, then the Fund may make
payments to the Company or to the Underwriter. 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.
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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.
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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 Portfolio
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
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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 or any Portfolio and reinvesting such assets in
a different investment medium, including (but not limited to) another
Portfolio 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
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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 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 3.9, 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.
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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
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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 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
12
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
(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
13
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 Section 6 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.
(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.
14
9. Applicable Law.
--------------
9.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York.
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 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
Portfolio 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 Portfolios 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 FINRA, 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 FINRA, 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 Portfolio thereof) for the shares of
15
any Portfolio in accordance with the terms of the Contracts for which
shares of that Portfolio 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
Portfolio are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of
such shares as the underlying investment medium of the Contracts issued
or to be issued by the Company; or
(g) at the option of the Company, if any Portfolio 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 Portfolio 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
16
(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 Portfolio 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 termination.
Furthermore, in the event that any termination is based upon the
provisions of Section 7, 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 Portfolio
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.
17
If to the Fund or to the Adviser:
Brighthouse Advisors, LLC
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
If to the Company:
Brighthouse Life Insurance Company of NY
11225 Xxxxx Xxxxxxxxx Xxxxx Xxxx
Xxxxx Xxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
If to the Underwriter:
Brighthouse Securities, LLC
00000 Xxxxx Xxxxxxxxx Xxxxx Xxxx
Xxxxx Xxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
12. Miscellaneous.
-------------
12.1 A copy of the Agreement and Declaration of Trust establishing the Met
Investors Series Trust (renamed Brighthouse Funds Trust I) is on file
with the Secretary of the State of Delaware, 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 Portfolio.
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.
18
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, FINRA 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.
12.8 At the request of any party to this Agreement and no less than
annually, each other party will make available to the requesting
party's Board, independent auditors and/or representatives of the
appropriate regulatory agencies, all records, reports, materials, data,
and access to operating procedures that may be reasonably requested in
connection with compliance and regulatory requirements related to this
Agreement or any party's obligations under this Agreement.
SIGNATURES APPEAR ON THE FOLLOWING PAGE.
19
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
as of the date first set forth above.
BRIGHTHOUSE LIFE INSURANCE COMPANY OF NY
By: /s/ Xxxx Xxxxxx
-------------------------------------
Xxxx Xxxxxx
Vice President
BRIGHTHOUSE FUNDS TRUST I
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Xxxxxx Xxxxxx
President and Chief Executive Officer
BRIGHTHOUSE INVESTMENT ADVISERS, LLC
By: /s/ Xxxx X. Xxxxxx, Xx.
-------------------------------------
Xxxx X. Xxxxxx, Xx.
Treasurer and Chief Financial Officer
BRIGHTHOUSE SECURITIES, LLC
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Xxxxxx Xxxxx
Vice President
20
