PARTICIPATION AGREEMENT
AMONG TEMPLETON VARIABLE PRODUCTS SERIES FUND,
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC. and
METROPOLITAN LIFE INSURANCE COMPANY
THIS AGREEMENT made as of May 1, 1999, among Templeton Variable Products
Series Fund (the "Trust"), an open-end management investment company organized
as a business trust under Massachusetts law, Franklin Xxxxxxxxx Distributors,
Inc., a California corporation, the Trust's principal underwriter
("Underwriter"), and Metropolitan Life Insurance Company, a life insurance
company organized as a corporation under New York law (the "Company"), on its
own behalf and on behalf of each segregated asset account of the Company set
forth in Schedule A, as may be amended from time to time (the "Accounts").
W I T N E S S E T H:
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and has an
effective registration statement relating to the offer and sale of the various
series of its shares under the Securities Act of 1933, as amended (the "1933
Act");
WHEREAS, the Trust and the Underwriter desire that Trust shares be used as
an investment vehicle for separate accounts established for variable life
insurance policies and variable annuity contracts to be offered by life
insurance companies which have entered into fund participation agreements with
the Trust (the "Participating Insurance Companies");
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each series representing an interest in a particular managed
portfolio of securities and other assets, and certain of those series, named in
Schedule B, (the "Portfolios") are to be made available for purchase by the
Company for the Accounts; and
WHEREAS, the Trust represents that it has received an order from the SEC,
dated November 16, 1993 (File No. 812-8546), granting Participating Insurance
Companies and their separate accounts exemptions from the provisions of Sections
9(a), 13(a), 15(a) and 15(b) of the 1940 Act, as amended, and Rules 6e-2(b)
(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares
of the Trust to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated life insurance
companies and certain qualified pension and retirement plans (the "Shared
Funding Exemptive Order");
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WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act unless an exemption from registration under
the 1940 Act is available and the Trust has been so advised; and has registered
or will register interests in the separate account listed on Schedule C
attached hereto which may be amended from time to time, under which the
portfolios are to be made available as investment vehicles (the "Contracts")
under the 1933 Act unless such interests under the Contracts in the Accounts are
exempt from registration under the 1933 Act and the Trust has been so advised;
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such account on Schedule A hereto, to set aside
and invest assets attributable to one or more Contracts; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission 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. ("NASD"); and
WHEREAS, each investment adviser listed on Schedule B (each, an "Adviser")
is duly registered as an investment adviser under the Investment Advisers Act of
1940, as amended ("Advisers Act") and any applicable state securities laws;
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid Contracts and the Underwriter
is authorized to sell such shares to unit investment trusts such as each Account
at net asset value;
NOW THEREFORE, in consideration of their mutual promises, the parties agree
as follows:
ARTICLE I.
PURCHASE AND REDEMPTION OF TRUST PORTFOLIO SHARES
1.1 For purposes of this Article I, the Company shall be the Trust's agent
for receipt of purchase orders and requests for redemption relating to each
Portfolio from each Account, provided that the Company notifies the Trust of
such purchase orders and requests for redemption by 10:00 a.m. Eastern time on
the next following Business Day, as defined in Section 1.3.
1.2 The Trust agrees to make shares of the Portfolios available to the
Accounts for purchase at the net asset value per share next computed after
receipt of a purchase order by the Trust (or its agent), as established in
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accordance with the provisions of the then current prospectus of the Trust
describing Portfolio purchase procedures on those days on which the Trust
calculates its net asset value pursuant to rules of the SEC, and the Trust shall
use its best efforts to calculate such net asset value on each day on which the
New York Stock Exchange ("NYSE") is open for trading. The Company will transmit
orders from time to time to the Trust for the purchase of shares of the
Portfolios. The Trustees of the Trust (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 if, 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, such action is deemed in the best interests of the shareholders of
such Portfolio. Except for market timing issues, when practicable, the Trust
will provide the Company with thirty (30) days written notice of its intention
to refuse to sell Portfolio shares pursuant to this Agreement. The Company
acknowledges receipt of the Trustees' December 1, 1998 resolution addressing
market timing.
1.3 The Company shall submit payment for the purchase of shares of a
Portfolio on behalf of an Account no later than the close of business on the
next Business Day after the Trust receives the purchase order. Payment shall be
made in federal funds transmitted by wire to the Trust or its designated
custodian. Upon receipt by the Trust of the federal funds so wired, such funds
shall cease to be the responsibility of the Company and shall become the
responsibility of the Trust for this purpose. "Business Day" shall mean any day
on which the NYSE is open for trading and on which the Trust calculates its net
asset value pursuant to the rules of the SEC.
1.4 The Trust will redeem for cash any full or fractional shares of any
Portfolio, when requested by the Company on behalf of an Account, at the net
asset value next computed after receipt by the Trust (or its agent) of the
request for redemption, as established in accordance with the provisions of the
then current prospectus of the Trust describing Portfolio redemption procedures.
The Trust shall make payment for such shares in the manner established from time
to time by the Trust. Redemption with respect to a Portfolio will normally be
paid to the Company for an Account in federal funds transmitted by wire to the
Company before the close of business on the next Business Day after the receipt
of the request for redemption. Such payment may be delayed if, for example, the
Portfolio's cash position so requires or if extraordinary market conditions
exist, but in no event shall payment be delayed for a greater period than is
permitted by the 1940 Act. The Trust will use good faith in determining when
payments will be delayed and currently anticipates delaying redemption only in
circumstances where extraordinary market conditions, or the size of the
redemption relative to the size of a given Fund will detriment remaining
shareholders if made immediately. The Trust and
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Underwriter agree to consult with the Company, in good faith, to determine a
plan for the orderly disposition of assets to meet redemption requests from
contract owners in the event of such a delay.
1.5 Payments for the purchase of shares of the Trust's Portfolios by the
Company under Section 1.3 and payments for the redemption of shares of the
Trust's Portfolios under Section 1.4 may be netted against one another on any
Business Day for the purpose of determining the amount of any wire transfer on
that Business Day.
1.6 Issuance and transfer of the Trust's Portfolio shares will be by book
entry only. Stock certificates will not be issued to the Company or the Account.
Portfolio Shares purchased from the Trust will be recorded in the appropriate
title for each Account or the appropriate subaccount of each Account.
1.7 The Trust shall furnish, on or before the ex-dividend date, notice to
the Company of any income dividends or capital gain distributions payable on the
shares of any Portfolio of the Trust. The Company hereby elects to receive all
such income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. The Trust shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.8 The Trust shall calculate the net asset value of each Portfolio on each
Business Day, as defined in Section 1.3. The Trust shall make the net asset
value per share for each Portfolio available to the Company or its designated
agent on a daily basis in accordance with mutually agreed upon guidelines for
electronic transmission (which transmission will be by electronic file) as soon
as reasonably practical after the net asset value per share is calculated
(normally by 6:30 p.m. Eastern time) and shall use reasonable efforts to make
such net asset value per share available by 7:00 p.m. Eastern time each Business
Day.
1.9 The Trust and Underwriter agree that Portfolio shares will be sold only
to Participating Insurance Companies and their separate accounts and to certain
qualified pension and retirement plans to the extent permitted by the Shared
Funding Exemptive Order. No shares of any Portfolio will be sold directly to the
general public. The Company agrees that it will use Trust shares only for the
purposes of funding the Contracts through the Accounts listed in Schedule A, as
amended from time to time.
1.10 The Trust agrees that all Participating Insurance Companies shall have
the obligations and responsibilities regarding pass-through voting and conflicts
of interest corresponding to those required by the Shared Funding Exemptive
Order, including 2.3 and Article IV of this Agreement.
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1.11 Each party to this Agreement shall have the right to rely on
information or confirmations provided by any other party (or by any affiliate of
any other party), and shall not be liable in the event that an error results
from any incorrect information or confirmations supplied by any other party. If
an error is made in reliance upon incorrect information or confirmations, any
amount required to make a Contract owner's account whole shall be borne by the
party who provided the incorrect information or confirmation.
1.12 The Trust shall send to the Company, (i) confirmations of activity in
the Separate Account within five (5) business days after each date on which a
purchase or redemption of shares of the Company is effected for the Account, and
(ii) statements detailing activity in the Account upon request.
ARTICLE II.
OBLIGATIONS OF THE PARTIES; FEES AND EXPENSES
2.1 The Trust shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of the Trust.
The Trust shall bear the costs of registration and qualification of its shares
of the Portfolios, preparation and filing of the documents listed in this
Section 2.1 and all taxes to which an issuer is subject on the issuance and
transfer of its shares.
2.2 At the option of the Company, the Trust shall either (a) provide the
Company with as many copies of the Trust's current prospectus, annual report for
any specific Portfolio or combination thereof, semi-annual report and other
shareholder communications, including any amendments or supplements to any of
the foregoing, as the Company shall reasonably request; or (b) provide the
Company with a camera ready copy of such documents in a form suitable for
printing, or in a computer diskette or Internet format that cannot be changed by
the Company (i.e. read-only or PDF format). The Trust will provide the Company
with the prospectus (pursuant to either (a) or (b) above) as soon as reasonably
possible after it receives final SEC comments and before the date of the
prospectus (if reasonably possible). If the Company elects to include any
materials provided by the Trust, specifically prospectuses, SAIs, shareholder
reports and proxy materials, on its web site or any other computer or electronic
format, the Company assumes sole responsibility for maintaining such materials
in the form provided by the Trust and for replacing such materials with all
updates provided by the Trust. The prospectus will contain only those
Portfolios specified by the Company, upon reasonable notice by the Company. The
Trust shall provide the Company with a copy of its statement of additional
information in a form suitable for duplication by the Company. The Trust (at
its expense) shall provide the Company with copies of any Trust-sponsored proxy
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materials in such quantity as the Company shall reasonably require for
distribution to Contract owners. The Trust or Underwriter shall bear the costs
of distributing such proxy materials (or similar materials such as voting
solicitation instructions) to the Company's Contract owners. Expenses of
printing and furnishing prospectuses, SAIs and shareholder reports of the
Contract and the Trust for marketing purposes shall be borne by the Company.
Expenses for furnishing such documents of the Trust for current Contract owners
invested in the Trust shall be borne by the Trust or Underwriter, and shall be
pro-rated if such Trust documents are combined with those of the contract or
other investment companies.
2.3 If and to the extent required by law, the Company shall: (i) solicit
voting instructions from Contract owners; (ii) vote the Trust shares in
accordance with the instructions received from Contract owners; and (iii) vote
Trust shares in each Account for which no instructions have been received in the
same proportion as Trust shares of such Portfolio in that Account for which
instructions have been received; so long as and to the extent that the SEC
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Trust
shares held in any segregated asset account in its own right, to the extent
permitted by law. The Trust and Underwriter agree that Participating Insurance
Companies shall be contractually obligated to assure that each of their separate
accounts participating in the Trust calculates voting privileges in a manner
consistent with the Shared Funding Exemptive Order. The Company shall abide by
the terms and conditions of the Shared Funding Exemptive Order. The Company
shall be responsible for assuring that the Accounts calculate voting privileges
in a manner consistent with the standards set forth in Schedule E which
procedures may be adjusted by the parties on a case-by-case basis. The Company
and its agents will in no way recommend or oppose or interfere with the
solicitation of proxies for Portfolio shares held to fund the Contracts without
the prior written consent of the Trust, which consent may be withheld in the
Trust's sole discretion.
2.4 Except as provided in section 2.5, the Company shall not use any
designation comprised in whole or part of the names or marks "Franklin" or
"Xxxxxxxxx" or any other Trademark of or relating to the Trust, the Underwriter
or their affiliates without prior written consent, and upon termination of this
Agreement for any reason, the Company shall cease all use of any such name or
xxxx as soon as reasonably practicable. Notwithstanding the prior sentence, the
Company may use "Franklin" or "Xxxxxxxxx" in the name of the funding option
offered under the Contracts as long as it invests exclusively in a Franklin or
Xxxxxxxxx Portfolio.
2.5 (a) The Company shall furnish, or cause to be furnished to the Trust or
its designee, at least one complete copy of each registration statement,
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prospectus, statement of additional information, retirement plan disclosure
information or other disclosure documents or similar information, as applicable
(collectively "disclosure documents"), as well as any report, solicitation for
voting instructions, sales literature and other promotional materials, and all
amendments to any of the above that relate to the Contracts or the Accounts
prior to its first use. Except for provision 2.5(b), the Company shall
furnish, or shall cause to be furnished, to the Trust or its designee each piece
of sales literature or other promotional material in which the Trust or an
Adviser is named, at least 15 Business Days prior to its use. No such material
shall be used if the Trust or its designee reasonably objects to such use within
five Business Days after receipt of such material. The Trust shall furnish, or
shall cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company is described in a
material manner, at least fifteen (15) Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to such
use within five Business Days after receipt of such material.
(b) The Company intends to create and provide Contract owners with "fact
sheets" of participating funds on a regular basis. The Company will initially
provide a template fact sheet to the Underwriter for its approval. Thereafter,
the Company will provide the Underwriter with samples of the fact sheets for
approval only if the content or format of the report changes substantially.
Generally, the parties agree to good faith mutual cooperation in the resolution
of novel or controversial issues concerning sales literature that may arise
pursuant to this Agreement.
(c) For purposes of this Section 2.5, "sales literature or other
promotional material" includes, but is not limited to, portions of the following
that use any Trademark related to the Trust or Underwriter or refer to the Trust
or affiliates of the Trust: 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 electronic communication 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 or
any other advertisement, sales literature or published article or electronic
communication), educational or training materials or other communications
distributed or made generally available to some or all agents or employees, and
disclosure documents, shareholder reports and proxy materials.
2.6 The Company and its agents shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust,
the Underwriter or an Adviser in connection with the sale of the Contracts other
than information or representations contained in and accurately derived from
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the registration statement or prospectus for the Trust shares (as such
registration statement and prospectus may be amended or supplemented from time
to time), annual and semi-annual reports of the Trust, Trust-sponsored proxy
statements, or in sales literature or other promotional material approved by the
Trust or its designee, except as required by legal process or regulatory
authorities or with the written permission of the Trust or its designee.
2.7 The Trust shall use its best efforts to provide the Company, on a
timely basis, with such information about the Trust, the Portfolios and each
Adviser, in such form as the Company may reasonably require, as the Company
shall reasonably request in connection with the preparation of disclosure
documents and annual and semi-annual reports pertaining to the Contracts.
2.8 Neither the Trust nor the Distributor shall give any information or
make any representations or statements on behalf of the Company or concerning
the Company, the Accounts or the Contracts other than information or
representations contained in and accurately derived from disclosure documents
for the Contracts (as such disclosure documents may be amended or supplemented
from time to time), or in materials approved by the Company for distribution
including sales literature or other promotional materials, except as required by
legal process or regulatory authorities or with the written permission of the
Company.
2.9 The Underwriter or an affiliate may make payments (other than pursuant
to a Rule 12b-1 Plan) to the Company or its affiliates or to the Contracts'
underwriter in amounts agreed to in a separate written agreement and such
payments may be made out of fees otherwise payable to the Underwriter or its
affiliates, profits of the Underwriter or its affiliates, or other resources
available to the Underwriter or its affiliates. This Agreement, however, shall
not obligate the Trust or the Underwriter to pay any fee or other compensation
to the Company.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of New York and
that it has legally and validly established each Account as a segregated asset
account under such law as of the date set forth in Schedule A.
3.2 The Company represents and warrants that, with respect to each Account,
(1) the Company has registered or, prior to any issuance or sale of the
Contracts, will register the Account as a unit investment trust in accordance
with the provisions of the 1940 Act to serve as a segregated asset account for
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the Contracts, or (2) if the Account is exempt from registration as an
investment company under Section 3(c) of the 1940 Act, the Company will make
every effort to maintain such exemption and will notify the Trust and the
Adviser immediately upon having a reasonable basis for believing that such
exemption no longer applies or might not apply in the future.
3.3 The Company represents and warrants that, with respect to each
Contract, (1) the interests in the Separate Account funding the Contract will be
registered under the 1933 Act, or (2) if the Separate Account is exempt from
registration under Section 3(a)(2) of the 1933 Act or under Section 4(2) and
Regulation D of the 1933 Act, the Company will make every effort to maintain
such exemption and will notify the Trust and the Adviser immediately upon having
a reasonable basis for believing that such exemption no longer applies or might
not apply in the future. The Company further represents and warrants that the
Contracts will be sold by broker-dealers, or their registered representatives,
who are registered with the SEC under the 1934 Act and who are members in good
standing of the NASD; the interests in the separate Account funding the
Contracts will be issued and sold in compliance in all material respects with
all applicable federal and state laws; and the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements.
For any unregistered Accounts which are exempt from registration under the '40
Act in reliance upon Sections 3(c)(1) or 3(c)(7) thereof, the Company represents
and warrants that:
(a) each Account and sub-account thereof has a principal underwriter which
is registered as a broker-dealer under the Securities Exchange Act of
1934, as amended;
(b) Trust shares are and will continue to be the only investment
securities held by the corresponding Account sub-accounts; and
(c) with regard to each Portfolio, the Company, on behalf of the
corresponding sub-account, will:
(1) seek instructions from all Contract owners with regard to the
voting of all proxies with respect to Trust shares and vote such
proxies only in accordance with such instructions or vote such
shares held by it in the same proportion as the vote of all other
holders of such shares; and
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(2) refrain from substituting shares of another security for such
shares unless the SEC has approved such substitution in the
manner provided in Section 26 of the '40 Act.
3.4 The Trust represents and warrants that it is duly organized and validly
existing under the laws of the State of Massachusetts and that it does and will
comply in all material respects with the 1940 Act and the rules and regulations
thereunder (including without limitation provisions relating to shareholder
voting and investment advisory contracts and fees).
3.5 The Trust represents and warrants that the Portfolio shares offered and
sold pursuant to this Agreement will be registered under the 1933 Act and the
Trust shall be registered under the 1940 Act prior to and at the time of any
issuance or sale of such shares. The Trust shall amend its registration
statement under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The Trust shall register
and qualify its shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the Trust or the
Underwriter.
3.6 The Trust (i) acknowledges that each Account intends to "look-through"
to the investments of each Portfolio in which it holds shares in accordance with
the "look-through" rules found in Treas. Reg. 1.817-5(f) and (ii) represents and
warrants that the investments of each Portfolio will comply with the
diversification requirements for variable annuity, endowment or life insurance
contracts set forth in Section 817(h) of the Internal Revenue Code of 1986, as
amended ("Code"), and the rules and regulations thereunder, including without
limitation Treasury Regulation 1.817-5, and (iii) will notify the Company
immediately upon having a reasonable basis for believing any Portfolio has
ceased to comply or might not so comply and will in that event immediately take
all reasonable steps to adequately diversify the Portfolio to achieve compliance
within the grace period afforded by Regulation 1.817-5. The Trust shall provide
in a form substantially identical to Schedule D attached hereto, the Company
with a certificate of compliance with section 817(h) diversification rules
within 45 days of the close of each calendar quarter.
3.7 The Trust represents and warrants that it is currently qualified as a
"regulated investment company" under Subchapter M of the Code, that it will make
every effort to maintain such qualification and will notify the Company
immediately upon having a reasonable basis for believing it has ceased to so
qualify or might not so qualify in the future.
3.8 The Trust represents and warrants that should it ever desire to make
any payments to finance distribution expenses of the Class 1 shares available
under this Agreement pursuant to Rule 12b-1 under the 1940 Act, the Trustees,
including a majority who are not "interested persons" of the Trust under the
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1940 Act ( "disinterested Trustees" ), will formulate and approve any plan under
Rule 12b-1 to finance distribution expenses. In the event a Rule 12b-1 plan is
adopted with respect to shares available under this Agreement, the Trust will
provide commercially reasonable prior written notice thereof to the Company.
3.9 The Trust represents and warrants that it, its directors, officers,
employees and others dealing with the money or securities, or both, of a
Portfolio shall at all times be covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust in an amount not less that the minimum
coverage required by Rule 17g-1 or other regulations under the 1940 Act. Such
bond shall include coverage for larceny and embezzlement and be issued by a
reputable bonding company.
3.10 The Company represents and warrants that all of its officers and other
individuals that are so required by Rule 17g-1 of the 1940 Act are and shall be
at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust, in an amount not less than an amount not less than the
minimum coverage required currently for entities subject to Rule 17g-1 or
related provisions, as may be promulgated from time to time. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Trust and the
Underwriter in the event that such coverage no longer applies.
3.11 The Underwriter represents that each Adviser (i) is duly organized and
validly existing under applicable corporate law and (ii) is and shall remain
duly registered under all applicable federal and state securities laws and (iii)
shall perform its obligations for the Trust in compliance in all material
respects with all applicable state and federal laws.
3.12 The Trust currently intends for one or more Classes to make payments
to finance its distribution expenses, including service fees, pursuant to a Plan
adopted under Rule 12b-1 under the 1940 Act ("Rule 12b-1"), although it may
determine to discontinue such practice in the future. To the extent that any
Class of the Trust finances its distribution expenses pursuant to a Plan adopted
under Rule 12b-1, the Trust represents and warrants that it will comply with
any then current SEC and SEC staff interpretations concerning Rule 12b-1 or any
successor provisions.
ARTICLE IV.
POTENTIAL CONFLICTS
4.1 The parties acknowledge that a Portfolio's shares may be made available
for investment to other Participating Insurance Companies. In such event, the
Trustees will monitor the Trust for the existence of any material
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irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. 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 Trust shall promptly inform the Company in writing of any
determination by the Trustees that an irreconcilable material conflict exists
and of the implications thereof.
4.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Shared Funding
Exemptive Order by providing the Trustees with all information reasonably
necessary for the Trustees to consider any issues raised including, but not
limited to, information as to a decision by the Company to disregard Contract
owner voting instructions. All communications from the Company to the Trustees
may be made in care of the Trust.
4.3 If it is determined by a majority of the Trustees, or a majority of the
disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation with
other Participating Insurance Companies whose contract owners are also affected,
at its own expense and to the extent reasonably practicable (as determined by a
majority of the disinterested Trustees) take whatever steps are necessary to
remedy or eliminate the irreconcilable material conflict, which steps could
include: (a) withdrawing the assets allocable to some or all of the Accounts
from the Trust or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the
Trust, or submitting the question of whether or not such withdrawal should be
implemented to a vote of all affected Contract owners and, as appropriate,
withdrawal of the assets of any appropriate group (i.e., annuity contract
owners, life insurance policy owners, or variable contract owners of one or more
Participating Insurance Companies) that votes in favor of such withdrawal, or
offering to the affected Contract owners the option of making such a change; and
(b) establishing a new registered management investment company or managed
separate account.
4.4 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
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may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested Trustees. Any such withdrawal
and termination must take place within six (6) months after the Trust gives
written notice that this provision is being implemented. Until the end of such
six (6) month period, the Trust shall continue to accept and implement orders by
the Company for the purchase and redemption of shares of the Trust in accordance
with the terms of this Agreement.
4.5 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with a
majority of other state regulators, then the Company will withdraw the affected
Account's investment in the Trust and terminate this Agreement with respect to
such Account within six (6) months after the Trustees inform the Company in
writing that 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 the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Trustees. Until the
end of such six (6) month period, the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of the
Trust in accordance with the terms of this Agreement.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a majority
of the disinterested Trustees shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Trust be required to establish a new funding medium for the Contracts. In
the event that the Trustees determine that any proposed action does not
adequately remedy any irreconcilable material conflict, then the Company will
withdraw the Account's investment in the Trust and terminate this Agreement
within six (6) months after the Trustees inform the Company in writing of the
foregoing determination; provided, however, that such withdrawal and termination
shall be limited to the extent required by any such material irreconcilable
conflict as determined by a majority of the disinterested Trustees.
4.7 The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the duties imposed upon them by the Shared Funding
Exemptive Order, and said reports, materials and data shall be submitted more
frequently if reasonably deemed appropriate by the Trustees.
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared
13
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable.
ARTICLE V.
INDEMNIFICATION
5.1 INDEMNIFICATION BY THE COMPANY
(a) The Company agrees to indemnify and hold harmless the
Underwriter, the Trust and each of its Trustees, officers, employees
and agents and each person, if any, who controls the Trust within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" and individually the "Indemnified Party" for purposes of this
Article V) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Company, which consent shall not be withheld for any settlement that
would be commercially reasonable for the Indemnified Parties in the
absence of this Section 5.1) or expenses (including the reasonable
costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or
regulation, or at common law or otherwise, insofar as such Losses are
related to the sale or acquisition of Trust 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 a
disclosure document for the Contracts or in the Contracts
themselves or in sales literature generated or approved by the
Company on behalf of the Contracts or Accounts (or any amendment
or supplement to any of the foregoing) (collectively, "Company
Documents" for the purposes of this Article V), 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 indemnity 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 was accurately derived
from written information furnished to
14
the Company by or on behalf of the Trust for use in Company
Documents or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(ii) arise out of or result from statements or
representations (other than statements or representations
contained in and accurately derived from Trust Documents as
defined in Section 5.2 (a)(i)) or wrongful conduct of the Company
or persons under its control, with respect to the sale or
acquisition of the Contracts or Trust shares; or
(iii) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a)(i) 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 and accurately derived from written information furnished to
the Trust by the Company; or
(iv) arise out of or result from any failure by the Company
to provide the services or furnish the materials required 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 5.1(b) and
5.1(c).
(b) The Company shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified Party
would otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this
Agreement or to the Trust or Underwriter, whichever is applicable.
(c) The Company shall also not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified
the Company in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the
15
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). Failure to notify the Company of any such
claim shall not relieve the Company from any liability except to the
extent that the Company has been prejudiced by such failure to give
notice, or from any other liability it may have to the Indemnified
Party. In case any such action is brought against the Indemnified
Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action, subject to the Indemnified
Parties' consent, which shall not be unreasonably withheld. The
Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action; provided,
however, that if the Indemnified Party shall have reasonably concluded
that there may be defenses available to it which are different from or
additional to those available to the Company, the Company shall not
have the right to assume said defense, but shall pay the costs and
expenses thereof except that in no event shall the Company be liable
for the fees and expenses of more than one counsel for Indemnified
Parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same
general allegations or circumstances. 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.
(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 Trust shares or the
Contracts or the operation of the Trust.
5.2 INDEMNIFICATION BY THE UNDERWRITER
(a) The Underwriter agrees to indemnify and hold harmless the Company,
the underwriter of the Contracts 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" and
individually an "Indemnified Party" for purposes of this Section 5.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter, which
consent shall not be withheld for any settlement that would be
16
commercially reasonable for the Indemnified Parties in the absence of this
Section 5.2) or expenses (including the reasonable costs of investigating
or defending any alleged loss, claim, damage, liability or expense and
reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses") to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such
Losses are related to the sale or acquisition of the Trust'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, prospectus or sales literature of the Trust
(or any amendment or supplement to any of the foregoing)
(collectively, the "Trust Documents") 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 of such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Underwriter
or Trust by or on behalf of the Company for use in the Registration
Statement or prospectus for the Trust or in sales literature (or any
amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the disclosure
documents or sales literature for the Contracts not supplied by the
Underwriter or persons under its control) or wrongful conduct of the
Trust, Adviser or Underwriter or persons under their control, with
respect to the sale or distribution of the Contracts or Trust shares;
or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a disclosure document or
sales literature 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 statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Trust; or
(iv) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good
17
faith or otherwise, to comply with the qualification representation
specified in Section 3.7 of this Agreement and the diversification
requirements specified in Section 3.6 of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter,
as limited by and in accordance with the provisions of Sections 5.2(b) and
5.2(c) hereof.
(b) The Underwriter shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Underwriter 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 Underwriter of any such claim shall not relieve the
Underwriter from its obligations hereunder except to the extent that the
Underwriter has been prejudiced by such failure to give notice, or from any
other liability it may have to the Indemnified Party. In case any such
action is brought against the Indemnified Parties, the Underwriter will be
entitled to participate, at its own expense, in the defense thereof. The
Underwriter also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from
the Underwriter to such party of the Underwriter's election to assume the
defense thereof, the Indemnified Party shall bear the expenses of any
additional counsel retained by it, and 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.
(d) The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its
18
officers or directors in connection with the issuance or sale of the
Contracts or the operation of each Account.
5.3 INDEMNIFICATION BY THE TRUST
(a) The Trust agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 5.3) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Trust, which consent shall not
be unreasonably withheld) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements result from the gross negligence, bad faith or willful
misconduct of the Board or any member thereof, are related to the
operations of the Trust, and arise out of or result from any material
breach of any representation and/or warranty made by the Trust in this
Agreement or arise out of or result from any other material breach of this
Agreement by the Trust; as limited by and in accordance with the provisions
of Section 5.3(b) and 5.3(c) hereof. It is understood and expressly
stipulated that neither the holders of shares of the Trust nor any Trustee,
officer, agent or employee of the Trust shall be personally liable
hereunder, nor shall any resort to be had to other private property for the
satisfaction of any claim or obligation hereunder, but the Trust only shall
be liable.
(b) The Trust shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against any Indemnified Party as such may arise from
such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company, the Trust, the Underwriter
or each Account, whichever is applicable.
(c) The Trust shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Trust 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
Trust of any such claim shall not relieve the Trust from any liability
which it
19
may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Trust will be
entitled to participate, at its own expense, in the defense thereof. The
Trust also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Trust
to such party of the Trust'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 Trust 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.
(d) The Company and the Underwriter agree promptly to notify the Trust
of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
the Account, or the sale or acquisition of shares of the Trust.
ARTICLE VI.
TERMINATION
6.1 This Agreement may be terminated by any party in its entirety or with
respect to one, some or all Portfolios with or without cause by six (6) months
advance written notice delivered to the other parties, and shall terminate
immediately in the event of its assignment, as that term is used in the 1940
Act.
6.2 This Agreement may be terminated at the option of either the Trust or
the Underwriter, under the following circumstances:
(a) by written notice to the Company with respect to any
Portfolio, Account or Contract in the event any Account or Contract is
not registered, issued or sold in accordance with applicable law as
warranted above, or such law precludes the Trust from selling its
shares for use as the underlying investment media of the Contracts
issued or to be issued by the Company; or
(b) in the event that formal administrative proceedings are
instituted against the Company by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body, if
the Trust or the Underwriter reasonably
20
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
(c) by written notice to the Company with respect to any
Portfolio if the Trust or the Underwriter reasonably believes that the
Company will fail to comply with the Shared Fund Order; or
(d) if (i) the Trust or Underwriter, respectively, 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 that material adverse change or publicity will have a
material adverse impact on the Company's ability to perform its
obligations under this Agreement, (ii) the Trust or Underwriter
notifies the Company of that determination and its intent to terminate
this Agreement, AND (iii) after considering the actions taken by the
Company and any other changes in circumstances since the giving of
such a notice, which consideration shall be presumed and shall not
require any action by the Trust or the Underwriter, the Trust or
Underwriter have not revoked their notice by on the sixtieth (60th)
day following the giving of that notice, which sixtieth day shall be
the effective date of termination.
6.3 This Agreement may be terminated at the option of the Company under the
following circumstances:
(a) by written notice to the other parties with respect to any
Portfolio based upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the requirements of the
Contracts; or
(b) by written notice to the other parties with respect to any
Portfolio in the event any of the Portfolio's shares are not
registered, issued or sold to the Company in accordance with
applicable law as warranted above, or such law precludes the use of
such shares as the underlying investment media of the Contracts issued
or to be issued by the Company; or
(c) in the event that formal administrative proceedings are
instituted against the Trust, the Underwriter or the Adviser by the
NASD, the SEC, or any state securities or insurance
21
department or any other regulatory body, if the Company reasonably
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 Trust, the Underwriter or the Adviser to perform
their obligations under this Agreement; or
(d) by written notice to the Trust with respect to any Portfolio
if the Company reasonably believes that the Portfolio will fail to
meet the Section 817(h) diversification requirements or Subchapter M
qualifications specified herein; or
(e) if (i) the Company shall determine, in its sole judgment
reasonably exercised in good faith, that the Trust or Underwriter has
suffered a material adverse change in its business or financial
condition or is the subject of material adverse publicity and that
material adverse change or publicity will have a material adverse
impact on the Trust's or Underwriter's Adviser's ability to perform
its obligations under this Agreement, (ii) the Company notifies the
Trust or Underwriter, as appropriate, of that determination and its
intent to terminate this Agreement, AND (iii) after considering the
actions taken by the Trust or Underwriter and any other changes in
circumstances since the giving of such a notice, which consideration
shall be presumed and shall not require any action by the Company, the
Company has not revoked its notice by the sixtieth (60th) day
following the giving of that notice, which sixtieth day shall be the
effective date of termination.
6.4 If this Agreement is terminated for any reason, except under Article IV
(Potential Conflicts) above, the Trust shall, at the option of the Company,
continue to make available additional shares of any Portfolio and redeem shares
of any Portfolio pursuant to all of the terms and conditions of this Agreement
for all Contracts in effect on the effective date of termination of this
Agreement ("Existing Contracts"). Owners of Existing Contracts shall be
permitted to maintain their investments in the Trust, to reallocate investments
in the Trust, to redeem investments in the Trust and/or invest in the Trust by
making additional purchase payments under the Existing Contracts. All relevant
provisions of this Agreement shall remain if effect for purposes of Existing
Contracts. If this Agreement is terminated pursuant to Article IV, the
provisions of Article IV shall govern.
22
6.5 The provisions of Articles II (Representations and Warranties) and V
(Indemnification) shall survive the termination of this Agreement. All other
applicable provisions of this Agreement shall survive the termination of this
Agreement, as long as shares of the Trust are held on behalf of Contract owners
in accordance with Section 6.4, except that the Trust and the Underwriter shall
have no further obligation to sell Trust shares with respect to Contracts issued
after termination.
6.6 The Company shall not redeem Trust shares attributable to the Contracts
(as opposed to Trust shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions (including the deduction of applicable fees and charges),
(ii) as required by state and/or federal laws or regulations or judicial or
other legal precedent of general application (hereinafter referred to as a
"Legally Required Redemption"), (iii) as permitted by an order of the SEC
pursuant to Section 26(b) of the 1940 Act. Upon request, the Company will
promptly furnish to the Trust and the Underwriter the opinion of counsel for the
Company (which counsel shall be reasonably satisfactory to the Trust and the
Underwriter) to the effect that any redemption pursuant to clause (ii) above is
a Legally Required Redemption.
ARTICLE VII.
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 Trust or the Underwriter:
Templeton Variable Products Series Fund or
Franklin Xxxxxxxxx Distributors, Inc.
000 X. Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx, Trust Secretary
WITH A COPY TO
Franklin Resources, Inc.
000 Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Associate General Counsel
23
If to the Company:
Metropolitan Life Insurance Company
Specialized Benefit Resources
000-X X.X. Xxxxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx, Vice President
WITH A COPY TO
Xxxxx Xxxxxx, Esq.
Metropolitan Life Insurance Company
000-X X.X. Xxxxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
ARTICLE VIII.
MISCELLANEOUS
8.1 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.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 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.
8.4 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York. It shall also be
subject to the provisions of the federal securities laws and the rules and
regulations thereunder and to any orders of the SEC granting exemptive relief
therefrom and the conditions of such orders. Copies of any such orders shall be
promptly forwarded by the Trust to the Company.
8.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
8.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD, and
24
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.
8.7 At the request of any party to this Agreement, each other party will
make available to the other party's independent auditors all relevant records,
data and access to operating procedures that pertain to the performance of
services under this Agreement and may be reasonably requested. However, the
Trust shall own and control all of its records pertaining to its performance of
the services under this Agreement.
8.8 The Trust, and the Underwriter shall treat as confidential the names
and addresses of the Contract owners and each party shall treat as confidential
all information reasonably identified as confidential in writing by any other
party hereto, and, except as permitted by this Agreement or as required by legal
process or regulatory authorities, shall not disclose, disseminate, or utilize
such names and addresses and other confidential information until such time as
they may come into the public domain, without the express written consent of the
affected party. Without limiting the foregoing, no party hereto shall disclose
any information that such party has been advised is proprietary, except such
information that such party is required to disclose by any appropriate
governmental authority (including, without limitation, the SEC, the NASD, and
state securities and insurance regulators).
Each party shall use reasonable efforts to provide non-confidential
information related to this Agreement that may be reasonably requested by
another party from time to time, in connection with the performance of this
Agreement, and reporting to management and customers. This information will be
provided within a commercially reasonable time after receiving such requests.
8.9 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.
8.10 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.11 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other party.
8.12 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
25
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year first
above written.
The Company:
METROPOLITAN LIFE INSURANCE COMPANY
By its authorized officer
By: /s/ Xxxx Xxxx
-----------------------------------
Name: Xxxx Xxxx
Title: Vice-President
The Trust:
TEMPLETON VARIABLE PRODUCTS SERIES FUND
By its authorized officer
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President,
Assistant Secretary
The Underwriter:
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
By its authorized officer
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President, Assistant
Secretary
26
SCHEDULE A
SEPARATE ACCOUNT OF
METROPOLITAN LIFE INSURANCE COMPANY
1. Separate Account UL
Date Established: December 13, 1988
SEC Registration Number: 33-57320
27
SCHEDULE B
TRUST PORTFOLIOS AND CLASSES AVAILABLE
Templeton Variable Products Series Adviser
---------------------------------- -------
Xxxxxxxxx International Fund Xxxxxxxxx Investment Counsel, Inc.
-Class 1
28
SCHEDULE C
VARIABLE LIFE INSURANCE CONTRACT
ISSUED BY METROPOLITAN LIFE INSURANCE COMPANY
REPRESENTATIVE
CONTRACT FORM NUMBER
-------- -----------
1. Separate Account UL
Title: Metflex Form:
SEC Registration Number:
29
SCHEDULE D
FORM OF COMPLIANCE LETTER
Metropolitan Life Insurance Company
Attn: Xxxxxxx Xxxxxxxx
000-X X.X. Xxxxxxx Xxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Dear ___________:
Based upon the review of procedures performed by Franklin Xxxxxxxxx Services,
Inc. for the quarter ended _________, 1999, the Templeton Variable Products
Series Fund - Xxxxxxxxx International Fund is in compliance with the Section
817(h) requirements as outlined in the Internal Revenue Code. For your
reference, I have included a copy of the portfolio holdings as of _________,
1999.
If you have any questions, please do not hesitate to contact me at (954)
000-0000.
Sincerely,
Tax Manager
30
SCHEDULE E
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Trust by the Underwriter and the Company.
The defined terms herein shall have the meanings assigned in the Participation
Agreement except that the term "Company" shall also include the department or
third party assigned by the Company to perform the steps delineated below.
1. The number of proxy proposals is given to the Company by the Trust as early
as possible before the date set by the Trust for the shareholder meeting to
facilitate the establishment of tabulation procedures. At this time the
Underwriter will inform the Company of the Record, Mailing and Meeting
dates. This will be done verbally approximately two months before the
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run," or
other activity, which will generate the names, addresses and number of
units which are attributed to each contract owner policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customer's account as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to
provide all required contract holder information to the Trust, as soon
as possible, but no later than one week after the Record Date.
3. The test and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Trust. The Trust, at its expense, shall
produce and personalize the Voting Instruction cards. The Legal Department
of the Trust must approve the Card before it is printed. Allow
approximately 2-4 business days for printing information on the Cards.
Information commonly found on the Cards includes:
a.. Names (legal name as found on account registration)
b. Address
c. Portfolio or account number
d. Coding to state number of units
31
e. Individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Company). (These related steps
may occur later in the chronological process due to possible
uncertainties relating to the proposals.)
4. During this time, the Trust's Legal Department will develop, produce, and
the Trust will pay for the Notice of Proxy and the Proxy Statement (one
document). Printed and folded notices and statements will be sent to the
Company for insertion into envelopes (envelopes and return envelopes as
provided and paid for by the Company). Contents of envelope sent to
customers by the Company will include:
a. Voting Instruction Card(s)
b. One Proxy notice and statement (one document)
c. Return envelope (postage pre-paid by Insurance Company) addressed to
the Company or its tabulation agent
d. "Urge buckslip" - optional, but recommended. (This is a small, single
sheet of paper that request Customers to vote as quickly as possible
and that their vote is important. One copy will be supplied by the
Company.)
e. Cover letter - optional, supplied by Company and reviewed and approved
in advance by the Trust's Legal Department.
5. The above contents should be received by the Company approximately 3-5
business days before the mail date. Individuals in charge at the Company
review and approve the contents of the mailing package to ensure
correctness and completeness. Copy of this approval is sent to Trust's
Legal Department.
6. Package mailed by the Company.
* The Trust must allow at least a 15 day solicitation time to the Company as
the shareowner. (A 5-week period is recommended.) Solicitation time is
calculated as calendar days from (but not including) the meeting, counting
backwards.
7. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin date entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to Company's internal procedure.
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8. If Cards are mutilated, or for any reason are illegible or not signed
properly, they are sent back to the Customer with an explanatory letter, a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be not received for purposes of vote
tabulation. Such mutilated or illegible Cards are "hand verified," i.e.,
examined as to why they did note complete the system. Any questions on
those Cards are usually remedied individually.
9. There are various control procedures used to ensure proper tabulation of
votes and accuracy of the tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; and
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
10. The actual tabulation of votes is done in units which are then converted to
shares. (It is very important that the Company receives the tabulations
stated in terms of a percentage and the number of shares.) The Trust's
Legal Department must review and approve tabulation format.
11. Final tabulation in shares is verbally given by the Company to the Trust's
Legal Department on the morning not later than 8:00 a.m. Eastern time. The
Trust's Legal Department may request an earlier deadline if required to
calculate the vote in time for the meeting.
12. A Certificate of Mailing and Authorization to Vote Shares will be required
from the Company as well as an original copy of the final vote. The
Trust's Legal Department will provide a standard form for each
Certification.
13. The Trust will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Trust's Legal
Department will be permitted reasonable access to such Cards.
14. All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
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