Exhibit (h)(6)
JANUS ASPEN SERIES
FUND PARTICIPATION AGREEMENT
(Institutional Shares)
THIS AGREEMENT is made this 30th day of April, 2004, between JANUS ASPEN
SERIES, an open-end management investment company organized as a Delaware
business trust (the "Trust"), and Metropolitan Life Insurance Company, a life
insurance company organized under the laws of the State of New York (the
"Company"), on its own behalf and on behalf of each segregated asset account of
the Company set forth on 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 has registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and 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 (the
"Portfolios"); and
WHEREAS, the Trust has registered the offer and sale of a class of shares
designated the Institutional Shares ("Shares") of each of its Portfolios under
the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Trust (the "Participating Insurance
Companies"); and
WHEREAS, the Trust has received an order from the Securities and Exchange
Commission 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, 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 "Exemptive Order"); and
WHEREAS, the Company has registered or will register (unless registration
is not required under applicable law) certain variable life insurance policies
and/or variable annuity contracts under the 1933 Act (the "Contracts"); and
WHEREAS, the Company has registered or will register each Account as a unit
-1-
investment trust under the 1940 Act if necessary; and
WHEREAS, the Company desires to utilize Shares of one or more Portfolios as
an investment vehicle of the Accounts;
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I
Sale of Trust Shares
1.1 The Trust shall make Shares of its Portfolios available to the Accounts
at the net asset value next computed after receipt of such purchase order by the
Trust (or its agent), as established in accordance with the provisions of the
then current prospectus of the Trust. Shares of a particular Portfolio of the
Trust shall be ordered in such quantities and at such times as determined by the
Company to be necessary to meet the requirements of the Contracts. 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
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, necessary in
the best interests of the shareholders of such Portfolio. With respect to
payment of purchase price by the Company and of redemption proceeds by the
Trust, the Company and the Trust shall remit gross purchase and sale orders with
respect to each Portfolio and shall transmit one net payment per Portfolio in
accordance with the provisions of this Article I.
1.2 The Trust will redeem 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. The Trust shall wire payment for such shares in federal
funds to an account designated by the Company no later than 5:00 p.m. Eastern
Time on the same Business Day the Trust receives notice of the order, provided
that the Trust may delay payment in extraordinary circumstances to the extent
permitted under Section 22(e) of the 0000 Xxx.
1.3 For the purposes of Sections 1.1 and 1.2, the Trust hereby appoints the
Company as its agent for the limited purpose of receiving and accepting purchase
and redemption orders resulting from investment in and payments under the
Contracts. Receipt by the Company shall constitute receipt by the Trust provided
that i) such orders are received by the Company in good order prior to the time
the net asset value of each Portfolio is priced in accordance with its
prospectus and ii) the Trust receives notice of such orders by 9:00 a.m. New
York time on the next following Business Day. "Business Day" shall mean any day
on which the New York Stock Exchange is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the Securities and
Exchange Commission.
-2-
1.4 Purchase orders that are transmitted to the Trust in accordance with
Section 1.3 shall be paid for no later than 5:00 p.m. New York time on the same
Business Day that the Trust receives notice of the order. Payments shall be made
in federal funds transmitted by wire.
1.5 Issuance and transfer of the Trust's Shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account. Shares
ordered from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
1.6 The Trust shall furnish at least two days advance notice to the Company
of an estimate of any income dividends or capital gain distributions payable on
the Trust's Shares. 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 that Portfolio. The Trust shall notify the Company of
the number of Shares so issued as payment of such dividends and distributions.
1.7 The Trust 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 6 p.m. New York time. If the
Trust provides the Company with materially incorrect share net asset value
information, the Trust shall make an adjustment to the number of shares
purchased or redeemed for the Accounts to reflect the correct net asset value
per share. Any material error in the calculation or reporting of net asset value
per share, dividend or capital gains information shall be reported promptly upon
discovery to the Company.
1.8 The Trust agrees that its Shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified pension
and retirement plans, but only to the extent such sale will not impair the
ability of any Account to treat investments of a Portfolio in which an Account
owns shares as investments of the Account for the purpose of satisfying the
diversification requirements of Section 817(h) and to the extent permitted by
the Exemptive Order. No Shares of any Portfolio will be sold directly to the
general public. The Company agrees that Trust Shares will be used only for the
purposes of funding the Contracts and Accounts listed in Schedule A, as amended
from time to time.
1.9 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 contained in Section 2.8 and Article IV of
this Agreement.
-3-
1.10 All orders accepted by the Company shall be subject to the terms of
the then current prospectus of each Portfolio, including without limitation,
policies regarding minimum account sizes, market timing and excessive trading.
The Company shall use its best efforts, and shall reasonably cooperate with, the
Trust to enforce stated prospectus policies regarding transactions in Shares,
particularly those related to market timing. The Company acknowledges that
orders accepted by it in violation of the Trust's stated policies may be
subsequently revoked or cancelled by the Trust and that the Trust shall not be
responsible for any losses incurred by the Company or Contract or Account as a
result of such cancellation. The Trust or its agent shall notify the Company of
such cancellation prior to 12:00 p.m. EST on the next day following Business Day
after any such cancellation.
In addition, the Company acknowledges that the Trust has the right to
refuse any purchase order for any reason, particularly if the Trust determines
that a Portfolio would be unable to invest the money effectively in accordance
with its investment policies or would otherwise be adversely affected due to the
size of the transaction, frequency of trading by the account or other factors.
ARTICLE II
Obligations of the Parties
2.1 The Trust shall prepare and be responsible for filing with the
Securities and Exchange Commission 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, 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 (at the Company's expense) with as many copies of the Trust's Shares'
current prospectus, annual report, 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. The Trust
shall use best efforts to provide camera-ready or diskette copies of annual and
semi-reports to the Company no later than 45 days (and in no event later than 50
days) after the end of the Fund's reporting period. 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 materials in such
quantity as the Company shall reasonably require for distribution to Contract
owners.
2.3 (a) The Company shall bear the costs of printing and distributing the
Trust's Shares' prospectus, statement of additional information, shareholder
reports and other shareholder communications to owners of and applicants for
policies for which Shares of the Trust is serving or is to serve as an
investment vehicle. The Company shall bear the costs of distributing proxy
materials (or similar materials such as voting solicitation instructions) to
Contract owners. The
-4-
Company assumes sole responsibility for ensuring that such materials are
delivered to Contract owners in accordance with applicable federal and state
securities laws.
(b) If the Company elects to include any materials provided by the
Trust, specifically prospectuses, Statement of Information, shareholder reports
and proxy materials, on its web site or in any other computer or electronic
format, the Company assumes sole responsibility for maintaining such materials
in the form provided by the Trust and for promptly replacing such materials with
all updates provided by the Trust.
2.4 The Company agrees and acknowledges that the Trust's adviser, Janus
Capital Management LLC or its affiliates ("Janus Capital"), is the sole owner of
the name and xxxx "Xxxxx" and that all use of any designation comprised in whole
or part of Janus (a "Xxxxx Xxxx") under this Agreement shall inure to the
benefit of Janus Capital. Except as provided in Section 2.5, the Company shall
not use any Xxxxx Xxxx on its own behalf or on behalf of the Accounts or
Contracts in any registration statement, advertisement, sales literature or
other materials relating to the Accounts or Contracts without the prior written
consent of Janus Capital. All references contained in this Agreement to "the
name or xxxx `Xxxxx'" shall include but not be limited to the Janus logo, the
website xxx.xxxxx.xxx and any and all electronic links relating to such website.
The Company will make no use of the name or xxxx "Xxxxx" except as expressly
provided in this Agreement or expressly authorized by Janus Capital in writing.
All goodwill associated with the name and xxxx "Xxxxx" shall inure to the
benefit of Janus Capital or its affiliates. Upon termination of this Agreement
for any reason, the Company shall cease any and all use of any Xxxxx Xxxx(s).
2.5 The Company shall furnish, or cause to be furnished, to the Trust or
its designee, a copy of each Contract prospectus, offering memorandum or
statement of additional information in which the Trust or its investment adviser
is named contemporaneously with the filing of such document with the Securities
and Exchange Commission. 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 its investment adviser is named, at
least ten Business Days prior to its use or such shorter period as the parties
hereto may, from time to time, agree upon. No such material shall be used if the
Trust or its designee reasonably objects to such use within ten Business Days
after receipt of such material.
2.6 The Company shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust or its investment
adviser in connection with the sale of the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Trust Shares (as such registration statement and
prospectus may be amended or supplemented from time to time), 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, such permission not to be unreasonably withheld.
-5-
2.7 The Trust shall not 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 the registration statement or prospectus for the
Contracts (as such registration statement and prospectus 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. . No such material shall be used if the Company or
its designee reasonably objects to such use within ten Business Days after
receipt of such material.
2.8 So long as, and to the extent that the Securities and Exchange
Commission interprets the 1940 Act to require pass-through voting privileges for
variable policyowners, the Company will provide pass-through voting privileges
to owners of policies whose cash values are invested, through the Accounts, in
shares of the Trust. The Trust shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and the Company
shall be responsible for assuring that the Accounts calculate voting privileges
in the manner established by the Trust. With respect to each Account, the
Company will vote Shares of the Trust held by the Account and for which no
timely voting instructions from policyowners are received as well as Shares it
owns that are held by that Account, in the same proportion as those Shares for
which voting instructions are received. The Company and its agents will in no
way recommend or oppose or interfere with the solicitation of proxies for Trust
shares held by Contract owners without the prior written consent of the Trust,
which consent may be withheld in the Trust's sole discretion.
2.9 The Company shall notify the Trust of any additional applicable state
insurance laws that restrict the Portfolios' investments or otherwise affect the
operation of the Trust after the date of this Agreement.
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 on the date set forth in Schedule A.
3.2 The Company represents and warrants that each Account has been
registered or, prior to any issuance or sale of the Contracts, will be
registered, if necessary, as a unit investment trust in accordance with the
provisions of the 0000 Xxx.
3.3 The Company represents and warrants that the Contracts or interests in
the Accounts (1) are or, prior to issuance, will be registered as securities
under the 1933 Act or,
-6-
alternatively (2) are not registered because they are properly exempt from
registration under the 1933 Act or will be offered exclusively in transactions
that are properly exempt from registration under the 1933 Act. The Company
further represents and warrants that 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 any
applicable state insurance suitability requirements.
3.4 The Trust represents and warrants that it is duly organized and validly
existing under the laws of the State of Delaware, and has full corporate power,
authority, and legal right to execute, deliver, and perform its duties and
comply with the obligations under this Agreement.
3.5 The Trust represents and warrants that the Trust 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 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.
3.6 3.6 The Trust represents and warrants that the investments of each
Portfolio will comply with the diversification requirements set forth
in Section 817(h) of the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder. The Trust further represents
and warrants that each Portfolio qualifies as a "look-through" entity
under Treas. Sec. 1.817-5(f) and will use its best efforts to continue
to so qualify as long as the Company or an Account owns Shares. The
Trust also agrees to provide the Company with a certificate of
compliance with this Section 3.6 within 30 days after the end of each
calendar quarter and will notify the Company immediately upon having a
reasonable basis for believing that it is out of compliance with this
Section 3.6.
3.7 The Trust represents and warrants that each portfolio qualifies as a
regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended and that it will use its best efforts
to maintain such qualification (under Subchapter M or any successor or
similar provision) and that it will notify the Company immediately
upon having a reasonable basis for believing that it is out of
compliance with this Section 3.7.
3.8 The Trust has received Company's written instructins relating to
"investor control" and shall enact procedures reasonably designed to
comply with such written instructions.
-7-
3.9 The Company represents and warrants that it is in compliance with all
applicable anti-money laundering laws, rules and regulations including, but not
limited to, the U.S.A. PATRIOT Act of 2001, P.L. 107-56.
ARTICLE IV
Potential Conflicts
4.1 The parties acknowledge that the Trust'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 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 Trustees shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and 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 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.
4.3 If it is determined by a majority of the Trustees, or a majority of its
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 expense and to the extent reasonably practicable (as determined by the
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 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 (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
-8-
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 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.
4.5 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 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.
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 Company be required 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 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 Exemptive
Order, and said reports, materials and data shall be submitted more frequently
if 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 funding
(as defined in the Exemptive Order) on terms and conditions materially different
from those contained in the 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
-9-
extent such rules are applicable.
ARTICLE V
Indemnification
5.1 Indemnification By the Company. The Company agrees to indemnify and
hold harmless 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" 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) 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:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a registration
statement, offering memorandum or prospectus 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 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
(b) arise out of or result from misleading statements or
representations (other than statements or representations contained in and
accurately derived from Trust Documents as defined in Section 5.2(a)) 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
(c) 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) 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 or on behalf of the Company; or
(d) arise out of or result from any failure by the Company to provide
the
-10-
services or furnish the materials required under the terms of this
Agreement; or
(e) 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.
5.2 Indemnification By the Trust. The Trust agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees and agents
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
Article V) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Trust) 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:
(a) 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 for the Trust (or any amendment or supplement
thereto), (collectively, "Trust 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 the Trust by or on
behalf of the Company for use in Trust Documents or otherwise for use in
connection with the sale of the Contracts or Trust Shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Company Documents) or wrongful conduct of the Trust or persons under its
control, with respect to the sale or acquisition of the Contracts or Trust
Shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Company Documents 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 Company by or on behalf of the Trust;
or
(d) arise out of or result from any failure by the Trust to provide
the services or furnish the materials required under the terms of this
Agreement; or
-11-
(e) 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.
5.3 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
such Indemnified Party's willful misfeasance, bad faith or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
5.4 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the other party in writing within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have received notice of
service upon or other notification to any designated agent), but failure to
notify the party against whom indemnification is sought of any such claim shall
not relieve that party from any liability which it may have to the Indemnified
Party in the absence of Sections 5.1 and 5.2.
5.5 In case any such action is brought against the Indemnified Parties, the
indemnifying party shall be entitled to participate, at its own expense, in the
defense of such action. The indemnifying party also shall be entitled to assume
the defense thereof, with counsel reasonably satisfactory to the party named in
the action. After notice from the indemnifying party to the Indemnified Party of
an election to assume such defense, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and the indemnifying
party will not be liable to the Indemnified 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.
ARTICLE VI
Termination
6.1 This Agreement may be terminated by either party for any reason by
ninety (90) days advance written notice delivered to the other party.
6.2 Notwithstanding any termination of this Agreement, the Trust shall, at
the option of the Company, continue to make available additional shares of the
Trust (or any Portfolio) pursuant to the terms and conditions of this Agreement
for all Contracts in effect on the effective date of termination of this
Agreement, provided that the Company continues to pay the costs set forth in
Section 2.3.
6.3 The provisions of Article V shall survive the termination of this
Agreement, and
-12-
the provisions of Article IV and Section 2.8 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 6.2.
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:
Janus Aspen Series
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
If to the Company:
Metropolitan Life Insurance Company
1 MetLife Plaza
00-00 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx
With copy to:
Metropolitan Life Insurance Company
000X XX Xxxxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxx K Model
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.
-13-
8.4 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of State of Colorado.
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 Securities and
Exchange Commission, the National Association of Securities Dealers, Inc., 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.
8.7 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.
8.8 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
8.9 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other party.
8.10 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.
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.
JANUS ASPEN SERIES
By:
-------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
Metropolitan Life Insurance Company
-14-
By:
-------------------------------
Name: Xxxx Xxxx
Title: Vice President
-15-
Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Contracts Funded
Date Established by Board of Directors By Separate Account
-------------------------------------- -------------------
Separate Account UL MetFlex
Separate Account DCVL PPVL- Group and Individual
-16-
Schedule B
List of Portfolios
Name of Portfolio
All Portfolios of Janus Aspen Series open to new investors (as set forth in the
current prospectus of Janus Aspen Series) except Global Technology Portfolio and
Global Life Sciences Portfolio.
Separate Account UL
Balanced Portfolio - Service Shares
Growth Portfolio - Institutional Shares
Capital Appreciation Portfolio - Service Shares
Separate Account DCVL
Balanced Portfolio - Institutional Shares
Capital Appreciation Portfolio - Institutional Shares
-17-
JANUS ASPEN SERIES
FUND PARTICIPATION AGREEMENT
(Service Shares)
THIS AGREEMENT is made this 30th day of April, 2004, between JANUS ASPEN
SERIES, an open-end management investment company organized as a Delaware
business trust (the "Trust"), and _Metropolitan Life Insurance Company, a life
insurance company organized under the laws of the State of _New York (the
"Company"), on its own behalf and on behalf of each segregated asset account of
the Company set forth on 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 has registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and 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 (the
"Portfolios"); and
WHEREAS, the Trust has registered the offer and sale of a class of shares
designated the Service Shares ("Shares") of each of its Portfolios under the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Trust (the "Participating Insurance
Companies"); and
WHEREAS, the Trust has received an order from the Securities and Exchange
Commission 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, 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 "Exemptive Order"); and
WHEREAS, the Company has registered or will register (unless registration
is not required under applicable law) certain variable life insurance policies
and/or variable annuity contracts under the 1933 Act (the "Contracts"); and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act, if necessary; and
-1-
WHEREAS, the Company desires to utilize the Shares of one or more
Portfolios as an investment vehicle of the Accounts;
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I
Sale of Trust Shares
1.1 The Trust shall make Shares of its Portfolios listed on Schedule B
available to the Accounts at the net asset value next computed after receipt of
such purchase order by the Trust (or its agent), as established in accordance
with the provisions of the then current prospectus of the Trust. Shares of a
particular Portfolio of the Trust shall be ordered in such quantities and at
such times as determined by the Company to be necessary to meet the requirements
of the Contracts. 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 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, necessary in the best interests of the shareholders
of such Portfolio.
1.2 The Trust will redeem 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. The Trust shall make payment for such Shares in the
manner established from time to time by the Trust, but in no event shall payment
be delayed for a greater period than is permitted by the 0000 Xxx.
1.3 For the purposes of Sections 1.1 and 1.2, the Trust hereby appoints the
Company as its agent for the limited purpose of receiving and accepting purchase
and redemption orders resulting from investment in and payments under the
Contracts. Receipt by the Company shall constitute receipt by the Trust provided
that i) such orders are received by the Company in good order prior to the time
the net asset value of each Portfolio is priced in accordance with its
prospectus and ii) the Trust receives notice of such orders by 9:00 a.m. New
York time on the next following Business Day. "Business Day" shall mean any day
on which the New York Stock Exchange is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the Securities and
Exchange Commission.
1.4 Purchase orders that are transmitted to the Trust in accordance with
Section 1.3 shall be paid for no later than 12:00 noon New York time on the same
Business Day that the Trust receives notice of the order. Payments shall be made
in federal funds transmitted by wire.
-2-
1.5 Issuance and transfer of the Trust's Shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account. Shares
ordered from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
1.6 The Trust shall furnish prompt notice to the Company of any income
dividends or capital gain distributions payable on the Trust's Shares. 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
that Portfolio. The Trust shall notify the Company of the number of Shares so
issued as payment of such dividends and distributions.
1.7 The Trust 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 6 p.m. New York time. If the
Trust provides the Company with materially incorrect share net asset value
information, the Trust shall make an adjustment to the number of shares
purchased or redeemed for the Accounts to reflect the correct net asset value
per share. Any material error in the calculation or reporting of net asset value
per share, dividend or capital gains information shall be reported promptly upon
discovery to the Company.
1.8 The Trust agrees that its 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 Exemptive Order. No Shares
of any Portfolio will be sold directly to the general public. The Company agrees
that Trust Shares will be used only for the purposes of funding the Contracts
and Accounts listed in Schedule A, as amended from time to time.
1.9 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 contained in Section 2.8 and Article IV of
this Agreement.
1.10 All orders accepted by the Company shall be subject to the terms of
the then current prospectus of each Portfolio, including without limitation,
policies regarding minimum account sizes, market timing and excessive trading.
The Company shall use its best efforts, and shall reasonably cooperate with, the
Trust to enforce stated prospectus policies regarding transactions in Shares,
particularly those related to market timing. The Company acknowledges that
orders accepted by it in violation of the Trust's stated policies may be
subsequently revoked or cancelled by the Trust and that the Trust shall not be
responsible for any losses incurred by the Company or Contract or Account as a
result of such cancellation. The Trust or its agent shall notify the Company of
such cancellation prior to 12:00 p.m. EST on the next day following Business Day
after any such cancellation.
In addition, the Company acknowledges that the Trust has the right to
refuse any purchase order for any reason, particularly if the Trust determines
that a Portfolio would be unable to invest
-3-
the money effectively in accordance with its investment policies or would
otherwise be adversely affected due to the size of the transaction, frequency of
trading by the account or other factors.
ARTICLE II
Obligations of the Parties
2.1 The Trust shall prepare and be responsible for filing with the
Securities and Exchange Commission 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, 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 (at the Company's expense) with as many copies of the Trust's Shares'
current prospectus, annual report, 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. The Trust
shall provide the Company with a copy of the Shares' 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
materials in such quantity as the Company shall reasonably require for
distribution to Contract owners.
2.3 (a) The Company shall bear the costs of printing and distributing the
Trust's Shares' prospectus, statement of additional information, shareholder
reports and other shareholder communications to owners of and applicants for
policies for which Shares of the Trust are serving or are to serve as an
investment vehicle. The Company shall bear the costs of distributing proxy
materials (or similar materials such as voting solicitation instructions) to
Contract owners. The Company assumes sole responsibility for ensuring that such
materials are delivered to Contract owners in accordance with applicable federal
and state securities laws.
(b) If the Company elects to include any materials provided by the
Trust, specifically prospectuses, Statement of Information, shareholder reports
and proxy materials, on its web site or in any other computer or electronic
format, the Company assumes sole responsibility for maintaining such materials
in the form provided by the Trust and for promptly replacing such materials with
all updates provided by the Trust.
2.4 The Company agrees and acknowledges that the Trust's adviser, Janus
Capital Management LLC or its affiliates ("Janus Capital") is the sole owner of
the name and xxxx "Xxxxx" and that all use of any designation comprised in whole
or part of Janus (a "Xxxxx Xxxx") under this Agreement shall inure to the
benefit of Janus Capital. Except as provided in Section 2.5, the Company shall
not use any Xxxxx Xxxx on its own behalf or on behalf of the Accounts or
Contracts in any registration statement, advertisement, sales literature or
other materials relating
-4-
to the Accounts or Contracts without the prior written consent of Janus Capital.
All references contained in this Agreement to "the name or xxxx `Xxxxx'" shall
include but not be limited to the Janus logo, the website xxx.xxxxx.xxx and any
and all electronic links relating to such website. The Company will make no use
of the name or xxxx "Xxxxx" except as expressly provided in this Agreement or
expressly authorized by Janus Capital in writing. All goodwill associated with
the name and xxxx "Xxxxx" shall inure to the benefit of Janus Capital or its
affiliates. Upon termination of this Agreement for any reason, the Company shall
cease any and all use of any Xxxxx Xxxx(s).
2.5 The Company shall furnish, or cause to be furnished, to the Trust or
its designee, a copy of each Contract prospectus, offering memorandum or
statement of additional information in which the Trust or its investment adviser
is named prior to the filing of such document with the Securities and Exchange
Commission. 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 its investment adviser is named, at least fifteen
Business Days prior to its use. No such material shall be used if the Trust or
its designee reasonably objects to such use within fifteen Business Days after
receipt of such material.
2.6 The Company shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust or its investment
adviser in connection with the sale of the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Trust Shares (as such registration statement and
prospectus may be amended or supplemented from time to time), 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 not 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 the registration statement, offering memorandum or
prospectus for the Contracts (as such registration statement and prospectus 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. No such material shall be used if the
Company or its designee reasonably objects to such use within fifteen Business
Days after receipt of such material.2.8 So long as, and to the extent that the
Securities and Exchange Commission interprets the 1940 Act to require
pass-through voting privileges for variable policyowners, the Company will
provide pass-through voting privileges to owners of policies whose cash values
are invested, through the Accounts, in shares of the Trust. The Trust shall
require all Participating Insurance Companies to calculate voting privileges in
the same manner and the Company shall be responsible for assuring that the
Accounts calculate voting privileges in the manner established by the Trust.
With respect to each Account, the Company will vote Shares of the Trust held by
the Account and for which no timely voting instructions from policyowners are
received as well as Shares it owns that are held by that
-5-
Account, in the same proportion as those Shares for which voting instructions
are received. The Company and its agents will in no way recommend or oppose or
interfere with the solicitation of proxies for Trust shares held by Contract
owners without the prior written consent of the Trust, which consent may be
withheld in the Trust's sole discretion.
2.9 The Company shall notify the Trust of any applicable state insurance
laws that restrict the Portfolios' investments or otherwise affect the operation
of the Trust and shall notify the Trust of any changes in such laws.
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 on the date set forth in Schedule A.
3.2 The Company represents and warrants that each Account has been
registered or, prior to any issuance or sale of the Contracts, will be
registered as a unit investment trust, if necessary, in accordance with the
provisions of the 0000 Xxx.
3.3 The Company represents and warrants that the Contracts or interests in
the Accounts (1) are or, prior to issuance, will be registered as securities
under the 1933 Act or, alternatively (2) are not registered because they are
properly exempt from registration under the 1933 Act or will be offered
exclusively in transactions that are properly exempt from registration under the
1933 Act. The Company further represents and warrants that 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 any applicable state insurance suitability requirements.
3.4 The Trust represents and warrants that it is duly organized and validly
existing under the laws of the State of Delaware, and has full corporate power,
authority, and legal right to execute, deliver, and perform its duties and
comply with the obligations under this Agreement.
3.5 The Trust represents and warrants that the Trust 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 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.
3.6 The Trust represents and warrants that the investments of each
Portfolio will
-6-
comply with the diversification requirements set forth in Section 817(h) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder. The Trust further repressents and warrants that each Portfolio
qualifies as a "look-through" entity under Treasury Section 1.817-5(f) and will
use its best efforts to continue to qualify so long as the company or an Account
owns Shares. The Trust also agrees to provide the Company with a certificate of
compliance with this Section 3.6 within 30 days after the end of each calender
quarter and will notify the Company immediately upon having a reasonable basis
for believing that it is out of compliance with this Section 3.6.
3.7 The Trust represents and warrants that each portfolio qualifies as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended and that it will use its best efforts to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it is out of compliance with this Section 3.7.
3.8 The Trust has received Company's written instructins relating to
"investor control" and shall enact procedures reasonably designed to comply with
such written instructions.
3.9 The Company represents and warrants that it is in compliance with all
applicable anti-money laundering laws, rules and regulations including, but not
limited to, the U.S.A. PATRIOT Act of 2001, P.L. 107-56.
ARTICLE IV
Potential Conflicts
4.1 The parties acknowledge that the Trust'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 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 Trustees shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and the implications thereof.
-7-
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 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.
4.3 If it is determined by a majority of the Trustees, or a majority of its
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 expense and to the extent reasonably practicable (as determined by the
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 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 (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
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.
4.5 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 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.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a majority
of the
-8-
disinterested Trustees shall determine whether any proposed action adequately
remedies any irreconcilable material conflict, but in no event will the Company
be required 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 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 Exemptive
Order, and said reports, materials and data shall be submitted more frequently
if 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 funding
(as defined in the Exemptive Order) on terms and conditions materially different
from those contained in the 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. The Company agrees to indemnify and
hold harmless 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" 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) 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:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a registration
statement or prospectus for the Contracts or in the Contracts themselves or
in sales literature for the Trust 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
-9-
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 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
(b) arise out of or result from misleading statements or
representations (other than statements or representations contained in and
accurately derived from Trust Documents as defined in Section 5.2(a)) 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
(c) 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) 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 or on behalf of the Company; or
(d) 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
(e) 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.
5.2 Indemnification By the Trust. The Trust agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees and agents
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
Article V) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Trust) 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:
(a) 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 offering memorandum for the Trust (or any amendment
or supplement thereto), (collectively, "Trust 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
-10-
such alleged statement or omission was made in reliance upon and was
accurately derived from written information furnished to the Trust by or on
behalf of the Company for use in Trust Documents or otherwise for use in
connection with the sale of the Contracts or Trust Shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Company Documents) or wrongful conduct of the Trust or persons under its
control, with respect to the sale or acquisition of the Contracts or Trust
Shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Company Documents 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 Company by or on behalf of the Trust;
or
(d) arise out of or result from any failure by the Trust to provide
the services or furnish the materials required under the terms of this
Agreement; or
(e) 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.
5.3 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
such Indemnified Party's willful misfeasance, bad faith or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
5.4 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the other party in writing within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have received notice of
service upon or other notification to any designated agent), but failure to
notify the party against whom indemnification is sought of any such claim shall
not relieve that party from any liability which it may have to the Indemnified
Party in the absence of Sections 5.1 and 5.2.
5.5 In case any such action is brought against the Indemnified Parties, the
indemnifying party shall be entitled to participate, at its own expense, in the
defense of such action. The indemnifying party also shall be entitled to assume
the defense thereof, with counsel reasonably satisfactory to the party named in
the action. After notice from the indemnifying party to the
-11-
Indemnified Party of an election to assume such defense, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the indemnifying party will not be liable to the Indemnified 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.
-12-
ARTICLE VI
Termination
6.1 This Agreement may be terminated by either party for any reason by
ninety (90) days advance written notice delivered to the other party.
6.2 Notwithstanding any termination of this Agreement, the Trust shall, at
the option of the Company, continue to make available additional shares of the
Trust (or any Portfolio) pursuant to the terms and conditions of this Agreement
for all Contracts in effect on the effective date of termination of this
Agreement, provided that the Company continues to pay the costs set forth in
Section 2.3.
6.3 The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.8 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 6.2.
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:
Janus Aspen Series
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
If to the Company:
Metropolitan Life Insurance Company
1 MetLife Plaza
00-00 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx
With copy to:
Metropolitan Life Insurance Company
000X XX Xxxxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
-13-
Attn: Xxxxxxx K Model
-14-
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 State of Colorado.
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 Securities and
Exchange Commission, the National Association of Securities Dealers, Inc., 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.
8.7 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.
8.8 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
8.9 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other party.
8.10 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.
-15-
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.
JANUS ASPEN SERIES
By:
------------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
(Insurance Company)
By:
------------------------------------
Name:
----------------------------------
Te:
------------------------------------
-16-
Schedule A
Separate Accounts and Associated Contracts
Contracts Funded
Name of Separate Account By Separate Account
------------------------ --------------------------
Separate Account UL MetFlex
Separate Account DCVL PPVL- Group and Individual
-17-
Schedule B
List of Portfolios
Name of Portfolio
All Portfolios of Janus Aspen Series open to new investors (as set forth in the
current prospectus of Janus Aspen Series) except Global Technology Portfolio and
Global Life Sciences Portfolio.
Separate Account UL
Balanced Portfolio-Service Shares
Growth Portfolio- Institutional Shares
Capital Appreciation Portfolio- Service Shares
Separate Account DCVL
Balanced Portfolio - Institutional Shares
Capital Appreciation Portfolio - Institutional Shares
-18-
Participation Agreement
as of April 30, 2004
Franklin Xxxxxxxxx Variable Insurance Products Trust
Franklin Xxxxxxxxx Distributors, Inc.
Metropolitan Life Insurance Company
on behalf of itself and its Separate Accounts
CONTENTS
Section Subject Matter
------- --------------
1. Parties and Purpose
2. Representations and Warranties
3. Purchase and Redemption of Trust Portfolio Shares
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
5. Voting
6. Sales Material, Information and Trademarks
7. Indemnification
8. Notices
9. Termination
10. Miscellaneous
Schedules to this Agreement
A. The Company
B. Accounts of the Company
C. Available Portfolios and Classes of Shares of the Trust; Investment
Advisers
D. Contracts of the Company
E. Other Portfolios Available under the Contracts
F. Rule 12b-1 Plans of the Trust
G. Addresses for Notices
H. Shared Funding Order
1. Parties and Purpose
This agreement (the "Agreement") is between certain portfolios, specified
below and in Schedule C, of Franklin Xxxxxxxxx Variable Insurance Products
Trust, an open-end management investment company organized as a business trust
under Massachusetts law (the "Trust"), Franklin Xxxxxxxxx Distributors, Inc., a
California corporation which is the principal underwriter for the Trust (the
"Underwriter," and together with the Trust, "we" or "us") and the insurance
company identified on Schedule A ("you") and your distributor, on your own
behalf and on behalf of each segregated
asset account maintained by you that is listed on Schedule B, as that schedule
may be amended from time to time ("Account" or "Accounts").
The purpose of this Agreement is to entitle you, on behalf of the Accounts,
to purchase the shares, and classes of shares, of portfolios of the Trust
("Portfolios") that are identified on Schedule C, solely for the purpose of
funding benefits of your variable life insurance policies or variable annuity
contracts ("Contracts") that are identified on Schedule D. This Agreement does
not authorize any other purchases or redemptions of shares of the Trust.
2. Representations and Warranties
2.1 Representations and Warranties by You
You represent and warrant that:
2.1.1 You are an insurance company duly organized and in good standing
under the laws of your state of incorporation.
2.1.2 All of your directors, officers, employees, and other
individuals or entities dealing with the money and/or securities of the Trust
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 $5 million.
Such bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. You agree to make all reasonable efforts
to see that this bond or another bond containing such provisions is always in
effect, and you agree to notify us in the event that such coverage no longer
applies.
2.1.3 Each Account is a duly organized, validly existing segregated
asset account under applicable insurance law and interests in each Account are
offered exclusively through the purchase of or transfer into a "variable
contract" within the meaning of such terms under Section 817 of the Internal
Revenue Code of 1986, as amended ("Code") and the regulations thereunder. You
will use your best efforts to continue to meet such definitional requirements,
and will notify us immediately upon having a reasonable basis for believing that
such requirements have ceased to be met or that they might not be met in the
future.
2.1.4 Each Account either: (i) has been registered or, prior to any
issuance or sale of the Contracts, will be registered as a unit investment trust
under the Investment Company Act of 1940 ("1940 Act"); or (ii) has not been so
registered in proper reliance upon an exemption from registration under Section
3(c) of the 1940 Act; if the Account is exempt from registration as an
investment company under Section 3(c) of the 1940 Act, you will use your best
efforts to maintain such exemption and will notify us immediately upon having a
reasonable basis for believing that such exemption no longer applies or might
not apply in the future.
2.1.5 The Contracts or interests in the Accounts: (i) are or, prior to
any issuance or sale will be, registered as securities under the Securities Act
of 1933, as amended (the "1933 Act"); or (ii) are not registered because they
are properly exempt from registration under Section 3(a)(2) of the 1933 Act or
will be offered exclusively in transactions that are properly exempt from
registration
2
under Section 4(2) or Regulation D of the 1933 Act, in which case you will make
every effort to maintain such exemption and will notify us immediately upon
having a reasonable basis for believing that such exemption no longer applies or
might not apply in the future.
2.1.6 The Contracts: (i) will be sold by broker-dealers, or their
registered representatives, who are registered with the Securities and Exchange
Commission ("SEC") under the Securities and Exchange Act of 1934, as amended
(the "1934 Act") and who are members in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); (ii) will be issued and
sold in compliance in all material respects with all applicable federal and
state laws; and (iii) will be sold in compliance in all material respects with
any applicable state insurance suitability requirements and NASD suitability
guidelines.
2.1.7 Subject to Section 2.2.8, the Contracts currently are treated as
annuity contracts or life insurance contracts under applicable provisions of the
Code and you will use your best efforts to maintain such treatment; you will
notify us immediately upon having a reasonable basis for believing that any of
the Contracts have ceased to be so treated or that they might not be so treated
in the future.
2.1.8 The fees and charges deducted under each Contract, in the
aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by you.
2.1.9 You will use shares of the Trust only for the purpose of funding
benefits of the Contracts through the Accounts.
2.1.10 Contracts will not be sold outside of the United States.
2.1.11 With respect to any Accounts which are exempt from registration
under the 1940 Act in reliance on 3(c)(1) or Section 3(c)(7) thereof:
2.1.11.1 the principal underwriter for each such Account and any
subaccounts thereof is a registered broker-dealer with
the SEC under the 1934 Act;
2.1.11.2 the shares of the Portfolios of the Trust are and will
continue to be the only investment securities held by
the corresponding subaccounts; and
2.1.11.3 with regard to each Portfolio, you, on behalf of the
corresponding subaccount, will:
(a) vote such shares held by it in the same proportion
as the vote of all other holders of such shares;
and
(b) refrain from substituting shares of another
security for such shares unless the SEC has
approved such
3
substitution in the manner provided in Section 26
of the 0000 Xxx.
2.1.12 As covered financial institutions we, only with respect to
Portfolio shareholders, and you each undertake and agree to comply, and to take
full responsibility in complying with any and all applicable laws, regulations,
protocols and other requirements relating to money laundering including, without
limitation, the International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001 (Title III of the USA PATRIOT Act).
2.2 Representations and Warranties by the Trust
The Trust represents and warrants that:
2.2.1 It is duly organized and in good standing under the laws of the
State of Massachusetts.
2.2.2 All of its directors, officers, employees and others dealing
with the money and/or securities of a Portfolio 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 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.
2.2.3 It is registered as an open-end management investment company
under the 0000 Xxx.
2.2.4 Each class of shares of the Portfolios of the Trust is
registered under the 0000 Xxx.
2.2.5 It will 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.
2.2.6 It will comply, in all material respects, with the 1933 and 1940
Acts and the rules and regulations thereunder.
2.2.7 It, and each Portfolio, is currently qualified as a "regulated
investment company" under Subchapter M of the Code, it will make every effort to
maintain such qualification, and will notify you immediately upon having a
reasonable basis for believing that it or any Portfolio has ceased to so qualify
or might not so qualify in the future.
2.2.8 The Trust and each Portfolio qualifies as a "look-through"
entity under Treas. Sec. 1.817-5(f) and that the Trust will use its best efforts
to assure that it and each Portfolio continue to so qualify as long as you or an
Account owns shares. The Trust will use its best efforts to assure that each
Portfolio will comply with the diversification requirements for variable
annuity, endowment or life insurance contracts set forth in Section 817(h) of
the Code, and the rules and regulations thereunder, including without limitation
Treasury Regulation 1.817-5. The Trust has established procedures to monitor
such compliance. Upon having a reasonable basis for believing any Portfolio has
ceased to comply and will not be able to comply within the grace period afforded
by Regulation
4
1.817-5, the Trust will notify you immediately and will take all reasonable
steps to adequately diversify the Portfolio to achieve compliance. The Trust
will provide you with a certificate of Section 817(h) diversification compliance
for each Portfolio in which you or an Account owns shares within 30 days after
the end of each calendar quarter.
2.2.9 It currently intends for one or more classes of shares (each, a
"Class") to make payments to finance its distribution expenses, including
service fees, pursuant to a plan ("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
undertakes to comply with any then current SEC interpretations concerning rule
12b-1 or any successor provisions.
2.3 Representations and Warranties by the Underwriter
The Underwriter represents and warrants that:
2.3.1 It is registered as a broker dealer with the SEC under the 1934
Act, and is a member in good standing of the NASD.
2.3.2 Each investment adviser listed on Schedule C (each, an
"Adviser") is duly registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and any applicable state securities law.
2.4 Warranty and Agreement by Both You and Us
We received an order from the SEC dated November 16, 1993 (file no.
812-8546), which was amended by a notice and an order we received on September
17, 1999 and October 13, 1999, respectively (file no. 812-11698) (collectively,
the "Shared Funding Order," attached to this Agreement as Schedule H). The
Shared Funding Order grants exemptions from certain provisions of the 1940 Act
and the regulations 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 qualified pension and retirement plans outside the separate account context.
You and we both warrant and agree that both you and we will comply with the
"Applicants' Conditions" prescribed in the Shared Funding Order as though such
conditions were set forth verbatim in this Agreement, including, without
limitation, the provisions regarding potential conflicts of interest between the
separate accounts which invest in the Trust and regarding contract owner voting
privileges. In order for the Trust's Board of Trustees to perform its duty to
monitor for conflicts of interest, you agree to inform us of the occurrence of
any of the events specified in condition 2 of the Shared Funding Order to the
extent that such event may or does result in a material conflict of interest as
defined in that order.
3. Purchase and Redemption of Trust Portfolio Shares
3.1 We will make shares of the Portfolios available to the Accounts for the
benefit of the Contracts. The shares will be available for purchase at the net
asset value per share next computed after we (or our agent) receive a purchase
order, as established in accordance with the provisions of
5
the then current prospectus of the Trust. Notwithstanding the foregoing, the
Trust's Board of Trustees ("Trustees") may refuse to sell shares of any
Portfolio to any person, or may 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, they deem
such action to be in the best interests of the shareholders of such Portfolio.
Without limiting the foregoing, the Trustees have determined that there is a
significant risk that the Trust and its shareholders may be adversely affected
by investors whose purchase and redemption activity follows a market timing
pattern, and have authorized the Trust, the Underwriter and the Trust's transfer
agent to adopt procedures and take other action (including, without limitation,
rejecting specific purchase orders) as they deem necessary to reduce, discourage
or eliminate market timing activity. You agree to cooperate with us to assist us
in implementing the Trust's restrictions on purchase and redemption activity
that follows a market timing pattern.
3.2 We agree that shares of the Trust will be sold only to life insurance
companies which have entered into fund participation agreements with the Trust
("Participating Insurance Companies") and their separate accounts or to
qualified pension and retirement plans in accordance with the terms of the
Shared Funding Order, but only to the extent such sale will not impair the
ability of any Account to treat investments of a Portfolio in which an Account
owns shares as investments of the Account for the purpose of satisfying the
diversification requirements of Section 817(h). No shares of any Portfolio will
be sold to the general public.
3.3 You agree that all net amounts available under the Contracts shall be
invested in: (i) the Company's general account; (ii) investment companies
currently available as funding vehicles for the Contracts and appearing on
Schedule E of this Agreement; or (iii) other investment companies, provided that
you shall have given the Trust and the Underwriter thirty (30) days' advance
written notice of your intention to add such other investment companies.
3.4 You shall be the designee for us for receipt of purchase orders and
requests for redemption resulting from investment in and payments under the
Contracts ("Instructions"). The Business Day on which such Instructions are
received in proper form by you and time stamped by the close of trading will be
the date as of which Portfolio shares shall be deemed purchased, exchanged, or
redeemed as a result of such Instructions. Instructions received in proper form
by you and time stamped after the close of trading on any given Business Day
shall be treated as if received on the next following Business Day. You warrant
that all orders, Instructions and confirmations received by you which will be
transmitted to us for processing on a Business Day will have been received and
time stamped prior to the Close of Trading on that Business Day. Instructions we
receive after 9 a.m. Eastern Time shall be processed on the next Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Trust calculates its net asset value pursuant to
the rules of the SEC and its current prospectus.
3.5 We shall calculate the net asset value per share of each Portfolio on
each Business Day, and shall communicate these net asset values to you or your
designated agent on a daily basis as soon as reasonably practical after the
calculation is completed (normally by 6:30 p.m. Eastern time).
3.6 You shall submit payment for the purchase of shares of a Portfolio on
behalf of an Account in federal funds transmitted by wire to the Trust or to its
designated custodian, which must
6
receive such wires no later than the close of the Reserve Bank, which is 6:00
p.m. East Coast time, on the Business Day following the Business Day as of which
such purchases orders are made.
3.7 We will redeem any full or fractional shares of any Portfolio, when
requested by you on behalf of an Account, at the net asset value next computed
after receipt by us (or our agent) of the request for redemption, as established
in accordance with the provisions of the then current prospectus of the Trust.
We shall make payment for such shares in the manner we establish from time to
time, but in no event shall payment be delayed for a greater period than is
permitted by the 0000 Xxx.
3.8 Issuance and transfer of the Portfolio shares will be by book entry
only. Stock certificates will not be issued to you or the Accounts. Portfolio
shares purchased from the Trust will be recorded in the appropriate title for
each Account or the appropriate subaccount of each Account.
3.9 We shall furnish, on or before the ex-dividend date, notice to you of
any income dividends or capital gain distributions payable on the shares of any
Portfolio. You hereby elect to receive all such income dividends and capital
gain distributions as are payable on shares of a Portfolio in additional shares
of that Portfolio, and you reserve the right to change this election in the
future. We will notify you of the number of shares so issued as payment of such
dividends and distributions.
3.10 Each party to this Agreement agrees that, in the event of a material
error resulting from incorrect information or confirmations, the parties will
seek to comply in all material respects with the provisions of applicable
federal securities laws.
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
4.1 We shall pay no fee or other compensation to you under this Agreement
except as provided on Schedule F, if attached.
4.2 We 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.
We shall bear the costs of preparation and filing of the documents listed in the
preceding sentence, registration and qualification of the Trust's shares of the
Portfolios.
4.3 We shall use reasonable efforts to provide you, on a timely basis, with
such information about the Trust, the Portfolios and each Adviser, in such form
as you may reasonably require, as you shall reasonably request in connection
with the preparation of disclosure documents and annual and semi-annual reports
pertaining to the Contracts.
4.4 At your option, we shall provide you, at our expense, with either: (i)
for each Contract owner who is invested through the Account in a subaccount
corresponding to a Portfolio ("designated subaccount"), one copy of each of the
following documents on each occasion that such document is required by law or
regulation to be delivered to such Contract owner who is invested in a
designated subaccount: the Trust's current prospectus, annual report,
semi-annual report and other shareholder communications, including any
amendments or supplements to any of the foregoing,
7
pertaining specifically to the Portfolios ("Designated Portfolio Documents"); or
(ii) a camera ready copy of such Designated Portfolio Documents in a form
suitable for printing and from which information relating to series of the Trust
other than the Portfolios has been deleted to the extent practicable. In
connection with clause (ii) of this paragraph, we will pay for proportional
printing costs for such Designated Portfolio Documents in order to provide one
copy for each Contract owner who is invested in a designated subaccount on each
occasion that such document is required by law or regulation to be delivered to
such Contract owner, and provided the appropriate documentation is provided and
approved by us. We shall provide you with a copy of the Trust's current
statement of additional information, including any amendments or supplements, in
a form suitable for you to duplicate. The expenses of furnishing, including
mailing, to Contract owners the documents referred to in this paragraph shall be
borne by you. For each of the documents provided to you in accordance with
clause (i) of this paragraph 4.4, we shall provide you, upon your request and at
your expense, additional copies. In no event shall we be responsible for the
costs of printing or delivery of Designated Portfolio Documents to potential or
new Contract owners or the delivery of Designated Portfolio Documents to
existing contract owners.
4.5 We shall provide you, at our expense, with copies of any
Trust-sponsored proxy materials in such quantity as you shall reasonably require
for distribution to Contract owners who are invested in a designated subaccount.
You shall bear the costs of distributing proxy materials (or similar materials
such as voting solicitation instructions) to Contract owners.
4.6 You assume sole responsibility for ensuring that the Trust's
prospectuses, shareholder reports and communications, and proxy materials are
delivered to Contract owners in accordance with applicable federal and state
securities laws.
5. Voting
5.1 All Participating Insurance Companies shall have the obligations and
responsibilities regarding pass-through voting and conflicts of interest
corresponding to those contained in the Shared Funding Order.
5.2 If and to the extent required by law, you 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 for
which no instructions have been received in the same proportion as Trust shares
of such Portfolio 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. You reserve the
right to vote Trust shares held in any Account in your own right, to the extent
permitted by law.
5.3 So long as, and to the extent that, the SEC interprets the 1940 Act to
require pass-through voting privileges for Contract owners, you shall provide
pass-through voting privileges to Contract owners whose Contract values are
invested, through the Accounts, in shares of one or more Portfolios of the
Trust. We shall require all Participating Insurance Companies to calculate
voting privileges in the same manner and you shall be responsible for assuring
that the Accounts calculate voting privileges in the manner established by us.
With respect to each Account, you will vote shares of each Portfolio of the
Trust held by an Account and for which no timely voting instructions from
8
Contract owners are received in the same proportion as those shares held by that
Account for which voting instructions are received. You and your agents will in
no way recommend or oppose or interfere with the solicitation of proxies for
Portfolio shares held to fund the Contracts without our prior written consent,
which consent may be withheld in our sole discretion.
6. Sales Material, Information and Trademarks
6.1 For purposes of this Section 6, "Sales literature or other Promotional
material" includes, but is not limited to, portions of the following that use
any logo or other trademark related to the Trust, or Underwriter or its
affiliates, or refer to 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, 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 in
any media, and disclosure documents, shareholder reports and proxy materials.
6.2 You shall furnish, or cause to be furnished to us or our designee, at
least one complete copy of each registration statement, prospectus, statement of
additional information, private placement memorandum, 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 or other Promotional materials, and all
amendments to any of the above that relate to the Contracts or the Accounts
prior to its first use. You shall furnish, or shall cause to be furnished, to us
or our designee each piece of Sales literature or other Promotional material in
which the Trust or an Adviser is named, at least fifteen (15) Business Days
prior to its proposed use. No such material shall be used unless we or our
designee approve such material and its proposed use.
6.3 You and your 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, other than information or representations
contained in and accurately derived from 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. You shall send us a complete copy of
each Disclosure Document and item of Sales literature or other Promotional
materials in its final form within twenty (20) days of its first use.
6.4 We shall not give any information or make any representations or
statements on behalf of you or concerning you, the Accounts or the Contracts
other than information or representations, including naming you as a Trust
shareholder, 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 you for distribution, including Sales
9
literature or other Promotional materials, except as required by legal process
or regulatory authorities or with your written permission.
6.5 Except as provided in Section 6.2, you shall not use any designation
comprised in whole or part of the names or marks "Franklin" or "Xxxxxxxxx" or
any logo or other trademark relating to the Trust or the Underwriter without
prior written consent, and upon termination of this Agreement for any reason,
you shall cease all use of any such name or xxxx as soon as reasonably
practicable.
6.6 You shall furnish to us ten (10) Business Days prior to its first
submission to the SEC or its staff, any request or filing for no-action
assurance or exemptive relief naming, pertaining to, or affecting, the Trust,
the Underwriter or any of the Portfolios.
7. Indemnification
7.1 Indemnification By You
7.1.1 You agree 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 Section 7) against any and all losses, claims,
damages, fines, liabilities (including amounts paid in settlement with your
written consent, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, fines, 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 shares of the Trust or the Contracts and
7.1.1.1 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 you 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 Section 7), 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 you by or on
behalf of us for use in Company Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
7.1.1.2 arise out of or result from untrue or alleged untrue
statements or representations (other than statements or representations
contained in and accurately derived from Trust Documents as defined below
in Section 7.2) or wrongful conduct of you or
10
persons under your control, with respect to the sale or acquisition of the
Contracts or Trust shares; or
7.1.1.3 arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Trust Documents as
defined below in Section 7.2 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 or on behalf of you; or
7.1.1.4 arise out of or result from any failure by you to provide
the services or furnish the materials required under the terms of this
Agreement;
7.1.1.5 arise out of or result from any material breach of any
representation and/or warranty made by you in this Agreement or arise out
of or result from any other material breach of this Agreement by you; or
7.1.1.6 The Trust has received Company's written instructions
relating to "investor control" and shall enact procedures reasonably
designed to comply with such written instructions.
7.1.2 You 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.
You 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 you 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 you of any such claim shall not relieve you from any liability which
it 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, you shall be entitled to
participate, at your own expense, in the defense of such action. Unless the
Indemnified Party releases you from any further obligations under this Section
7.1, you also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from you to such
party of your election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
you 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.
7.1.3 The Indemnified Parties will promptly notify you 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.
11
7.2 Indemnification By The Underwriter
7.2.1 The Underwriter agrees to indemnify and hold harmless you, and
each of your directors and officers and each person, if any, who controls you
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" and individually an "Indemnified Party" for purposes of this Section
7.2) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter, which consent
shall not be unreasonably withheld) 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 shares of the Trust or the Contracts
and:
7.2.1.1 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 us by or on
behalf of you 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
7.2.1.2 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
7.2.1.3 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 you by or on behalf of the Trust;
or
7.2.1.4 arise as a result of any failure by us to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or otherwise,
to comply with the qualification representation specified above in Section
2.2.7 and the diversification requirements specified above in Section
2.2.8); or
7.2.1.5 arise out of or result from any material breach of any
representation and/or warranty made by us in this Agreement or arise out of
or result from any other
12
material breach of this Agreement by us; as limited by and in accordance
with the provisions of Sections 7.2.2, and 7.2.3, 7.3.3 hereof.
7.2.2 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 you or the Accounts, whichever
is applicable.
7.2.3 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 any liability which it 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 Underwriter will be entitled to
participate, at its own expense, in the defense thereof. Unless the Indemnified
Party releases the Underwriter from any further obligations under this Section
7.2, 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.
7.2.4 You agree promptly to notify the Underwriter of the commencement
of any litigation or proceedings against you or the Indemnified Parties in
connection with the issuance or sale of the Contracts or the operation of each
Account.
7.3 Indemnification By The Trust
7.3.1 The Trust agrees to indemnify and hold harmless you, and each of
your directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 7.3) 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 Sections 7.3.2 and 7.3.3 hereof. It is
understood and expressly stipulated that neither the holders of shares of the
Trust nor any Trustee, officer, agent or
13
employee of the Trust shall be personally liable hereunder, nor shall any resort
be had to other private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
7.3.2 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
you, the Trust, the Underwriter or each Account, whichever is applicable.
14
7.3.3 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 claims 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 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. Unless the Indemnified Party releases
the Trust from any further obligations under this Section 7.3, 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.
7.3.4 You agree promptly to notify the Trust of the commencement of
any litigation or proceedings against you or the Indemnified Parties in
connection with this Agreement, the issuance or sale of the Contracts, with
respect to the operation of the Account, or the sale or acquisition of shares of
the Trust.
8. 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 in Schedule G below or
at such other address as such party may from time to time specify in writing to
the other party.
9. Termination
9.1 This Agreement may be terminated by mutual agreement at any time. If
this Agreement is so terminated, we shall, at your option, continue to make
available additional shares of any Portfolio and redeem shares of any Portfolio
for any or all Contracts or Accounts existing on the effective date of
termination of this Agreement, pursuant to the terms and conditions of this
Agreement.
9.2 This Agreement may be terminated by any party in its entirety or with
respect to one, some or all Portfolios for any reason by sixty (60) days'
advance written notice delivered to the other parties. If this Agreement is so
terminated, we may, at our option, continue to make available additional shares
of any Portfolio and redeem shares of any Portfolio for any or all Contracts or
Accounts existing on the effective date of termination of this Agreement,
pursuant to the terms and conditions of this Agreement; alternatively, we may,
at our option, redeem the Portfolio shares held by the Accounts, provided that
such redemption shall not occur prior to six (6) months following written notice
of termination, during which time we will cooperate with you in effecting a
transfer of Portfolio assets to another underlying fund pursuant to any legal
and appropriate means.
15
9.3 This Agreement may be terminated immediately by you or us upon written
notice to the other party if either party materially breaches any of the
representations and warranties made in this Agreement or either party is
materially in default in the performance of any of its duties or obligations
under the Agreement, receive a written notice thereof and fails to remedy such
default or breach to the other party's reasonable satisfaction within 30 days
after such notice. If this Agreement so terminates, the parties shall cooperate
to effect an orderly windup of the business which may include, at the
non-breaching party's option, a redemption of the Portfolio shares held by the
Accounts, provided that such redemption shall not occur prior to a period of up
to six (6) months following written notice of termination, during which time we
will cooperate reasonably with you in effecting a transfer of Portfolio assets
to another underlying fund pursuant to any legal and appropriate means.
9.4 This Agreement may be terminated immediately by us upon written notice
to you if, with respect to the representations and warranties made in sections
2.1.3, 2.1.5, 2.1.7 and 2.1.12 of this Agreement: (i) you materially breach any
of such representations and warranties; or (ii) you inform us that any of such
representations and warranties may no longer be true or might not be true in the
future; or (iii) any of such representations and warranties were not true on the
effective date of this Agreement, are at any time no longer true, or have not
been true during any time since the effective date of this Agreement. If this
Agreement is so terminated, the Trust may redeem, at its option in kind or for
cash, the Portfolio shares held by the Accounts on the effective date of
termination of this Agreement.
9.5 This Agreement may be terminated by the Board of Trustees of the Trust,
in the exercise of its fiduciary duties, either upon its determination that such
termination is a necessary and appropriate remedy for a material breach of this
Agreement which includes a violation of laws, or upon its determination to
completely liquidate a Portfolio. Pursuant to such termination, the Trust may
redeem, at its option in kind or for cash, the Portfolio shares held by the
Accounts on the effective date of termination of this Agreement;
9.6 This Agreement shall terminate immediately in the event of its
assignment by any party without the prior written approval of the other parties,
or as otherwise required by law. If this Agreement is so terminated, the Trust
may redeem, at its option in kind or for cash, the Portfolio shares held by the
Accounts on the effective date of termination of this Agreement.
9.7 This Agreement shall be terminated as required by the Shared Funding
Order, and its provisions shall govern.
9.8 The provisions of Sections 2 (Representations and Warranties) and 7
(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,
except that we shall have no further obligation to sell Trust shares with
respect to Contracts issued after termination.
9.9 You shall not redeem Trust shares attributable to the Contracts (as
opposed to Trust shares attributable to your assets held in the Account) except:
(i) as necessary to implement Contract owner initiated or approved transactions;
(ii) as required by state and/or federal laws or regulations
16
or judicial or other legal precedent of general application (hereinafter
referred to as a "Legally Required Redemption"); or (iii) as permitted by an
order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon request, you
shall promptly furnish to us the opinion of your counsel (which counsel shall be
reasonably satisfactory to us) to the effect that any redemption pursuant to
clause (ii) of this Section 9.9 is a Legally Required Redemption. Furthermore,
you shall not prevent Contract owners from allocating payments to any Portfolio
that has been available under a Contract without first giving us ninety (90)
days advance written notice of your intention to do so.
10. Miscellaneous
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions of this
Agreement or otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, all of which taken together shall constitute one and the same
instrument.
10.3 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.
10.4 This Agreement shall be construed and its provisions interpreted under
and in accordance with the laws of the State of California. It shall also be
subject to the provisions of the federal securities laws and the rules and
regulations thereunder, to any orders of the SEC on behalf of the Trust granting
it exemptive relief, and to the conditions of such orders. We shall promptly
forward copies of any such orders to you.
10.5 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.
10.6 The parties to this Agreement agree that the assets and liabilities of
each Portfolio of the Trust are separate and distinct from the assets and
liabilities of each other Portfolio. No Portfolio shall be liable or shall be
charged for any debt, obligation or liability of any other Portfolio.
10.7 Each party to this Agreement shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
10.8 Each party shall treat as confidential all information of the other
party which the parties agree in writing is confidential ("Confidential
Information"). Except as permitted by this Agreement or as required by
appropriate governmental authority (including, without limitation, the SEC, the
NASD, or state securities and insurance regulators) the receiving party shall
not disclose or
17
use Confidential Information of the other party before it enters the public
domain, without the express written consent of the party providing the
Confidential Information.
10.9 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 to this Agreement are entitled to under
state and federal laws.
10.10 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect, except as provided above in
Section 3.3.
10.11 Neither this Agreement nor any rights or obligations created by it
may be assigned by any party without the prior written approval of the other
parties.
10.12 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.
18
IN WITNESS WHEREOF, each of the parties have caused their duly authorized
officers to execute this Agreement.
The Company: Metropolitan Life Insurance Company
By:
---------------------------------
Name: Xxxx Xxxx
Title: Vice President
Distributor for the Company:
By:
---------------------------------
Name:
Title:
The Trust: Franklin Xxxxxxxxx Variable Insurance
Only on behalf of each Products Trust
Portfolio listed on
Schedule C hereof.
By:
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President
The Underwriter: Franklin Xxxxxxxxx Distributors, Inc.
By:
---------------------------------
Name:
Title:
19
Schedule A
The Company and its Distributor
[name] Metropolitan Life Insurance Company
1 MetLife Plaza
00-00 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
[address]
[state of incorporation] New York
[name of Distributor] Metropolitan Life Insurance Company
000X XX Xxxxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
[address of Distributor]
[state of incorporation of Distributor] New York
A
Schedule B
Accounts of the Company
------------------------------------------------------------
1. Name: [Separate Account UL]
------------------------------------------------------------
Date Established: [12/1988]
------------------------------------------------------------
SEC Registration Number: 811-06025
----
------------------------------------------------------------
------------------------------------------------------------
2. Name: [Separate Account DCVL]
------------------------------------------------------------
Date Established: [11/2003]
------------------------------------------------------------
SEC Registration Number: Unregistered Account
------------------------------------------------------------
------------------------------------------------------------
B
Schedule C
Available Portfolios and Classes of Shares of the Trust; Investment Advisers
Separate Account UL
--------------------------------------------------------------------------------
Franklin Xxxxxxxxx Variable Insurance Products Trust Investment Adviser
--------------------------------------------------------------------------------
Mutual Discovery Securities Fund Class 2 Franklin Mutual Advisors
--------------------------------------------------------------------------------
Growth Securities Fund Class 2 Xxxxxxxxx Global Advisors
--------------------------------------------------------------------------------
Foreign Securities Fund Class 1 Templeton
--------------------------------------------------------------------------------
Separate Account DCVL
--------------------------------------------------------------------------------
Franklin Xxxxxxxxx Variable Insurance Products Trust Investment Adviser
--------------------------------------------------------------------------------
Mutual Discovery Securities Fund Class 2 Franklin Mutual Advisors
--------------------------------------------------------------------------------
Growth Securities Fund Class 2 Xxxxxxxxx Global Advisors
--------------------------------------------------------------------------------
C
Schedule D
Contracts of the Company
--------------------------------------------------------------------------------------------------------
Product Name Separate Account Name
Insurance Registered Y/N Registered Y/N
# Company 1933 Act #, State Form ID 1940 Act # Classes of Shares and Portfolios
--------------------------------------------------------------------------------------------------------
01 Metropolitan MetFlex Separate Account UL Class 2 shares:
Life Yes Yes
Insurance 811- Mutual Discovery Securities Fund
Company Growth Securities Fund
Class 1 Shares:
Foreign Securities Fund
--------------------------------------------------------------------------------------------------------
02 Metropolitan PPVL Separate Account DCVL Class 2 shares:
Life No No Mutual Discovery Securities Fund
Insurance NA
Company Growth Securities Fund
--------------------------------------------------------------------------------------------------------
D
Schedule E
Other Portfolios Available under the Contracts
[names of other portfolios] Are you asking us to list all of the investment
options - if so why?
E
Schedule F
Rule 12b-1 Plans
Compensation Schedule
Each Portfolio named below shall pay the following amounts pursuant to the terms
and conditions referenced below under its Class 2 Rule 12b-1 Distribution Plan,
stated as a percentage per year of Class 2's average daily net assets
represented by shares of Class 2.
Portfolio Name Maximum Annual Payment Rate
--------------------------------------------------------------------------------
Mutual Discovery Securities Fund .25
--------------------------------------------------------------------------------
Growth Securities Fund .25
--------------------------------------------------------------------------------
Question: What about additional 5 bps revenue share?
Agreement Provisions
If the Company, on behalf of any Account, purchases Trust Portfolio shares
("Eligible Shares") which are subject to a Rule 12b-1 plan adopted under the
1940 Act (the "Plan"), the Company may participate in the Plan.
To the extent the Company or its affiliates, agents or designees
(collectively "you") provide any activity or service which is primarily intended
to assist in the promotion, distribution or account servicing of Eligible Shares
("Rule 12b-1 Services") or variable contracts offering Eligible Shares, the
Underwriter, the Trust or their affiliates (collectively, "we") may pay you a
Rule 12b-1 fee. "Rule 12b-1 Services" may include, but are not limited to,
printing of prospectuses and reports used for sales purposes, preparing and
distributing sales literature and related expenses, advertisements, education of
dealers and their representatives, and similar distribution-related expenses,
furnishing personal services to owners of Contracts which may invest in Eligible
Shares ("Contract Owners"), education of Contract Owners, answering routine
inquiries regarding a Portfolio, coordinating responses to Contract Owner
inquiries regarding the Portfolios, maintaining such accounts or providing such
other enhanced services as a Trust Portfolio or Contract may require, or
providing other services eligible for service fees as defined under NASD rules.
Your acceptance of such compensation is your acknowledgment that eligible
services have been rendered. All Rule 12b-1 fees, shall be based on the value of
Eligible Shares owned by the Company on behalf of its Accounts, and shall be
calculated on the basis and at the rates set forth in the Compensation Schedule
stated above. The aggregate annual fees paid pursuant to each Plan shall not
exceed the amounts stated as the "annual maximums" in the Portfolio's
prospectus, unless an increase is approved by shareholders as provided in the
Plan. These maximums shall be a specified percent of the value of a Portfolio's
net assets attributable to Eligible Shares owned by the Company on behalf of its
Accounts (determined in the same manner as the Portfolio uses to compute its net
assets as set forth in its effective Prospectus). The Rule 12b-1 fee will be
paid to you within thirty (30) days after the end of the three-month periods
ending in January, April, July and October.
F-1
You shall furnish us with such information as shall reasonably be requested
by the Trust's Boards of Trustees ("Trustees") with respect to the Rule 12b-1
fees paid to you pursuant to the Plans. We shall furnish to the Trustees, for
their review on a quarterly basis, a written report of the amounts expended
under the Plans and the purposes for which such expenditures were made.
The Plans and provisions of any agreement relating to such Plans must be
approved annually by a vote of the Trustees, including the Trustees who are not
interested persons of the Trust and who have no financial interest in the Plans
or any related agreement ("Disinterested Trustees"). Each Plan may be terminated
at any time by the vote of a majority of the Disinterested Trustees, or by a
vote of a majority of the outstanding shares as provided in the Plan, on sixty
(60) days' written notice, without payment of any penalty. The Plans may also be
terminated by any act that terminates the Underwriting Agreement between the
Underwriter and the Trust, and/or the management or administration agreement
between Franklin Advisers, Inc. and its affiliates and the Trust. Continuation
of the Plans is also conditioned on Disinterested Trustees being ultimately
responsible for selecting and nominating any new Disinterested Trustees. Under
Rule 12b-1, the Trustees have a duty to request and evaluate, and persons who
are party to any agreement related to a Plan have a duty to furnish, such
information as may reasonably be necessary to an informed determination of
whether the Plan or any agreement should be implemented or continued. Under Rule
12b-1, the Trust is permitted to implement or continue Plans or the provisions
of any agreement relating to such Plans from year-to-year only if, based on
certain legal considerations, the Trustees are able to conclude that the Plans
will benefit each affected Trust Portfolio and class. Absent such yearly
determination, the Plans must be terminated as set forth above. In the event of
the termination of the Plans for any reason, the provisions of this Schedule F
relating to the Plans will also terminate. You agree that your selling
agreements with persons or entities through whom you intend to distribute
Contracts will provide that compensation paid to such persons or entities may be
reduced if a Portfolio's Plan is no longer effective or is no longer applicable
to such Portfolio or class of shares available under the Contracts.
Any obligation assumed by the Trust pursuant to this Agreement shall be limited
in all cases to the assets of the Trust and no person shall seek satisfaction
thereof from shareholders of the Trust. You agree to waive payment of any
amounts payable to you by Underwriter under a Plan until such time as the
Underwriter has received such fee from the Trust.
The provisions of the Plans shall control over the provisions of the
Participation Agreement, including this Schedule F, in the event of any
inconsistency.
You agree to provide complete disclosure as required by all applicable statutes,
rules and regulations of all rule 12b-1 fees received from us in the prospectus
of the Contracts.
F-2
Schedule G
Addresses for Notices
To the Company: [ ]
Metropolitan Life Insurance Company
1 MetLife Plaza
00-00 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx, Counsel
With a copy to: Metropolitan Life Insurance Company
000X XX Xxxxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxx K Model, Director
To the Trust: Franklin Xxxxxxxxx Variable Insurance Products
Trust
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Assistant Vice President
To the Underwriter: Franklin Xxxxxxxxx Distributors, Inc.
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Vice President
G
Schedule H
Shared Funding Order
Templeton Variable Products Series Fund, et al.
File No. 812-11698
SECURITIES AND EXCHANGE COMMISSION
Release No. IC-24018
1999 SEC LEXIS 1887
September 17, 1999
ACTION: Notice of application for an amended order of exemption pursuant to
Section 6(c) of the Investment Company Act of 1940 (the "1940 Act") from the
provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder.
TEXT: Summary of Application: Templeton Variable Products Series Fund (the
"Templeton Trust"), Franklin Xxxxxxxxx Variable Insurance Products Trust
(formerly Franklin Valuemark Funds) (the "VIP Trust," and together with the
Templeton Trust, the "Funds"), Xxxxxxxxx Funds Annuity Company ("TFAC") or any
successor to TFAC, and any future open-end investment company for which TFAC or
any affiliate is the administrator, sub-administrator, investment manager,
adviser, principal underwriter, or sponsor ("Future Funds") seek an amended
order of the Commission to (1) add as parties to that order the VIP Trust and
any Future Funds and (2) permit shares of the Funds and Future Funds to be
issued to and held by qualified pension and retirement plans outside the
separate account context.
Applicants: Templeton Variable Products Series Fund, Franklin Xxxxxxxxx
Variable Insurance Products Trust, Xxxxxxxxx Funds Annuity Company or any
successor to TFAC, and any future open-end investment company for which TFAC or
any affiliate is the administrator, sub-administrator, investment manager,
adviser, principal underwriter, or sponsor (collectively, the "Applicants").
Filing Date: The application was filed on July 14, 1999, and amended and
restated on September 17, 1999.
Hearing or Notification of Hearing: An order granting the application will
be issued unless the Commission orders a hearing. Interested persons may request
a hearing by writing to the Secretary of the Commission and serving Applicants
with a copy of the request, personally or by mail. Hearing requests should be
received by the Commission by 5:30 p.m., on October 12, 1999, and should be
accompanied by proof of service on the Applicants in the form of an affidavit
or, for lawyers, a certificate of service. Hearing requests should state the
nature of the writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request notification
by writing to the Secretary of the Commission.
Addresses: Secretary, Securities and Exchange Commission, 000 Xxxxx Xxxxxx,
XX, Xxxxxxxxxx, X.X. 00000-0000.
Applicants: Templeton Variable Products Series Fund and Franklin Xxxxxxxxx
Variable Insurance Products Trust, 000 Xxxxxxxx Xxxxxx Xxxxxxxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000, Attn: Xxxxx X. Xxxxxxxx, Esq.
For Further Information Contact: Xxxxx X. XxXxxxx, Senior Counsel, or Xxxxx
X. Xxxxx, Branch Chief, Office of Insurance Products, Division of Investment
Management, at (000) 000-0000.
H-1
Supplementary Information: The following is a summary of the application.
The complete application is available for a fee from the SEC's Public Reference
Branch, 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000-0000 (tel. (202)
000-0000).
Applicants' Representations:
1. Each of the Funds is registered under the 1940 Act as an open-end
management investment company and was organized as a Massachusetts business
trust. The Templeton Trust currently consists of eight separate series, and the
VIP Trust consists of twenty-five separate series. Each Fund's Declaration of
Trust permits the Trustees to create additional series of shares at any time.
The Funds currently serve as the underlying investment medium for variable
annuity contracts and variable life insurance policies issued by various
insurance companies. The Funds have entered into investment management
agreements with certain investment managers ("Investment Managers") directly or
indirectly owned by Franklin Resources, Inc. ("Resources"), a publicly owned
company engaged in the financial services industry through its subsidiaries.
2. TFAC is an indirect, wholly owned subsidiary of Resources. TFAC is the
sole insurance company in the Franklin Xxxxxxxxx organization, and specializes
in the writing of variable annuity contracts. The Templeton Trust has entered
into a Fund Administration Agreement with Franklin Xxxxxxxxx Services, Inc. ("FT
Services"), which replaced TFAC in 1998 as administrator, and FT Services
subcontracts certain services to TFAC. FT Services also serves as administrator
to all series of the VIP Trust. TFAC and FT Services provide certain
administrative facilities and services for the VIP and Templeton Trusts.
3. On November 16, 1993, the Commission issued an order granting exemptive
relief to permit shares of the Templeton Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies (Investment Company Act
Release No. 19879, File No. 812-8546) (the "Original Order"). Applicants
incorporate by reference into the application the Application for the Original
Order and each amendment thereto, the Notice of Application for the Original
Order, and the Original Order, to the extent necessary, to supplement the
representations made in the application in support of the requested relief.
Applicants represent that all of the facts asserted in the Application for the
Original Order and any amendments thereto remain true and accurate in all
material respects to the extent that such facts are relevant to any relief on
which Applicants continue to rely. The Original Order allows the Xxxxxxxxx Trust
to offer its shares to insurance companies as the investment vehicle for their
separate accounts supporting variable annuity contracts and variable life
insurance contracts (collectively, the "Variable Contracts"). Applicants state
that the Original Order does not (i) include the VIP Trust or Future Funds as
parties, nor (ii) expressly address the sale of shares of the Funds or any
Future Funds to qualified pension and retirement plans outside the separate
account context including, without limitation, those trusts, plans, accounts,
contracts or annuities described in Sections 401(a), 403(a), 403(b), 408(b),
408(k), 414(d), 457(b), 501(c)(18) of the Internal Revenue Code of 1986, as
amended (the "Code"), and any other trust, plan, contract, account or annuity
that is determined to be within the scope of Treasury Regulation
1.817.5(f)(3)(iii) ("Qualified Plans").
4. Separate accounts owning shares of the Funds and their insurance company
depositors are referred to in the application as "Participating Separate
Accounts" and "Participating Insurance Companies," respectively. The use of a
common management investment company as the underlying investment medium for
both variable annuity and variable life insurance separate accounts of a single
insurance company (or of two or more affiliated insurance companies) is referred
to as "mixed funding." The use of a common management investment company as the
underlying investment medium for variable annuity and/or variable life insurance
separate accounts of unaffiliated insurance companies is referred to as "shared
funding."
Applicants' Legal Analysis:
1. Applicants request that the Commission issue an amended order pursuant
to Section 6(c) of the 1940 Act, adding the VIP Trust and Future Funds to the
Original Order and exempting scheduled premium variable life insurance separate
accounts and flexible premium variable life insurance separate accounts of
Participating Insurance Companies (and, to the extent necessary, any principal
underwriter and depositor of such an account) and the Applicants from
H-2
Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) (and any comparable rule) thereunder, respectively, to the extent
necessary to permit shares of the Funds and any Future Funds to be sold to and
held by Qualified Plans. Applicants submit that the exemptions requested are
appropriate in the public interest, consistent with the protection of investors,
and consistent with the purposes fairly intended by the policy and provisions of
the 1940 Act.
2. The Original Order does not include the VIP Trust or Future Funds as
parties nor expressly address the sale of shares of the Funds or any Future
Funds to Qualified Plans. Applicants propose that the VIP Trust and Future Funds
be added as parties to the Original Order and the Funds and any Future Funds be
permitted to offer and sell their shares to Qualified Plans.
3. Section 6(c) of the 1940 Act provides, in part, that the Commission, by
order upon application, may conditionally or unconditionally exempt any person,
security or transaction, or any class or classes of persons, securities or
transactions from any provisions of the 1940 Act or the rules or regulations
thereunder, if and to the extent that such exemption is necessary or appropriate
in the public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the 1940 Act.
4. In connection with the funding of scheduled premium variable life
insurance contracts issued through a separate account registered under the 1940
Act as a unit investment trust ("UIT"), Rule 6e-2(b)(15) provides partial
exemptions from various provisions of the 1940 Act, including the following: (1)
Section 9(a), which makes it unlawful for certain individuals to act in the
capacity of employee, officer, or director for a UIT, by limiting the
application of the eligibility restrictions in Section 9(a) to affiliated
persons directly participating in the management of a registered management
investment company; and (2) Sections 13(a), 15(a) and 15(b) of the 1940 Act to
the extent that those sections might be deemed to require "pass-through" voting
with respect to an underlying fund's shares, by allowing an insurance company to
disregard the voting instructions of contractowners in certain circumstances.
5. These exemptions are available, however, only where the management
investment company underlying the separate account (the "underlying fund")
offers its shares "exclusively to variable life insurance separate accounts of
the life insurer, or of any affiliated life insurance company." Therefore, Rule
6e-2 does not permit either mixed funding or shared funding because the relief
granted by Rule 6e-2(b)(15) is not available with respect to a scheduled premium
variable life insurance separate account that owns shares of an underlying fund
that also offers its shares to a variable annuity or a flexible premium variable
life insurance separate account of the same company or of any affiliated life
insurance company. Rule 6e-2(b)(15) also does not permit the sale of shares of
the underlying fund to Qualified Plans.
6. In connection with flexible premium variable life insurance contracts
issued through a separate account registered under the 1940 Act as a UIT, Rule
6e-3(T)(b)(15) also provides partial exemptions from Sections 9(a), 13(a), 15(a)
and 15(b) of the 1940 Act. These exemptions, however, are available only where
the separate account's underlying fund offers its shares "exclusively to
separate accounts of the life insurer, or of any affiliated life insurance
company, offering either scheduled contracts or flexible contracts, or both; or
which also offer their shares to variable annuity separate accounts of the life
insurer or of an affiliated life insurance company." Therefore, Rule 6e-3(T)
permits mixed funding but does not permit shared funding and also does not
permit the sale of shares of the underlying fund to Qualified Plans. As noted
above, the Original Order granted the Xxxxxxxxx Trust exemptive relief to permit
mixed and shared funding, but did not expressly address the sale of its shares
to Qualified Plans.
7. Applicants note that if the Funds were to sell their shares only to
Qualified Plans, exemptive relief under Rule 6e-2 and Rule 6e-3(T) would not be
necessary. Applicants state that the relief provided for under Rule 6e-2(b)(15)
and Rule 6e-3(T)(b)(15) does not relate to qualified pension and retirement
plans or to a registered investment company's ability to sell its shares to such
plans.
8. Applicants state that changes in the federal tax law have created the
opportunity for each of the Funds to increase its asset base through the sale of
its shares to Qualified Plans. Applicants state that Section 817(h) of the
Internal Revenue Code of 1986, as amended (the "Code"), imposes certain
diversification standards on the assets underlying Variable Contracts. Treasury
Regulations generally require that, to meet the diversification requirements,
all of the
H-3
beneficial interests in the underlying investment company must be held by the
segregated asset accounts of one or more life insurance companies.
Notwithstanding this, Applicants note that the Treasury Regulations also contain
an exception to this requirement that permits trustees of a Qualified Plan to
hold shares of an investment company, the shares of which are also held by
insurance company segregated asset accounts, without adversely affecting the
status of the investment company as an adequately diversified underlying
investment of Variable Contracts issued through such segregated asset accounts
(Treas. Reg. 1.817-5(f)(3)(iii)).
9. Applicants state that the promulgation of Rules 6e-2(b)(15) and
6e-3(T)(b)(15) under the 1940 Act preceded the issuance of these Treasury
Regulations. Thus, Applicants assert that the sale of shares of the same
investment company to both separate accounts and Qualified Plans was not
contemplated at the time of the adoption of Rules 6e-2(b)(15) and
6e-3(T)(b)(15).
10. Section 9(a) provides that it is unlawful for any company to serve as
investment adviser or principal underwriter of any registered open-end
investment company if an affiliated person of that company is subject to a
disqualification enumerated in Section 9(a)(1) or (2). Rules 6e-2(b)(15) and
6e-3(T)(b)(15) provide exemptions from Section 9(a) under certain circumstances,
subject to the limitations on mixed and shared funding. These exemptions limit
the application of the eligibility restrictions to affiliated individuals or
companies that directly participate in the management of the underlying
portfolio investment company.
11. Applicants state that the relief granted in Rule 6e-2(b)(15) and
6e-3(T)(b)(15) from the requirements of Section 9 limits, in effect, the amount
of monitoring of an insurer's personnel that would otherwise be necessary to
ensure compliance with Section 9 to that which is appropriate in light of the
policy and purposes of Section 9. Applicants submit that those Rules recognize
that it is not necessary for the protection of investors or the purposes fairly
intended by the policy and provisions of the 1940 Act to apply the provisions of
Section 9(a) to the many individuals involved in an insurance company complex,
most of whom typically will have no involvement in matters pertaining to
investment companies funding the separate accounts.
12. Applicants to the Original Order previously requested and received
relief from Section 9(a) and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) to the extent
necessary to permit mixed and shared funding. Applicants maintain that the
relief previously granted from Section 9(a) will in no way be affected by the
proposed sale of shares of the Funds to Qualified Plans. Those individuals who
participate in the management or administration of the Funds will remain the
same regardless of which Qualified Plans use such Funds. Applicants maintain
that more broadly applying the requirements of Section 9(a) because of
investment by Qualified Plans would not serve any regulatory purpose. Moreover,
Qualified Plans, unlike separate accounts, are not themselves investment
companies and therefore are not subject to Section 9 of the 1940 Act.
13. Applicants state that Rules 6e-2(b)(15)(iii) and 6e-3(T)(b)(15)(iii)
provide exemptions from the pass-through voting requirement with respect to
several significant matters, assuming the limitations on mixed and shared
funding are observed. Rules 6e-2(b)(15)(iii)(A) and 6e-3(T)(b)(15)(iii)(A)
provide that the insurance company may disregard the voting instructions of its
contractowners with respect to the investments of an underlying fund or any
contract between a fund and its investment adviser, when required to do so by an
insurance regulatory authority (subject to the provisions of paragraphs
(b)(5)(i) and (b)(7)(ii)(A) of the Rules). Rules 6e-2(b)(15)(iii)(B) and
6e-3(T)(b)(15)(iii)(A)(2) provide that the insurance company may disregard
contractowners' voting instructions if the contractowners initiate any change in
such company's investment policies, principal underwriter, or any investment
adviser (provided that disregarding such voting instructions is reasonable and
subject to the other provisions of paragraphs (b)(5)(ii) and (b)(7)(ii)(B) and
(C) of the Rules).
14. Applicants assert that Qualified Plans, which are not registered as
investment companies under the 1940 Act, have no requirement to pass-through the
voting rights to plan participants. Applicants state that applicable law
expressly reserves voting rights to certain specified persons. Under Section
403(a) of the Employment Retirement Income Security Act ("ERISA"), shares of a
fund sold to a Qualified Plan must be held by the trustees of the Qualified
Plan. Section 403(a) also provides that the trustee(s) must have exclusive
authority and discretion to manage and control the Qualified Plan with two
exceptions: (1) when the Qualified Plan expressly provides that the trustee(s)
are subject to the direction of a named fiduciary who is not a trustee, in which
case the trustees are subject to proper
H-4
directions made in accordance with the terms of the Qualified Plan and not
contrary to ERISA; and (2) when the authority to manage, acquire or dispose of
assets of the Qualified Plan is delegated to one or more investment managers
pursuant to Section 402(c)(3) of ERISA. Unless one of the two above exceptions
stated in Section 403(a) applies, Qualified Plan trustees have the exclusive
authority and responsibility for voting proxies. Where a named fiduciary to a
Qualified Plan appoints an investment manager, the investment manager has the
responsibility to vote the shares held unless the right to vote such shares is
reserved to the trustees or the named fiduciary. Where a Qualified Plan does not
provide participants with the right to give voting instructions, Applicants do
not see any potential for material irreconcilable conflicts of interest between
or among variable contract holders and Qualified Plan investors with respect to
voting of the respective Fund's shares. Accordingly, Applicants state that,
unlike the case with insurance company separate accounts, the issue of the
resolution of material irreconcilable conflicts with respect to voting is not
present with respect to such Qualified Plans since the Qualified Plans are not
entitled to pass-through voting privileges.
15. Even if a Qualified Plan were to hold a controlling interest in one of
the Funds, Applicants believe that such control would not disadvantage other
investors in such Fund to any greater extent than is the case when any
institutional shareholder holds a majority of the voting securities of any
open-end management investment company. In this regard, Applicants submit that
investment in a Fund by a Qualified Plan will not create any of the voting
complications occasioned by mixed funding or shared funding. Unlike mixed or
shared funding, Qualified Plan investor voting rights cannot be frustrated by
veto rights of insurers or state regulators.
16. Applicants state that some of the Qualified Plans, however, may provide
for the trustee(s), an investment adviser (or advisers), or another named
fiduciary to exercise voting rights in accordance with instructions from
participants. Where a Qualified Plan provides participants with the right to
give voting instructions, Applicants see no reason to believe that participants
in Qualified Plans generally or those in a particular Qualified Plan, either as
a single group or in combination with participants in other Qualified Plans,
would vote in a manner that would disadvantage Variable Contract holders. In
sum, Applicants maintain that the purchase of shares of the Funds by Qualified
Plans that provide voting rights does not present any complications not
otherwise occasioned by mixed or shared funding.
17. Applicants do not believe that the sale of the shares of the Funds to
Qualified Plans will increase the potential for material irreconcilable
conflicts of interest between or among different types of investors. In
particular, Applicants see very little potential for such conflicts beyond that
which would otherwise exist between variable annuity and variable life insurance
contractowners.
18. As noted above, Section 817(h) of the Code imposes certain
diversification standards on the underlying assets of variable contracts held in
an underlying mutual fund. The Code provides that a variable contract shall not
be treated as an annuity contract or life insurance, as applicable, for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the Treasury Department, adequately
diversified.
19. Treasury Department Regulations issued under Section 817(h) provide
that, in order to meet the statutory diversification requirements, all of the
beneficial interests in the investment company must be held by the segregated
asset accounts of one or more insurance companies. However, the Regulations
contain certain exceptions to this requirement, one of which allows shares in an
underlying mutual fund to be held by the trustees of a qualified pension or
retirement plan without adversely affecting the ability of shares in the
underlying fund also to be held by separate accounts of insurance companies in
connection with their variable contracts (Treas. Reg. 1.817-5(f)(3)(iii)). Thus,
Applicants believe that the Treasury Regulations specifically permit "qualified
pension or retirement plans" and separate accounts to invest in the same
underlying fund. For this reason, Applicants have concluded that neither the
Code nor the Treasury Regulations or revenue rulings thereunder presents any
inherent conflict of interest.
20. Applicants note that while there are differences in the manner in which
distributions from Variable Contracts and Qualified Plans are taxed, these
differences will have no impact on the Funds. When distributions are to be made,
and a Separate Account or Qualified Plan is unable to net purchase payments to
make the distributions, the Separate Account and Qualified Plan will redeem
shares of the Funds at their respective net asset value in conformity with Rule
22c-1 under the 1940 Act (without the imposition of any sales charge) to provide
proceeds to meet distribution needs. A Qualified Plan will make distributions in
accordance with the terms of the Qualified Plan.
H-5
21. Applicants maintain that it is possible to provide an equitable means
of giving voting rights to Participating Separate Account contractowners and to
Qualified Plans. In connection with any meeting of shareholders, the Funds will
inform each shareholder, including each Participating Insurance Company and
Qualified Plan, of information necessary for the meeting, including their
respective share of ownership in the relevant Fund. Each Participating Insurance
Company will then solicit voting instructions in accordance with Rules 6e-2 and
6e-3(T), as applicable, and its participation agreement with the relevant Fund.
Shares held by Qualified Plans will be voted in accordance with applicable law.
The voting rights provided to Qualified Plans with respect to shares of the
Funds would be no different from the voting rights that are provided to
Qualified Plans with respect to shares of funds sold to the general public.
22. Applicants have concluded that even if there should arise issues with
respect to a state insurance commissioner's veto powers over investment
objectives where the interests of contractowners and the interests of Qualified
Plans are in conflict, the issues can be almost immediately resolved since the
trustees of (or participants in) the Qualified Plans can, on their own, redeem
the shares out of the Funds. Applicants note that state insurance commissioners
have been given the veto power in recognition of the fact that insurance
companies usually cannot simply redeem their separate accounts out of one fund
and invest in another. Generally, time-consuming, complex transactions must be
undertaken to accomplish such redemptions and transfers. Conversely, the
trustees of Qualified Plans or the participants in participant-directed
Qualified Plans can make the decision quickly and redeem their interest in the
Funds and reinvest in another funding vehicle without the same regulatory
impediments faced by separate accounts or, as is the case with most Qualified
Plans, even hold cash pending suitable investment.
23. Applicants also state that they do not see any greater potential for
material irreconcilable conflicts arising between the interests of participants
under Qualified Plans and contractowners of Participating Separate Accounts from
possible future changes in the federal tax laws than that which already exist
between variable annuity contractowners and variable life insurance
contractowners.
24. Applicants state that the sale of shares of the Funds to Qualified
Plans in addition to separate accounts of Participating Insurance Companies will
result in an increased amount of assets available for investment by the Funds.
This may benefit variable contractowners by promoting economies of scale, by
permitting increased safety of investments through greater diversification, and
by making the addition of new portfolios more feasible.
25. Applicants assert that, regardless of the type of shareholders in each
Fund, each Fund's Investment Manager is or would be contractually and otherwise
obligated to manage the Fund solely and exclusively in accordance with that
Fund's investment objectives, policies and restrictions as well as any
guidelines established by the Board of Trustees of such Fund (the "Board"). The
Investment Manager works with a pool of money and (except in a few instances
where this may be required in order to comply with state insurance laws) does
not take into account the identity of the shareholders. Thus, each Fund will be
managed in the same manner as any other mutual fund. Applicants therefore see no
significant legal impediment to permitting the sale of shares of the Funds to
Qualified Plans.
26. Applicants state that the Commission has permitted the amendment of a
substantially similar original order for the purpose of adding a party to the
original order and has permitted open-end management investment companies to
offer their shares directly to Qualified Plan in addition to separate accounts
of affiliated or unaffiliated insurance companies which issue either or both
variable annuity contracts or variable life insurance contracts. Applicants
state that the amended order sought in the application is identical to precedent
with respect to the conditions Applicants propose should be imposed on Qualified
Plans in connection with investment in the Funds.
Applicants' Conditions:
If the requested amended order is granted, Applicants consent to the
following conditions:
1. A majority of the Board of each Fund shall consist of persons who are
not "interested persons" thereof, as defined by Section 2(a)(19) of the 1940
Act, and the rules thereunder and as modified by any applicable orders of the
Commission, except that if this condition is not met by reason of the death,
disqualification or bona fide resignation of any Board Member or Members, then
the operation of this condition shall be suspended: (a) for a period of 45 days
if
H-6
the vacancy or vacancies may be filled by the remaining Board Members; (b) for a
period of 60 days if a vote of shareholders is required to fill the vacancy or
vacancies; or (c) for such longer period as the Commission may prescribe by
order upon application.
2. The Board will monitor their respective Fund for the existence of any
material irreconcilable conflict among the interests of the Variable Contract
owners of all Separate Accounts investing in the Funds and of the Qualified Plan
participants investing in the Funds. The Board will determine what action, if
any, shall be taken in response to such conflicts. A material irreconcilable
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 interpretive 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 the Funds are being managed; (e) a difference in voting
instructions given by variable annuity contract owners, variable life insurance
contract owners, and trustees of Qualified Plans; (f) a decision by an insurer
to disregard the voting instructions of Variable Contract owners; or (g) if
applicable, a decision by a Qualified Plan to disregard the voting instructions
of Qualified Plan participants.
3. Participating Insurance Companies, the Investment Managers, and any
Qualified Plan that executes a fund participation agreement upon becoming an
owner of 10 percent or more of the assets of an Fund (a "Participating Qualified
Plan"), will report any potential or existing conflicts of which it becomes
aware to the Board of any relevant Fund. Participating Insurance Companies, the
Investment Managers and the Participating Qualified Plans will be responsible
for assisting the Board in carrying out its responsibilities under these
conditions by providing the Board with all information reasonably necessary for
the Board to consider any issues raised. This responsibility includes, but is
not limited to, an obligation by each Participating Insurance Company to inform
the Board whenever voting instructions of Contract owners are disregarded and,
if pass-through voting is applicable, an obligation by each Participating
Qualified Plan to inform the Board whenever it has determined to disregard
Qualified Plan participant voting instructions. The responsibility to report
such information and conflicts, and to assist the Board, will be contractual
obligations of all Participating Insurance Companies investing in the Funds
under their agreements governing participation in the Funds, and such agreements
shall provide that these responsibilities will be carried out with a view only
to the interests of the Variable Contract owners. The responsibility to report
such information and conflicts, and to assist the Board, will be contractual
obligations of all Participating Qualified Plans under their agreements
governing participation in the Funds, and such agreements will provide that
their responsibilities will be carried out with a view only to the interests of
Qualified Plan participants.
4. If it is determined by a majority of the Board of a Fund, or by a
majority of the disinterested Board Members, that a material irreconcilable
conflict exists, the relevant Participating Insurance Companies and
Participating Qualified Plans will, at their own expense and to the extent
reasonably practicable as determined by a majority of the disinterested Board
Members, take whatever steps are necessary to remedy or eliminate the material
irreconcilable conflict, which steps could include: (a) in the case of
Participating Insurance Companies, withdrawing the assets allocable to some or
all of the Separate Account s from the Fund or any portfolio thereof and
reinvesting such assets in a different investment medium, including another
portfolio of an Fund or another Fund, or submitting the question as to whether
such segregation should be implemented to a vote of all affected Variable
Contract owners and, as appropriate, segregating the assets of any appropriate
group (i.e., variable annuity contract owners or variable life insurance
contract owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Variable Contract owners
the option of making such a change; (b) in the case of Participating Qualified
Plans, withdrawing the assets allocable to some or all of the Qualified Plans
from the Fund and reinvesting such assets in a different investment medium; and
(c) establishing a new registered management investment company or managed
Separate Account. If a material irreconcilable conflict arises because of a
decision by a Participating Insurance Company to disregard Variable Contract
owner voting instructions, and that decision represents a minority position or
would preclude a majority vote, then the insurer may be required, at the Fund's
election, to withdraw the insurer's Separate Account investment in such Fund,
and no charge or penalty will be imposed as a result of such withdrawal. If a
material irreconcilable conflict arises because of a Participating Qualified
Plan's decision to disregard Qualified Plan participant voting instructions, if
applicable, and that decision represents minority position or would preclude a
majority vote, the Participating Qualified Plan may be required, at the Fund's
election, to withdraw its investment in such Fund, and no charge or penalty will
be imposed as a result of such
H-7
withdrawal. The responsibility to take remedial action in the event of a
determination by a Board of a material irreconcilable conflict and to bear the
cost of such remedial action will be a contractual obligation of all
Participating Insurance Companies and Participating Qualified Plans under their
agreements governing participation in the Funds, and these responsibilities will
be carried out with a view only to the interest of Variable Contract owners and
Qualified Plan participants.
5. For purposes of Condition 4, a majority of the disinterested Board
Members of the applicable Board will determine whether or not any proposed
action adequately remedies any material irreconcilable conflict, but in no event
will the relevant Fund or the Investment Managers be required to establish a new
funding medium for any Contract. No Participating Insurance Company shall be
required by Condition 4 to establish a new funding medium for any Variable
Contract if any offer to do so has been declined by vote of a majority of the
Variable Contract owners materially and adversely affected by the material
irreconcilable conflict. Further, no Participating Qualified Plan shall be
required by Condition 4 to establish a new funding medium for any Participating
Qualified Plan if (a) a majority of Qualified Plan participants materially and
adversely affected by the irreconcilable material conflict vote to decline such
offer, or (b) pursuant to governing Qualified Plan documents and applicable law,
the Participating Qualified Plan makes such decision without a Qualified Plan
participant vote.
6. The determination of the Board of the existence of a material
irreconcilable conflict and its implications will be made known in writing
promptly to all Participating Insurance Companies and Participating Qualified
Plans.
7. Participating Insurance Companies will provide pass-through voting
privileges to Variable Contract owners who invest in registered Separate
Accounts so long as and to the extent that the Commission continues to interpret
the 1940 Act as requiring pass-through voting privileges for Variable Contract
owners. As to Variable Contracts issued by unregistered Separate Accounts,
pass-through voting privileges will be extended to participants to the extent
granted by issuing insurance companies. Each Participating Insurance Company
will also vote shares of the Funds held in its Separate Accounts for which no
voting instructions from Contract owners are timely received, as well as shares
of the Funds which the Participating Insurance Company itself owns, in the same
proportion as those shares of the Funds for which voting instructions from
contract owners are timely received. Participating Insurance Companies will be
responsible for assuring that each of their registered Separate Accounts
participating in the Funds calculates voting privileges in a manner consistent
with other Participating Insurance Companies. The obligation to calculate voting
privileges in a manner consistent with all other registered Separate Accounts
investing in the Funds will be a contractual obligation of all Participating
Insurance Companies under their agreements governing their participation in the
Funds. Each Participating Qualified Plan will vote as required by applicable law
and governing Qualified Plan documents.
8. All reports of potential or existing conflicts received by the Board of
a Fund and all action by such Board with regard to determining the existence of
a conflict, notifying Participating Insurance Companies and Participating
Qualified Plans of a conflict, and determining whether any proposed action
adequately remedies a conflict, will be properly recorded in the minutes of the
meetings of such Board or other appropriate records, and such minutes or other
records shall be made available to the Commission upon request.
9. Each Fund will notify all Participating Insurance Companies that
separate disclosure in their respective Separate Account prospectuses may be
appropriate to advise accounts regarding the potential risks of mixed and shared
funding. Each Fund shall disclose in its prospectus that (a) the Fund is
intended to be a funding vehicle for variable annuity and variable life
insurance contracts offered by various insurance companies and for qualified
pension and retirement plans; (b) due to differences of tax treatment and other
considerations, the interests of various Contract owners participating in the
Fund and/or the interests of Qualified Plans investing in the Fund may at some
time be in conflict; and (c) the Board of such Fund will monitor events in order
to identify the existence of any material irreconcilable conflicts and to
determine what action, if any, should be taken in response to any such conflict.
10. Each Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders (which, for these purposes, will be the persons having a
voting interest in the shares of the Funds), and, in particular, the Funds will
either provide for annual shareholder meetings (except insofar as the Commission
may interpret Section 16 of the 1940 Act not to require such meetings) or comply
with Section 16(c) of the 1940 Act, although the Funds are not the
H-8
type of trust described in Section 16(c) of the 1940 Act, as well as with
Section 16(a) of the 1940 Act and, if and when applicable, Section 16(b) of the
1940 Act. Further, each Fund will act in accordance with the Commission's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of Board Members and with whatever rules the Commission may promulgate
with respect thereto.
11. If and to the extent Rules 6e-2 or 6e-3(T) under the 1940 Act is
amended, or proposed Rule 6e-3 under the 1940 Act is adopted, to provide
exemptive relief from any provision of the 1940 Act or the rules promulgated
thereunder, with respect to mixed or shared funding on terms and conditions
materially different from any exemptions granted in the order requested in the
application, then the Funds and/or Participating Insurance Companies and
Participating Qualified Plans, as appropriate, shall take such steps as may be
necessary to comply with such Rules 6e-2 and 6e-3(T), as amended, or proposed
Rule 6e-3, as adopted, to the extent that such Rules are applicable.
12. The Participating Insurance Companies and Participating Qualified Plans
and/or the Investment Managers, at least annually, will submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out obligations imposed upon it by the conditions contained in
the application. Such reports, materials and data will be submitted more
frequently if deemed appropriate by the Board. The obligations of the
Participating Insurance Companies and Participating Qualified Plans to provide
these reports, materials and data to the Board, when the Board so reasonably
requests, shall be a contractual obligation of all Participating Insurance
Companies and Participating Qualified Plans under their agreements governing
participation in the Funds.
13. If a Qualified Plan should ever become a holder of ten percent or more
of the assets of a Fund, such Qualified Plan will execute a participation
agreement with the Fund that includes the conditions set forth herein to the
extent applicable. A Qualified Plan will execute an application containing an
acknowledgment of this condition upon such Qualified Plan's initial purchase of
the shares of any Fund.
Conclusion:
Applicants assert that, for the reasons summarized above, the requested
exemptions are appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy and
provisions of the 1940 Act.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
H-9
Xxxxxxxxx Variable Products Series Fund, et al.
File No. 812-11698
SECURITIES AND EXCHANGE COMMISSION
Release No. IC-24079
1999 SEC LEXIS 2177
October 13, 1999
ACTION: Order Granting Exemptions
TEXT: Xxxxxxxxx Variable Products Series Fund ("Xxxxxxxxx Trust"), Franklin
Xxxxxxxxx Variable Insurance Products Trust ("VIP Trust"), Xxxxxxxxx Funds
Annuity Company ("TFAC") or any successor to TFAC, and any future open-end
investment company for which TFAC or any affiliate is the administrator,
sub-administrator, investment manager, adviser, principal underwriter, or
sponsor ("Future Funds") filed an application on July 14, 1999, and an amendment
on September 17, 1999 seeking an amended order of the Commission pursuant to
Section 6(c) of the Investment Company Act of 1940 ("1940 Act") exempting them
from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15). The prior order (Rel. No. IC-19879)
granted exemptive relief to permit shares of the Xxxxxxxxx Trust to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies. The proposed relief
would amend the prior order to add as parties to that order the VIP Trust and
any Future Funds and to permit shares of the Xxxxxxxxx Trust, the VIP Trust, and
Future Funds to be issued to and held by qualified pension and retirement plans
outside the separate account context.
A notice of the filing of the application was issued on September 17, 1999
(Rel. No. IC-24018). The notice gave interested persons an opportunity to
request a hearing and stated that an order granting the application would be
issued unless a hearing should be ordered. No request for a hearing has been
filed, and the Commission has not ordered a hearing.
The matter has been considered, and it is found that granting the requested
exemptions is appropriate in the public interest and consistent with the
protection of investors and the purposes intended by the policy and provisions
of the 1940 Act.
Accordingly,
IT IS ORDERED, pursuant to Section 6(c) of the 1940 Act, that the requested
exemptions from Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, be, and hereby are, granted,
effective forthwith.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
H-10
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS,
A I M DISTRIBUTORS, INC., AND
METROPOLITAN LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
TABLE OF CONTENTS
Description Page
----------- ----
Section 1. Available Funds..................................................2
1.1 Availability..................................................2
1.2 Addition, Deletion or Modification of Funds...................2
1.3 No Sales to the General Public................................2
Section 2. Processing Transactions..........................................2
2.1 Timely Pricing and Orders.....................................2
2.2 Timely Payments...............................................3
2.3 Applicable Price..............................................3
2.4 Dividends and Distributions...................................4
2.5 Book Entry....................................................4
Section 3. Costs and Expenses...............................................4
3.1 General.......................................................4
3.2 Parties To Cooperate..........................................4
Section 4. Legal Compliance.................................................4
4.1 Tax Laws......................................................4
4.2 Insurance and Certain Other Laws..............................7
4.3 Securities Laws...............................................7
4.4 Notice of Certain Proceedings and Other Circumstances.........8
4.5 LIFE COMPANY To Provide Documents; Information About AVIF.....9
4.6 AVIF To Provide Documents; Information About LIFE COMPANY....10
Section 5. Mixed and Shared Funding........................................11
5.1 General......................................................11
5.2 Disinterested Trustees.......................................12
5.3 Monitoring for Material Irreconcilable Conflicts.............12
5.4 Conflict Remedies............................................13
5.5 Notice to LIFE COMPANY.......................................14
5.6 Information Requested by Board of Trustees...................14
5.7 Compliance with SEC Rules....................................14
5.8 Other Requirements...........................................15
Section 6. Termination.....................................................15
6.1 Events of Termination........................................15
6.2 Notice Requirement for Termination...........................16
6.3 Funds To Remain Available....................................16
6.4 Survival of Warranties and Indemnifications..................17
6.5 Continuance of Agreement for Certain Purposes................17
Section 7. Parties To Cooperate Respecting Termination.....................17
Section 8. Assignment......................................................17
Section 9. Notices.........................................................17
Section 10. Voting Procedures...............................................18
Section 11. Foreign Tax Credits.............................................19
Section 12. Indemnification.................................................19
12.1 Of AVIF and AIM by LIFE COMPANY and UNDERWRITER..............19
12.2 Of LIFE COMPANY and UNDERWRITER by AVIF and AIM..............21
12.3 Effect of Notice.............................................23
12.4 Successors...................................................24
Section 13. Applicable Law..................................................24
Section 14. Execution in Counterparts.......................................24
Section 15. Severability....................................................24
Section 16. Rights Cumulative...............................................24
Section 17. Headings........................................................24
Section 18. Confidentiality.................................................24
Section 19. Trademarks and Fund Names.......................................25
Section 20. Parties to Cooperate............................................26
Section 21. Amendments......................................................26
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 30th day of April, 2004
("Agreement"), by and among AIM Variable Insurance Funds, a Delaware Trust
("AVIF"), A I M Distributors, Inc., a Delaware corporation, and Metropolitan
Life Insurance Company, a New York life insurance company ("LIFE COMPANY"), on
behalf of itself and each of its segregated asset accounts listed in Schedule A
hereto, as the parties hereto may amend from time to time (each, an "Account,"
and collectively, the "Accounts").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of eighteen separate series ("Series"),
shares ("Shares") each of which are registered under the Securities Act of 1933,
as amended (the "1933 Act") and are currently sold to one or more separate
accounts of life insurance companies to fund benefits under variable annuity
contracts and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto
as the Parties hereto may amend from time to time (each a "Fund"; reference
herein to "AVIF" includes reference to each Fund, to the extent the context
requires) available for purchase by the Accounts; and
WHEREAS, LIFE COMPANY will be the issuer of certain variable annuity
contracts and variable life insurance contracts ("Contracts") as set forth on
Schedule A hereto, as the Parties hereto may amend from time to time, which
Contracts (hereinafter collectively, the "Contracts"), if required by applicable
law, will be registered under the 1933 Act; and
WHEREAS, LIFE COMPANY will fund the Contracts through the Accounts, each of
which may be divided into two or more subaccounts ("Subaccounts"; reference
herein to an "Account" includes reference to each Subaccount thereof to the
extent the context requires); and
WHEREAS, LIFE COMPANY will serve as the depositor of the Accounts, each of
which is registered as a unit investment trust investment company under the 1940
Act (or exempt therefrom), and the security interests deemed to be issued by the
Accounts under the Contracts will be registered as securities under the 1933 Act
(or exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds
on behalf of the Accounts to fund the Contracts; and
1
WHEREAS, AIM is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
Section 1. Available Funds
1.1 Availability.
AVIF will make Shares of each Fund available to LIFE COMPANY for purchase
and redemption at net asset value and with no sales charges, subject to the
terms and conditions of this Agreement. The Board of Trustees of AVIF may refuse
to sell Shares of any Fund to any person, or suspend or terminate the offering
of Shares of any Fund 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 Fund.
1.2 Addition, Deletion or Modification of Funds.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall
include a reference to any such additional Fund. Schedule A, as amended from
time to time, is incorporated herein by reference and is a part hereof.
1.3 No Sales to the General Public.
AVIF represents and warrants that no Shares of any Fund have been or will
be sold to the general public.
Section 2. Processing Transactions
2.1 Timely Pricing and Orders.
(a) AVIF or its designated agent will use its best efforts to provide LIFE
COMPANY with the net asset value per Share for each Fund by 6:00 p.m. Central
Time on each Business Day. As used herein, "Business Day" shall mean any day on
which (i) the New York Stock Exchange is open for regular trading, (ii) AVIF
calculates the Fund's net asset value, and (iii) LIFE COMPANY is open for
business.
(b) LIFE COMPANY will use the data provided by AVIF each Business Day
pursuant to paragraph (a) immediately above to calculate Account unit values and
to process transactions that
2
receive that same Business Day's Account unit values. LIFE COMPANY will perform
such Account processing the same Business Day, and will place corresponding
orders to purchase or redeem Shares with AVIF by 9:00 a.m. Central Time the
following Business Day; provided, however, that AVIF shall provide additional
time to LIFE COMPANY in the event that AVIF is unable to meet the 6:00 p.m. time
stated in paragraph (a) immediately above. Such additional time shall be equal
to the additional time that AVIF takes to make the net asset values available to
LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of
redemption proceeds by AVIF, LIFE COMPANY and AVIF shall net purchase and
redemption orders with respect to each Fund and shall transmit one net payment
per Fund in accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value information
(as determined under SEC guidelines), LIFE COMPANY shall be entitled to an
adjustment to the number of Shares purchased or redeemed to reflect the correct
net asset value per Share. Any material error in the calculation or reporting of
net asset value per Share, dividend or capital gain information shall be
reported promptly upon discovery to LIFE COMPANY. Materiality and reprocessing
cost reimbursement shall be determined in accordance with standards established
by the Parties as provided in Schedule B, attached hereto and incorporated
herein.
2.2 Timely Payments.
LIFE COMPANY will wire payment for net purchases to a custodial account
designated by AVIF by 1:00 p.m. Central Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment for net
redemptions to an account designated by LIFE COMPANY by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY to pay redemption proceeds within the time specified in
Section 22(e) of the 1940 Act or such shorter period of time as may be required
by law.
2.3 Applicable Price.
(a) Share purchase payments and redemption orders that result from purchase
payments, premium payments, surrenders and other transactions under Contracts
(collectively, "Contract transactions") and that LIFE COMPANY receives prior to
the close of regular trading on the New York Stock Exchange on a Business Day
will be executed at the net asset values of the appropriate Funds next computed
after receipt by AVIF or its designated agent of the orders. For purposes of
this Section 2.3(a), LIFE COMPANY shall be the designated agent of AVIF for
receipt of orders relating to Contract transactions on each Business Day and
receipt by such designated agent shall constitute receipt by AVIF; provided that
AVIF receives notice of such orders by 9:00 a.m. Central Time on the next
following Business Day or such later time as computed in accordance with Section
2.1(b) hereof.
(b) All other Share purchases and redemptions by LIFE COMPANY will be
effected at the net asset values of the appropriate Funds next computed after
receipt by AVIF or its designated agent of the order therefor, and such orders
will be irrevocable.
3
2.4 Dividends and Distributions.
AVIF will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to LIFE COMPANY of any income
dividends or capital gain distributions payable on the Shares of any Fund. LIFE
COMPANY hereby elects to reinvest all dividends and capital gains distributions
in additional Shares of the corresponding Fund at the ex-dividend date net asset
values until LIFE COMPANY otherwise notifies AVIF in writing, it being agreed by
the Parties that the ex-dividend date and the payment date with respect to any
dividend or distribution will be the same Business Day. LIFE COMPANY reserves
the right to revoke this election and to receive all such income dividends and
capital gain distributions in cash.
2.5 Book Entry.
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to LIFE COMPANY. Shares ordered from AVIF will
be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
Section 3. Costs and Expenses
3.1 General.
Except as otherwise specifically provided in Schedule C, attached hereto
and made a part hereof, each Party will bear, or arrange for others to bear, all
expenses incident to its performance under this Agreement.
3.2 Parties To Cooperate.
Each Party agrees to cooperate with the others, as applicable, in arranging
to print, mail and/or deliver, in a timely manner, combined or coordinated
prospectuses or other materials of AVIF and the Accounts.
Section 4. Legal Compliance
4.1 Tax Laws.
(a) AVIF represents and warrants that each Fund is currently qualified as a
regulated investment company ("RIC") under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), and represents that it will use its best
efforts to qualify and to maintain qualification of each Fund as a RIC. AVIF
will notify LIFE COMPANY immediately upon having a reasonable basis for
believing that a Fund has ceased to so qualify or that it might not so qualify
in the future.
(b) AVIF represents and warrants that each Fund qualifies as a
"look-through entity" within the meaning of Treas. Reg. Section 1.817-5(f) and
that that it will use its best efforts to comply
4
and to maintain each Fund's compliance with the diversification requirements set
forth in Section 817(h) of the Code and Section 1.817-5(b) of the regulations
under the Code. AVIF will notify LIFE COMPANY immediately upon having a
reasonable basis for believing that a Fund has ceased to so qualify or comply or
that a Fund might not so qualify or comply in the future. In the event of a
breach of this Section 4.1(b) by AVIF, it use its best efforts to adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Section 1.817-5 of the regulations under the Code and make changes that are
necessary so that the Fund may again qualify as a "look-through entity.".
(c) Notwithstanding any other provision of this Agreement, LIFE COMPANY and
AVIF agrees that if the Internal Revenue Service ("IRS") asserts in writing in
connection with any governmental audit or review of LIFE COMPANY or AVIF or any
Fund, to LIFE COMPANY'S or AVIF's knowledge, of any Contract owners, annuitants,
insureds or participants (as appropriate) under the Contracts (collectively,
"Participants"), that any Fund has failed to comply with the diversification
requirements of Section 817(h) of the Code or LIFE COMPANY or AVIF otherwise
becomes aware of any facts that could give rise to any claim against AVIF or its
affiliates as a result of such a failure or alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF, or AVIF shall promptly
notify LIFE COMPANY, as the case may be of such assertion or
potential claim (subject to the Confidentiality provisions of
Section 18 as to any Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to minimize any
liability that may arise as a result of such failure or alleged
failure;
(iii) LIFE COMPANY shall use its best efforts to minimize any
liability of AVIF or its affiliates resulting from such failure,
including, without limitation, demonstrating, pursuant to
Treasury Regulations Section 1.817-5(a)(2)(i) and (ii), to the
Commissioner of the IRS that such failure was inadvertent by
presenting relevant information provided by AVIF, it being
understood that any payment required to be made by LIFE COMPANY
to the IRS under Treasury Regulations Section 1.817-5(a)(2)(iii)
and any associated legal and other related costs shall be fully
reimbursed to LIFE COMPANY by AVIF, unless the Fund's or Funds'
failure to comply with Section 817(h) of the Code or the
regulations thereunder is as a result of LIFE COMPANY'S failure
to comply with sections 4.1(d) or 4.1(e) of this Agreement;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal
and accounting advisors to participate in any conferences,
settlement discussions or other administrative or judicial
proceeding or contests (including judicial appeals thereof) with
the IRS, any Participant or any other claimant regarding any
claims that could give rise to liability to AVIF or its
affiliates as a result of such a failure or alleged failure;
provided, however, that LIFE COMPANY will retain control of the
conduct of such conferences discussions, proceedings, contests or
appeals;
5
(v) any written materials to be submitted by LIFE COMPANY to the IRS,
any Participant or any other claimant in connection with any of
the foregoing proceedings or contests (including, without
limitation, any such materials to be submitted to the IRS
pursuant to Treasury Regulations Section 1.817-5(a)(2)), (a)
shall be provided by LIFE COMPANY to AVIF (together with any
supporting information or analysis); subject to the
confidentiality provisions of Section 18, at least ten (10)
business days or such shorter period to which the Parties hereto
agree prior to the day on which such proposed materials are to be
submitted, and (b) shall not be submitted by LIFE COMPANY to any
such person without the express written consent of AVIF which
shall not be unreasonably withheld;
(vi) LIFE COMPANY shall provide to AVIF and AVIF shall provide to LIFE
COMPANY or AVIF's or LIFE COMPANY's affiliates and their
accounting and legal advisors with such cooperation as AVIF or
LIFE COMPANY shall reasonably request (including, without
limitation, by permitting AVIF or LIFE COMPANY and its accounting
and legal advisors, as the case may be, to review the relevant
books and records of AVIF or LIFE COMPANY) in order to facilitate
the preparation of any written submission by LIFE COMPANY
pursuant to the preceding clause or a review by AVIF or its
advisors of any written submissions provided to it pursuant to
the preceding clause or its assessment of the validity or amount
of any claim against its arising from such a failure or alleged
failure;
(vii) LIFE COMPANY shall not with respect to any claim of the IRS or
any Participant that would give rise to a claim against AVIF or
its affiliates (a) compromise or settle any claim, (b) accept any
adjustment on audit, or (c) forego any allowable administrative
or judicial appeals, without the express written consent of AVIF
or its affiliates, which shall not be unreasonably withheld,
provided that LIFE COMPANY shall not be required, after
exhausting all administrative remedies, to appeal any adverse
judicial decision unless AVIF or its affiliates shall have
provided an opinion of independent counsel to the effect that a
reasonable basis exists for taking such appeal; and provided
further that the costs of any such appeal shall be borne by AVIF
unless the Fund's or Funds' failure to comply with Section 817(h)
of the Code or the regulations thereunder is as a result of LIFE
COMPANY'S failure to comply with sections 4.1(d) or 4.1(e) of
this Agreement; and
(viii) AVIF and its affiliates shall have no liability as a result of
such failure or alleged failure if LIFE COMPANY fails to comply
with any of the foregoing clauses (i) through (vii), and such
failure could be shown to have materially contributed to the
liability.
Should AVIF or any of its affiliates refuse to give its written consent to any
compromise or settlement of any claim or liability hereunder, LIFE COMPANY may,
in its discretion, authorize AVIF or its
6
affiliates to act in the name of LIFE COMPANY in, and to control the conduct of,
such conferences, discussions, proceedings, contests or appeals and all
administrative or judicial appeals thereof, and in that event AVIF or its
affiliates shall bear the fees and expenses associated with the conduct of the
proceedings that it is so authorized to control; provided, that in no event
shall LIFE COMPANY have any liability resulting from AVIF's refusal to accept
the proposed settlement or compromise with respect to any failure caused by AVIF
whether or not LIFE COMPANY authorizes AVIF or its affiliates to act in the name
of LIFE COMPANY. As used in this Agreement, the term "affiliates" shall have the
same meaning as "affiliated person" as defined in Section 2(a)(3) of the 1940
Act. AVIF and LIFE COMPANY, each, shall comply with MetLife's written
instructions dealing with investor control, appended hereto as Schedule D.
(d) LIFE COMPANY represents and warrants that the Contracts currently are
and will be treated as annuity contracts or life insurance contracts under
applicable provisions of the Code and that it will use its best efforts to
maintain such treatment; LIFE COMPANY will notify AVIF immediately upon having a
reasonable basis for believing that any of the Contracts have ceased to be so
treated or that they might not be so treated in the future.
(e) LIFE COMPANY represents and warrants that each Account is a "segregated
asset account" and that interests in each Account are offered exclusively
through the purchase of or transfer into a "variable contract," within the
meaning of such terms under Section 817 of the Code and the regulations
thereunder. LIFE COMPANY will use its best efforts to continue to meet such
definitional requirements, and it will notify AVIF immediately upon having a
reasonable basis for believing that such requirements have ceased to be met or
that they might not be met in the future.
4.2 Insurance and Certain Other Laws.
(a) AVIF will use its best efforts to comply with any applicable state
insurance laws or regulations, including, the furnishing of information not
otherwise available to LIFE COMPANY which is required by state insurance law to
enable LIFE COMPANY to obtain the authority needed to issue the Contracts in any
applicable state.
(b) LIFE COMPANY represents and warrants that (i) it is an insurance
company duly organized, validly existing and in good standing under the laws of
the State of New York and has full corporate power, authority and legal right to
execute, deliver and perform its duties and comply with its obligations under
this Agreement, (ii) it has legally and validly established and maintains each
Account as a segregated asset account under the New York Insurance Law and the
regulations thereunder, and (iii) the Contracts comply in all material respects
with all other applicable federal and state laws and regulations.
(c) AVIF represents and warrants that it is lawfully organized, validly
existing, and in good standing under the laws of the State of Delaware and has
full power, authority, and legal right to execute, deliver, and perform its
duties and comply with its obligations under this Agreement.
4.3 Securities Laws.
7
(a) LIFE COMPANY represents and warrants that (i) interests in each Account
pursuant to the Contracts will be registered under the 1933 Act to the extent
required by the 1933 Act, (ii) the Contracts will be duly authorized for
issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and the
law(s) of LIFE COMPANY's state(s) of organization and domicile, (iii) each
Account is and will remain registered under the 1940 Act, to the extent required
by the 1940 Act, (iv) each Account does and will comply in all material respects
with the requirements of the 1940 Act and the rules thereunder, to the extent
required, (v) each Account's 1933 Act registration statement relating to the
Contracts, together with any amendments thereto, will at all times comply in all
material respects with the requirements of the 1933 Act and the rules
thereunder, (vi) LIFE COMPANY will amend the registration statement for its
Contracts under the 1933 Act and for its Accounts under the 1940 Act from time
to time as required in order to effect the continuous offering of its Contracts
or as may otherwise be required by applicable law, and (vii) each Account
Prospectus will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(b) AVIF represents and warrants that (i) Shares sold pursuant to this
Agreement will be registered under the 1933 Act to the extent required by the
1933 Act and duly authorized for issuance and sold in compliance with Delaware
law, (ii) AVIF is and will remain registered under the 1940 Act to the extent
required by the 1940 Act, (iii) AVIF will amend the registration statement for
its Shares under the 1933 Act and itself under the 1940 Act from time to time as
required in order to effect the continuous offering of its Shares, (iv) AVIF
does and will comply in all material respects with the requirements of the 1940
Act and the rules thereunder, (v) AVIF's 1933 Act registration statement,
together with any amendments thereto, will at all times comply in all material
respects with the requirements of the 1933 Act and rules thereunder, and (vi)
AVIF's Prospectus will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(c) AVIF will at its expense register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and to the extent
reasonably deemed advisable by AVIF.
(d) AVIF represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities having access to
the funds and/or securities of the Fund are and continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund in an amount not less than the minimal coverage as required currently by
Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.
4.4 Notice of Certain Proceedings and Other Circumstances.
(a) AVIF or AIM will immediately notify LIFE COMPANY of (i) the issuance by
any court or regulatory body of any stop order, cease and desist order, or other
similar order with respect to AVIF's registration statement under the 1933 Act
or AVIF Prospectus, (ii) any request by the SEC for any amendment to such
registration statement or AVIF Prospectus that may affect the offering of Shares
of AVIF, (iii) the initiation of any proceedings for that purpose or for any
other purpose relating to the registration or offering of AVIF's Shares, or (iv)
any other action or circumstances that may prevent the lawful offer or sale of
Shares of any Fund in any state or jurisdiction, including, without limitation,
any circumstances in which (a) such Shares are not registered and, in all
material
8
respects, issued and sold in accordance with applicable state and federal law,
or (b) such law precludes the use of such Shares as an underlying investment
medium of the Contracts issued or to be issued by LIFE COMPANY. AVIF and AIM
will make every reasonable effort to prevent the issuance, with respect to any
Fund, of any such stop order, cease and desist order or similar order and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
time.
(b) LIFE COMPANY will immediately notify AVIF of (i) the issuance by any
court or regulatory body of any stop order, cease and desist order, or other
similar order with respect to each Account's registration statement under the
1933 Act relating to the Contracts or each Account Prospectus, (ii) any request
by the SEC for any amendment to such registration statement or Account
Prospectus that may affect the offering of Shares of AVIF, (iii) the initiation
of any proceedings for that purpose or for any other purpose relating to the
registration or offering of each Account's interests pursuant to the Contracts,
or (iv) any other action or circumstances that may prevent the lawful offer or
sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. LIFE COMPANY will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
time.
4.5 LIFE COMPANY To Provide Documents; Information About AVIF.
(a) LIFE COMPANY will provide to AVIF or its designated agent at least one
(1) complete copy of all SEC registration statements, Account Prospectuses,
reports, any preliminary and final voting instruction solicitation material,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to each Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) LIFE COMPANY will provide to AVIF or its designated agent at least one
(1) complete copy of each piece of sales literature or other promotional
material in which AVIF or any of its affiliates is named, at least five (5)
Business Days prior to its use or such shorter period as the Parties hereto may,
from time to time, agree upon. No such material shall be used if AVIF or its
designated agent objects to such use within five (5) Business Days after receipt
of such material or such shorter period as the Parties hereto may, from time to
time, agree upon. AVIF hereby designates AIM as the entity to receive such sales
literature, until such time as AVIF appoints another designated agent by giving
notice to LIFE COMPANY in the manner required by Section 9 hereof.
(c) Neither LIFE COMPANY nor any of its affiliates, will give any
information or make any representations or statements on behalf of or concerning
AVIF or its affiliates in connection with the sale of the Contracts other than
(i) the information or representations contained in the registration statement,
including the AVIF Prospectus contained therein, relating to Shares, as such
registration statement and AVIF Prospectus may be amended from time to time; or
(ii) in reports or proxy materials for AVIF; or (iii) in published reports for
AVIF that are in the public domain and approved by AVIF for distribution; or
(iv) in sales literature or other promotional material approved by AVIF, except
with the express written permission of AVIF.
9
(d) LIFE COMPANY shall adopt and implement procedures reasonably designed
to ensure that information concerning AVIF and its affiliates that is intended
for use only by brokers or agents selling the Contracts (i.e., information that
is not intended for distribution to Participants) ("broker only materials") is
so used, and neither AVIF nor any of its affiliates shall be liable for any
losses, damages or expenses relating to the improper use of such broker only
materials.
(e) For the purposes of this Section 4.5, 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, (e.g., on-line
networks such as the Internet or other electronic messages), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising under the
NASD rules, the 1933 Act or the 0000 Xxx.
4.6 AVIF To Provide Documents; Information About LIFE COMPANY.
(a) AVIF will provide to LIFE COMPANY at least one (1) complete copy of all
SEC registration statements, AVIF Prospectuses, reports, any preliminary and
final proxy material, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to AVIF or the
Shares of a Fund, contemporaneously with the filing of such document with the
SEC or other regulatory authorities.
(b) AVIF will provide to LIFE COMPANY a camera ready copy of all AVIF
prospectuses and printed copies, in an amount specified by LIFE COMPANY, of AVIF
statements of additional information, proxy materials, periodic reports to
shareholders and other materials required by law to be sent to Participants who
have allocated any Contract value to a Fund. AVIF will provide such copies to
LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, as the case may
be, to print and distribute such materials within the time required by law to be
furnished to Participants.
(c) AVIF will provide to LIFE COMPANY or its designated agent at least one
(1) complete copy of each piece of sales literature or other promotional
material in which LIFE COMPANY, or any of its respective affiliates is named, or
that refers to the Contracts, at least five (5) Business Days prior to its use
or such shorter period as the Parties hereto may, from time to time, agree upon.
No such material shall be used if LIFE COMPANY or its designated agent objects
to such use within five (5) Business Days after receipt of such material or such
shorter period as the Parties hereto may, from time to time, agree upon. LIFE
COMPANY shall receive all such sales literature until such time as it appoints a
designated agent by giving notice to AVIF in the manner required by Section 9
hereof.
10
(d) Neither AVIF nor any of its affiliates will give any information or
make any representations or statements on behalf of or concerning LIFE COMPANY,
each Account, or the Contracts other than (i) the information or representations
contained in the registration statement, including each Account Prospectus
contained therein, relating to the Contracts, as such registration statement and
Account Prospectus may be amended from time to time; or (ii) in published
reports for the Account or the Contracts that are in the public domain and
approved by LIFE COMPANY for distribution; or (iii) in sales literature or other
promotional material approved by LIFE COMPANY or its affiliates, except with the
express written permission of LIFE COMPANY.
(e) AVIF shall cause its principal underwriter to adopt and implement
procedures reasonably designed to ensure that information concerning LIFE
COMPANY, and its respective affiliates that is intended for use only by brokers
or agents selling the Contracts (i.e., information that is not intended for
distribution to Participants) ("broker only materials") is so used, and neither
LIFE COMPANY, nor any of its respective affiliates shall be liable for any
losses, damages or expenses relating to the improper use of such broker only
materials.
(f) For purposes of this Section 4.6, 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, (e.g., on-line
networks such as the Internet or other electronic messages), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising under the
NASD rules, the 1933 Act or the 1940 Act.
Section 5. Mixed and Shared Funding
5.1 General.
The SEC has granted an order to AVIF exempting it from certain
provisions of the 1940 Act and rules thereunder so that AVIF may be available
for investment by certain other entities, including, without limitation,
separate accounts funding variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies unaffiliated with LIFE
COMPANY, and trustees of qualified pension and retirement plans (collectively,
"Mixed and Shared Funding"). The Parties recognize that the SEC has imposed
terms and conditions for such orders that are substantially identical to many of
the provisions of this Section 5. Sections 5.2 through 5.8 below shall apply
pursuant to such an exemptive order granted to AVIF. AVIF hereby notifies LIFE
COMPANY that, in the event that AVIF implements Mixed and Shared Funding, it may
be appropriate to include in the prospectus pursuant to which a Contract is
offered disclosure regarding the potential risks of Mixed and Shared Funding.
11
5.2 Disinterested Trustees.
AVIF agrees that its Board of Trustees shall at all times consist of
trustees a majority of whom (the "Disinterested Trustees") are not interested
persons of AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the
rules thereunder and as modified by any applicable orders of the SEC, except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any director, then the operation of this condition
shall be suspended (a) for a period of forty-five (45) days if the vacancy or
vacancies may be filled by the Board;(b) for a period of sixty (60) days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.
5.3 Monitoring for Material Irreconcilable Conflicts.
AVIF agrees that its Board of Trustees will monitor for the existence of
any material irreconcilable conflict between the interests of the Participants
in all separate accounts of life insurance companies utilizing AVIF
("Participating Insurance Companies"), including each Account, and participants
in all qualified retirement and pension plans investing in AVIF ("Participating
Plans"). LIFE COMPANY agrees to inform the Board of Trustees of AVIF of the
existence of or any potential for any such material irreconcilable conflict of
which it is aware. The concept of a "material irreconcilable conflict" is not
defined by the 1940 Act or the rules thereunder, but the Parties recognize that
such a conflict may arise for a variety of reasons, including, without
limitation:
(a) an action by any state insurance or other 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 Fund are being managed;
(e) a difference in voting instructions given by variable annuity contract
and variable life insurance contract Participants or by Participants of
different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the voting
instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting instructions
of Plan participants.
Consistent with the SEC's requirements in connection with exemptive orders
of the type referred to in Section 5.1 hereof, LIFE COMPANY will assist the
Board of Trustees in carrying out its responsibilities by providing the Board of
Trustees with all information reasonably necessary for
12
the Board of Trustees to consider any issue raised, including information as to
a decision by LIFE COMPANY to disregard voting instructions of Participants.
LIFE COMPANY's responsibilities in connection with the foregoing shall be
carried out with a view only to the interests of Participants.
5.4 Conflict Remedies.
(a) It is agreed that if it is determined by a majority of the members of
the Board of Trustees or a majority of the Disinterested Trustees that a
material irreconcilable conflict exists, LIFE COMPANY will, if it is a
Participating Insurance Company for which a material irreconcilable conflict is
relevant, 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 material irreconcilable conflict, which
steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the Accounts
from AVIF or any Fund and reinvesting such assets in a different
investment medium, including another Fund of AVIF, or submitting
the question whether such segregation should be implemented to a
vote of all affected Participants and, as appropriate,
segregating the assets of any particular group (e.g., annuity
Participants, life insurance Participants or all Participants)
that votes in favor of such segregation, or offering to the
affected Participants the option of making such a change; and
(ii) establishing a new registered investment company of the type
defined as a "management company" in Section 4(3) of the 1940 Act
or a new separate account that is operated as a management
company.
(b) If the material irreconcilable conflict arises because of LIFE
COMPANY's decision to disregard Participant voting instructions and that
decision represents a minority position or would preclude a majority vote, LIFE
COMPANY may be required, at AVIF's election, to withdraw each Account's
investment in AVIF or any Fund. No charge or penalty will be imposed as a result
of such withdrawal. Any such withdrawal must take place within six (6) months
after AVIF gives notice to LIFE COMPANY that this provision is being
implemented, and until such withdrawal AVIF shall continue to accept and
implement orders by LIFE COMPANY for the purchase and redemption of Shares of
AVIF.
(c) If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to LIFE COMPANY conflicts with the
majority of other state regulators, then LIFE COMPANY will withdraw each
Account's investment in AVIF within six (6) months after AVIF's Board of
Trustees informs LIFE COMPANY that it has determined that such decision has
created a material irreconcilable conflict, and until such withdrawal AVIF shall
continue to accept and implement orders by LIFE COMPANY for the purchase and
redemption of Shares of AVIF. No charge or penalty will be imposed as a result
of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in resolving
any material irreconcilable conflict will be carried out at its expense and with
a view only to the interests of Participants.
13
(e) For purposes hereof, a majority of the Disinterested Trustees will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will AVIF or any of its
affiliates be required to establish a new funding medium for any Contracts. LIFE
COMPANY will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
5.5 Notice to LIFE COMPANY.
AVIF will promptly make known in writing to LIFE COMPANY the Board of
Trustees' determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
5.6 Information Requested by Board of Trustees.
LIFE COMPANY and AVIF (or its investment adviser) will at least annually
submit to the Board of Trustees of AVIF such reports, materials or data as the
Board of Trustees may reasonably request so that the Board of Trustees may fully
carry out the obligations imposed upon it by the provisions hereof or any
exemptive order granted by the SEC to permit Mixed and Shared Funding, and said
reports, materials and data will be submitted at any reasonable time deemed
appropriate by the Board of Trustees. All reports received by the Board of
Trustees of potential or existing conflicts, and all Board of Trustees actions
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies and Participating Plans of a conflict, and determining
whether any proposed action adequately remedies a conflict, will be properly
recorded in the minutes of the Board of Trustees or other appropriate records,
and such minutes or other records will be made available to the SEC upon
request.
5.7 Compliance with SEC Rules.
If, at any time during which AVIF is serving as an investment medium for
variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding, AVIF agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed
14
modified if and only to the extent required in order also to comply with the
terms and conditions of such exemptive relief that is afforded by any of said
rules that are applicable.
5.8 Other Requirements.
AVIF will require that each Participating Insurance Company and
Participating Plan enter into an agreement with AVIF that contains in substance
the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b),
4.5(a), 5, and 10 of this Agreement.
Section 6. Termination
6.1 Events of Termination.
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of any party, with or without cause with respect to the
Fund, upon three (3) months advance written notice to the other parties, or, if
later, upon receipt of any required exemptive relief from the SEC, unless
otherwise agreed to in writing by the parties; or
(b) at the option of AVIF upon institution of formal proceedings against
LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding LIFE COMPANY's obligations
under this Agreement or related to the sale of the Contracts, the operation of
each Account, or the purchase of Shares, if, in each case, AVIF reasonably
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on the Fund with respect to which the Agreement is to be terminated; or
(c) at the option of LIFE COMPANY upon institution of formal proceedings
against AVIF, its principal underwriter, or its investment adviser by the NASD,
the SEC, or any state insurance regulator or any other regulatory body regarding
AVIF's obligations under this Agreement or related to the operation or
management of AVIF or the purchase of AVIF Shares, if, in each case, LIFE
COMPANY reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing material
adverse consequences on LIFE COMPANY, or the Subaccount corresponding to the
Fund with respect to which the Agreement is to be terminated; or
(d) at the option of any Party in the event that (i) the Fund's Shares are
not registered and, in all material respects, issued and sold in accordance with
any applicable federal or state law, or (ii) such law precludes the use of such
Shares as an underlying investment medium of the Contracts issued or to be
issued by LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the
Fund pursuant to Section 5 hereof; or
15
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC
under Subchapter M of the Code or under successor or similar provisions, or if
LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANY if the Fund fails to comply with Section
817(h) of the Code or with successor or similar provisions, or if LIFE COMPANY
reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by LIFE COMPANY cease to
qualify as annuity contracts or life insurance contracts under the Code (other
than by reason of the Fund's noncompliance with Section 817(h) or Subchapter M
of the Code) or if interests in an Account under the Contracts are not
registered, where required, and, in all material respects, are not issued or
sold in accordance with any applicable federal or state law; or
(i) upon another Party's material breach of any provision of this
Agreement.
6.2 Notice Requirement for Termination.
No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other Party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given at
least three (3) months in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of
Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given at
least ninety (90) days in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto or required by the NASD, SEC,
any state insurance regulator or other regulatory body; and
(c) in the event that any termination is based upon the provisions of
Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written
notice shall be given as soon as possible within twenty-four (24) hours after
the terminating Party learns of the event causing termination to be required.
6.3 Funds To Remain Available.
Notwithstanding any termination of this Agreement, AVIF will, at the option
of LIFE COMPANY, continue to make available additional shares of the Fund
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 will be permitted to reallocate investments in
the Fund (as in effect on such date), 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 6.3
16
will not apply to any terminations under Section 5 and the effect of such
terminations will be governed by Section 5 of this Agreement.
6.4 Survival of Warranties and Indemnifications.
All warranties and indemnifications will survive the termination of this
Agreement.
6.5 Continuance of Agreement for Certain Purposes.
If any Party terminates this Agreement with respect to any Fund pursuant to
Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, this
Agreement shall nevertheless continue (to extent permitted, in the case of
terminations pursuant to Sections 6.1(b) or 6.1(c) by any applicable regulatory
body or order) in effect as to any Shares of that Fund that are outstanding as
of the date of such termination (the "Initial Termination Date"). This
continuation shall extend to the earlier of the date as of which an Account owns
no Shares of the affected Fund or a date (the "Final Termination Date") six (6)
months following the Initial Termination Date, except that LIFE COMPANY may, by
written notice shorten said six (6) month period in the case of a termination
pursuant to Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i).
Section 7. Parties To Cooperate Respecting Termination
The Parties hereto agree to cooperate and give reasonable assistance to one
another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Contracts in such Fund.
Section 8. Assignment
This Agreement may not be assigned by any Party, except with the written
consent of each other Party.
Section 9. Notices
Notices and communications required or permitted will be given by means
mutually acceptable to the Parties concerned. Each other notice or communication
required or permitted by this Agreement will be given to the following persons
at the following addresses and facsimile numbers, or such other persons,
addresses or facsimile numbers as the Party receiving such notices or
communications may subsequently direct in writing:
17
AIM Variable Insurance Funds
A I M Distributors, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Metropolitan Life Insurance Company
000X X.X. Xxxxxxx Xxx Xxxxx
Xxxxx 000X
Xxxxxx, Xxx Xxxxxx 00000
Facsimile: 000-000-0000
Attn: Xxxxxxx X. Model
with a copy to:
Metropolitan Life Insurance Company
1 MetLife Plaza, 00-00 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx, Esq.
Section 10. Voting Procedures
Subject to the cost allocation procedures set forth in Section 3 hereof,
LIFE COMPANY will distribute all proxy material furnished by AVIF to
Participants to whom pass-through voting privileges are required to be extended
and will solicit voting instructions from Participants. LIFE COMPANY will vote
Shares in accordance with timely instructions received from Participants. LIFE
COMPANY will vote Shares that are (a) not attributable to Participants to whom
pass-through voting privileges are extended, or (b) attributable to
Participants, but for which no timely instructions have been received, in the
same proportion as Shares for which said instructions have been received from
Participants, so long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass through voting privileges for Participants. Neither
LIFE COMPANY nor any of its affiliates will in any way recommend action in
connection with or oppose or interfere with the solicitation of proxies for the
Shares held for such Participants. LIFE COMPANY reserves the right to vote
shares held in any Account in its own right, to the extent permitted by law.
LIFE COMPANY shall be responsible for assuring that each of its Accounts holding
Shares calculates voting privileges in a manner consistent with that of other
Participating Insurance Companies or in the manner required by the Mixed and
Shared Funding exemptive order obtained by AVIF. AVIF will notify LIFE COMPANY
of any changes of interpretations or amendments to Mixed and Shared Funding
exemptive order it has obtained. AVIF will comply with all provisions of the
1940 Act requiring voting by shareholders, and in particular, AVIF either will
provide for annual meetings (except insofar as the SEC may interpret Section 16
of the 1940 Act not to require such meetings) or will comply
18
with Section 16(c) of the 1940 Act (although AVIF is not one of the trusts
described in Section 16(c) of that Act) as well as with Sections 16(a) and, if
and when applicable, 16(b). Further, AVIF will act in accordance with the SEC's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of trustees and with whatever rules the SEC may promulgate with
respect thereto.
Section 11. Foreign Tax Credits
AVIF agrees to consult in advance with LIFE COMPANY concerning any decision
to elect or not to elect pursuant to Section 853 of the Code to pass through the
benefit of any foreign tax credits to its shareholders.
Section 12. Indemnification
12.1 Of AVIF and AIM by LIFE COMPANY.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below,
LIFE COMPANY agrees to indemnify and hold harmless AVIF, AIM, their affiliates,
and each person, if any, who controls AVIF, AIM, or their affiliates within the
meaning of Section 15 of the 1933 Act and each of their respective trustees and
officers, (collectively, the "Indemnified Parties" for purposes of this Section
12.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of LIFE COMPANY) or actions
in respect thereof (including, to the extent reasonable, legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise; provided, the Account owns
shares of the Fund and insofar as such losses, claims, damages, liabilities or
actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, the
Contracts, or sales literature or advertising 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 LIFE COMPANY by
or on behalf of AVIF or AIM for use in any Account's 1933 Act
registration statement, any Account Prospectus, the Contracts, or
sales literature or advertising or otherwise for use in
connection with the sale of Contracts or Shares (or any amendment
or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in AVIF's 1933 Act registration
19
statement, AVIF Prospectus, sales literature or advertising of
AVIF, or any amendment or supplement to any of the foregoing, not
supplied for use therein by or on behalf of LIFE COMPANY or its
affiliates and on which such persons have reasonably relied) or
the negligent, illegal or fraudulent conduct of LIFE COMPANY or
its affiliates or persons under their control (including, without
limitation, their employees and "persons associated with a
member," as that term is defined in paragraph (q) of Article I of
the NASD's By-Laws), in connection with the sale or distribution
of the Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of the
foregoing, 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 and in conformity with
information furnished to AVIF, AIM or their affiliates by or on
behalf of LIFE COMPANY or its affiliates for use in AVIF's 1933
Act registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by LIFE COMPANY to perform the
obligations, provide the services and furnish the materials
required of them under the terms of this Agreement, or any
material breach of any representation and/or warranty made by
LIFE COMPANY in this Agreement or arise out of or result from any
other material breach of this Agreement by LIFE COMPANY; or
(v) arise as a result of failure by the Contracts issued by LIFE
COMPANY to qualify as annuity contracts or life insurance
contracts under the Code, otherwise than by reason of any Fund's
failure to comply with Subchapter M or Section 817(h) of the
Code.
(b) LIFE COMPANY shall not be liable under this Section 12.1 with respect
to any losses, claims, damages, liabilities or actions to which an Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance by that Indemnified Party of its duties or
by reason of that Indemnified Party's reckless disregard of obligations or
duties (i) under this Agreement, or (ii) to AVIF or AIM.
(c) LIFE COMPANY shall not be liable under this Section 12.1 with respect
to any action against an Indemnified Party unless AVIF or AIM shall have
notified LIFE COMPANY in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the action 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 LIFE
20
COMPANY of any such action shall not relieve LIFE COMPANY from any liability
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this Section 12.1. Except as otherwise provided
herein, in case any such action is brought against an Indemnified Party, LIFE
COMPANY shall be entitled to participate, at its own expense, in the defense of
such action and also shall be entitled to assume the defense thereof, with
counsel approved by the Indemnified Party named in the action, which approval
shall not be unreasonably withheld. After notice from LIFE COMPANY to such
Indemnified Party of LIFE COMPANY's election to assume the defense thereof, the
Indemnified Party will cooperate fully with LIFE COMPANY and shall bear the fees
and expenses of any additional counsel retained by it, and LIFE COMPANY will not
be liable to such Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof, other than reasonable costs of
investigation.
12.2 Of LIFE COMPANY by AVIF and AIM.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e),
below, AVIF and AIM agree to indemnify and hold harmless LIFE COMPANY and its
affiliates, and each person, if any, who controls LIFE COMPANY and its
affiliates within the meaning of Section 15 of the 1933 Act and each of their
respective trustees and officers, (collectively, the "Indemnified Parties" for
purposes of this Section 12.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
AVIF and/or AIM) or actions in respect thereof (including, to the extent
reasonable, legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law, or otherwise;
provided, the Account owns shares of the Fund and insofar as such losses,
claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus or sales literature
or advertising of AVIF (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 AVIF or its
affiliates by or on behalf of LIFE COMPANY and its affiliates for
use in AVIF's 1933 Act registration statement, AVIF Prospectus,
or in sales literature or advertising or otherwise for use in
connection with the sale of Contracts or Shares (or any amendment
or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in any Account's 1933 Act registration statement, any
Account Prospectus, sales literature or advertising for the
Contracts, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of AVIF,
AIM or their affiliates
21
and on which such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of AVIF, AIM or their
affiliates or persons under their control (including, without
limitation, their employees and "persons associated with a
member" as that term is defined in Section (q) of Article I of
the NASD By-Laws), in connection with the sale or distribution of
AVIF Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, sales
literature or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing, 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 in conformity with information furnished to LIFE COMPANY
and its affiliates by or on behalf of AVIF or AIM for use in any
Account's 1933 Act registration statement, any Account
Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by AVIF to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement, or any material
breach of any representation and/or warranty made by AVIF in this
Agreement or arise out of or result from any other material
breach of this Agreement by AVIF.
(b) The parties agree that the foregoing indemnification by AVIF shall not
apply to any acts or omissions of AIM. Except to the extent provided in Sections
12.2(c), 12.2(d) and 12.2(e) hereof, AVIF and AIM agree to indemnify and hold
harmless the Indemnified Parties from and against any and all losses, claims,
damages, liabilities (including amounts paid in settlement thereof with, the
written consent of AVIF and/or AIM) or actions in respect thereof (including, to
the extent reasonable, legal and other expenses) to which the Indemnified
Parties may become subject directly or indirectly under any statute, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
actions directly or indirectly result from or arise out of the failure of any
Fund to operate as a regulated investment company in compliance with (i)
Subchapter M of the Code and regulations thereunder, or (ii) Section 817(h) of
the Code and regulations thereunder, including, without limitation, any income
taxes and related penalties, rescission charges, liability under state law to
Participants asserting liability against LIFE COMPANY pursuant to the Contracts,
the costs of any ruling and closing agreement or other settlement with the IRS,
and the cost of any substitution by LIFE COMPANY of Shares of another investment
company or portfolio for those of any adversely affected Fund as a funding
medium for each Account that LIFE COMPANY reasonably deems necessary or
appropriate as a result of the noncompliance.
(c) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that
22
Indemnified Party of its duties or by reason of such Indemnified Party's
reckless disregard of its obligations and duties (i) under this Agreement, or
(ii) to LIFE COMPANY, each Account or Participants.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any action against an Indemnified Party unless the Indemnified Party
shall have notified AVIF and/or AIM in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
action 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 AVIF or AIM of any such action shall not relieve
AVIF or AIM from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
12.2. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, AVIF and/or AIM will be entitled to participate,
at its own expense, in the defense of such action and also shall be entitled to
assume the defense thereof (which shall include, without limitation, the conduct
of any ruling request and closing agreement or other settlement proceeding with
the IRS), with counsel approved by the Indemnified Party named in the action,
which approval shall not be unreasonably withheld. After notice from AVIF and/or
AIM to such Indemnified Party of AVIF's or AIM's election to assume the defense
thereof, the Indemnified Party will cooperate fully with AVIF and AIM and shall
bear the fees and expenses of any additional counsel retained by it, and AVIF
and AIM will not be liable to such Indemnified Party under this Agreement for
any legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof, other than reasonable
costs of investigation.
(e) In no event shall AVIF or AIM be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including,
without limitation, LIFE COMPANY, or any other Participating Insurance Company
or any Participant, with respect to any losses, claims, damages, liabilities or
expenses that arise out of or result from (i) a breach of any representation,
warranty, and/or covenant made by LIFE COMPANY hereunder or by any Participating
Insurance Company under an agreement containing substantially similar
representations, warranties and covenants; (ii) the failure by LIFE COMPANY or
any Participating Insurance Company to maintain its segregated asset account
(which invests in any Fund) as a legally and validly established segregated
asset account under applicable state law and as a duly registered unit
investment trust under the provisions of the 1940 Act (unless exempt therefrom);
or (iii) the failure by LIFE COMPANY or any Participating Insurance Company to
maintain its variable annuity or life insurance contracts (with respect to which
any Fund serves as an underlying funding vehicle) as annuity contracts or life
insurance contracts under applicable provisions of the Code.
12.3 Effect of Notice.
Any notice given by the indemnifying Party to an Indemnified Party referred
to in Sections 12.1(c) or 12.2(d) above of participation in or control of any
action by the indemnifying Party will in
23
no event be deemed to be an admission by the indemnifying Party of liability,
culpability or responsibility, and the indemnifying Party will remain free to
contest liability with respect to the claim among the Parties or otherwise.
12.4 Successors.
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
Section 13. Applicable Law
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Delaware law, without regard for that state's
principles of conflict of laws.
Section 14. Execution in Counterparts
This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
Section 15. Severability
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
Section 16. Rights Cumulative
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, that the Parties are entitled to under federal and state
laws.
Section 17. Headings
The Table of Contents and headings used in this Agreement are for purposes
of reference only and shall not limit or define the meaning of the provisions of
this Agreement.
Section 18. Confidentiality
AVIF acknowledges that the identities of the customers of LIFE COMPANY or
any of its affiliates (collectively, the "LIFE COMPANY Protected Parties" for
purposes of this Section 18),
24
information maintained regarding those customers, and all computer programs and
procedures or other information developed by the LIFE COMPANY Protected Parties
or any of their employees or agents in connection with LIFE COMPANY's
performance of its duties under this Agreement are the valuable property of the
LIFE COMPANY Protected Parties. AVIF agrees that if it comes into possession of
any list or compilation of the identities of or other information about the LIFE
COMPANY Protected Parties[ ] customers, or any other information or property of
the LIFE COMPANY Protected Parties, other than such information as may be
independently developed or compiled by AVIF from information supplied to it by
the LIFE COMPANY Protected Parties[ ] customers who also maintain accounts
directly with AVIF, AVIF will hold such information or property in confidence
and refrain from using, disclosing or distributing any of such information or
other property except: (a) with LIFE COMPANY's prior written consent; or (b) as
required by law or judicial process. LIFE COMPANY acknowledges that the
identities of the customers of AVIF or any of its affiliates (collectively, the
"AVIF Protected Parties" for purposes of this Section 18), information
maintained regarding those customers, and all computer programs and procedures
or other information developed by the AVIF Protected Parties or any of their
employees or agents in connection with AVIF's performance of its duties under
this Agreement are the valuable property of the AVIF Protected Parties. LIFE
COMPANY agrees that if it comes into possession of any list or compilation of
the identities of or other information about the AVIF Protected Parties[ ]
customers or any other information or property of the AVIF Protected Parties,
other than such information as may be independently developed or compiled by
LIFE COMPANY from information supplied to it by the AVIF Protected Parties[ ]
customers who also maintain accounts directly with LIFE COMPANY, LIFE COMPANY
will hold such information or property in confidence and refrain from using,
disclosing or distributing any of such information or other property except: (a)
with AVIF's prior written consent; or (b) as required by law or judicial
process. Each party acknowledges that any breach of the agreements in this
Section 18 would result in immediate and irreparable harm to the other parties
for which there would be no adequate remedy at law and agree that in the event
of such a breach, the other parties will be entitled to equitable relief by way
of temporary and permanent injunctions, as well as such other relief as any
court of competent jurisdiction deems appropriate.
Section 19. Trademarks and Fund Names
(a) Except as may otherwise be provided in a License Agreement among A I M
Management Group Inc., LIFE COMPANY or any of its affiliates, shall not use any
trademark, trade name, service xxxx or logo of AVIF, AIM or any of their
respective affiliates, or any variation of any such trademark, trade name,
service xxxx or logo, without AVIF's or AIM's prior written consent, the
granting of which shall be at AVIF's or AIM's sole option.
(b) Except as otherwise expressly provided in this Agreement, neither AVIF,
its investment adviser, its principal underwriter, or any affiliates thereof
shall use any trademark, trade name, service xxxx or logo of LIFE COMPANY or any
of its affiliates, or any variation of any such trademark, trade name, service
xxxx or logo, without LIFE COMPANY's prior written consent, the granting of
which shall be at LIFE COMPANY's sole option.
25
Section 20. Parties to Cooperate
Each party to this Agreement will cooperate with each other party and all
appropriate governmental authorities (including, without limitation, the SEC,
the NASD and state insurance regulators) and will permit each other and such
authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
Section 21. Amendments
No provision of this Agreement may be amended or modified in any manner
except by a written agreement executed by all parties hereto.
26
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
AIM VARIABLE INSURANCE FUNDS
Attest: By:
-------------------------------- ---------------------------------
Name: Name:
---------------------------------- -------------------------------
Title: Title:
--------------------------------- ------------------------------
A I M DISTRIBUTORS, INC.
Attest: By:
-------------------------------- ---------------------------------
Name: Name:
---------------------------------- -------------------------------
Title: Title:
--------------------------------- ------------------------------
METROPOLITAN LIFE INSURANCE COMPANY,
on behalf of itself and its separate
accounts
Attest: By:
-------------------------------- ---------------------------------
Name: Name:
---------------------------------- -------------------------------
Title: Title:
--------------------------------- ------------------------------
27
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
Series I shares and Series II shares of:
AIM V.I. Aggressive Growth Fund AIM V.I. Money Market Fund
AIM V.I. Premier Equity Fund
AIM V.I. Balanced Fund AIM V.I. Real Estate Fund
AIM V.I. Basic Value Fund AIM V.I. Small Cap Equity Fund
AIM V.I. Blue Chip Fund INVESCO VIF - Core Equity Fund
AIM V.I. Capital Appreciation Fund INVESCO VIF - Dynamics Fund
AIM V.I. Capital Development Fund INVESCO VIF - Financial Services Fund
AIM V.I. Core Equity Fund INVESCO VIF - Health Sciences Fund
AIM V.I. Dent Demographic Trends Fund INVESCO VIF - Leisure Fund
AIM V.I. Diversified Income Fund INVESCO VIF - Small Company Growth Fund
AIM V.I. Government Securities Fund INVESCO VIF - Technology Fund
AIM V.I. Growth Fund INVESCO VIF - Total Return Fund
AIM V.I. High Yield Fund INVESCO VIF - Utilities Fund
AIM V.I. International Growth Fund
AIM V.I. Large Cap Growth Fund
AIM V.I. Mid Cap Core Equity Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
MetLife Registered Variable Life - Separate Account
UL
MetLife Unregistered Variable Life - Separate Account DCVL
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
MetFlex
PPVL- Both Group and Individual
28
SCHEDULE B
AIM's PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net
asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered
immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following
thresholds are applied:
a. If the amount of the difference in the erroneous net asset value and
the correct net asset value is less than .5% of the correct net asset
value, AIM will reimburse the affected Fund to the extent of any loss
resulting from the error. No other adjustments shall be made.
b. If the amount of the difference in the erroneous net asset value and
the correct net asset value is .5% of the correct net asset value or
greater, then AIM will determine the impact of the error to the
affected Fund and shall reimburse such Fund (and/or LIFE COMPANY, as
appropriate, such as in the event that the error was not discovered
until after LIFE COMPANY processed transactions using the erroneous
net asset value) to the extent of any loss resulting from the error.
To the extent that an overstatement of net asset value per share is
detected quickly and LIFE COMPANY has not mailed redemption checks to
Participants, LIFE COMPANY and AIM agree to examine the extent of the
error to determine the feasibility of reprocessing such redemption
transaction (for purposes of reimbursing the Fund to the extent of any
such overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to
paragraph (b), above, AIM shall reimburse LIFE COMPANY for LIFE COMPANY's
reprocessing costs in an amount not to exceed $1.00 per contract affected by $10
or more.
The Pricing Policies described herein may be modified by AVIF as approved by its
Board of Trustees. AIM agrees to use its best efforts to notify LIFE COMPANY at
least five (5) days prior to any such meeting of the Board of Trustees of AVIF
to consider such proposed changes.
29
SCHEDULE C
EXPENSE ALLOCATIONS
================================================================================
Life Company AVIF / AIM
--------------------------------------------------------------------------------
preparing and filing the Account's Preparing and filing the Fund's
registration statement registration statement
--------------------------------------------------------------------------------
text composition for Account text composition for Fund
prospectuses and supplements prospectuses and supplements
--------------------------------------------------------------------------------
text alterations of prospectuses text alterations of prospectuses
(Account) and supplements (Account) (Fund) and supplements (Fund)
--------------------------------------------------------------------------------
printing Account and Fund prospectuses a camera ready Fund prospectus
and supplements
--------------------------------------------------------------------------------
text composition and printing Account text composition and printing Fund
SAIs SAIs
--------------------------------------------------------------------------------
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by Federal Securities
Laws and to prospective purchasers
--------------------------------------------------------------------------------
text composition (Account), printing, text composition of annual and
mailing, and distributing annual and semi-annual reports (Fund)
semi-annual reports for Account (Fund
and Account as, applicable)
--------------------------------------------------------------------------------
text composition, printing, mailing, text composition, printing, mailing,
distributing, and tabulation of proxy distributing and tabulation of proxy
statements and voting instruction statements and voting instruction
solicitation materials to policy owners solicitation materials to policy
with respect to proxies related to the owners with respect to proxies
Account related to the Fund
--------------------------------------------------------------------------------
preparation, printing and distributing
sales material and advertising relating
to the Funds, insofar as such materials
relate to the Contracts and filing such
materials with and obtaining approval
from, the SEC, the NASD, any state
insurance regulatory authority, and any
other appropriate regulatory authority,
to the extent required
================================================================================
30
SCHEDULE D
INVESTOR CONTROL
METLIFE'S WRITTEN INSTRUCTIONS
INVESTOR CONTROL
COMMUNICATIONS BETWEEN POLICYOWNER AND INVESTMENT
MANAGER(S) NOT PERMITTED
MetLife SBR offers a suite of individual and group variable universal life
policies which allow investments in the fixed account (general account) and
variable account (underlying separate accounts which feature insurance dedicated
investment options).
In addition to death benefit protection, the purchase of life insurance provides
certain tax advantages, namely (a) death benefits are generally income tax free
and (b) the inside build-up (i.e. gains/losses and reallocations within a life
insurance policy) is generally tax deferred.
In order to protect the integrity of the life insurance transaction, MetLife
exercises absolute control over the separate account.
This document constitutes "written instructions" for purposes of the investor
control rule and retention of external investment managers. This document may be
updated from time to time to reflect new guidance and developments in this area.
BACKGROUND - INVESTOR CONTROL
For separate accounts within the life insurance policy, the key points for
consideration are "diversification" and "investor control."
"Investor control" and "diversification" are often thought to be synonymous, but
are not. The rules for diversification are found in Internal Revenue Code (IRC)
Section 817(h) and applicable IRS regulations, and relate to the mix of assets
in a separate account. Investor control, which has its origins in certain
so-called "wraparound annuity" rulings, generally relates to the ability of the
policyowner to affect portfolio investment decisions. Generally, when the
policyowner exercises impermissible investor control over separate account
assets, the policyowner is treated as the owner of the assets for tax purposes.
This would be the result even where the separate account is adequately
diversified. The consequence of investor control by the policyowner is a loss of
the tax deferral advantage of the insurance contract. Therefore, the policyowner
is immediately taxed on interest, dividends or other income derived from the
assets which the policyowner is treated as owning.
Cases and rulings generally hold that where a policyowner possesses substantial
incidents of ownership in an account established by an insurance company and can
select and control separate account investments, the policyowner is deemed to
possess investor control. See e.g. , Rev. Rul. 77-85, 1977-1 CB 12; Rev. Rul.
80-274, 1980-2 CB 27.
31
Investor control is also deemed to be present where the pool of investments
within the separate account is available for direct purchase by the policyowner
outside of an insurance setting. See e.g., Rev. Rul. 81-225, 1981-2 CB 12; Rev.
Rul. 82-54, 1982-1 CB 11; Rev. Rul. 2003-92 I.R.B. 2003-33 (July 23, 2003).NA;
Xxxxxxxxxxxxxx v. U.S. , 749 F.2d 513 (8 Cir.), rev'g 578 F. Supp. 398 (N.D.
Iowa 1984).
In Rev. Rul. 2003-91 I.R.B. 2003-33 (July 23, 2003), the IRS stated that the
determination of whether a policyowner possesses investor control depends on all
of the relevant facts and circumstances. The policyowner was deemed not to
possess investor control where all of the following facts and circumstances were
present:
(a) Policyowner could not select or direct separate account investments.
(b) Policyowner could not sell, purchase, or exchange separate account assets.
(c) The insurance company or the manager hired by the insurance company makes
all investment decisions.
(d) The investment strategies of the separate accounts are sufficiently broad.
(e) Only the insurance company may add or substitute other separate accounts or
investment strategies in the future.
(f) No arrangement, plan, contract, or agreement exists between the policyowner
and the insurance company or the investment manager regarding specific
investments.
(g) Policyowner may not communicate directly or indirectly with the investment
manager or any of the insurance company's investment officers concerning
the selection, quality, or rate of return of any specific investment or
group of investments held by the separate account.
(h) Investments in the separate account are available solely through the
purchase of an insurance contract.
As noted above, the presence of investor control will cause the policyowner to
be immediately taxed on interest, dividends or other income derived from the
assets which the policyowner is treated as owning.
In our view the issue of investor control is not clearly defined. If the
following guidelines are followed, MetLife believes the investor control risk
may be reduced.
MetLife Guidelines and Instructions
1. MetLife owns the life insurance Separate Account
32
2. MetLife in its sole discretion will choose, conduct all dealings with,
monitor, and if necessary, terminate any investment manager of life
insurance Separate Account. MetLife or an investment manager hired by
MetLife will make all Separate Account investment decisions.
3. The policyowner, or any of its agents (e.g. the policyowner's broker)
may not communicate either directly or indirectly with the investment
manager regarding the assets in the Separate Account.
4. The policyowner must not have any legally binding right to require
MetLife or the investment manager to acquire any particular investment
item.
5. There must be no prearranged plan, contract or agreement between the
policyowner and the Separate Account investment manager for any
specific investment. However, the policyowner may be informed of
general investment strategies.
6. The policyowner may not participate in any investment decisions of the
Separate Account. The policyowner may not select the Separate Account
investments or direct the sale, purchase or exchange of Separate
Account investments.
7. The policyowner must not have any interest in any specific investments
in the Separate Account other than through a contractual claim for
cash value and death benefit as a result of purchasing the contract.
There will be no distributions of assets in kind to the policyowner.
8. The policyowner or its agent will communicate to MetLife its reporting
and information needs regarding its life insurance policy. MetLife
will ensure that the policyowner's reporting and information needs are
met in a timely and reasonable manner.
9. Only MetLife, in its sole discretion, may add or substitute other
Separate Accounts or investment strategies in the future.
33
SHAREHOLDER SERVICES AGREEMENT
THIS SHAREHOLDER SERVICES AGREEMENT is made and entered into as of April
30, 2004 by and between METROPOLITAN LIFE INSURANCE COMPANY (the "Company"), and
AMERICAN CENTURY INVESTMENT SERVICES, INC. ("Distributor").
WHEREAS, the Company offers to the public certain group and individual
variable annuity and variable life insurance contracts (the "Contracts"); and
WHEREAS, the Company wishes to make available as investment options under
the Contracts shares of the following funds: Class I of VP Vista and/or Class II
of VP International and VP Value (the "Funds") made available by the Distributor
from time to time, each of which is a series of mutual fund shares registered
under the Investment Company Act of 1940, as amended, and issued by American
Century Variable Portfolios, Inc., (the "Issuer"); and
WHEREAS, on the terms and conditions hereinafter set forth, Distributor
desires to make shares of the Funds available as investment options under the
Contracts and to retain the Company to perform certain administrative services
on behalf of the Funds, and the Company is willing and able to furnish such
services;
NOW, THEREFORE, the Company and Distributor agree as follows:
1. Transactions in the Funds. Subject to the terms and conditions of this
Agreement, Distributor will cause the Issuer to make shares of the Funds
available to be purchased, exchanged, or redeemed, by or on behalf of the
Accounts (defined in Section 7(a) below) through a single account per Fund at
the net asset value applicable to each order. The Funds' shares shall be
purchased and redeemed on a net basis in such quantity and at such time as
determined by the Company to satisfy the requirements of the Contracts for which
the Funds serve as underlying investment media. Dividends and capital gains
distributions will be automatically reinvested in full and fractional shares of
the Funds.
2. Administrative Services. The Company agrees to provide all
administrative services for the Contract owners, including but not limited to
those services specified in EXHIBIT A (the "Administrative Services"). Neither
Distributor nor the Issuer shall be required to provide Administrative Services
for the benefit of Contract owners. The Company agrees that it will maintain and
preserve all records as required by law to be maintained and preserved in
connection with providing the Administrative Services, and will otherwise comply
with all laws, rules and regulations applicable to the marketing of the
Contracts and the provision of the Administrative Services. Upon request, the
Company will provide Distributor or its representatives reasonable information
regarding the quality of the Administrative Services being provided and its
compliance with the terms of this Agreement.
3. Timing of Transactions.
1
(a) Distributor hereby appoints the Company as agent for the Funds for the
limited purpose of accepting purchase and redemption orders for Fund shares from
the Plans sponsors and/or Participants, as applicable. On each day the New York
Stock Exchange (the "Exchange") is open for business (each, a "Business Day"),
the Company may receive instructions from the Plans sponsors and/or Participants
for the purchase or redemption of shares of the Funds ("Orders"). Orders
received and accepted by the Company prior to the price time for each Fund as
set forth in its prospectus (the "Price Time") generally the close of regular
trading on the Exchange (the "Close of Trading") on any given Business Day
(currently, 4:00 p.m. Eastern time) and transmitted to the Funds' transfer agent
prior to the Price Time on such Business Day will be executed at the net asset
value determined as of the relevant Fund's Price Time on the Business Day the
Company received such Order. Any Orders received by the Company on such day but
after the relevant Fund's Price Time on a Business Day, will be executed at the
net asset value next determined as of that Fund's Price Time on the next
Business Day. The day as of which an Order is executed by the Funds' transfer
agent pursuant to the provisions set forth above is referred to herein as the
"Trade Date". All Orders are subject to acceptance or rejection by Distributor
or the Funds in the sole discretion of any of them.
(b) Notwithstanding Section 3(a) above, if the Securities and Exchange
Commission adopts a rule, or Congress adopts a law, that changes the
requirements for intermediaries with regard to accepting Orders on behalf of the
Funds, the timing of transmitting Orders to the Funds, or otherwise affects the
way Orders are accepted, transmitted and priced, Section 3(a) shall be deemed to
be automatically amended to comply with such new rule or law.
4. Processing of Transactions.
(a) If transactions in Fund shares are to be settled through the National
Securities Clearing Corporation's ("NSCC") Mutual Fund Settlement, Entry, and
Registration Verification (Fund/SERV) system, the following provisions shall
apply:
(1) Each party to this Agreement represents that it or one of its
affiliates has entered into the Standard Networking Agreement with the NSCC and
it desires to participate in the programs offered by the NSCC Fund/SERV system
which provide (i) an automated process whereby shareholder purchases and
redemptions, exchanges and transactions of mutual fund shares are executed
through the Fund/SERV system, and (ii) a centralized and standardized
communication system for the exchange of customer-level information and account
activity through the Fund/SERV Networking system ("Networking").
(2) For each Fund/SERV transaction, including transactions
establishing accounts with the Distributor or its affiliate, the Company shall
provide the Funds and the Distributor or its affiliate with all information
necessary or appropriate to establish and maintain each Fund/SERV transaction
(and any subsequent changes to such information), which the Company hereby
certifies is and shall remain true and correct. The Company shall maintain
documents required by the Funds to
2
effect Fund/SERV transactions. Each instruction shall be deemed to be
accompanied by a representation by the Company that it has received proper
authorization from each person whose purchase, redemption, account transfer or
exchange transaction is effected as a result of such instruction.
(3) At all times each party shall maintain insurance coverage that is
reasonable and customary in light of all its responsibilities hereunder and
under applicable law. Such coverage shall insure for losses resulting from the
criminal acts, errors or omissions of each party's employees and agents.
(4) The parties agree to participate in Networking with each other
under the terms of the Standard Networking Agreement, except that (i) Section 12
of Article IV relating to governing law is hereby amended by deleting the second
sentence of such section, and (ii) Section 13 of Article IV relating to
arbitration of disputes is hereby deleted and shall be of no force and effect
among the parties.
(5) The Company represents and warrants that all instructions,
questions and other correspondence concerning the accounts for which trades are
made in accordance with this Section 4(a) shall come from the Company, and that
individual account holders shall contact the Company, rather than contact
Distributor or the Funds directly, with instructions, questions and requests
concerning the Funds. The Company further represents and warrants that it,
rather than Distributor or the Funds, has reporting responsibility to its
clients for confirmations of transactions and monthly, quarterly and year-end
statements. The Company is a member of the Securities Investor Protection
Corporation and is current with the dues required by such membership.
(b) If transactions in Fund shares are to be settled directly with the
Funds' transfer agent, procedures relating to the processing and settlement of
Orders shall be subject to such instructions as Distributor may forward to the
Company from time to time. Payment for net purchase transactions shall be made
by wire transfer or through a clearinghouse agency approved by us to the
applicable Fund custodial account designated by Distributor on the Business Day
next following the Trade Date. Such wire transfers shall be initiated by the
Company's bank prior to 4:00 p.m. Eastern time and received by the Funds prior
to 6:00 p.m. Eastern time on the Business Day next following the Trade Date. If
payment for a purchase Order is not timely received, the Fund may cancel the
Order or, at Distributor's option, resell the shares to the applicable Fund at
the then prevailing net asset value, and the Company shall be responsible for
all costs to Distributor, the Funds or any affiliate of the Funds resulting from
such resale. The Company shall be responsible for any loss, expense, liability
or damage, including loss of profit suffered by Distributor and/or the
respective Funds resulting from delay or failure to make timely payment for such
shares or cancellation of any trade, or for any Orders that are processed on an
"as of" basis as an accommodation to the Company. The Company shall not be
entitled to any gains generated thereby.
(c) The Company agrees not to withhold placing Orders received from any
customers for the purchase or sale of shares so as to profit itself as a result
of such withholding. The Company shall
3
not purchase shares through Distributor except for the purpose of covering
purchase Orders received by the Company, or for the Company's bona fide
investment. The Company agrees to purchase shares only from the Funds or its
customers. If the Company purchases shares from its customers, it will pay such
customers not less than the applicable redemption price as established by the
then-current prospectuses of the Funds.
5. Prospectus and Proxy Materials. Distributor shall provide the Company
with reasonable quantities of the Issuer's prospectuses, statements of
additional information, proxy materials, periodic fund reports to shareholders
and other materials that are required by law to be sent to the Issuers'
shareholders, each in the amounts and at the times requested by the Company. The
cost of any distribution of prospectuses, proxy materials, periodic fund reports
and other materials of the Issuers to the Plans or their Participants shall be
paid by either the Company, the Plans or the Plan sponsors, as determined by
Company's agreement with the Plans, and shall not be the responsibility of
Distributor or the Issuers.
6. Compensation and Expenses.
(a) The Accounts shall be the sole shareholder of Fund shares purchased for
the Contract owners pursuant to this Agreement (the "Record Owner"). The Record
Owner shall properly complete any applications or other forms required by
Distributor or the Issuer from time to time.
(b) Distributor acknowledges that it will derive a substantial savings in
administrative expenses, such as a reduction in expenses related to postage,
shareholder communications and recordkeeping, by virtue of having a single
shareholder account per Fund for the Accounts rather than having each Contract
owner as a shareholder. In consideration of the Administrative Services and
performance of all other obligations under this Agreement by the Company,
Distributor will pay the Company a fee (the "Administrative Services Fee") equal
to 25 basis points (0.25%) per annum of the average aggregate amount invested by
the Company in Class I shares of the Funds and 5 basis points (0.05%) per annum
of the average aggregate amount invested by the Company in Class II shares of
the Funds under this Agreement. The assets under this Agreement shall be
included when determining the total asset level thresholds in VP Class I Funds
invested in the American Century family of funds by the following affiliates of
the Company under other agreements with Distributor or an affiliate of
Distributor:
General American Life Insurance Company
Metlife Securities, Inc.
New England Life Insurance Company
First Metlife Investors Insurance Company
Metlife Investors Insurance Company
Metlife Investors Insurance Company of California
(c) In consideration of performance of the Distribution Services specified
on EXHIBIT B by the Company, Distributor will pay the Company a fee (the
"Distribution Fee") of 25 basis points
4
(0.25%) of the average aggregate amount invested by the Company in Class II
shares of the Funds under this Agreement.
(d) For the purposes of computing the payments to the Company contemplated
by this Section 6, the average aggregate amount invested by the Company on
behalf of the Accounts in the Funds over a one month period shall be computed by
totaling the Company's aggregate investment (share net asset value multiplied by
total number of shares of the Funds held by the Company) on each calendar day
during the month and dividing by the total number of calendar days during such
month.
(e) Distributor will calculate the amount of the payments to be made
pursuant to this Section 6 at the end of each calendar quarter and will make
such payment to the Company within 30 days thereafter. The check for such
payments will be accompanied by a statement showing the calculation of the
amounts being paid by Distributor for the relevant months and such other
supporting data as may be reasonably requested by the Company and shall be
mailed to:
Metropolitan Life Insurance Company
000X XX Xxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxx XxXxxxxxx
Phone No.: 000-000-0000
Fax No: 000-000-0000
----------
7. Representations.
(a) The Company represents and warrants that (i) this Agreement has been
duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has established the
separate accounts set forth on EXHIBIT C, attached hereto (the "Accounts"), each
of which is a duly authorized and established separate account under New York
Insurance law, and has registered each Account as a unit investment trust under
the Investment Company Act of 1940 (the "1940 Act") to serve as an investment
vehicle for the Contracts; (iii) each Contract provides for the allocation of
net amounts received by the Company to an Account for investment in the shares
of one or more specified investment companies selected among those companies
available through the Account to act as underlying investment media; (iv)
selection of a particular investment company is made by the Contract owner under
a particular Contract, who may change such selection from time to time in
accordance with the terms of the applicable Contract; and (v) the activities of
the Company contemplated by this Agreement comply in all material respects with
all provisions of federal and state securities laws applicable to such
activities.
(b) Distributor represents that (i) this Agreement has been duly authorized
by all necessary corporate action and, when executed and delivered, shall
constitute the legal, valid and binding obligation of Distributor, enforceable
in accordance with its terms; (ii) the prospectus of each Fund
5
complies in all material respects with federal and state securities laws, and
(iii) shares of the Issuer are registered and authorized for sale in accordance
with all federal and state securities laws.
8. Additional Covenants and Agreements.
(a) Each party shall comply with all provisions of federal and state laws
applicable to its respective activities under this Agreement. All obligations of
each party under this Agreement are subject to compliance with applicable
federal and state laws.
(b) Each party shall promptly notify the other party in the event that it
is, for any reason, unable to perform any of its obligations under this
Agreement.
(c) The Company covenants and agrees that all Orders accepted and
transmitted by it hereunder with respect to each Account on any Business Day
will be based upon instructions that it received from the Contract owners, in
proper form prior to the Close of Trading of the Exchange on that Business Day.
The Company shall time stamp all Orders or otherwise maintain records that will
enable the Company to demonstrate compliance with Section 8(c) hereof.
(d) The Company covenants and agrees that all Orders transmitted to the
Issuer, whether by telephone, telecopy, or other electronic transmission
acceptable to Distributor, shall be sent by or under the authority and direction
of a person designated by the Company as being duly authorized to act on behalf
of the owner of the Accounts. Distributor shall be entitled to rely on the
existence of such authority and to assume that any person transmitting Orders
for the purchase, redemption or transfer of Fund shares on behalf of the Company
is "an appropriate person" as used in Sections 8-107 and 8-401 of the Uniform
Commercial Code with respect to the transmission of instructions regarding Fund
shares on behalf of the owner of such Fund shares. The Company shall maintain
the confidentiality of all passwords and security procedures issued, installed
or otherwise put in place with respect to the use of Remote Computer Terminals
and assumes full responsibility for the security therefor. The Company further
agrees to be responsible for the accuracy, propriety and consequences of all
data transmitted to Distributor by the Company by telephone, telecopy or other
electronic transmission acceptable to Distributor.
(e) The Company agrees that, to the extent it is able to do so, it will use
its best efforts to give equal emphasis and promotion to shares of the Funds as
is given to other underlying investments of the Accounts, subject to applicable
Securities and Exchange Commission rules. In addition, the Company shall not
impose any fee, condition, or requirement for the use of the Funds as investment
options for the Contracts that operates to the specific prejudice of the Funds
vis-a-vis the other investment media made available for the Contracts by the
Company.
(f) The Company shall not, without the written consent of Distributor, make
representations concerning the Issuer or the shares of the Funds except those
contained in the then-current prospectus and in current printed sales literature
approved by Distributor or the Issuer.
6
(g) Advertising and sales literature with respect to the Issuer or the
Funds prepared by the Company or its agents, if any, for use in marketing shares
of the Funds as underlying investment media to Contract owners shall be
submitted to Distributor for review and approval 5 business days prior to such
materials beingused and whose approval shall not be unreasonable withheld.
9. Use of Names. Except as otherwise expressly provided for in this
Agreement, neither Distributor nor any of its affiliates nor the Funds shall use
any trademark, trade name, service xxxx or logo of the Company, or any variation
of any such trademark, trade name, service xxxx or logo, without the Company's
prior written consent, the granting of which shall be at the Company's sole
option. Except as otherwise expressly provided for in this Agreement, the
Company shall not use any trademark, trade name, service xxxx or logo of the
Issuer, Distributor or any variation of any such trademarks, trade names,
service marks, or logos, without the prior written consent of either the Issuer
or Distributor, as appropriate, the granting of which shall be at the sole
option of Distributor and/or the Issuer.
10. Proxy Voting.
(a) The Company shall provide pass-through voting privileges to all
Contract owners so long as the SEC continues to interpret the 1940 Act as
requiring such privileges. It shall be the responsibility of the Company to
assure that it and the separate accounts of the other Participating Companies
(as defined in Section 12(a) below) participating in any Fund calculate voting
privileges in a consistent manner.
(b) The Company will distribute to Contract owners all proxy material
furnished by Distributor and will vote shares in accordance with instructions
received from such Contract owners. The Company shall vote Fund shares for which
no voting instructions are received in the same proportion as shares for which
such instructions have been received. The Company and its agents shall not
oppose or interfere with the solicitation of proxies for Fund shares held for
such Contract owners.
11. Indemnity.
(a) Distributor agrees to indemnify and hold harmless the Company and its
officers, directors, employees, agents, affiliates and each person, if any, who
controls the Company within the meaning of the Securities Act of 1933
(collectively, the "Indemnified Parties" for purposes of this Section 11(a))
against any losses, claims, expenses, damages or liabilities (including amounts
paid in settlement thereof) or litigation expenses (including legal and other
expenses) (collectively, "Losses"), to which the Indemnified Parties may become
subject, insofar as such Losses result from a breach by Distributor of a
material provision of this Agreement. Distributor will reimburse any legal or
other expenses reasonably incurred by the Indemnified Parties in connection with
investigating or defending any such Losses. Distributor shall not be liable for
indemnification hereunder if such Losses are attributable to the negligence or
misconduct of the Company in performing its obligations under this Agreement.
7
(b) The Company agrees to indemnify and hold harmless Distributor and the
Issuer, and their respective officers, directors, employees, agents, affiliates
and each person, if any, who controls Issuer or Distributor within the meaning
of the Securities Act of 1933 (collectively, the "Indemnified Parties" for
purposes of this Section 11(b)) against any Losses to which the Indemnified
Parties may become subject, insofar as such Losses result from a breach by the
Company of a material provision of this Agreement or the use by any person of
the Remote Computer Terminals. The Company will reimburse any legal or other
expenses reasonably incurred by the Indemnified Parties in connection with
investigating or defending any such Losses. The Company shall not be liable for
indemnification hereunder if such Losses are attributable to the negligence or
misconduct of Distributor or the Issuer in performing their obligations under
this Agreement.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party hereunder, notify the
indemnifying party of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which it may have
to any indemnified party otherwise than under this Section 11. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 11 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnifying party assumes the defense of any such action, the
indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or compromise the liability of the
indemnified parties in such action, or permit a default or consent to the entry
of any judgment in respect thereof, unless in connection with such settlement,
compromise or consent, each indemnified party receives from such claimant an
unconditional release from all liability in respect of such claim.
12. Potential Conflicts
(a) The Company has received a copy of an application for exemptive relief,
as amended, filed by the Issuer on December 21, 1987, with the SEC and the order
issued by the SEC in response thereto (the "Shared Funding Exemptive Order").
The Company has reviewed the conditions to the requested relief set forth in
such application for exemptive relief. As set forth in such application, the
Board of Directors of the Issuer (the "Board") will monitor the Issuer for the
existence of any material irreconcilable conflict between the interests of the
contract owners of all separate accounts ("Participating Companies") investing
in funds of the Issuer. An irreconcilable material conflict may arise for a
variety of reasons, including: (i) an action by any state insurance regulatory
authority; (ii) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling,
8
private letter ruling, no-action or interpretative letter, or any similar
actions by insurance, tax or securities regulatory authorities; (iii) an
administrative or judicial decision in any relevant proceeding; (iv) the manner
in which the investments of any portfolio are being managed; (v) a difference in
voting instructions given by variable annuity contract owners and variable life
insurance contract owners; or (vi) a decision by an insurer to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof.
(b) The Company will report any potential or existing conflicts of which it
is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order 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 by the Company to
inform the Board whenever contract owner voting instructions are disregarded.
(c) If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists with regard
to contract owner investments in a Fund, the Board shall give prompt notice to
all Participating Companies. If the Board determines that the Company is
responsible for causing or creating said conflict, the Company shall at its sole
cost and expense, and to the extent reasonably practicable (as determined by a
majority of the disinterested Board members), take such action as is necessary
to remedy or eliminate the irreconcilable material conflict. Such necessary
action may include but shall not be limited to:
(i) withdrawing the assets allocable to the Accounts from the Fund
and reinvesting such assets in a different investment medium 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
Companies) that votes in favor of such segregation, or offering
to the affected contract owners the option of making such a
change; and/or
(ii) establishing a new registered management investment company or
managed separate account.
(d) If a material irreconcilable conflict arises as a result of a decision
by the Company to disregard its contract owner voting instructions and said
decision represents a minority position or would preclude a majority vote by all
of its contract owners having an interest in the Issuer, the Company at its sole
cost, may be required, at the Board's election, to withdraw an Account's
investment in the Issuer and terminate this Agreement; 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 members of the Board.
(e) For the purpose of this Section 12, a majority of the disinterested
Board members shall
9
determine whether or not any proposed action adequately remedies any
irreconcilable material conflict, but in no event will the Issuer be required to
establish a new funding medium for any Contract. The Company shall not be
required by this Section 12 to establish a new funding medium for any Contract
if an offer to do so has been declined by vote of a majority of the Contract
owners materially adversely affected by the irreconcilable material conflict.
13. Termination; Withdrawal of Offering. This Agreement may be terminated
by any party upon 90 days' prior written notice to the other party, or, on 60
days' written notice pursuant to a vote of a majority of the outstanding
securities of the Funds. Notwithstanding the above, each Issuer reserves the
right, without prior notice, to suspend sales of shares of any Fund, in whole or
in part, or to make a limited offering of shares of any of the Funds in the
event that (A) any regulatory body commences formal proceedings against the
Company, Distributor or any of the Issuers, which proceedings Distributor
reasonably believes may have a material adverse impact on the ability of the
Issuers or the Company to perform its obligations under this Agreement or (B) in
the judgment of Distributor, declining to accept any additional instructions for
the purchase or sale of shares of any such Fund is warranted by market, economic
or political conditions. Notwithstanding the foregoing, this Agreement may be
terminated immediately (i) by any party as a result of any other breach of this
Agreement by another party, which breach is not cured within 30 days after
receipt of notice from the other party, or (ii) by any party upon a
determination that continuing to perform under this Agreement would, in the
reasonable opinion of the terminating party's counsel, violate any applicable
federal or state law, rule, regulation or judicial order, (iii) by a vote of a
majority of the independent directors. Termination of this Agreement shall not
affect the obligations of the parties to make payments under Section 4 for
Orders received by the Company prior to such termination and shall not affect
the Issuers' obligation to maintain the Accounts in the name of the Plans or any
successor trustee or recordkeeper for the Plans. Following termination,
Distributor shall not have any Administrative Services payment obligation to the
Company (except for payment obligations accrued but not yet paid as of the
termination date).
14. Non-Exclusivity. Both parties acknowledge and agree that this Agreement
and the arrangement described herein are intended to be non-exclusive and that
each party is free to enter into similar agreements and arrangements with other
entities.
15. Survival. The provisions of Section 9 (Use of Names) and Section 11
(Indemnity) of this Agreement shall survive termination of this Agreement.
16. Privacy Procedures. Each of the parties to this Agreement affirms that
it has procedures in place reasonably designed to protect the privacy of
non-public customer information and it will maintain such information that it
may acquire pursuant to this Agreement in confidence and in accord with all
applicable privacy laws. Each of the parties agrees not to use, or permit the
use of, any such customer information for any purpose except to carry out the
terms of this Agreement and/or pursuant to any exceptions set forth in such
privacy laws. This provision shall survive the termination of this Agreement.
10
17. Amendment. Neither this Agreement, nor any provision hereof, may be
amended, waived, discharged or terminated orally, but only by an instrument in
writing signed by all of the parties hereto.
18. Notices. All notices and other communications hereunder shall be given
or made in writing and shall be delivered personally, or sent by telex,
telecopier, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Company:
Metropolitan Life Insurance Company
1 MetLife Plaza
00-00 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Counsel
(000) 000-0000 (office number)
(000) 000-0000 (telecopy number)
With copy to:
Metropolitan Life Insurance Company
000X XX Xxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx K Model
(000) 000-0000 (office number)
(000) 000-0000 (telecopy number)
To the Issuer or Distributor:
American Century Investment Services, Inc.
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
(000) 000-0000 (office number)
(000) 000-0000 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
Section 18 shall be deemed to have been delivered on receipt.
19. Successors and Assigns. This Agreement may not be assigned and will be
terminated
11
automatically upon any attempted assignment. This Agreement shall be binding
upon and inure to the benefit both parties hereto.
20. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
21. Severability. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
22. Entire Agreement. This Agreement, including the attachments hereto,
constitutes the entire agreement between the parties with respect to the matters
dealt with herein, and supersedes all previous agreements, written or oral, with
respect to such matters.
If the foregoing correctly sets forth our understanding, please indicate
your agreement to and acceptance thereof by signing below, whereupon this
Agreement shall become a binding agreement between us as of the latest date
indicated.
AMERICAN CENTURY INVESTMENT
SERVICES, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Date:
---------------------------------------
We agree to and accept the terms of the foregoing Agreement.
METROPOLITAN LIFE
INSURANCE COMPANY
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Date:
---------------------------------------
12
EXHIBIT A
ADMINISTRATIVE SERVICES
Pursuant to the Agreement to which this is attached, the Company shall perform
all administrative and shareholder services required or requested under the
Contracts with respect to the Contract owners, including, but not limited to,
the following:
1. Maintain separate records for each Contract owner, which records shall
reflect the shares purchased and redeemed and share balances of such Contract
owners. The Company will maintain a single master account with each Fund on
behalf of the Contract owners and such account shall be in the name of the
Company (or its nominee) as the record owner of shares owned by the Contract
owners.
2. Disburse or credit to the Contract owners all proceeds of redemptions of
shares of the Funds and all dividends and other distributions not reinvested in
shares of the Funds.
3. Prepare and transmit to the Contract owners, as required by law or the
Contracts, periodic statements showing the total number of shares owned by the
Contract owners as of the statement closing date, purchases and redemptions of
Fund shares by the Contract owners during the period covered by the statement
and the dividends and other distributions paid during the statement period
(whether paid in cash or reinvested in Fund shares), and such other information
as may be required, from time to time, by the Contracts.
4. Transmit purchase and redemption orders to the Funds on behalf of the
Contract owners in accordance with the procedures set forth in Section 4 to the
Agreement.
5. Distribute to the Contract owners copies of the Funds' prospectus, proxy
materials, periodic fund reports to shareholders and other materials that the
Funds are required by law or otherwise to provide to their shareholders or
prospective shareholders.
6. Maintain and preserve all records as required by law to be maintained
and preserved in connection with providing the Administrative Services for the
Contracts.
B-1
EXHIBIT B
DISTRIBUTION SERVICES
Pursuant to the Agreement to which this is attached, the Company shall perform
distribution services for Class II shares of the Funds, including, but not
limited to, the following:
1. Receive and answer correspondence from prospective shareholders, including
distributing prospectuses, statements of additional information, and
shareholder reports.
2. Provide facilities to answer questions from prospective investors about
Fund shares.
3. Assist investors in completing application forms and selecting dividend and
other account options.
4. Provide other reasonable assistance in connection with the distribution of
Fund shares.
B-1
EXHIBIT C
SEPARATE ACCOUNTS
Separate Account UL
B-1
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 30thday of April, 2004 (the
"Agreement"), by and among Metropolitan Life Insurance Company, organized under
the laws of the State of New York_ (the "Company"), on behalf of itself and each
separate account of the Company named in Schedule A to this Agreement, as may be
amended from time to time (each such separate account being hereinafter referred
to as a "Separate Account" and, collectively, as the "Separate Accounts");
Delaware VIP Trust, an open-end management investment company organized as a
statutory trust under the laws of the State of Delaware (the "Trust"); Delaware
Management Company, a series of Delaware Management Business Trust, a statutory
trust organized under the laws of the State of Delaware and investment adviser
to the Trust (the "Adviser"); and Delaware Distributors, L.P., a limited
partnership organized under the laws of the State of Delaware and principal
underwriter/distributor of the Trust (the "Distributor").
WHEREAS, the Trust engages in business as an open-end diversified,
management investment company and was established for the purpose of serving as
the investment vehicle for separate accounts established for variable life
insurance contracts and variable annuity contracts (collectively, the "Variable
Insurance Products") to be offered by insurance companies that have entered into
participation agreements with the Trust substantially similar to this Agreement
("Participating Insurance Companies"); and
WHEREAS, beneficial interests in the Trust are divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets (each, a "Fund" and collectively, the "Funds"); and
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission ("SEC"), dated November 2, 1987 (File No. 812-6777), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of Sections 9(a),
13(a), 15(a) and 15(b) of the Investment Company Act of 1940, as amended ("1940
Act"), and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) hereunder, 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 life insurance
companies that may or may not be affiliated with one another and qualified
pension and retirement plans ("Qualified Plans") ("Mixed and Shares Funding
Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and shares of the Fund(s) are registered under the
Securities Act of 1933, as amended ("1933 Act"); and
WHEREAS, the Adviser is a series of a statutory trust which is duly
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended, and any applicable state securities laws; and
WHEREAS, the Distributor is duly registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended ("1934 Act") and is a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD"); and
Page 1 of 35
WHEREAS, the Company, as depositor, has established the Separate Accounts
to serve as investment vehicles for certain variable annuity contracts and
variable life insurance policies and funding agreements offered by the Company
set forth on Schedule A ("Contracts"); and
WHEREAS, the Company has registered interests under the Contracts that are
supported wholly or partially by the Separate Accounts under the 1933 Act to the
extent required and
WHEREAS, each Separate Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors of
the Company under the insurance laws of the State of New Yorkto set aside and
invest assets attributable to the Contracts; and
WHEREAS, the Company has registered each Separate Account as a unit
investment trust under the 1940 Act and has registered (or will register prior
to sale) the securities deemed to be issued by each Separate Account under the
1933 Act to the extent required; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Fund(s) listed in
Schedule B hereto (the "Designated Fund(s)"), on behalf of the Separate Accounts
to fund the Contracts, and the Trust is authorized to sell such shares to unit
investment trusts, such as the Separate Accounts, at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Separate Accounts also intend to purchase shares in other
open-end investment companies or series thereof not affiliated with the Trust
("Unaffiliated Funds") to fund the Contracts.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Trust, the Adviser and the Distributor agree as follows:
ARTICLE I. - SALE OF FUND SHARES
1.1 The Distributor agrees to sell to the Company those shares of the
Designated Funds that the Company orders on behalf of each Separate
Account, executing such orders on a daily basis at the net asset value (and
with no sales charges) next computed after receipt and acceptance by the
Trust or its designee of the orders for the shares of the Designated Funds.
For purposes of this Section 1.1, the Company will be designee of the Trust
solely for the purpose of receiving such orders from each Separate Account
and receipt by such designee will constitute receipt by the Trust, provided
that the Company provides the Trust with a purchase order by 7:30 a.m.
Eastern Time on the next following Business Day. "Business Day" will mean
any day on which the New York Stock Exchange is open for trading and on
which the Trust calculates its net asset value pursuant to the rules of the
SEC. If a purchase order is received by the Trust after 7:30 a.m. Eastern
Time on a Business Day, such redemption request will be considered to be
received on the next following Business Day and payment by the Company for
such purchase order pursuant to Section 1.2 of this Agreement will be made
by the Company on the next following Business Day. The Trust may net the
redemption requests it receives from the Company under Section 1.3 of this
Agreement against purchase orders it receives from the
2
Company under this Section 1.1. The Trust and the Company will be
responsible for assuring their compliance with the Purchase and Redemption
Order Procedures set forth in Schedule D.
1.2 The Company will transmit payment for shares of any Designated Fund
purchased by 3:00 p.m. Eastern Time on the same Business Day an order to
purchase such shares is provided to the Trust, in accordance with Section
1.1. Payment will be made in federal funds transmitted by wire. Upon
receipt by the Trust of the purchase payment, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of
the Trust.
1.3 The Trust agrees to redeem, upon the Company's request, any full or
fractional shares of a Designated Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after
receipt and acceptance by the Trust or its designee. For purposes of this
Section 1.3, the Company will be the designee of the Trust solely for the
purpose of receiving request for redemption from each Separate Account and
receipt by such designee will constitute receipt by the Trust, provided
that the Company provides the Trust with a redemption request by 7:30 am.
Eastern Time on the next following Business Day. Payment for shares of any
Designated Fund redeemed will be made in federal funds transmitted by wire
to the Company's account as designated by the Company in writing from time
to time, by 3:00 p.m. Eastern Time on the Business Day the Trust receives
notice of the redemption request for such shares from the Company. The
Trust reserves the right to delay payment of redemption proceeds, but in no
event may such payment be delayed longer than the period permitted under
Section 22(e) of the 0000 Xxx. The Trust will not bear any responsibility
whatsoever for the proper disbursement or crediting of redemption proceeds,
the Company alone will be responsible for such action. If a redemption
request is received by the Trust after 7:30 a.m. Eastern Time on a Business
Day, such redemption request will be considered to be received on the next
following Business Day and payment for redeemed shares will be made by the
Trust on the next following Business Day. The Trust may net purchase orders
it receives from the Company under Section 1.1 of this Agreement against
the redemption requests it receives from the Company under this Section
1.3. The Trust and the Company will be responsible for assuring their
compliance with the Purchase and Redemption Order Procedures set forth in
Schedule D.
1.4 The Trust agrees to make shares of the Designated Funds available
indefinitely for purchase at the applicable net asset value per share by
the Company on behalf of the Separate Accounts on those days on which the
Trust calculates the net asset value of each Designated Fund pursuant to
rules of the SEC; provided, however, that the Board of Trustees of the
Trust (the "Trustees") may refuse to sell shares of any Designated Fund to
any person, or suspend or terminate the offering of shares of any
Designated Fund 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, necessary in the best interests of
the shareholders of such Designated Fund.
3
1.5 The Trust and the Distributor agree that shares of the Designated Funds on
Schedule B will be sold only to Participating Insurance Companies and their
separate accounts, Qualified Plans or such other persons as are permitted
under applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code), and regulations promulgated thereunder, the sale of
which will not impair the tax treatment currently afforded the Contracts.
No shares of any Designated Fund on Schedule B will be sold directly to the
general public.
1.6 The Trust will not sell shares of any Designated Fund to any insurance
company or separate account unless an agreement containing provisions
substantially similar to those in Sections 2.1, 2.2 and 2.4 of Article II,
Section 3.4 of Article III, Sections 4.4 and 4.5 of Article IV, Section 6.1
of Article VI and Article VII of this Agreement are in effect to govern
such sales.
1.7 The Company agrees to purchase and redeem the shares of the Designated
Funds offered by the then current prospectus of the relevant Designated
Fund in accordance with the provisions of such prospectus.
1.8 Issuance and transfer of the shares of the Designated Funds will be by book
entry only. Share certificates will not be issued to the Company or to any
Separate Account. Purchase and redemption orders for shares of the
Designated Funds will be recorded in an appropriate title for each Separate
Account or the appropriate sub-account of each Separate Account.
1.9 The Trust will furnish notice (by wire, telephone or facsimile) to the
Company as soon as reasonably practicable of the declaration of any income,
dividends or capital gain distributions payable on each Designated Fund's
shares. The Company, on its behalf and on behalf of each Separate Account,
hereby elects to receive all such income, dividends and distributions as
are payable on a Designated Fund's shares in the form of additional shares
of that Designated Fund at the ex-dividend date net asset values. The
Company reserves the right to revoke this election upon prior reasonable
written notice to the Trust and to receive all such dividends and
distributions in cash. The Trust will notify the Company promptly of the
number of shares so issued as payment of such dividends and distributions.
1.10 The Trust will make the net asset value per share for each Designated Fund
available to the Company via electronic means on a daily basis as soon as
reasonably practical after the net asset value per share is calculated and
will use its best efforts to make such net asset value per share available
by 6:30 p.m., Eastern Time, each Business Day. If the Trust provides the
Company materially incorrect net asset value per share information (as
determined under SEC guidelines), the Company and the Trust shall be
entitled to an adjustment to the number of shares purchased or redeemed to
reflect the correct net asset value per share. Any material error in the
calculation or reporting of net asset value per share, dividend or capital
gain information shall be reported to the Company upon discovery by the
Trust. In no event, however, will the Trust be liable for material errors
in calculating or reporting net asset values where such errors are the
result
4
of information supplied by the Company or persons under its control
(MetLife does not calculate NAV- please explain).
ARTICLE II. - REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the securities deemed to be issued
by the Separate Accounts under the Contracts are or will be registered
under the Securities Act of 1933 (the "1933 Act"), or are exempt from
registration thereunder, and that the Contracts will be issued and sold in
compliance with all applicable federal and state laws, rules and
regulations (collectively, "laws"). The Company further represents and
warrants that: (i) it is an insurance company duly organized and in good
standing under applicable law; (ii) it has legally and validly established
each Separate Account as a segregated asset account under Section [____] of
the [State Statute] of [New York]; (iii) each Separate Account is or will
be registered as a unit investment trust in accordance with the provisions
of the 1940 Act to serve as a segregated investment account for the
Contracts, or is excluded from registration thereunder, and will comply in
all material respects with the provisions of the 1940 Act, to the extent
applicable; and (iv) it will maintain any registration contemplated by the
preceding clause (iii) for so long as any Contracts are outstanding. The
Company will amend each registration statement under the 1933 Act for the
Contracts and the registration statement under the 1940 Act for the
Separate Accounts from time to time as required under applicable law in
order to effect the continuous offering of the Contracts or as may
otherwise be required by applicable law. The Company will register and
qualify the Contracts for sale in accordance with the securities laws of
the various states as applicable.
2.2 Subject to the Trust's representations in Article III, the Company
represents and warrants that the Contracts currently will be treated as
annuity contracts and/or life insurance policies (as applicable) under
applicable provisions of the Code, and that it will make every effort to
maintain such treatment and that it will notify the Trust, the Adviser and
the Distributor 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. In addition, the Company represents and warrants
that each Separate Account is a "segregated asset account" and that
interests in the Separate Account are offered exclusively through the
purchase of or transfer into a "variable contract" within the meaning of
such terms under Section 817 of the Code and regulations thereunder. The
Company will make every effort to cause such definitional requirements to
be met at all times and it will notify the Trust, the Adviser and the
Distributor immediately upon having a reasonable basis for believing that
such requirements have ceased to be met or that they might not be met in
the future.
2.3 The Company represents and warrants that it will not purchase shares of the
Designated Fund(s) with assets derived from tax-qualified retirement plans
except, indirectly, through Contracts purchased in connection with such
plans.
2.4 The Trust represents and warrants that it will not sell shares of the
designated Funds to tax-qualified retirement plans except indirectly
through life insurance and annuity contracts purchased in conjunction with
such plans or if it sells any shares to such plans ,
5
will adopt procedures reasonably designed to provide assurances that any
such plan if in fact tax qualifies at the time shares are purchased and
when held.
2.4 The Trust represents and warrants that shares for the Designated Funds(s)
sold pursuant to this Agreement will be registered under the 1933 Act and
duly authorized for issuance in accordance with applicable law and that the
Trust is and will remain registered as an open-end, management investment
company under the 1940 Act for as long as such shares of the Designated
Fund(s) are sold. The Trust will amend the registration statement for its
shares under the 1933 Act and itself under the 1940 Act from time to time
as required under applicable law in order to effect the continuous offering
of its shares.
2.5 The Trust and the Adviser each represents and warrants that it will use its
best efforts to comply with any applicable state insurance laws or
regulations as they may apply to the investment objectives, policies and
restrictions of the Designated Funds. The Trust and the Distributor each
represents and warrants that it will use its best efforts to ensure that
the Designated Funds' shares will be sold in compliance with the insurance
laws of the State of New York and all applicable state insurance and
securities laws. The Company and the Trust will endeavor to mutually
cooperate with respect to the implementation of any modifications
necessitated by any change in state insurance laws, regulations or
interpretations of the foregoing that affect the Designated Funds (a "Law
Change") and to keep each other informed of any Law Change that becomes
known to such party. In the event of a Law Change, the Trust agrees that,
except in those circumstances where the Trust has advised the Company that
implementation of a Law Change is not in the best interests of all of the
Trust's shareholders with an explanation regarding why such action is
lawful, any action required by a Law Change will be taken. The Trust makes
no other 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 any state. The Company
represents that it will use its best efforts to notify the Trust of any
restrictions imposed by state insurance laws that may become applicable to
the Trust as a result of the Separate Accounts' investments therein. The
Trust and the Adviser agree that they will furnish the information
reasonably required by state insurance laws to assist the Company in
obtaining the authority needed to issue the Contracts in various states.
2.6 The Trust reserves the right to adopt a plan pursuant to Rule 12b-1 under
the 1940 Act and to impose asset-based or other sales charges to finance
distribution expenses as permitted by applicable laws. The Trust represents
and warrants that, to the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1 under the 1940 Act, the Trust undertakes to
have the Trustees, a majority of whom are not "interested" persons of the
Trust, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses. The Trust shall notify the Company immediately upon
determining to finance distribution expenses pursuant to a plan adopted in
accordance with Rule 12b-1 under the 1940 Act.
6
2.7 The Trust 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 applicable provisions of the 0000 Xxx.
2.8 The Trust represents and warrants that all of is trustees, officers,
employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Trust are and will continue to
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 the minimal coverage as
required currently by Rule 17g-1 of the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid bond includes coverage
for larceny and embezzlement and is issued by a reputable bonding company.
2.9 The Company represents and warrants that all of its directors, officers,
employees, and other individuals/entities employed by the Company dealing
with the money and/or securities of the Separate Accounts are covered by a
blanket fidelity bond or similar coverage in an amount not less than $5
million. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company. The Company agrees to hold
for the benefit of the Trust and to pay to the Trust any amounts lost from
larceny, embezzlement or other events covered by the aforesaid bond to the
extent such amounts derive from activities described in this Agreement. 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 in the event that such coverage no longer applies.
2.10 The Adviser represents and warrants that: (i) it is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as amended,
and will remain duly registered under all applicable federal and state
securities laws; and (ii) it will perform its obligations for the Trust in
accordance in all material respects with the laws of the State of Delaware
and any applicable state and federal securities laws.
2.11 The Distributor represents and warrants that it: (i) is registered as a
broker-dealer under the Securities and Exchange Act of 1934, as amended
(the "1934 Act") and will remain duly registered under all applicable
federal and state securities laws; (ii) is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"); (iii) serves as
principal underwriter/distributor of the Trust; and (iv) will perform its
obligations for the Trust in accordance in all material respects with the
laws of the State of Delaware and any applicable state and federal
securities laws.
ARTICLE III. - FUND COMPLIANCE
3.1 Subject to the Company's representations and warranties in Sections 2.1 and
2.2 hereof, the Trust, the Distributor and the Adviser each represents and
warrants that the Trust and each Designated Fund will at all times qualify
as a "look-through" entity within the meaning of Treasury Reg. 1.817-5(e)
and will sell its shares and invest its assets in such a manner as to
ensure that the Contracts will be treated as annuity contracts under the
Code, and the regulations issued thereunder. Specifically for further
clarification of the foregoing, the Trust and Adviser each represents and
warrants that the Trust and each
7
Designated Fund thereof will at all times comply with Section 817(h) of the
Code and Treasury Regulation (S)1.817-5, as amended from time to time, and
any Treasury interpretations thereof, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts
and with Section 817(d) of the Code, relating to the definition of a
"variable contract" and any amendments or other modifications or successor
provisions to such Sections or Regulations or any other applicable Code
requirements. In the event of a breach of this Article III by the Trust,
the Trust, Distributor, and Adviser will take all steps necessary to: (a)
notify the Company of such breach, and (b) adequately diversify the Trust
or Designated Fund so as to achieve compliance within the 30-day grace
period afforded by Regulation 1.817-5, and take any other steps that may be
required in order to correct any failure under this Article III. The Trust,
Distributor and Adviser will notify the Company upon having a reasonable
basis to believe that a failure has occurred regarding any representation
or warranty under this Article III.
3.2 The Trust and the Distributor each represents and warrants that shares of
the Designated Funds will be sold only to Participating Insurance
Companies, their separate accounts, and any other persons eligible to
purchase the Designated Fund; provided, that the purchase of shares by such
persons would not preclude the Company from "looking through" to the
investments of each Designated Fund in which it invests, pursuant to the
"look through" rules set forth in Treasury Regulation 1.817-5. No shares of
any Designated Fund will be sold to the general public.
3.3 The Trust represents and warrants that the Trust and each Designated Fund
is currently qualified as a Regulated Investment Company under Subchapter M
of the Code, and that the Trust will maintain such qualification (under
Subchapter M or any successor or similar provision) and that the Trust will
notify the Company immediately upon having a reasonable basis for believing
that any Designated Fund has ceased to so qualify of that it might not so
qualify or
that it might not so qualify in the future.
3.4 Without in any way limiting the effect of Sections 8.2 and 8.3 hereof, and
without in any way limiting or restricting any other remedies available to
the Company, the Distributor and/or Adviser will pay all costs associated
with or arising out of any failure, or any anticipated or reasonably
foreseeable failure, of the Trust or any Designated Fund to comply with
Section 3.1, 3.2 or 3.3 hereof, including all costs associated with
reasonable and appropriate corrections or responses to any such failure;
such costs may include, but are not limited to, the costs involved in
creating, organizing and registering a new investment company as a funding
medium for the Contracts and/or the costs of obtaining whatever regulatory
authorizations are required to substitute shares or another investment
company for those of the failed Designated Fund (including but not limited
to an order pursuant to Section 26(b) of the 1940 Act); such costs are to
include, but are not limited to, reasonable fees and expenses of legal
counsel and other advisers to the Company and any federal income taxes or
tax penalties and interest thereon (or "toll charges" or exactments or
amounts paid in settlement) incurred by the Company with respect to itself
8
or its Contract owners in connection with any such failure or anticipated
or reasonably foreseeable failure.
3.5 The Trust agrees to provide the Company with a certificate or statement
indicating compliance by each Fund of the Trust with Section 817(h) of the
Code, such certificate or statement to be sent to the Company no later than
thirty (30) days following the end of each calendar quarter.
ARTICLE IV. - PROSPECTUS AND PROXY STATEMENTS; VOTING
4.1 The Trust or the Distributor will provide the Company with as many copies
of the current Trust prospectus if any and any supplements thereto for the
Designated Funds as the Company may reasonably request for distribution to
Contract owners at the time of Contract fulfillment and confirmation. To
the extent that the Designated Funds are one or more of several funds or
series of the Trust, the Trust be obligated to provide the Company only
with disclosure related to the Designated Funds. The Trust will provide the
copies of said prospectus to the Company or to its mailing agent. If
requested by the Company, in lieu thereof, the Trust or the Distributor
will provide such documentation, including a final copy of a current
prospectus set in type or camera ready or electronic format and other
assistance as is reasonably necessary in order for the Company at least
annually (or more frequently if the Trust prospectus is amended more
frequently) to have the new prospectus for the Contracts and the Trust's
new prospectus printed together. The Trust or the Distributor will, upon
request, provide the Company with a copy of the Trust's prospectus through
electronic means to facilitate the Company's efforts to provide Trust
prospectuses via electronic delivery. Expenses associated with providing
such documentation shall be allocated in accordance with Article VI of this
Agreement.
4.2 The Trust's prospectus will state that a Statement of Additional
Information ("SAI") for the Trust is available, and will disclose how
investors may obtain the SAI.
4.3 The Trust, the Distributor or the Adviser will provide the Company or its
mailing agent with copies of its proxy material, if any, with respect to
the Designated Funds, reports to shareholders/Contract owners and other
communications to shareholders/Contract owners in such quantity as the
Company will reasonably require with expenses to be borne in accordance
with Article V of this Agreement. The Company will distribute this proxy
material, reports and other communications to existing Contract owners. If
requested by the Company, the Trust, the Distributor or the Adviser shall
provide an electronic copy of such documentation in a format suitable to
posting on a website maintained by or on behalf of the Company.
4.4 If and to the extent required by law, the Company will:
(a) solicit voting instructions from Contract owners;
(b) vote the shares of Designated Funds held in the Separate Accounts in
accordance with instructions received from Contract owners; and
9
(c) vote shares of Designated Funds held in the Separate Accounts for
which no timely instructions have been received from the Company's
Contract owners in the same proportion as shares of the Designated
Funds for which instructions have been received from contract owners,
so long as and to the extent that the SEC continues to interpret the 1940
Act to require pass-through voting privileges for Contract owners. The
Company reserves the right to vote shares of the Designated Funds held in
any segregated asset account in its own right, to the extent permitted by
law. The Company will be responsible for assuring that the Separate
Accounts calculate voting privileges in a manner consistent with all legal
requirements, including the Proxy Voting Procedures set forth in Schedule C
and the Mixed and Shared Funding Order, as described in Section 7.1.
4.5 The Trust will comply with all provisions of the 1940 Act requiring voting
by shareholders and, in particular, the Trust will either provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the
1940 Act not to require such meetings) or, as the Trust currently intends,
comply with Section 16(c) of the 1940 Act (although the Trust is not one of
the Trusts described in Section 16(c) of that Act) as well as with Sections
16(a) and, if an when applicable, 16(b). Further, the Trust will act in
accordance with the SEC's interpretation of the requirements of Section
16(a) with respect to periodic elections of directors or trustees and with
whatever rules the SEC may promulgate with respect thereto.
ARTICLE V. - SALES MATERIAL AND INFORMATION
5.1 The Company will furnish, or will cause to be furnished, to the Trust or
its designee, each piece of sales literature or other promotional material
in which the Trust, the Adviser or the Distributor is named. No such
material will be used until approved by the Trust or the Distributor. The
Trust or its designee reserves the right to object reasonably to the
continued use within five (5) business days after receipt of such material
or to its continued use of any such sales literature or other promotional
material in which the Trust (or any Designated Fund), the Adviser, any
sub-adviser or the Distributor is named and no such material shall be used
if the Trust or its designee so objects.
5.2 The Company will not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust or any Designated
Fund in connection with the sale of the Contracts other than the
information or representations contained in the registration statement,
prospectus or SAI for shares of the Designated Funds, as such registration
statement, prospectus and SAI may be amended or supplemented from time to
time, or in reports or proxy statements for the Designated Funds, or in
sales literature or other material provided by the Trust, the Adviser or
the Distributor, except with permission of the Trust, the Adviser or the
Distributor. The Trust, the Adviser or the Distributor agree to respond to
any request for approval on a prompt and timely basis.
5.3 The Trust, the Adviser or the Distributor, or a designee, will furnish, or
will cause to be furnished, to the Company or its designee, each piece of
sales literature or other promotional material in which the Company or any
Separate Account is named, prior to
10
its use. No such material will be used until approved by the Company or its
designee, if the Company reasonably objects to such use within five (5)
business days after receipt of such material or to its continued use.
5.4 The Trust, the Adviser or the Distributor will not give any information or
make any representations or statements on behalf of the Company or
concerning the Company, any Separate Account, or the Contracts other than
the information or representations contained in a registration statement,
if any, prospectus or SAI for the Contracts, if any, as such registration
statement, prospectus and SAI may be amended or supplemented from time to
time, or in published reports for each Separate Account or the Contracts
which are in the public domain or approved by the Company for distribution
to Contract owners, or in sales literature or other material provided by
the Company, except with permission of the Company. The Company agrees to
respond to any request for approval on a prompt and timely basis.
5.5 The Trust will provide to the Company at least one complete copy, if any,
of all registration statements, prospectuses, SAIs, reports, proxy
statements, sales literature and other promotional materials, applications
for exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Trust or shares of the Designated Funds,
within a reasonable time after filing of such document with the SEC or the
NASD [or contemporaneously with the first use or public availability of
such documents].
5.6 The Company will provide to the Trust at least one complete copy of all
definitive prospectuses, definitive SAIs, reports, solicitations for voting
instructions, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to any Contract or any Separate
Account (collectively, "Contract Materials"), contemporaneously with the
filing of each such document with the SEC or the NASD (except that with
respect to post-effective amendments to such prospectuses and SAIs and
sales literature and promotional material, only those prospectuses and SAIs
and sales literature and promotional material that relate to or refer to
the Trust or any Designated Fund will be provided). In addition, the
Company will provide to the Trust at least one complete copy of (i) a
registration statement that relates to the Contracts or any Separate
Account, containing representative and relevant disclosure concerning the
Trust; and (ii) any post-effective amendments to any registration
statements relating to the Contracts or such Separate Account that refer to
or relate to the Trust or any Designated Fund. The Company shall provide to
the Trust and the Distributor copies of any complaints received from
Contract owners pertaining to the Trust or any Designated Fund.
5.7 For purposes of this Article V, 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,
(i.e., on-line networks such as the Internet or other electronic
messages)), 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,
11
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, registration statements, prospectuses, SAIs,
shareholder reports, and proxy materials if any and any other material
constituting sales literature or advertising under the NASD Conduct Rules,
the 1933 Act or the 0000 Xxx.
5.8 The Trust, the Adviser and the Distributor hereby consent to the Company's
use of their respective names as well as the names of the Designated Funds
in connection with marketing the Contracts, subject to the terms of
Sections 5.1 or 5.2 of this Agreement. The Trust, the Adviser and the
Distributor hereby consent to the use of any trademark, trade name, service
xxxx or logo used by the Trust, the Adviser and the Distributor, subject to
the Trust's, the Adviser's and/or the Distributor's approval of such use
and in accordance with reasonable requirements of the Trust, the Adviser or
the Distributor. Such consent will terminate with the termination of this
Agreement. The Company agrees and acknowledges that the Trust, the Adviser
or the Distributor is the owner of the name, trademark, trade name, service
xxxx and logo and that all use of any designation comprised in whole or in
part of the name, trademark, trade name, service xxxx and logo under this
Agreement shall inure to the benefit of the Trust, Adviser and/or
Distributor.
5.9 The Trust, the Adviser, the Distributor and the Company agree to adopt and
implement procedures reasonably designed to ensure that information
concerning the Company, the Trust, the Adviser or the Distributor,
respectively, and their respective affiliated companies, that is intended
for use only by brokers or agents selling the Contracts (i.e., information
that is not intended for distribution to Contract owners or prospective
Contract owners) and is properly marked as "Not For Use With The Public" or
"For Broker-Dealer Use Only" and that such information is only so used.
ARTICLE VI. - FEES, COSTS AND EXPENSES
6.1 The Fund, Distributor and Adviser shall pay no fee or other compensation to
the Company under this Agreement and the Company shall pay no fee or other
compensation to the Fund, Distributor or Adviser under this Agreement,
although the Parties hereto will bear certain expenses in accordance with
this Agreement.
6.2 Each party shall, in accordance with the allocation of expenses specified
in this Agreement, reimburse other parties for expenses initially paid by
one party but allocated to another party. In addition, nothing herein shall
prevent the parties hereto from otherwise agreeing to perform and arranging
for appropriate compensation for (i) for distribution and
shareholder-related services under a plan adopted in accordance with Rule
12b-1 under the 1940 Act and (ii) other services that are not primarily
intended to result in the sale of shares of the Designated Funds, which are
provided to Contract owners relating to the Designated Funds.
6.3 All expenses incident to performance by the Trust of this Agreement will be
paid by the Trust or the Distributor to the extent permitted by law. All
shares of the Designated Funds will be duly authorized for issuance and
registered in accordance with applicable
12
federal law and, to the extent deemed advisable by the Trust, in accordance
with applicable state law, prior to sale. The Trust will bear the expenses
for the cost of registration and qualification of the Trust's shares,
including without limitation, the preparation of and filing with the SEC of
Forms N-1A and Rule 24f-2 Notices on behalf of the Trust and payment of all
applicable registration or filing fees (if applicable) with respect to
shares of the Trust; preparation and filing of the Trust's prospectus, SAI
and registration statement, proxy materials and reports; typesetting the
Trust's prospectus; typesetting and printing proxy materials and reports to
Contract owners (including the costs of printing a Trust prospectus that
constitutes an annual report); the preparation of all statements and
notices required by any federal or state law; all taxes on the issuance or
transfer of shares of the Designated Funds; any expenses permitted to be
paid or assumed by the Trust with respect to the Designated Funds pursuant
to a plan, if any, under Rule 12b-1 under the 1940 Act; and other costs
associated with preparation of prospectuses and SAIs regarding the
Designated Funds in electronic or typeset format for distribution to
existing Contract owners.
6.4 The Company shall bear all expenses associated with the registration,
qualification, and filing of the Contracts under applicable federal
securities and state insurance laws; the cost of preparing, printing, and
distributing the Contracts' prospectus and SAI; the cost of printing the
Trust's prospectus for use in connection with offering the Contracts; the
costs of printing and distributing to Contract owners the Trust's
prospectus and the Trust's proxy materials and reports; and the cost of
printing and distributing such annual individual account statements for
Contract owners as are required by state laws.
ARTICLE VII. - MIXED AND SHARED FUNDING RELIEF
7.1 The Trust represents and warrants that it has received an order from the
SEC granting Participating Insurance Companies and variable annuity
separate accounts and variable life insurance separate accounts relief from
the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Designated Funds to be sold to and held by variable
annuity separate accounts and variable life insurance separate accounts of
both affiliated and unaffiliated Participating Insurance Companies and
qualified pension and retirement plans outside of the separate account
context (the "Mixed and Shares Funding Order"). The parties to this
Agreement agree that the conditions or undertakings required by the Mixed
and Shared Funding Order that may be imposed on the Company, the Trust
and/or the Adviser by virtue of the receipt of such order by the SEC will:
(i) apply only upon the sale of shares of the Designated Fund to a variable
life insurance separate account (and then only to the extent required under
the 1940 Act); (ii) be incorporated herein by reference; and (iii) such
parties agree to comply with such conditions and undertakings to the extent
applicable to each such party notwithstanding any provision of the
agreement to the contrary.
7.2 The Trust represents and warrants that the Trustees will monitor the Trust
for the existence of any material irreconcilable conflict among the
interests of the Contract owners of all Separate Accounts investing in the
Designated Funds. A material irreconcilable conflict may arise for a
variety of reasons, including, but not limited to:
13
(1) 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 Designated Fund are being managed; (e) a difference in
voting instructions given by Participating Insurance Companies or by
variable annuity and variable life insurance Contract owners; or (f) a
decision by an insurer to disregard the voting instructions of Contract
owners. The Trustees will promptly inform the Company if it determines that
a material irreconcilable conflict exists and explain the implications
thereof.
7.3 The Company will promptly report any potential or existing conflicts of
which it is aware to the Trustees. The Company agrees to assist the
Trustees in carrying out their responsibilities under the Mixed and Shared
Funding Order by promptly providing the Trustees with all information
reasonably necessary for the Trustees to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to promptly
inform the Trustees whenever Contract owner voting instructions are to be
disregarded. Such responsibilities will be carried out by the Company with
a view only to the interests of its Contract owners.
7.4 If it is determined by a majority of the Trustees constituting the Trust's
Board of Trustees, or a majority of the disinterested Trustees of the
Board, that a material irreconcilable conflict exists, the Company and
other Participating Insurance Companies will, at their 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 material irreconcilable conflict, up to and including: (a)
withdrawing the assets allocable to some or all of the Separate Accounts
from the Trust or any Designated Fund and reinvesting such assets in a
different investment medium, including (but not limited to) another
Designated Fund, or submitting the question 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.,
variable annuity Contract owners or variable life insurance 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 (b) establishing a new registered management
investment company or managed separate account.
7.5 If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions, and such disregard
of voting instructions could conflict with the majority of Contract owner
voting instructions, and the Company's judgment represents a minority
position or would preclude a majority vote, the Company may be required, at
the Trust's election, to withdraw the investment of the affected
sub-account of the Separate Account in the Designated Fund and terminate
this Agreement with respect to such sub-account; provided, however, that
such withdrawal and termination will be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority
of the disinterested Trustees of the Trust. No charge or penalty will be
imposed as a result of such withdrawal. Any such withdrawal and termination
must take place within six (6) months after the Trust gives
14
written notice to the Company that this provision is being implemented.
Until the end of such six-month period, the Distributor and the Adviser
will, to the extent permitted by law and the Mixed and Shared Funding
Order, continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Trust.
7.6 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
decisions of the majority of other state insurance regulators, then the
Company will withdraw the investment of the affected sub-account of the
Separate Account in the Designated Fund and terminate this Agreement with
respect to such sub-account; provided, however, that such withdrawal and
termination will be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested Trustees. No charge or penalty will be imposed as a result of
such withdrawal. Any such withdrawal and termination must take place within
six (6) months after the Trust gives written notice to the Company that
this provision is being implemented. Until the end of such six-month period
the Trust will, to the extent permitted by law and the Mixed and Shared
Funding Order, continue to accept and implement orders by the Company for
the purchase (and redemption) of shares of the Designated Funds.
7.7 For purposes of Section 7.4 through 7.7 of this Agreement, a majority of
the disinterested Trustees of the Trust will determine whether any proposed
action adequately remedies any material irreconcilable conflict, but in no
event will the Trust be required to establish a new funding medium for the
Contracts. The Company will not be required by Section 7.4 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 affected by the material
irreconcilable conflict. In the event that the Board determines that any
proposed action does not adversely remedy any material irreconcilable
conflict, then the Company will withdraw the investment of the affected
sub-account of the Separate Account in the Designated 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 will be limited to the extent required by any
such material irreconcilable conflict as determined by a majority of the
disinterested Trustees of the Trust.
7.8 The Company will at least annually submit to the Trustees such reports,
materials or data as the Trustees of the Trust may reasonably request so
that the Trustees may fully carry out the duties imposed upon it as
delineated in the Mixed and Shared Funding Order, and said reports,
materials and data will be submitted more frequently if deemed appropriate
by the Trustees.
7.9 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide relief from any provision of the 1940 Act or
the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Mixed and Shared Funding Order) on terms and conditions
materially different from those contained in the Mixed and Shared Funding
Order, then: (a) the Trust and/or the Participating Insurance Companies, as
appropriate, will 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
15
are applicable; and (b) Sections 4.3, 4.4, 4.5, 7.1, 7.2, 7.3, 7.4, 7.5 and
7.6 of this Agreement will 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.
ARTICLE VIII. - INDEMNIFICATION
8.1 Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless the Trust, the
Adviser, the Distributor, and each of the Trust's or the Adviser's or
the Distributor's directors, trustees, officers, employees or agents
and each person, if any , who controls or is associated with the
Trust, the Adviser or the Distributor within the meaning of such terms
under the federal securities laws (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 actions in respect thereof
(including reasonable 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 litigation in respect thereof) or
settlements:
(1) 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 SAI 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 or necessary to make such
statements not misleading in light of the circumstances in which
they were made; provided, that this agreement to indemnify will
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
Company by or on behalf of the Trust, the Adviser, of the
Distributor for use in the registration statement, prospectus or
SAI for the Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or shares of the Designated Funds;
or
(2) arise out of or as a result of statements or representations by
or on behalf of the Company (other than statements or
representations contained in the Trust registration statement,
prospectus, SAI or sales literature or other promotional material
of the Trust, or any amendment or supplement to the foregoing,
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
shares of the Designated Funds; or
16
(3) arise out of untrue statement or alleged untrue statement of a
material fact contained in the Trust registration statement,
prospectus, SAI or sales literature or other promotional material
of the Trust (or any amendment or supplement thereto) or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make such
statements not misleading in light of the circumstances in which
they were made, if such statement or omission was made in
reliance upon and in conformity with information furnished to the
Trust by or on behalf of the Company or persons under its
control; or
(4) 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
(5) arise out of 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 by the Company of this
Agreement;
except to the extent provided in Sections 8.1(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Company
otherwise may have.
(b) No party will be entitled to indemnification under Section 8.1(a) if
such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such party's duties and obligations
under this Agreement.
(c) The Indemnified Parties promptly will notify in writing the Company of
the commencement of any litigation, proceedings, complaints or
litigation by regulatory authorities against them in connection with
the issuance or sale of the shares of the Designated Funds or the
Contracts or the operation of the Trust.
8.2 Indemnification by the Adviser and Distributor
(a) The Adviser and Distributor each agrees to indemnify and hold harmless
the Company and each of its directors, officers, employees or agents
and each person, if any, who controls or is associated with the
Company within the meaning of such terms under the federal securities
(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 Distributor) or litigation in respect thereof (including
reasonable 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 litigation in respect thereof) or settlements:
(1) 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 SAI for the Trust or sales
literature or other promotional
17
material generated or approved by the Adviser or the Distributor
on behalf of the Trust (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 or necessary to make such statements not misleading in
light of the circumstances in which they were made; provided that
this agreement to indemnify will 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 Adviser, the Distributor or the
Trust by or on behalf of the Company for use in the registration
statement, prospectus or SAI for the Trust or in sales literature
generated or approved by the Adviser or the Distributor on behalf
of the Trust (or any amendment or supplement thereto) or
otherwise for use in connection with the sale of the Contracts or
shares of the Designated Funds; or
(2) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Contracts or in the Contract or Trust registration statements,
prospectuses or statements of additional information or sales
literature or other promotional material for the Contracts or of
the Trust, or any amendment or supplement to the foregoing, not
supplied by the Adviser or the Distributor or persons under the
control of the Adviser or the Distributor respectively) or
wrongful conduct of the Adviser or the Distributor or persons
under the control of the Adviser or the Distributor respectively,
with respect to the sale or distribution of the Contracts or
shares of the Designated Funds; or
(3) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI or sales literature or other promotional material
covering the Contracts (or any amendment or supplement thereto),
or the omission or alleged omission to state therein a material
fact required to be stated or necessary to make such statement or
statements not misleading in light of the circumstances in which
they were made, if such statement or omission was made in
reliance upon and in conformity with information furnished to the
Company by or on behalf of the Adviser or the Distributor or
persons under the control of the Adviser or the Distributor; or
(4) arise as a result of any failure by the Adviser or the
Distributor to provide the services and furnish the materials
under the terms of this Agreement; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser or the
Distributor in this Agreement, or arise out of or result from any
other material breach of this Agreement by the Adviser or the
Distributor (including a failure, whether intentional or in good
faith or otherwise, to comply with the requirements of Subchapter
18
M of the Code specified in Article III, Section 3.3 of this
Agreement, as described more fully in Section 8.5 below);
except to the extent provided in Sections 8.2(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Adviser
or Distributor otherwise may have.
(b) No party will be entitled to indemnification under Section 8.2(a) if
such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such party's duties and obligations
under this Agreement.
(c) In no event shall the Adviser or the Distributor be liable under the
indemnification provisions contained in this Agreement to any
individual or entity, including without limitation, the Company, or
any Contract owner, with respect to any losses, claims, damages,
liabilities or expenses that arise out of or result from the failure
by the Company to maintain its segregated asset account(s) under
applicable state law and as a duly registered unit investment trust
under the provisions of the 1940 Act (unless exempt therefrom) or,
subject to compliance by the Designated Funds with the diversification
requirements specified in Article III, the failure by the Company to
maintain its Contracts (with respect to which any Designated Fund
serves as an underlying funding vehicle) as life insurance, endowment
or annuity contracts under applicable provisions of the Code.
(d) The Indemnified Parties promptly will notify in writing the Adviser
and the Distributor of the commencement of any litigation,
proceedings, complaints or litigation by regulatory authorities
against them in connection with the issuance or sale of the Contracts
or the operation of the Separate Account.
8.3 Indemnification by the Trust
(a) The Trust agrees to indemnify and hold harmless the Company and each
of its directors, officers, employees or agents and each person, if
any, who controls or is associated with the Company within the meaning
of such terms under the federal securities laws (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any
and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Trust) or litigation in
respect thereof (including reasonable 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 litigation in respect
thereof) or settlements, are related to the operations of the Trust
and:
(1) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of this
Agreement; or
19
(2) 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 (including a failure,
whether intentional or in good faith or otherwise, to comply with
the requirements of Subchapter M of the Code specified in Article
III, Section 3.3 of this Agreement as described more fully in
Section 8.5 below); or
(3) arise out of or result from the materially incorrect or untimely
calculation or reporting of daily net asset value per share of a
Designated Fund or dividend or capital gain distribution on
shares of a Designated Fund;
except to the extent provided in Sections 8.3(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Trust
otherwise may have.
(b) No party will be entitled to indemnification under Section 8.3(a) if
such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such party's duties and obligations
under this Agreement.
(c) In no event shall the Trust be liable under the indemnification
provisions contained in this Agreement to any individual or entity,
including without limitation, the Company, or any Contract owner, with
respect to any losses, claims, damages, liabilities or expenses that
arise out of or result from the failure by the Company to maintain its
segregated asset account(s) under applicable state law and as a duly
registered unit investment trust under the provisions of the 1940 Act
(unless exempt therefrom) or, subject to compliance by the Designated
Funds with the diversification requirements specified in Article III,
the failure by the Company to maintain its Contracts (with respect to
which any Designated Fund serves as an underlying funding vehicle) as
life insurance, endowment or annuity contracts under applicable
provisions of the Code.
(d) The Indemnified Parties each agree to promptly notify in writing the
Trust of the commencement of any litigation, proceedings, complaints
or actions by regulatory authorities against itself or any of its
respective officers or directors in connection with the Agreement, the
issuance or sale of the Contracts, the operation of the Separate
Account(s), or the sale or acquisition of shares of the Trust.
20
8.4 Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.4) will not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification under
this Article VIII ("Indemnified Party" for the purpose of this Section 8.4)
if such Indemnified Party has failed to notify in writing the Indemnifying
Party in accordance with its obligations under Sections 8.1(c), 8.2(c) or
8.3(d), as applicable, but failure to notify the Indemnifying Party or any
such claim will not relieve the Indemnifying Party from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of the indemnification provision of this Article
VIII, except to the extent that the failure to notify results in the
failure of actual notice to the Indemnifying Party and such Indemnifying
Party is damaged solely as a result of failure to give such notice. In case
any such action is brought against the Indemnified Party, the Indemnifying
Party will be entitled to participate, at its own expense, in the defense
thereof. The Indemnifying Party also will be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from the Indemnifying Party to the Indemnified Party of the
Indemnifying Party's election to assume the defense thereof, the
Indemnified Party 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, unless: (a) the Indemnifying Party and the
Indemnified Party will have mutually agreed to the retention of such
counsel; or (b) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
The Indemnifying Party will not be liable for any settlement of any
proceeding effected without its written consent but if settled with such
consent or if there is a final judgment for the plaintiff, the Indemnifying
Party agrees to indemnify the Indemnified Party from and against any loss
or liability by reason of such settlement or judgment. A successor by law
of the parties to this Agreement will be entitled to the benefits of the
indemnification contained in this Article VIII. The indemnification
provisions contained in this Article VIII will survive any termination of
this Agreement.
8.5 Indemnification for Failure to Comply with Diversification Requirements
The Trust and the Adviser acknowledge that if a Designated Fund fails
(whether intentionally or in good faith or otherwise) to comply with the
diversification requirements specified in Article III, Section 3.3 of this
Agreement, the Contracts consequently may not be treated as variable
contracts for federal income tax purposes, which would have adverse tax
consequences for Contract owners and could also adversely affect the
Company's corporate tax liability. Accordingly, without in any way limiting
the effects of Sections 8.2(a) and 8.3(a) hereof and without in any way
limiting or restricting any other remedies available to the Company, the
Trust, the Adviser and the Distributor will pay on a joint and several
basis all costs associated with or arising out of any failure, or any
anticipated or reasonably foreseeable failure, of any Designated Fund to
comply with Section 3.3 of this Agreement, including all costs associated
with
21
correcting or responding to any such failure; such costs may include, but
are not limited to, the costs involved in creating, organizing, and
registering a new investment company as a funding medium for the Contracts
and/or the costs of obtaining whatever regulatory authorizations are
required to substitute shares of another investment company for those of
the failed Designated Fund (including but not limited to an order pursuant
to Section 26(b) of the 1940 Act); reasonable fees and expenses of legal
counsel and other advisers of the Company and any federal income taxes or
tax penalties (or "toll charges" or exactments or amounts paid in
settlement) reasonably incurred by the Company in connection with any such
failure or anticipated or reasonably foreseeable failure. Such
indemnification and reimbursement obligation shall be in addition to any
other indemnification and reimbursement obligations of the Trust, the
Adviser and/or the Distributor under this Agreement.
8.6 Indemnification for Failure to Comply with Code Provisions
The Company acknowledges that if a Separate Account fails (whether
intentionally or in good faith or otherwise) to comply with the Code
provisions specified in Article II, Section 2.2 of this Agreement or other
Code provisions related to the maintenance of the contracts as variable
contracts for federal income tax purposes the failure of the contracts to
be treated as variable contracts for federal income tax purposes would have
adverse consequences for the Designated Funds serving as funding vehicles
for Participating Insurance Companies. Accordingly, without in any way
limiting the effects of Sections 8.1(a) hereof and without in any way
limiting or restricting any other remedies available to the Trust, the
Adviser and the Distributor, the Company will pay all costs associated with
or arising out of any failure, or any anticipated or reasonably foreseeable
failure, of any Separate Account to comply with Section 2.2 of this
Agreement or Code provisions related to the maintenance of the contracts as
variable contracts for federal income tax purposes, including all costs
associated with correcting or responding to any such failure; such costs
may include, but are not limited to, reasonable fees and expenses of legal
counsel and other advisers of the Trust, the Adviser and the Distributor in
connection with any such failure or anticipated or reasonably foreseeable
failure. Such indemnification and reimbursement obligation shall be in
addition to any other indemnification and reimbursement obligations of the
Company under this Agreement.
ARTICLE IX. - APPLICABLE LAW
9.1 This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware applicable
to contracts entirely entered into and performed in Delaware by Delaware
residents.
9.2 This Agreement will be subject to the provisions of the 1933 Act, the 1934
Act and the 1940 Act, and the rules and regulations and ruling thereunder,
including such exemptions from those statutes, rules and regulations as the
SEC may grant (including, but not limited to, the Mixed and Shared Funding
Order) and the terms hereof will be interpreted and construed in accordance
therewith. If in the future, the Mixed and Shared Funding
22
Order should no longer be necessary under applicable laws, then Article VII
shall no longer apply.
ARTICLE X. - TERMINATION
10.1 This Agreement will terminate automatically in the event of its assignment,
unless made with the prior written consent of each party, or:
(a) at the option of any party, with or without cause, with respect to
one, some or all of the Designated Funds, upon six (6) month's advance
written notice to the other parties or, if later, upon receipt of any
required exemptive relief or orders from the SEC, unless otherwise
agreed in a separate written agreement among the parties; or
(b) at the option of the Company, upon written notice to the other
parties, with respect to any Designated Fund if shares of the
Designated Fund are not reasonably available to meet the requirements
of the Contracts as determined in good faith by the Company; or
(c) at the option of the Company, upon written notice to the other
parties, with respect to any Designated Fund in the event any of the
Designated Fund's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such law
precludes the use of such shares as the underlying investment media of
the Contracts issued or to be issued by the Company; or
(d) at the option of the Trust upon institution of formal proceedings
against the Company by the NASD, the SEC, the insurance commission of
any state or any other regulatory body regarding the Company's duties
under this Agreement or related to the sale of the Contracts, the
administration of the Contracts, the operation of any Separate
Account, or the purchase of the Trust shares, provided that the Trust
determines in its reasonable judgment that any such proceeding would
have a material adverse effect on the Company's ability to perform its
obligations under this Agreement; or
(e) at the option of the Company upon institution of formal proceedings
against the Trust, the Adviser or the Distributor by the NASD, the SEC
or any state securities or insurance commission or any other
regulatory body, provided that the Company determines in its
reasonable judgment that any such proceeding would have a material
adverse effect on the Trust's, the Adviser's or the Distributor's
ability to perform its obligations under this Agreement; or
(f) at the option of the Company, if the Trust or any Designated Fund
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 Designated Fund may fail to so
qualify; or
(g) subject to the Company's compliance with Article II, at the option of
the Company, with respect to any Designated Fund, if any Designated
Fund fails to
23
meet the diversification requirements specified in Section 3.3 hereof
or if the Company reasonably believes any Designated Fund may fail to
meet such requirements; or
(h) at the option of any party to this Agreement, upon another party's
material breach of any provision of this Agreement; or
(i) at the option of the Company, if the Company determines in its sole
judgment exercised in good faith that either the Trust, the Adviser or
the Distributor has suffered a material adverse change in its
business, operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity which is
likely to have a material adverse impact upon the business and
operations of the Company or the Contracts (including the sale
thereof); or
(j) at the option of the Trust, the Adviser or the Distributor, if the
Trust, the Adviser or the Distributor respectively, determines in its
sole judgment exercised in good faith that the Company has suffered a
material adverse change in its business, operations or financial
condition since the date of this Agreement or is the subject of
material adverse publicity which is likely to have a material adverse
impact upon the business and operations of the Trust, the Adviser or
the Distributor; or
(k) at the option of the Company or the Trust upon receipt of any
necessary regulatory approvals and/or the vote of the Contract owners
having an interest in a Separate Account (or any sub-account) to
substitute the shares of another investment company for the
corresponding Designated Fund's shares in accordance with the terms of
the Contracts for which those Designated Fund shares had been selected
to serve as the underlying portfolio. The Company will give sixty (60)
days' prior written notice to the Trust of the date of any proposed
vote or other action taken to replace the shares of a Designated Fund
or of the filing of any required regulatory approval(s); or
(l) at the option of the Company or the Trust upon a determination by a
majority of the Trust Board, or a majority of the Trust's
disinterested Trustees, that a material irreconcilable conflict exists
among the interests of: (1) all Contract owners of variable insurance
products of all separate accounts; or (2) the interests of the
Participating Insurance Companies investing in the Trust as set forth
in Article VII of this Agreement; or
(m) subject to the Trust' compliance with Article III, at the option of
the Trust in the event any of the Contracts are not issued or sold in
accordance with applicable federal and/or state law, or will not be
treated as annuity contracts, life insurance policies and/or variable
contracts (as applicable) under applicable provisions of the Code, or
in the event any representation or warranty of the Company in Section
2.1 is no longer true. Termination will be effective immediately upon
such occurrence without notice.
10.2 Notice Requirement
24
(a) In the event that any termination of this Agreement is based upon the
provisions of Article VII, such prior written notice will be given in
advance of the effective date of termination as required by such
provisions.
(b) In the event that a party to this Agreement terminates the Agreement
based upon the provisions of Sections 10.1(b)-(h), prompt written
notice of the election to terminate this Agreement for cause shall be
furnished by the party terminating the Agreement to the
non-terminating party(ies). The Agreement shall be terminated
effective upon receipt of such notice by the non-terminating
party(ies).
(c) In the event that a party to this Agreement terminates the Agreement
based upon the provisions of Sections 10.1(i) or (j), prior written
notice of the election to terminate this Agreement for cause shall be
furnished by the party terminating the Agreement to the
non-terminating party(ies). Such prior written notice shall be given
by the party terminating this Agreement to the non-terminating
party(ies) at least sixty (60) days before the effective date of
termination.
10.3 Effect of Termination
Notwithstanding any termination of this Agreement, the Trust and the
Distributor will, at the option of the Company, continue to make available
additional shares of the Designated Funds 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"), unless the Distributor requests that the Company seek an order
pursuant to Section 26(b) of the 1940 Act to permit the substitution of
other securities for the shares of the Designated Funds. The Distributor
and the Company each will be responsible for one-half of the cost of
seeking such order and the Company agrees that it will cooperate with the
Distributor and seek such an order upon request. Specifically, without
limitation, the owners of the Existing Contracts will be permitted to
reallocate investments in the Designated Funds (as in effect on such date),
redeem investments in the Designated Funds and/or invest in the Designated
Funds upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.3 will not apply to any
terminations under Article VII and the effect of such Article VII
terminations will be governed by Article VII of this Agreement. The parties
further agree that this Section 10.3 will not apply to any termination
under 10.1(m) of this Agreement.
10.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each party's obligations
under Article VIII to indemnify other parties will survive and not be
affected by any termination of this Agreement. In addition, with respect to
Existing Contracts, all provisions of this Agreement also will survive and
not be affected by any termination of this Agreement.
ARTICLE XI. -- NOTICES
25
Any notice will be deemed duly given when sent by certified mail, return receipt
requested, 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 parties. All notices will be deemed given three (3) business days after
the date received or rejected by the address:
If to the Company:
Metropolitan Life
1 MetLife Plaza
00-00 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx, Counsel
With copy to:
Metropolitan Life
000X XX Xxxxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxx K Model
If to the Trust:
Delaware VIP Trust
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: General Counsel
If to the Adviser:
Delaware Management Company
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: General Counsel
If to the Distributor:
Delaware Distributors, L.P.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: General Counsel
ARTICLE XII. -- MISCELLANEOUS
26
12.1 All persons dealing with the Trust must look solely to the property of the
Trust or, in the event of a claim relating to a particular Designated Fund,
the relevant Designated Fund for the enforcement of any claims against the
Trust or the Designated Fund, as the case may be, as neither the trustees,
officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Trust or any Designated Funds.
12.2 The Trust, the Adviser and the Distributor each acknowledges that the
identities of the customers of the Company or any of its affiliates
(collectively the "Protected Parties" for purposes of this Section 12.2),
information maintained regarding Protected Parties, and all computer
programs and procedures developed by the Protected Parties or any of their
employees or agents in connection with the Company's performance of its
duties under this Agreement are the valuable property of the Protected
Parties. The Trust, the Adviser and the Distributor agree that if they come
into possession of any list or compilation of the identities of or other
information about the Protected Parties' customers, or any other property
of the Protected Parties, other than such information as may be
independently developed or compiled by the Trust, the Adviser or the
Distributor from information supplied to them by the Protected Parties'
customers who also maintain accounts directly with the Trust, the Adviser
and the Distributor, the Trust, the Adviser and the Distributor will hold
such information or property in confidence and refrain from using,
disclosing or distributing any of such information or other property
except: (a) with the Company's prior written consent; or (b) as required by
law or judicial process. Subject to the requirements of legal process and
regulatory authority, each party hereto in particular shall treat as
confidential any "non-public personal information" about any "consumer" of
any party as such terms are defined in the SEC's Regulation S-P and shall
not disclose or use such information without the express consent of such
party. Such consent shall specify the purposes for which information may be
disclosed or used, which disclosure or use shall be consistent with
Regulation S-P. The Trust and the Adviser each acknowledges that any breach
of the agreements in this Section 12.2 would result in immediate and
irreparable harm to the Protected Parties for which there would be no
adequate remedy at law and agree that in the event of such a breach, the
Protected Parties will be entitled to equitable relief by way of temporary
and permanent injunctions, as well as such other relief as any court of
competent jurisdiction deems appropriate.
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 will constitute one and the same instrument.
12.5 If any provision of this Agreement will be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement will
not be affected thereby.
12.6 This Agreement will not be assigned by any party hereto, without the prior
written consent of all of the parties.
27
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 law.
12.8 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
12.9 Each party to this Agreement will cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and will permit each other and
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.
12.10 Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate or trust action, as applicable, by
such party and when so executed and delivered this Agreement will be the
valid and binding obligation of such party enforceable in accordance with
its terms.
12.11 This Agreement may be amended by written instrument signed by all parties
to the Agreement. Notwithstanding the above, the parties to this Agreement
may amend the schedules to this Agreement from time to time to reflect
changes in or relating to the Contracts, the Separate Accounts or the Funds
of the Trust or other applicable terms of this Agreement.
28
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed hereto as of the date specified below.
Metropolitan Life Insurance Company on
behalf of Separate Account UL and
Separate Account DCVL
By:
-------------------------------------
Name:
Title:
DELAWARE VIP TRUST
By:
-------------------------------------
Name:
Title:
DELAWARE MANAGEMENT COMPANY
By:
-------------------------------------
Name:
Title:
DELAWARE DISTRIBUTORS, L.P.
By:
-------------------------------------
Name:
Title:
29
PARTICPATION AGREEMENT
SCHEDULE A
The following Separate Accounts and Associated Contracts of [Name of
Participating Insurance Company] are permitted in accordance with the provisions
of the Participation Agreement to invest in the Designated Funds of the Delaware
VIP Trust shown in Schedule B.
NAME OF SEPARATE ACCOUNT: Separate Account DCVL
CONTRACT(S): Metropolitan Life Insurance Company
NAME OF SEPARATE ACCOUNT: Separate Account UL
CONTRACT(S): Metropolitan Life Insurance Company
NAME OF SEPARATE ACCOUNT:
CONTRACT(S):
NAME OF SEPARATE ACCOUNT:
CONTRACT(S):
Date:
---------------
A-1
PARTICIPATION AGREEMENT
SCHEDULE B
In accordance with the provisions of the Participation Agreement, the Separate
Account(s) shown on Schedule A may invest in the following Funds of the Trust:
Delaware VIP Small Cap Value Series Standard Class
Delaware VIP Small Cap Value Series Service Class
Date:
---------------
B-1
PARTICIPATION AGREEMENT
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Delaware VIP Trust
(the "Trust") under the Participation Agreement (the "Agreement"). The defined
terms herein shall have the meanings assigned in the 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 proxy proposals are given to the Company by the Trust as early as
possible before the date set by the Trust for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Trust will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before 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
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call in
the number of Customers to the Trust, as soon as possible, but no later
than two weeks after the Record Date.
3. The Trust's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Trust will provide the last Annual
Report to the Company pursuant to the terms of Section 6.2 of the
Agreement.
4. The text and format for the Voting Instruction Cards ("Cards" or Card") is
provided to the Company by the Trust. The Company, at its expense, shall
produce and personalize the Voting Instructions Cards. The Trust or its
affiliate 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:
. name (legal name as found on account registration)
. address
. Trust or account number
. coding to state number of units
Date:
---------------
C-1
. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Trust).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, the Trust will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices
and statements will be sent to Company for insertion into envelopes
(envelopes and return envelopes are provided and paid for by the Company).
Contents of envelope sent to Customers by the Company will include:
. Voting Instruction Card(s)
. one proxy notice and statement (one document)
. return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
. "urge buckslip" - optional, but recommended. (This is a small, single
sheet of paper that requests Customers to vote as quickly as possible
and that their vote is important. One copy will be supplied by the
Trust.)
. cover letter - optional, supplied by Company and reviewed and approved
in advance by the Trust
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Trust.
7. Package mailed by the Company.
* The Trust must allow at least 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.
8. 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 data entry.
9. Signature on Card checked against legal name on account registration which
was printed on the Card. Note: For Example, if the account registration is
under "Xxxx X. Xxxxx, Trustee," then that is the exact legal name to be
printed on the Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g., mutilated,
2
illegible) or the procedure are "hand verified," i.e., examined as to
whether they did not complete the system. Any questions on those Cards are
usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
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.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Trust receives the tabulations
stated in terms of a percentage and the number of SHARES.) The Trust must
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to the Trust on
the morning of the meeting not later than 10:00 a.m. Eastern time. The
Trust may request an earlier deadline if reasonable and if required to
calculate the vote in time for the meeting.
14. A Certification 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 will provide a standard form for each Certification.
15. The Company 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 will be
permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
3
PARTICIPATION AGREEMENT
SCHEDULE D
PURCHASE AND REDEMPTION ORDER PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
processing of purchase and redemption orders relating to the Delaware VIP Trust
(the "Trust") under the Participation Agreement (the "Agreement"). The defined
terms herein shall have the meanings assigned in the Agreement except that the
term "Company" shall also include the department assigned by the Company to
perform the steps delineated below.
1. The Company shall transmit any purchase or redemption order to the Trust or
its designated affiliate electronically by an automated file in a form
acceptable to the Trust.
2. The purchase or redemption order must be received no later than the times
specified in Sections 1.1 and 1.3 of the Agreement.
3. The Trust or its designated affiliate shall send confirmations of the
purchase and redemption orders to the Company no later than 10:30 a.m. on
the Business Day that the purchase or redemption order is deemed to be
received pursuant to Sections 1.1 or 1.3 of the Agreement.
4. The Company shall submit any corrections to the purchase or redemption
order to the Trust or its designated affiliate no later than 11:30 a.m. on
the same Business Day that the purchase or redemption order is deemed to be
received pursuant to the Sections 1.1 or 1.3 of the Agreement.
4
FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the 30st Day of April, 2004, between
Metropolitan Life Insurance Company of New York, a life insurance company
organized under the laws of the State of New York ("Insurance Company"), and
Dreyfus Variable Investment Fund, Dreyfus Investment Portfolios, The Dreyfus
Socially Responsible Growth Fund, Inc. and the Dreyfus Life and Annuity Index
Fund, Inc. (d/b/a Dreyfus Stock Index Fund, Inc.) (each of the foregoing the
"Fund") and The Dreyfus Corporation.
ARTICLE I
DEFINITIONS
1.1 "Act" shall mean the Investment Company Act of 1940, as amended.
1.2 "Board" shall mean the Board of Directors or Trustees, as the case may be,
of a Fund, which has the responsibility for management and control of the
Fund.
1.3 "Business Day" shall mean any day for which a Fund calculates net asset
value per Share (as defined below) as described in the Fund's Prospectus.
1.4 "Commission" shall mean the Securities and Exchange Commission.
1.5 "Contract" shall mean a variable annuity or variable life insurance
contract that uses any Participating Fund (as defined below) as an
underlying investment medium. Individuals who participate under a group
Contract are "Participants."
1.6 "Contractholder" shall mean any entity that is a party to a Contract with a
Participating Company (as defined below).
1.7 "Disinterested Board Members" shall mean those members of the Board of a
Fund that are not deemed to be "interested persons" of the Fund, as defined
by the Act.
1.8 "Dreyfus" shall mean The Dreyfus Corporation and its affiliates, including
Dreyfus Service Corporation.
1.9 "Insurance Company's General Account(s)" shall mean the general account(s)
of Insurance Company and its affiliates that invest in Shares (as defined
below) of a Participating Fund.
1.10 "Participating Companies" shall mean any insurance company (including
Insurance Company) that offers variable annuity and/or variable life
insurance contracts to the public and that has entered into an agreement
with one or more of the Funds.
1.11 "Participating Fund" shall mean each Fund, including, as applicable, any
series thereof, specified in Exhibit A, as such Exhibit may be amended from
time to time by agreement of the parties hereto, the Shares (as defined
below) of which are available to serve as the underlying investment medium
for the aforesaid Contracts.
1.12 "Prospectus" shall mean the current prospectus and statement of additional
information of a Fund, relating to its Shares (as defined below), as most
recently filed with the Commission.
1.13 "Separate Account" shall mean the separate account(s), a separate account
established by Insurance Company in accordance with the laws of the State
of New York.
1.14 "Shares" shall mean (i) each class of shares of a Participating Fund set
forth on Exhibit A next to the name of such Participating Fund, as such
Exhibit may be revised from time to time, or (ii) if no class of shares is
set forth on Exhibit A next to the name of such Participating Fund, the
shares of the Participating Fund.
1.15 "Software Program" shall mean the software program used by a Fund for
providing Fund and account balance information including net asset value
per Share. Such Program may include the Lion System. In situations where
the Lion System or any other Software Program used by a Fund is not
available, such information may be provided by telephone. The Lion System
shall be provided to Insurance Company at no charge.
ARTICLE II
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it
has legally and validly established the Separate Account pursuant to the
insurance laws of the State of New York_and the regulations thereunder for
the purpose of offering to the public certain individual and group variable
annuity and variable life insurance contracts; (c) it has registered the
Separate Account, if required, as a unit investment trust under the Act to
serve as the segregated investment account for the Contracts; and (d) the
Separate Account is eligible to invest in Shares of each Participating Fund
without such investment disqualifying any Participating Fund as an
investment medium for insurance company separate accounts supporting
variable annuity contracts or variable life insurance contracts.
2.2 Insurance Company represents and warrants that (a) the Contracts will be
described in a registration statement filed under the Securities Act of
1933, if required, as amended ("1933 Act"); (b) the Contracts will be
issued and sold in compliance in all material respects with all applicable
federal and state laws; and
2
(c) the sale of the Contracts shall comply in all material respects with
state insurance law requirements. Insurance Company agrees to notify each
Participating Fund promptly of any investment restrictions imposed by state
insurance law and applicable to the Participating Fund.
2.3 Insurance Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to the Separate
Account are, in accordance with the applicable Contracts, to be credited to
or charged against such Separate Account without regard to other income,
gains or losses from assets allocated to any other accounts of Insurance
Company. Insurance Company represents and warrants that the assets of the
Separate Account are and will be kept separate from Insurance Company's
General Account and any other separate accounts Insurance Company may have,
and will not be charged with liabilities from any business that Insurance
Company may conduct or the liabilities of any companies affiliated with
Insurance Company.
2.4 Each Participating Fund represents and warrants that it is registered with
the Commission under the Act as an open-end, management investment company
and possesses, and shall maintain, all legal and regulatory licenses,
approvals, consents and/or exemptions required for the Participating Fund
to operate and offer its Shares as an underlying investment medium for
Participating Companies.
2.5 Each Participating Fund represents and warrants that it is currently
qualified as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and that it will
make every effort to maintain such qualification (under Subchapter M or any
successor or similar provision) and that it will notify Insurance Company
immediately upon having a reasonable basis for believing that it has ceased
to so qualify or that it might not so qualify in the future.
2.6 Insurance Company represents and agrees that the Contracts are currently,
and at the time of issuance will be, treated as life insurance policies or
annuity contracts, whichever is appropriate, under applicable provisions of
the Code, and that it will make every effort to maintain such treatment and
that it will notify each Participating Fund and Dreyfus 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.
2.7 Each Participating Fund represents and agrees that its assets shall be
managed and invested in a manner that complies with the requirements of
Section 817(h) of the Code and applicable Treasury Regulations. Each
Participating Fund further represents and warrants that it qualifies as a
"look through" entity under Treasury Regulation Section 1.817-5(f) and will
make every effort to so qualify as long as the Insurance Company owns
shares. Each Participating Fund agrees to notify the Insurance company when
it has a reasonable basis for believing that it no longer qualifies as a
"look thorugh entitiy" or that it is out of compliance with Section
3
817(h) diversification requirements. Each Participating Fund also agrees to
provide the Insurance Company with a certificate of compliance with this
Section 2.7 upon request from Insurance Company.
2.8 Insurance Company agrees that each Participating Fund shall be permitted
(subject to the other terms of this Agreement) to make its shares available
to other Participating Companies and Contractholders as a separate account
investment option under a Contract.
2.9 Each Participating Fund represents and warrants that any of its directors,
trustees, officers, employees, investment advisers, and other
individuals/entities who deal with the money and/or securities of the
Participating Fund are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the
Participating Fund in an amount not less than that required by Rule 17g-1
under the Act. The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.10 Insurance Company represents and warrants that all of its employees and
agents who deal with the money and/or securities of each Participating 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 the coverage required
to be maintained by the Participating Fund. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11 Insurance Company agrees that Dreyfus shall be deemed a third party
beneficiary under this Agreement and may enforce any and all rights
conferred by virtue of this Agreement.
ARTICLE III
FUND SHARES
3.1 The Contracts funded through the Separate Account will provide for the
investment of certain amounts in Shares of each Participating Fund.
3.2 Each Participating Fund agrees to make its Shares available for purchase at
the then applicable net asset value per Share by Insurance Company and the
Separate Account on each Business Day pursuant to rules of the Commission.
Notwithstanding the foregoing, each Participating Fund may refuse to sell
its Shares to any person, or suspend or terminate the offering of its
Shares, if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of its Board, acting in
good faith and in light of its fiduciary duties under federal and any
applicable state laws, necessary and in the best interests of the
Participating Fund's shareholders.
3.3 Each Participating Fund agrees that shares of the Participating Fund will
be sold only to (a) Participating Companies and their separate accounts or
(b) "qualified
4
pension or retirement plans" as determined under Section 817(h)(4) of the
Code for the benefit of participants under those plans ("Participants").
Each Participating Fund agrees that shares of the Participating Fund will
be sold only to Participating Companies and their separate accounts and to
persons or plans that represent and warrant to the Participating Fund that
they qualify to purchase shares of the Participating Fund under Section
817(h) of the Code, and the regulations thereunder without impairing the
ability of the Separate Account to consider the portfolio investments of
the Participating Fund as constituting investments of the Separate Account
for the purpose of satisfying the diversification requirements of Section
817(h). The Participating Fund shall not sell Participating Fund shares to
any insurance company or separate account unless an agreement substantially
complying with Sections 2.1 and 2.6 of this Agreement is in effect to
govern such sales, to the extent required. Except as otherwise set forth in
this Section 3.3, no shares of any Participating Fund will be sold to the
general public.
3.4 Each Participating Fund shall use its best efforts to provide closing net
asset value, dividend and capital gain information on a per Share basis to
Insurance Company by 6:00 p.m. Eastern time on each Business Day. Any
material errors in the calculation of net asset value, dividend and capital
gain information shall be reported immediately upon discovery to Insurance
Company. Non-material errors will be corrected in the next Business Day's
net asset value per Share.
3.5 At the end of each Business Day, Insurance Company will use the information
described in Sections 3.2 and 3.4 to calculate the unit values of the
Separate Account for the day. Using this unit value, Insurance Company will
process the day's Separate Account transactions received by it by the close
of trading on the floor of the New York Stock Exchange (currently 4:00 p.m.
Eastern time) to determine the net dollar amount of the Shares of each
Participating Fund that will be purchased or redeemed at that day's closing
net asset value per Share. The net purchase or redemption orders will be
transmitted to each Participating Fund by Insurance Company by 11:00 a.m.
Eastern time on the Business Day next following Insurance Company's receipt
of that information. Subject to Sections 3.6 and 3.8, all purchase and
redemption orders for Insurance Company's General Accounts shall be
effected at the net asset value per Share of each Participating Fund next
calculated after receipt of the order by the Participating Fund or its
Transfer Agent.
3.6 Each Participating Fund appoints Insurance Company as its agent for the
limited purpose of accepting orders for the purchase and redemption of
Shares of the Participating Fund for the Separate Account. Each
Participating Fund will execute orders at the applicable net asset value
per Share determined as of the close of trading on the day of receipt of
such orders by Insurance Company acting as agent ("effective trade date"),
provided that the Participating Fund receives notice of such orders by
11:00 a.m. Eastern time on the next following Business Day and, if such
orders request the purchase of Shares of the Participating Fund,
5
the conditions specified in Section 3.8, as applicable, are satisfied. A
redemption or purchase request that does not satisfy the conditions
specified above and in Section 3.8, as applicable, will be effected at the
net asset value per Share computed on the Business Day immediately
preceding the next following Business Day upon which such conditions have
been satisfied in accordance with the requirements of this Section and
Section 3.8. Insurance Company represents and warrants that all orders
submitted by the Insurance Company for execution on the effective trade
date shall represent purchase or redemption orders received from
Contractholders prior to the close of trading on the New York Stock
Exchange on the effective trade date.
3.7 Insurance Company will make its best efforts to notify each applicable
Participating Fund in advance of any unusually large purchase or redemption
orders.
3.8 If Insurance Company's order requests the purchase of Shares of a
Participating Fund, Insurance Company will pay for such purchases by wiring
Federal Funds to the Participating Fund or its designated custodial account
on the day the order is transmitted. Insurance Company shall make all
reasonable efforts to transmit to the applicable Participating Fund payment
in Federal Funds by 12:00 noon Eastern time on the Business Day the
Participating Fund receives the notice of the order pursuant to Section
3.5. Each applicable Participating Fund will execute such orders at the
applicable net asset value per Share determined as of the close of trading
on the effective trade date if the Participating Fund receives payment in
Federal Funds by 12:00 midnight Eastern time on the Business Day the
Participating Fund receives the notice of the order pursuant to Section
3.5. If payment in Federal Funds for any purchase is not received or is
received by a Participating Fund after 12:00 noon Eastern time on such
Business Day, Insurance Company shall promptly, upon each applicable
Participating Fund's request, reimburse the respective Participating Fund
for any charges, costs, fees, interest or other expenses incurred by the
Participating Fund in connection with any advances to, or borrowings or
overdrafts by, the Participating Fund, or any similar expenses incurred by
the Participating Fund, as a result of portfolio transactions effected by
the Participating Fund based upon such purchase request. If Insurance
Company's order requests the redemption of any Shares of a Participating
Fund valued at or greater than $1 million dollars, the Participating Fund
will wire such amount to Insurance Company within seven days of the order.
3.9 Each Participating Fund has the obligation to ensure that its Shares are
registered with applicable federal agencies at all times.
3.10 Each Participating Fund will confirm each purchase or redemption order made
by Insurance Company. Transfers of Shares of a Participating Fund will be
by book entry only. No share certificates will be issued to Insurance
Company. Insurance Company will record Shares ordered from a Participating
Fund in an appropriate title for the corresponding account.
6
3.11 Each Participating Fund shall credit Insurance Company with the appropriate
number of Shares.
3.12 On each ex-dividend date of a Participating Fund or, if not a Business Day,
on the first Business Day thereafter, each Participating Fund shall
communicate to Insurance Company the amount of dividend and capital gain,
if any, per Share. All dividends and capital gains shall be automatically
reinvested in additional Shares of the applicable Participating Fund at the
net asset value per Share on the ex-dividend date. Each Participating Fund
shall, on the day after the ex-dividend date or, if not a Business Day, on
the first Business Day thereafter, notify Insurance Company of the number
of Shares so issued.
ARTICLE IV
STATEMENTS AND REPORTS
4.1 Each Participating Fund shall provide monthly statements of account as of
the end of each month for all of Insurance Company's accounts by the
fifteenth (15th) Business Day of the following month.
4.2 Each Participating Fund shall distribute to Insurance Company copies of the
Participating Fund's Prospectuses, proxy materials, notices, periodic
reports and other printed materials (which the Participating Fund
customarily provides to the holders of its Shares) in quantities as
Insurance Company may reasonably request for distribution to each
Contractholder and Participant. Insurance Company may elect to print the
Participating Fund's prospectus and/or its statement of additional
information in combination with other fund companies' prospectuses and
statements of additional information, which are also offered in Insurance
Company's insurance product at its own cost. At Insurance Company's
request, the Participating Fund will provide, in lieu of printed documents,
camera-ready copy or diskette of prospectuses, annual and semi-annual
reports for printing by the Insurance Company.
4.3 Each Participating Fund will provide to Insurance Company at least one
complete copy of all registration statements, Prospectuses, reports, proxy
statements, sales literature and other promotional materials, applications
for exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Participating Fund or its Shares (except
for such materials that are designed only for a class of shares of a
Participating Fund not offered to the Insurance Company pursuant to this
Agreement), contemporaneously with the filing of such document with the
Commission or other regulatory authorities.
4.4 Insurance Company will provide to each Participating Fund at least one copy
of all registration statements, Prospectuses, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-
7
action letters, and all amendments to any of the above, that relate to the
Contracts or the Separate Account, contemporaneously with the filing of
such document with the Commission .
4.5 Insurance Company will provide Participating Funds on a semi-annual basis,
or more frequently as reasonably requested by the Participating Funds, with
a current tabulation of the number of existing Contractholders of Insurance
Company whose Variable Contract values are invested in the Participating
Funds. This tabulation will be sent to Participating Funds in the form of a
letter signed by a duly authorized officer of the Insurance Company
attesting to the accuracy of the information contained in the letter.
ARTICLE V
EXPENSES
5.1 The charge to each Participating Fund for all expenses and costs of the
Participating Fund, including but not limited to management fees, Rule
12b-1 fees, if any, administrative expenses and legal and regulatory costs,
will be included in the determination of the Participating Fund's daily net
asset value per Share.
5.2 Except as provided in Articles IV and V, in particular in the next
sentence, Insurance Company shall not be required to pay directly any
expenses of any Participating Fund or expenses relating to the distribution
of its Shares. Insurance Company shall pay the following expenses or costs:
a. Such amount of the production expenses of any Participating Fund
materials, including the cost of printing a Participating Fund's
Prospectus, or marketing materials for prospective Insurance Company
Contractholders and Participants as Dreyfus and Insurance Company
shall agree from time to time.
b. Distribution expenses of any Participating Fund materials or
marketing materials for prospective Insurance Company Contractholders
and Participants.
c. Distribution expenses of any Participating Fund materials or
marketing materials for Insurance Company Contractholders and
Participants.
A Participating Fund's principal underwriter may pay Insurance Company, or
the broker-dealer acting as principal underwriter for the Insurance
Company's Contracts, for distribution and other services related to the
Shares of the Participating Fund pursuant to any distribution plan adopted
by the Participating Fund in accordance with Rule 12b-1 under the Act,
subject to the terms and
8
conditions of an agreement between the Participating Fund's principal
underwriter and Insurance Company or the principal underwriter for the
Insurance Company's Contracts, as applicable, related to such plan.
Except as provided herein, all other expenses of each Participating Fund
shall not be borne by Insurance Company.
ARTICLE VI
EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of the order dated February 5, 1998
of the Commission under Section 6(c) of the Act with respect to Dreyfus
Investment Portfolios, and, in particular, has reviewed the conditions to
the relief set forth in the Notice. As set forth therein, if Dreyfus
Investment Portfolios is a Participating Fund, Insurance Company agrees, as
applicable, to report any potential or existing conflicts promptly to the
Board of Dreyfus Investment Portfolios, and, in particular, whenever
contract voting instructions are disregarded, and recognizes that it will
be responsible for assisting the Board in carrying out its responsibilities
under such application. Insurance Company agrees to carry out such
responsibilities with a view to the interests of existing Contractholders.
6.2 If a majority of the Board, or a majority of Disinterested Board Members,
determines that a material irreconcilable conflict exists with regard to
Contractholder investments in a Participating Fund, the Board shall give
prompt notice to all Participating Companies and any other Participating
Fund. If the Board determines that Insurance Company is responsible for
causing or creating said conflict, Insurance Company shall at its sole cost
and expense, and to the extent reasonably practicable (as determined by a
majority of the Disinterested Board Members), take such action as is
necessary to remedy or eliminate the irreconcilable material conflict. Such
necessary action may include, but shall not be limited to:
a. Withdrawing the assets allocable to the Separate Account from the
Participating Fund and reinvesting such assets in another
Participating Fund (if applicable) or a different investment medium,
or submitting the question of whether such segregation should be
implemented to a vote of all affected Contractholders; and/or
b. Establishing a new registered management investment company.
6.3 If a material irreconcilable conflict arises as a result of a decision by
Insurance Company to disregard Contractholder voting instructions and said
decision represents a minority position or would preclude a majority vote
by all Contractholders having an interest in a Participating Fund,
Insurance Company
9
may be required, at the Board's election, to withdraw the investments of
the Separate Account in that Participating Fund.
6.4 For the purpose of this Article, a majority of the Disinterested Board
Members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will any
Participating Fund be required to bear the expense of establishing a new
funding medium for any Contract. Insurance Company shall not be required by
this Article to establish a new funding medium for any Contract if an offer
to do so has been declined by vote of a majority of the Contractholders
materially adversely affected by the irreconcilable material conflict.
6.5 No action by Insurance Company taken or omitted, and no action by the
Separate Account or any Participating Fund taken or omitted as a result of
any act or failure to act by Insurance Company pursuant to this Article VI,
shall relieve Insurance Company of its obligations under, or otherwise
affect the operation of, Article V.
ARTICLE VII
VOTING SHARES OF PARTICIPATING FUND
7.1 Each Participating Fund shall provide Insurance Company with copies, at no
cost to Insurance Company, of the Participating Fund's proxy materials,
reports to shareholders and other communications to shareholders (except
for such materials that are designed only for a class of shares of a
Participating Fund not offered to the Insurance Company pursuant to this
Agreement) in such quantity as Insurance Company shall reasonably require
for distributing to Contractholders or Participants
Insurance Company shall:
(a) solicit voting instructions from Contractholders or Participants
on a timely basis and in accordance with applicable law;
(b) vote the Shares of the Participating Fund in accordance with
instructions received from Contractholders or Participants; and
(c) vote the Shares of the Participating Fund for which no
instructions have been received in the same proportion as Shares of
the Participating Fund for which instructions have been received.
Insurance Company agrees at all times to vote Shares held by Insurance
Company's General Account in the same proportion as Shares of the
Participating Fund for which instructions have been received from
Contractholders or Participants. Insurance Company further agrees to be
responsible for assuring
10
that voting the Shares of the Participating Fund for the Separate Account
is conducted in a manner consistent with other Participating Companies.
7.2 Insurance Company agrees that it shall not, without the prior written
consent of each applicable Participating Fund and Dreyfus, solicit, induce
or encourage Contractholders to (a) change or supplement the Participating
Fund's current investment adviser or (b) change, modify, substitute, add to
or delete from the current investment media for the Contracts.
11
ARTICLE VIII
MARKETING AND REPRESENTATIONS
8.1 Each Participating Fund or its principal underwriter shall periodically
furnish Insurance Company with the following documents relating to the
Shares of the Participating Fund, in quantities as Insurance Company may
reasonably request:
a. Current Prospects and any supplements thereto; and
b. Other marketing materials.
Expenses for the production of such documents shall be borne by Insurance
Company in accordance with Section 5.2 of this Agreement.
8.2 Insurance Company shall designate certain persons or entities that shall
have the requisite licenses to solicit applications for the sale of
Contracts. No representation is made as to the number or amount of
Contracts that are to be sold by Insurance Company. Insurance Company shall
make reasonable efforts to market the Contracts and shall comply with all
applicable federal and state laws in connection therewith.
8.3 Insurance Company shall furnish, or shall cause to be furnished, to each
applicable Participating Fund or its designee, each piece of sales
literature or other promotional material in which the Participating Fund,
its investment adviser or the administrator is named, at least fifteen
Business Days prior to its use. No such material shall be used unless the
Participating Fund or its designee approves such material. Such approval
(if given) must be in writing and shall be presumed not given if not
received within ten Business Days after receipt of such material. Each
applicable Participating Fund or its designee, as the case may be, shall
use all reasonable efforts to respond within ten days of receipt.
8.4 Insurance Company shall not give any information or make any
representations or statements on behalf of a Participating Fund or
concerning a Participating Fund in connection with the sale of the
Contracts other than the information or representations contained in the
registration statement or Prospectus of, as may be amended or supplemented
from time to time, or in reports or proxy statements for, the applicable
Participating Fund, or in sales literature or other promotional material
approved by the applicable Participating Fund.
8.5 Each Participating Fund shall furnish, or shall cause to be furnished, to
Insurance Company, each piece of the Participating Fund's sales literature
or other promotional material in which Insurance Company or the Separate
Account is named, at least fifteen Business Days prior to its use. No such
material shall be used unless Insurance Company approves such material.
Such approval (if given) must be in writing and shall be presumed not given
if not received within ten
12
Business Days after receipt of such material. Insurance Company shall use
all reasonable efforts to respond within ten days of receipt.
8.6 Each Participating Fund shall not, in connection with the sale of Shares of
the Participating Fund, give any information or make any representations on
behalf of Insurance Company or concerning Insurance Company, the Separate
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus or disclosure document
for the Contracts, as may be amended or supplemented from time to time, or
in published reports for the Separate Account that are in the public domain
or approved by Insurance Company for distribution to Contractholders or
Participants, or in sales literature or other promotional material approved
by Insurance Company.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for
use, in a newspaper, magazine or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards, motion
pictures or other public media), sales literature (such as any written
communication distributed or made generally available to customers or the
public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, or 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, registration statements,
prospectuses or disclosure documents, statements of additional information,
shareholder reports and proxy materials, and any other material
constituting sales literature or advertising under National Association of
Securities Dealers, Inc. rules, the Act or the 1933 Act.
ARTICLE IX
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless each Participating
Fund, Dreyfus, each respective Participating Fund's investment adviser and
sub-investment adviser (if applicable), each respective Participating
Fund's distributor, and their respective affiliates, and each of their
directors, trustees, officers, employees, agents and each person, if any,
who controls or is associated with any of the foregoing entities or persons
within the meaning of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of Section 9.1), against any and all losses, claims, damages
or liabilities joint or several (including any investigative, legal and
other expenses reasonably incurred in connection with, and any amounts paid
in settlement of, any action, suit or proceeding or any claim asserted) for
which the Indemnified Parties may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) (i) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
information furnished
13
by Insurance Company for use in the registration statement or Prospectus or
disclosure documentsor sales literature or advertisements of the respective
Participating Fund or with respect to the Separate Account or Contracts, 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; (ii) arise out of or as a
result of conduct, statements or representations (other than statements or
representations contained in the Prospectus and sales literature or
advertisements of the respective Participating Fund) of Insurance Company
or its agents, with respect to the sale and distribution of Contracts for
which the Shares of the respective Participating Fund are an underlying
investment; (iii) arise out of the wrongful conduct of Insurance Company or
persons under its control with respect to the sale or distribution of the
Contracts or the Shares of the respective Participating Fund; (iv) arise
out of Insurance Company's incorrect calculation and/or untimely reporting
of net purchase or redemption orders; or (v) arise out of any breach by
Insurance Company of a material term of this Agreement or as a result of
any failure by Insurance Company to provide the services and furnish the
materials or to make any payments provided for in this Agreement. Insurance
Company will reimburse any Indemnified Party in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that with respect to clauses (i) and (ii) above
Insurance Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon
any untrue statement or omission or alleged omission made in such
registration statement, prospectus, sales literature, or advertisement in
conformity with written information furnished to Insurance Company by the
respective Participating Fund specifically for use therein. This indemnity
agreement will be in addition to any liability which Insurance Company may
otherwise have.
9.2 Each Participating Fund and The Dreyfus Corporation severally agree to
indemnify and hold harmless Insurance Company and each of its directors,
officers, employees, agents and each person, if any, who controls Insurance
Company within the meaning of the 1933 Act against any losses, claims,
damages or liabilities to which Insurance Company or any such director,
officer, employee, agent or controlling person may become subject, under
the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) (i) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the registration statement or Prospectus or sales literature
or advertisements of the respective Participating Fund; (ii) arise out of
or are based upon the omission to state in the registration statement or
Prospectus or sales literature or advertisements of the respective
Participating Fund any material fact required to be stated therein or
necessary to make the statements therein not misleading; or (iii) arise out
of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the registration statement or Prospectus or
sales literature or advertisements with respect to the Separate Account or
the Contracts and such statements were based on information provided to
Insurance Company by the respective Participating Fund or (iv) arise
14
out of any breach by a Participating Fund of a material term of this
Agreement or as a result of a failure by a Particpating Fund to provide
services and furnish materials; and the respective Participating Fund and
The Dreyfus Corporation will reimburse any legal or other expenses
reasonably incurred by Insurance Company or any such director, officer,
employee, agent or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the respective Participating Fund or The Dreyfus Corporation
will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or omission or alleged omission made in such registration
statement, Prospectus or disclosure statement, sales literature or
advertisements in conformity with written information furnished to the
respective Participating Fund by Insurance Company specifically for use
therein. This indemnity agreement will be in addition to any liability
which the respective Participating Fund or the Dreyfus Corporation may
otherwise have.
9.3 Each Participating Fund severally shall indemnify and hold Insurance
Company harmless against any and all liability, loss, damages, costs or
expenses which Insurance Company may incur, suffer or be required to pay
due to the respective Participating Fund's (i) incorrect calculation of the
daily net asset value, dividend rate or capital gain distribution rate;
(ii) incorrect reporting of the daily net asset value, dividend rate or
capital gain distribution rate; and (iii) untimely reporting of the net
asset value, dividend rate or capital gain distribution rate; provided that
the respective Participating Fund shall have no obligation to indemnify and
hold harmless Insurance Company if the incorrect calculation or incorrect
or untimely reporting was the result of incorrect information furnished by
Insurance Company or information furnished untimely by Insurance Company or
otherwise as a result of or relating to a breach of this Agreement by
Insurance Company.
9.4 Promptly after receipt by an indemnified party under this Article of notice
of the commencement of any action, such indemnified party will, if a claim
in respect thereof is to be made against the indemnifying party under this
Article, notify the indemnifying party of the commencement thereof. The
omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability under this Article IX, except to the
extent that the omission results in a failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a
result of the failure to give such notice. In case any such action is
brought against any indemnified party, and it notified the indemnifying
party of the commencement thereof, the indemnifying party will be entitled
to participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such indemnified party, and
to the extent that the indemnifying party has given notice to such effect
to the indemnified party and is performing its obligations under this
Article, the indemnifying party shall not be liable for any legal or other
expenses subsequently incurred by such indemnified party in connection with
the defense thereof, other than reasonable costs of investigation.
Notwithstanding the foregoing, in any such proceeding, any
15
indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent.
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article IX. The
provisions of this Article IX shall survive termination of this Agreement.
9.5
ARTICLE X
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date hereof and shall continue
in force until terminated in accordance with the provisions herein.
10.2 This Agreement shall terminate without penalty:
a. As to any Participating Fund, at the option of Insurance Company or
the Participating Fund at any time from the date hereof upon 60 days'
notice, unless a shorter time is agreed to by the respective
Participating Fund and Insurance Company;
b. As to any Participating Fund, at the option of Insurance Company, if
Shares of that Participating Fund are not reasonably available to meet
the requirements of the Contracts as determined by Insurance Company.
Prompt notice of election to terminate shall be furnished by Insurance
Company, said termination to be effective ten days after receipt of
notice unless the Participating Fund makes available a sufficient
number of Shares to meet the requirements of the Contracts within said
ten-day period;
c. As to a Participating Fund, at the option of Insurance Company, upon
the institution of formal proceedings against that Participating Fund
by the Commission, National Association of Securities Dealers or any
other regulatory body, the expected or anticipated ruling, judgment or
outcome of which would, in Insurance Company's reasonable judgment,
materially impair that Participating Fund's ability to meet and
perform the Participating Fund's obligations and duties hereunder.
Prompt notice of
16
election to terminate shall be furnished by Insurance Company with
said termination to be effective upon receipt of notice;
d. As to a Participating Fund, at the option of each Participating Fund,
upon the institution of formal proceedings against Insurance Company
by the Commission, National Association of Securities Dealers or any
other regulatory body, the expected or anticipated ruling, judgment or
outcome of which would, in the Participating Fund's reasonable
judgment, materially impair Insurance Company's ability to meet and
perform Insurance Company's obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by such
Participating Fund with said termination to be effective upon receipt
of notice;
e. As to a Participating Fund, at the option of that Participating Fund,
if the Participating Fund shall determine, in its sole judgment
reasonably exercised in good faith, that Insurance 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 is likely to
have a material adverse impact upon the business and operation of that
Participating Fund or Dreyfus, such Participating Fund shall notify
Insurance Company in writing of such determination and its intent to
terminate this Agreement, and after considering the actions taken by
Insurance Company and any other changes in circumstances since the
giving of such notice, such determination of the Participating Fund
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;
f. As to a Participating Fund, at the option of Insurance Company, if
Insurance Company shall determine, in its sole judgment reasonably
exercised in good faith that the Participating Fund 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 is likely to have a material
adverse impact upon the business and operations of Insurance Company
or its Separate Account, the Insurance Company shall notify the
Participating Fund in writing of such determination and its intent to
terminate this Agreement, and after considering the actions taken by
the Participating Fund and any other changes in circumstances since
the giving of such notice, such determination of Insurance Company
shall continue to apply to the sixtieth (60th) day following the
giving of such notice, which sixtieth day shall be the effective date
of termination;
g. As to a Participating Fund, upon termination of the Investment
Advisory Agreement between that Participating Fund and Dreyfus or its
successors unless Insurance Company specifically approves the
selection of a new
17
Participating Fund investment adviser. Such Participating Fund shall
promptly furnish notice of such termination to Insurance Company;
h. As to a Participating Fund, in the event that Shares of the
Participating Fund are not registered, issued or sold in accordance
with applicable federal law, or such law precludes the use of such
Shares as the underlying investment medium of Contracts issued or to
be issued by Insurance Company. Termination shall be effective
immediately as to that Participating Fund only upon such occurrence
without notice;
i. At the option of a Participating Fund upon a determination by its
Board in good faith that it is no longer advisable and in the best
interests of shareholders of that Participating Fund to continue to
operate pursuant to this Agreement. Termination pursuant to this
Subsection (i) shall be effective upon notice by such Participating
Fund to Insurance Company of such termination;
j. At the option of a Participating Fund if the Contracts cease to
qualify as annuity contracts or life insurance policies, as
applicable, under the Code, or if such Participating Fund reasonably
believes that the Contracts may fail to so qualify;
k. At the option of any party to this Agreement, upon another party's
breach of any material provision of this Agreement;
l. At the option of a Participating Fund, if the Contracts are not
registered, issued or sold in accordance with applicable federal
and/or state law
m. At the option of Insurance Company if it determines in good faith that
it is no longer advisable and in the best interests of Contractholders
to continue to operate pursuant to this Agreement. Termination
pursuant to this Subsection (i) shall be effective upon notice by
Insurance Company to Dreyfus and the Participating Fund; or
m. Upon assignment of this Agreement, unless made with the written
consent of every other non-assigning party.
Any such termination pursuant to Section 10.2a, 10.2d, 10.2e, 10.2f or
10.2k herein shall not affect the operation of Article V of this Agreement.
Any termination of this Agreement shall not affect the operation of Article
IX of this Agreement.
10.3 Notwithstanding any termination of this Agreement pursuant to Section 10.2
hereof, each Participating Fund and Dreyfus may, at the option of the
Participating Fund, continue to make available additional Shares of that
Participating Fund for as long as the Participating Fund desires pursuant
to the
18
terms and conditions of this Agreement as provided below, for all Contracts
in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, if that Participating Fund and Dreyfus so elect to make
additional Shares of the Participating Fund available, the owners of the
Existing Contracts or Insurance Company, whichever shall have legal
authority to do so, shall be permitted to reallocate investments in that
Participating Fund, redeem investments in that Participating Fund and/or
invest in that Participating Fund upon the making of additional purchase
payments under the Existing Contracts. In the event of a termination of
this Agreement pursuant to Section 10.2 hereof, such Participating Fund and
Dreyfus, as promptly as is practicable under the circumstances, shall
notify Insurance Company whether Dreyfus and that Participating Fund will
continue to make Shares of that Participating Fund available after such
termination. If such Shares of the Participating Fund continue to be made
available after such termination, the provisions of this Agreement shall
remain in effect and thereafter either of that Participating Fund or
Insurance Company may terminate the Agreement as to that Participating
Fund, as so continued pursuant to this Section 10.3, upon prior written
notice to the other party, such notice to be for a period that is
reasonable under the circumstances but, if given by the Participating Fund,
need not be for more than six months.
10.4 Termination of this Agreement as to any one Participating Fund shall not be
deemed a termination as to any other Participating Fund unless Insurance
Company or such other Participating Fund, as the case may be, terminates
this Agreement as to such other Participating Fund in accordance with this
Article X.
ARTICLE XI
AMENDMENTS
11.1 Any other changes in the terms of this Agreement, except for the addition
or deletion of any Participating Fund or class of Shares of a Participating
Fund as specified in Exhibit A, shall be made by agreement in writing
between Insurance Company and each respective Participating Fund.
ARTICLE XII
NOTICE
19
12.1 Each notice required by this Agreement shall be given by certified mail,
return receipt requested, to the appropriate parties at the following
addresses:
Insurance Company: Metropolitan Life Insurance Company
1 MetLife Plaza
00-00 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxx, Esq.
Copy: Metropolitan Life Insurance Company
000X XX Xxxxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxx Model
Participating Funds: [Name of Fund]
c/o The Dreyfus Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel
with copies to: Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Notice shall be deemed to be given on the date of receipt by the addresses
as evidenced by the return receipt.
ARTICLE XIII
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of each Fund by the undersigned
officer of the Fund in his capacity as an officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any director, trustee,
officer or shareholder of the Fund individually. It is agreed that the
obligations of the Funds are several and not joint, that no Fund shall be
liable for any amount owing by another Fund and that the Funds have
executed one instrument for convenience only.
20
ARTICLE XIV
LAW
14.1 This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict of
laws.
ARTICLE XV
FOREIGN TAX CREDITS
15.1 Each Participating Fund agrees to consult in advance with Insurance Company
concerning any decision to elect or not to pass through the benefit of any
foreign tax credits to the Participating Fund's shareholders pursuant to
Section 853 of the Code.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested as of the date first above written.
METROPOLITAN LIFE INSURANCE COMPANY
Name:
----------------------------------
Title:
---------------------------------
Attest:
---------------------------
DREYFUS VARIABLE INVESTMENT FUND
Name:
----------------------------------
Title:
---------------------------------
Attest:
---------------------------
DREYFUS INVESTMENT PORTFOLIOS
Name:
----------------------------------
Title:
---------------------------------
Attest:
---------------------------
21
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC.
Name:
----------------------------------
Title:
---------------------------------
Attest:
---------------------------
DREYFUS STOCK INDEX FUND, INC.
Name:
----------------------------------
Title:
---------------------------------
Attest:
---------------------------
THE DREYFUS CORPORATION
Name:
----------------------------------
Title:
---------------------------------
Attest:
---------------------------
22
EXHIBIT A
LIST OF PARTICIPATING FUNDS
Separate Account DCVL, unregistered separate account
Fund Name Share Class
--------- -----------
Dreyfus Variable Investment Fund
Appreciation Portfolio Initial Shares
International Value Portfolio Initial Shares
Dreyfus Investment Portfolios
Emerging Leaders Portfolio Initial Shares
MidCap Stock Portfolio Initial Shares
Separate Account UL, Registered Separate Account
Dreyfus Variable Investment Fund
Appreciation Portfolio Service Class
International Value Portfolio Service Class
Dreyfus Investment Portfolios
Emerging Leaders Portfolio Service Class
MidCap Stock Portfolio Service Class
23
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 30th day of April, 2004 by and
between XXXXXXX XXXXX VARIABLE INSURANCE TRUST, an unincorporated business trust
formed under the laws of Delaware (the "Trust"), XXXXXXX, SACHS & CO., a New
York limited partnership (the "Distributor"), and METROPOLITAN LIFE INSURANCE
COMPANY, a _New York life insurance company (the "Company"), on its own behalf
and on behalf of each separate account of the Company identified herein.
WHEREAS, the Trust is a series-type mutual fund offering shares of
beneficial interest (the "Trust shares") consisting of one or more separate
series ("Series") of shares, each such Series representing an interest in a
particular investment portfolio of securities and other assets (a "Fund"), and
which Series may be subdivided into various classes ("Classes") with each such
Class supporting a distinct charge and expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies to be offered by
insurance companies and may also be utilized by qualified retirement plans; and
WHEREAS, the Distributor has the exclusive right to distribute Trust shares
to qualifying investors; and
WHEREAS, the Company desires that the Trust serve as an investment vehicle
for a certain separate account(s) of the Company and the Distributor desires to
sell shares of certain Series and/or Class(es) to such separate account(s);
NOW, THEREFORE, in consideration of their mutual promises, the Trust, the
Distributor and the Company agree as follows:
ARTICLE I
Additional Definitions
1.1. "Account" -- the separate account of the Company described more
specifically in Schedule 1 to this Agreement. If more than one separate account
is described on Schedule 1, the term shall refer to each separate account so
described.
1.2. "Business Day" -- each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.3. "Code" -- the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.4. "Contracts" -- the class or classes of variable annuity contracts
and/or variable life insurance policies issued by the Company and described more
specifically on Schedule 2 to this Agreement.
1.5. "Contract Owners" -- the owners of the Contracts, as distinguished
from all Product Owners.
1.6. "Participating Account" -- a separate account investing all or a
portion of its assets in the Trust, including the Account.
1.7. "Participating Insurance Company" -- any insurance company investing
in the Trust on its behalf or on behalf of a Participating Account, including
the Company.
1.8. "Participating Plan" -- any qualified retirement plan investing in the
Trust.
1.9. "Participating Investor" -- any Participating Account, Participating
Insurance Company or Participating Plan, including the Account and the Company.
1.10. "Products" -- variable annuity contracts and variable life insurance
policies supported by Participating Accounts, including the Contracts.
1.11. "Product Owners" -- owners of Products, including Contract Owners.
1.12. "Trust Board" -- the board of trustees of the Trust.
1.13. "Registration Statement" -- with respect to the Trust shares or a
class of Contracts, the registration statement filed with the SEC to register
such securities under the 1933 Act, or the most recently filed amendment
thereto, in either case in the form in which it was declared or became
effective. The Contracts' Registration Statement for each class of Contracts is
described more specifically on Schedule 2 to this Agreement. The Trust's
Registration Statement is filed on Form N-1A (File No. 333-35883).
1.14. "1940 Act Registration Statement" -- with respect to the Trust or the
Account, the registration statement filed with the SEC to register such person
as an investment company under the 1940 Act, or the most recently filed
amendment thereto. The Account's 1940 Act Registration Statement is described
more specifically on Schedule 2 to this Agreement. The Trust's 1940 Act
Registration Statement is filed on Form N-1A (File No. 811-08361).
1.15. "Prospectus" -- with respect to shares of a Series (or Class) of the
Trust or a class of Contracts, each version of the definitive prospectus or
supplement thereto filed with the SEC pursuant to Rule 497 under the 1933 Act.
With respect to any provision of this Agreement requiring a party to take action
in accordance with a Prospectus, such reference thereto shall be deemed to be to
the version for the applicable Series, Class or Contracts last so filed prior to
the taking of such action. For purposes of Article IX, the term "Prospectus"
shall include any statement of additional information incorporated therein.
1.16. "Statement of Additional Information" -- with respect to the shares
of the Trust or a class of Contracts, each version of the definitive statement
of additional information or supplement thereto filed with the SEC pursuant to
Rule 497 under the 1933 Act. With respect to any provision of this Agreement
requiring a party to take action in accordance with a Statement of Additional
Information, such reference thereto shall be deemed to be the last version so
filed prior to the taking of such action.
1.17. "SEC" -- the Securities and Exchange Commission.
1.18. "NASD" -- The National Association of Securities Dealers, Inc.
2
1.19. "1933 Act" -- the Securities Act of 1933, as amended.
1.20. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II
Sale of Trust Shares
2.1. Availability of Shares
(a) The Trust has granted to the Distributor exclusive authority to
distribute the Trust shares and to select which Series or Classes of Trust
shares shall be made available to Participating Investors. Pursuant to such
authority, and subject to Article X hereof, the Distributor shall make
available to the Company for purchase on behalf of the Account, shares of
the Series and Classes listed on Schedule 3 to this Agreement, such
purchases to be effected at net asset value in accordance with Section 2.3
of this Agreement. Such Series and Classes shall be made available to the
Company in accordance with the terms and provisions of this Agreement until
this Agreement is terminated pursuant to Article X or the Distributor
suspends or terminates the offering of shares of such Series or Classes in
the circumstances described in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or Classes
of Trust shares in existence now or that may be established in the future
will be made available to the Company only as the Distributor may so
provide, subject to the Distributor's rights set forth in Article X to
suspend or terminate the offering of shares of any Series or Class or to
terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may revoke
the Distributor's authority pursuant to the terms and conditions of its
distribution agreement with the Distributor; and (ii) the Trust reserves
the right in its sole discretion to refuse to accept a request for the
purchase of Trust shares.
2.2. Redemptions. The Trust shall redeem, at the Company's request, any
full or fractional Trust shares held by the Company on behalf of the Account,
such redemptions to be effected at net asset value in accordance with Section
2.3 of this Agreement. Notwithstanding the foregoing, (i) the Company shall not
redeem Trust shares attributable to Contract Owners except in the circumstances
permitted in Article X of this Agreement, and (ii) the Trust may delay
redemption of Trust shares of any Series or Class to the extent permitted by the
1940 Act, any rules, regulations or orders thereunder, or the Prospectus for
such Series or Class.
2.3. Purchase and Redemption Procedures
(a) The Trust hereby appoints the Company as an agent of the Trust for
the limited purpose of receiving purchase and redemption requests on behalf
of the Account (but not with respect to any Trust shares that may be held
in the general account of the Company) for shares of those Series or
Classes made available hereunder, based on allocations of amounts to the
Account or subaccounts thereof under the Contracts, other transactions
relating to the Contracts or the Account and customary processing of the
Contracts. Receipt of any such requests (or effectuation of such
transaction or processing) on any Business Day by the Company as such
limited agent of the Trust prior to the Trust's close of business as
defined from time to time in the applicable Prospectus for such Series or
Class (which as of the date of execution of this Agreement is defined as
the close of regular trading on the New York Stock Exchange (normally 4:00
p.m. New
3
York Time)) shall constitute receipt by the Trust on that same Business
Day, provided that the Trust receives actual and sufficient notice of such
request by 8:00 a.m. New York Time on the next following Business Day. Such
notice may be communicated by telephone to the office or person designated
for such notice by the Trust, and shall be confirmed by facsimile.
(b) The Company shall pay for shares of each Series or Class on the
same day that it provides actual notice to the Trust of a purchase request
for such shares. Payment for Series or Class shares shall be made in
Federal funds transmitted to the Trust by wire to be received by the Trust
by 12:00 noon New York Time on the day the Trust receives actual notice of
the purchase request for Series or Class shares (unless the Trust
determines and so advises the Company that sufficient proceeds are
available from redemption of shares of other Series or Classes effected
pursuant to redemption requests tendered by the Company on behalf of the
Account). In no event may proceeds from the redemption of shares requested
pursuant to an order received by the Company after the Trust's close of
business on any Business Day be applied to the payment for shares for which
a purchase order was received prior to the Trust's close of business on
such day. If the issuance of shares is canceled because Federal funds are
not timely received, the Company shall indemnify the respective Fund and
Distributor with respect to all costs, expenses and losses relating
thereto. Upon the Trust's receipt of Federal funds so wired, such funds
shall cease to be the responsibility of the Company and shall become the
responsibility of the Trust. If Federal funds are not received on time,
such funds will be invested, and Series or Class shares purchased thereby
will be issued, as soon as practicable after actual receipt of such funds
but in any event not on the same day that the purchase order was received.
(c) Payment for Series or Class shares redeemed by the Account or the
Company shall be made in Federal funds transmitted by wire to the Company
or any other person properly designated in writing by the Company, such
funds normally to be transmitted by 6:00 p.m. New York Time on the next
Business Day after the Trust receives actual notice of the redemption order
for Series or Class shares (unless redemption proceeds are to be applied to
the purchase of Trust shares of other Series or Classes in accordance with
Section 2.3(b) of this Agreement), except that the Trust reserves the right
to redeem Series or Class shares in assets other than cash and to delay
payment of redemption proceeds to the extent permitted by the 1940 Act, any
rules or regulations or orders thereunder, or the applicable Prospectus.
The Trust shall not bear any responsibility whatsoever for the proper
disbursement or crediting of redemption proceeds by the Company; the
Company alone shall be responsible for such action.
(d) Any purchase or redemption request for Series or Class shares held
or to be held in the Company's general account shall be effected at the net
asset value per share next determined after the Trust's actual receipt of
such request, provided that, in the case of a purchase request, payment for
Trust shares so requested is received by the Trust in Federal funds prior
to close of business for determination of such value, as defined from time
to time in the Prospectus for such Series or Class.
(e) Prior to the first purchase of any Trust shares hereunder, the
Company and the Trust shall provide each other with all information
necessary to effect wire transmissions of Federal funds to the other party
and all other designated persons pursuant to such protocols and security
procedures as the parties may agree upon. Should such information change
thereafter, the Trust and the Company, as applicable, shall notify the
other in writing of such changes, observing the same protocols and security
procedures, at least three Business Days in advance of when such change is
to take effect. The Company
4
and the Trust shall observe customary procedures to protect the
confidentiality and security of such information, but the Trust shall not
be liable to the Company for any breach of security.
(f) The procedures set forth herein are subject to any additional
terms set forth in the applicable Prospectus for the Series or Class or by
the requirements of applicable law.
2.4. Net Asset Value. The Trust shall use its best efforts to inform the
Company of the net asset value per share for each Series or Class available to
the Company as soon as reasonably practicable after the net asset value per
share for such Series or Class is calculated. The Trust shall calculate such net
asset value in accordance with the Prospectus for such Series or Class.
2.5. Dividends and Distributions. The Trust shall furnish notice to the
Company as soon as reasonably practicable of any income dividends or capital
gain distributions payable on any Series or Class shares. The Company, on its
behalf and on behalf of the Account, hereby elects to receive all such dividends
and distributions as are payable on any Series or Class shares in the form of
additional shares of that Series or Class. The Company reserves the right, on
its behalf and on behalf of the Account, to revoke this election and to receive
all such dividends and capital gain distributions in cash; to be effective, such
revocation must be made in writing and received by the Trust at least ten
Business Days prior to a dividend or distribution date. The Trust shall notify
the Company promptly of the number of Series or Class shares so issued as
payment of such dividends and distributions.
2.6. Book Entry. Issuance and transfer of Trust shares shall be by book
entry only. Stock certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Trust shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
2.7. Pricing Errors. Any material errors in the calculation of net asset
value, dividends or capital gain information shall be reported immediately upon
discovery to the Company. An error shall be deemed "material" based on our
interpretation of the SEC's position and policy with regard to materiality, as
it may be modified from time to time. Neither the Trust, any Fund, the
Distributor, nor any of their affiliates shall be liable for any information
provided to the Company pursuant to this Agreement which information is based on
incorrect information supplied by or on behalf of the Company or any other
Participating Company to the Trust or the Distributor.
2.8. Limits on Purchasers. The Distributor and the Trust shall sell Trust
shares only to insurance companies and their separate accounts and to persons or
plans ("Qualified Persons") that qualify to purchase shares of the Trust under
Section 817(h) of the Code and the regulations thereunder without impairing the
ability of the Account to consider the portfolio investments of the Trust as
constituting investments of the Account for the purpose of satisfying the
diversification requirements of Section 817(h). The Distributor and the Trust
shall not sell Trust shares to any insurance company or separate account unless
an agreement complying with Article VIII of this Agreement is in effect to
govern such sales. The Company hereby represents and warrants that it and the
Account are Qualified Persons. However, the Trust shall not sell shares to a
qualified retirement plan unless it adopts procedures reasonably designed to
provide assurances that such plan is in fact a qualified retirement plan at the
time shares are purchased and on an ongoing basis.
5
ARTICLE III
Representations and Warranties
3.1. Company. The Company represents and warrants that: (i) the Company is
an insurance company duly organized and in good standing under New York
insurance law; (ii) the Account is a validly existing separate account, duly
established and maintained in accordance with applicable law; (iii) the
Account's 1940 Act Registration Statement has been filed with the SEC in
accordance with the provisions of the 1940 Act and the Account is duly
registered as a unit investment trust thereunder; (iv) the Contracts'
Registration Statement has been declared effective by the SEC; (v) the Contracts
will be issued in compliance in all material respects with all applicable
Federal and state laws; (vi) the Contracts have been filed, qualified and/or
approved for sale, as applicable, under the insurance laws and regulations of
the states in which the Contracts will be offered; (vii) the Account will
maintain its registration under the 1940 Act and will comply in all material
respects with the 1940 Act; (viii) subject to Seciton 6.1 the Contracts
currently are, and at the time of issuance will be, treated as annuity contracts
or life insurance policies, whichever is appropriate, under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Trust immediately upon having a reasonable
basis for believing that the contracts hae ceased to be so treated or that they
might not be so treated in the future; and (ix) the Company's entering into and
performing its obligations under this Agreement does not and will not violate
its charter documents or by-laws, rules or regulations, or any agreement to
which it is a party. The Company will notify the Trust promptly if for any
reason it is unable to perform its obligations under this Agreement.
3.2. Trust. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed and validly existing under the
Delaware law; (ii) the Trust's 1940 Act Registration Statement has been filed
with the SEC in accordance with the provisions of the 1940 Act and the Trust is
duly registered as an open-end management investment company thereunder; (iii)
the Trust's Registration Statement has been declared effective by the SEC; (iv)
the Trust shares will be issued in compliance in all material respects with all
applicable federal laws; (v) the Trust will remain registered under and will
comply in all material respects with the 1940 Act during the term of this
Agreement; (vi) each Fund of the Trust currently qualifies as a "regulated
investment company" under Subchapter M of the Code and to comply with the
diversification standards prescribed in Section 817(h) of the Code and the
regulations thereunder and qualifies as a "look-through" entity under Treasury
Regulation 1.817-5(t) and will make every effort to so qualify and comply in the
future; and (vii) the investment policies of each Fund are in material
compliance with any investment restrictions set forth on Schedule 4 to this
Agreement. The Trust, however, makes no representation as to whether any aspect
of its operations (including, but not limited to, fees and expenses and
investment policies) otherwise complies with the insurance laws or regulations
of any state.
3.3. Distributor. The Distributor represents and warrants that: (i) the
Distributor is a limited partnership duly organized and in good standing under
New York law; (ii) the Distributor is registered as a broker-dealer under
federal and applicable state securities laws and is a member of the NASD; and
(iii) the Distributor is registered as an investment adviser under federal
securities laws.
3.4. Legal Authority. Each party represents and warrants that the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary corporate,
partnership or trust action, as applicable, by such party, and, when so executed
and delivered, this Agreement will be the valid and binding obligation of such
party enforceable in accordance with its terms.
6
3.5. Bonding Requirement. Each party represents and warrants that all of
its directors, officers, partners and employees dealing with the money and/or
securities of the Trust are and shall continue to 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 the amount required by the applicable rules of the NASD and
the federal securities laws. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company. All
parties shall make all reasonable efforts to see that this bond or another bond
containing these provisions is always in effect, shall provide evidence thereof
promptly to any other party upon written request therefor, and shall notify the
other parties promptly in the event that such coverage no longer applies.
ARTICLE IV
Regulatory Requirements
4.1. Trust Filings. The Trust shall amend the Trust's Registration
Statement and the Trust's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of Trust shares in
compliance with applicable law and to maintain the Trust's registration under
the 1940 Act for so long as Trust shares are sold.
4.2. Contracts Filings. The Company shall amend the Contracts' Registration
Statement and the Account's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of the Contracts in
compliance with applicable law or as may otherwise be required by applicable
law, but in any event shall maintain a current effective Contracts' Registration
Statement and the Account's registration under the 1940 Act for so long as the
Contracts are outstanding unless the Company has supplied the Trust with an SEC
no-action letter or opinion of counsel satisfactory to the Trust's counsel to
the effect that maintaining such Registration Statement on a current basis is no
longer required. The Company shall be responsible for filing all such Contract
forms, applications, marketing materials and other documents relating to the
Contracts and/or the Account with state insurance commissions, as required or
customary, and shall use its best efforts: (i) to obtain any and all approvals
thereof, under applicable state insurance law, of each state or other
jurisdiction in which Contracts are or may be offered for sale; and (ii) to keep
such approvals in effect for so long as the Contracts are outstanding.
4.3. Voting of Trust Shares. With respect to any matter put to vote by the
holders of Trust shares ("Voting Shares"), the Company will provide
"pass-through" voting privileges to owners of Contracts registered with the SEC
as long as the 1940 Act requires such privileges in such cases. In cases in
which "pass-through" privileges apply, the Company will (i) solicit voting
instructions from Contract Owners of SEC-registered Contracts; (ii) vote Voting
Shares attributable to Contract Owners in accordance with instructions or
proxies timely received from such Contract Owners; and (iii) vote Voting Shares
held by it that are not attributable to reserves for SEC-registered Contracts or
for which it has not received timely voting instructions in the same proportion
as instructions received in a timely fashion from Owners of SEC-registered
Contracts. The Company shall be responsible for ensuring that it calculates
"pass-through" votes for the Account in a manner consistent with the provisions
set forth above and with other Participating Insurance Companies. Neither the
Company nor any of its affiliates will in any way recommend action in connection
with, or oppose or interfere with, the solicitation of proxies for the Trust
shares held for such Contract Owners, except with respect to matters as to which
the Company has the right under Rule 6e-2 or 6e-3(T) under the 1940 Act, to vote
Voting Shares without regard to voting instructions from Contract Owners.
4.4. State Insurance Restrictions. The Company acknowledges and agrees that
it is the responsibility of the Company and other Participating Insurance
Companies to determine investment restrictions and any other restrictions,
limitations or requirements under state
7
insurance law applicable to any Fund or the Trust or the Distributor, and that
neither the Trust nor the Distributor shall bear any responsibility to the
Company, other Participating Insurance Companies or any Product Owners for any
such determination or the correctness of such determination. Schedule 4 sets
forth the investment restrictions that the Company and/or other Participating
Insurance Companies have determined are applicable to any Fund and with which
the Trust has agreed to comply as of the date of this Agreement. The Company
shall inform the Trust of any investment restrictions imposed by state insurance
law that the Company determines may become applicable to the Trust or a Fund
from time to time as a result of the Account's investment therein, other than
those set forth on Schedule 4 to this Agreement. Upon receipt of any such
information from the Company or any other Participating Insurance Company, the
Trust shall determine whether it is in the best interests of shareholders to
comply with any such restrictions. If the Trust determines that it is not in the
best interests of shareholders (it being understood that "shareholders" for this
purpose shall mean Product Owners) to comply with a restriction determined to be
applicable by the Company, the Trust shall so inform the Company, and the Trust
and the Company shall discuss alternative accommodations in the circumstances.
If the Trust determines that it is in the best interests of shareholders to
comply with such restrictions, the Trust and the Company shall amend Schedule 4
to this Agreement to reflect such restrictions, subject to obtaining any
required shareholder approval thereof.
4.6. Drafts of Filings. The Trust and the Company shall provide to each
other copies of draft versions of any Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or Contract
Owner reports, proxy statements, solicitations for voting instructions,
applications for exemptions, requests for no-action letters, and all amendments
or supplements to any of the above, prepared by or on behalf of either of them
and that mentions the other party by name. Such drafts shall be provided to the
other party sufficiently in advance of filing such materials with regulatory
authorities in order to allow such other party a reasonable opportunity to
review the materials.
4.7. Copies of Filings. The Trust and the Company shall provide to each
other at least one complete copy of all Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or Contract
Owner reports, proxy statements, solicitations of voting instructions,
applications for exemptions, requests for no-action letters, and all amendments
or supplements to any of the above, that relate to the Trust, the Contracts or
the Account, as the case may be, promptly after the filing by or on behalf of
each such party of such document with the SEC or other regulatory authorities
(it being understood that this provision is not intended to require the Trust to
provide to the Company copies of any such documents prepared, filed or used by
Participating Investors other than the Company and the Account).
4.8. Regulatory Responses. Each party shall promptly provide to all other
parties copies of responses to no-action requests, notices, orders and other
rulings received by such party with respect to any filing covered by Section 4.7
of this Agreement.
8
4.9. Complaints and Proceedings
(a) The Trust and/or the Distributor shall immediately notify the
Company of: (i) the issuance by any court or regulatory body of any stop
order, cease and desist order, or other similar order (but not including an
order of a regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Trust's Registration Statement or the
Prospectus of any Series or Class; (ii) any request by the SEC for any
amendment to the Trust's Registration Statement or the Prospectus of any
Series or Class; (iii) the initiation of any proceedings for that purpose
or for any other purposes relating to the registration or offering of the
Trust shares; or (iv) any other action or circumstances that may prevent
the lawful offer or sale of Trust shares or any Class or Series in any
state or jurisdiction, including, without limitation, any circumstance in
which (A) such shares are not registered and, in all material respects,
issued and sold in accordance with applicable state and federal law or (B)
such law precludes the use of such shares as an underlying investment
medium for the Contracts. The Trust will make every reasonable effort to
prevent the issuance of any such stop order, cease and desist order or
similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
(b) The Company shall immediately notify the Trust and the Distributor
of: (i) the issuance by any court or regulatory body of any stop order,
cease and desist order, or other similar order (but not including an order
of a regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Contracts' Registration Statement or the
Contracts' Prospectus; (ii) any request by the SEC for any amendment to the
Contracts' Registration Statement or Prospectus; (iii) the initiation of
any proceedings for that purpose or for any other purposes relating to the
registration or offering of the Contracts; or (iv) any other action or
circumstances that may prevent the lawful offer or sale of the Contracts or
any class of Contracts in any state or jurisdiction, including, without
limitation, any circumstance in which such Contracts are not registered,
qualified and approved, and, in all material respects, issued and sold in
accordance with applicable state and federal laws. The Company will make
every reasonable effort to prevent the issuance of any such stop order,
cease and desist order or similar order and, if any such order is issued,
to obtain the lifting thereof at the earliest possible time.
(c) Each party shall immediately notify the other parties when it
receives notice, or otherwise becomes aware of, the commencement of any
litigation or proceeding against such party or a person affiliated
therewith in connection with the issuance or sale of Trust shares or the
Contracts.
(d) The Company shall provide to the Trust and the Distributor any
complaints it has received from Contract Owners pertaining to the Trust or
a Fund, and the Trust and Distributor shall each provide to the Company any
complaints it has received from Contract Owners relating to the Contracts.
4.10. Cooperation. Each party hereto shall cooperate with the other parties
and all appropriate government authorities (including without limitation the
SEC, the NASD and state securities and insurance regulators) and shall permit
such authorities reasonable access to its books and records in connection with
any investigation or inquiry by any such authority relating to this Agreement or
the transactions contemplated hereby. However, such access shall not extend to
attorney-client privileged information.
9
ARTICLE V
Sale, Administration and Servicing of the Contracts
5.1. Sale of the Contracts. The Company shall be fully responsible as to
the Trust and the Distributor for the sale and marketing of the Contracts. The
Company shall provide Contracts, the Contracts' and Trust's Prospectuses,
Contracts' and Trust's Statements of Additional Information, and all amendments
or supplements to any of the foregoing to Contract Owners and prospective
Contract Owners, all in accordance with federal and state laws. The Company
shall ensure that all persons offering the Contracts are duly licensed and
registered under applicable insurance and securities laws. The Company shall
ensure that each sale of a Contract satisfies applicable suitability
requirements under insurance and securities laws and regulations, including
without limitation the rules of the NASD. The Company shall adopt and implement
procedures reasonably designed to ensure that information concerning the Trust
and the Distributor that is intended for use only by brokers or agents selling
the Contracts (i.e., information that is not intended for distribution to
Contract Owners or offerees) is so used.
5.2. Administration and Servicing of the Contracts. The Company shall be
fully responsible as to the Trust and the Distributor for the underwriting,
issuance, service and administration of the Contracts and for the administration
of the Account, including, without limitation, the calculation of performance
information for the Contracts, the timely payment of Contract Owner redemption
requests and processing of Contract transactions, and the maintenance of a
service center, such functions to be performed in all respects at a level
commensurate with those standards prevailing in the variable insurance industry.
The Company shall provide to Contract Owners all Trust reports, solicitations
for voting instructions including any related Trust proxy solicitation
materials, and updated Trust Prospectuses as required under the federal
securities laws.
5.3. Customer Complaints. The Company shall promptly address all customer
complaints and resolve such complaints consistent with high ethical standards
and principles of ethical conduct.
5.4. Trust Prospectuses and Reports. In order to enable the Company to
fulfill its obligations under this Agreement and the federal securities laws,
the Trust shall provide the Company with a copy, in camera-ready form or form
otherwise suitable for printing or duplication of: (i) the Trust's Prospectus
for the Series and Classes listed on Schedule 3 and any supplement thereto; (ii)
each Statement of Additional Information and any supplement thereto; (iii) any
Trust proxy soliciting material for such Series or Classes; and (iv) any Trust
periodic shareholder reports. The Trust and the Company may agree upon alternate
arrangements, but in all cases, the Trust reserves the right to approve the
printing of any such material. The Trust shall provide the Company at least 10
days advance written notice when any such material shall become available,
provided, however, that in the case of a supplement, the Trust shall provide the
Company notice reasonable in the circumstances, it being understood that
circumstances surrounding such supplement may not allow for advance notice. The
Company may not alter any material so provided by the Trust or the Distributor
(including without limitation presenting or delivering such material in a
different medium, e.g., electronic or Internet) without the prior written
consent of the Distributor.
5.5. Trust Advertising Material. No piece of marketing, advertising or
sales literature or other promotional material in which the Trust or the
Distributor or the trade name and trademark Xxxxxxx Xxxxx (the "Xxxx") is named
(including, without limitation, material for prospects, existing Contract
Owners, brokers, rating or ranking agencies, or the press, whether in print,
radio, television, video, Internet, or other electronic medium) shall be used by
the Company or any person directly or indirectly authorized by the Company,
including without limitation,
10
underwriters, distributors, and sellers of the Contracts, except with the prior
written consent of the Trust or the Distributor, as applicable, as to the form,
content and medium of such material. Any such piece shall be furnished to the
Trust for such consent prior to its use. The Trust or the Distributor shall
respond to any request for written consent on a prompt and timely basis, but
failure to respond shall not relieve the Company of the obligation to obtain the
prior written consent of the Trust or the Distributor. After receiving the
Trust's or Distributor's consent to the use of any such material, no further
changes may be made without obtaining the Trust's or Distributor's consent to
such changes. The Trust or Distributor may at any time in its sole discretion
revoke such written consent, and upon notification of such revocation, the
Company shall no longer use the material subject to such revocation. Until
further notice to the Company, the Trust has delegated its rights and
responsibilities under this provision to the Distributor.
5.6. Contracts Advertising Material. No piece of marketing, advertising or
sales literature or other promotional material in which the Company is named
shall be used by the Trust or the Distributor, except with the prior written
consent of the Company. Any such piece shall be furnished to the Company for
such consent prior to its use. The Company shall respond to any request for
written consent on a prompt and timely basis, and failure to respond to the
Trust or the Distributor within three business days shall be deemed as the
Company's consent to the use of such sales or marketing literature. The Company
may at any time in its sole discretion revoke any written consent, and upon
notification of such revocation, neither the Trust nor the Distributor shall use
the material subject to such revocation. The Company, upon prior written notice
to the Trust, may delegate its rights and responsibilities under this provision
to the principal underwriter for the Contracts.
5.7. Trade Names. No party shall use any other party's trade names, logos,
trademarks or service marks, whether registered or unregistered, without the
prior written consent of such other party, or after written consent therefor has
been revoked. The Company shall not use in advertising, publicity or otherwise
the name of the Trust, Distributor, or any of their affiliates nor any trade
name, trademark, trade device, service xxxx, symbol or any abbreviation,
contraction or simulation thereof of the Trust, Distributor, or their affiliates
without the prior written consent of the Trust or the Distributor in each
instance. The Company acknowledges that the Distributor owns all right, title
and interest in and to the Xxxx and the registrations thereof. The Company shall
use the Xxxx intact and shall not modify or alter the Xxxx. Upon termination of
this Agreement, the Company or its successor (to the extent and as soon as it
lawfully can) will cease the use of the Xxxx.
5.8. Representations by Company. Except with the prior written consent of
the Trust, the Company shall not give any information or make any
representations or statements about the Trust or the Funds nor shall it
authorize or allow any other person to do so except information or
representations contained in the Trust's Registration Statement or the Trust's
Prospectuses or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved in writing by the Trust or its
designee in accordance with this Article V, or in published reports or
statements of the Trust in the public domain.
5.9. Representations by Trust. Except with the prior written consent of the
Company, the Trust shall not give any information or make any representations on
behalf of the Company or concerning the Company, the Account or the Contracts
other than the information or representations contained in the Contracts'
Registration Statement or Contracts' Prospectus or in published reports of the
Account which are in the public domain or in sales literature or other
promotional material approved in writing by the Company in accordance with this
Article V.
11
5.10. Advertising. For purposes of this Article V, the phrase "sales
literature or other promotional material" includes, but is not limited to, any
material constituting sales literature or advertising under the NASD rules, the
1940 Act or the 1933 Act.
ARTICLE VI
Compliance with Code
6.1. Section 817(h). Each Fund of the Trust shall comply with the
diversification and "look-through" requirements of Section 817(h) of the Code
and the regulations issued thereunder to the extent applicable to the Fund as an
investment company underlying the Account, and the Trust shall notify the
Company immediately upon having a reasonable basis for believing that a Fund has
ceased to so qualify or that it might not so qualify in the future. The Trust
shall provide a certificate of compliance with this Section 6.1 within 30 days
after the end of each calendar quarter.
6.2. Subchapter M. Each Fund of the Trust shall maintain the qualification
of the Fund as a regulated investment company (under Subchapter M or any
successor or similar provision), and the Trust shall notify the Company
immediately upon having a reasonable basis for believing that a Fund has ceased
to so qualify or that it might not so qualify in the future.
6.3. Contracts. The Company shall make every effort to ensure the continued
treatment of the Contracts as annuity contracts or life insurance policies,
whichever is appropriate, under applicable provisions of the Code and shall
notify the Trust and the Distributor 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.
ARTICLE VII
Expenses
7.1. Expenses. All expenses incident to each party's performance under this
Agreement (including expenses expressly assumed by such party pursuant to this
Agreement) shall be paid by such party to the extent permitted by law.
7.2. Trust Expenses. Expenses incident to the Trust's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) registration and qualification of the Trust shares under the federal
securities laws;
(b) preparation and filing with the SEC of the Trust's Prospectuses,
Trust's Statement of Additional Information, Trust's Registration
Statement, Trust proxy materials and shareholder reports, and
preparation of a camera-ready copy of the foregoing;
(c) preparation of all statements and notices required by any Federal or
state securities law;
(d) all taxes on the issuance or transfer of Trust shares;
(e) payment of all applicable fees relating to the Trust, including,
without limitation, all fees due under Rule 24f-2 in connection with
sales of Trust shares to qualified retirement plans, custodial,
auditing, transfer agent and advisory fees, fees for insurance
coverage and Trustees' fees; and
12
(f) any expenses permitted to be paid or assumed by the Trust pursuant to
a plan, if any, under Rule 12b-1 under the 1940 Act.
7.3. Company Expenses. Expenses incident to the Company's performance of
its duties and obligations under this Agreement include, but are not limited to,
the costs of:
(a) registration and qualification of the Contracts under the federal
securities laws;
(b) preparation and filing with the SEC of the Contracts' Prospectus and
Contracts' Registration Statement;
(c) the sale, marketing and distribution of the Contracts, including
printing and dissemination of Contracts' Prospectuses and compensation
for Contract sales;
(d) administration of the Contracts;
(e) payment of all applicable fees relating to the Contracts, including,
without limitation, all fees due under Rule 24f-2;
(f) preparation, printing and dissemination of all statements and notices
to Contract Owners required by any Federal or state insurance law
other than those paid for by the Trust; and
(g) preparation, printing and dissemination of all marketing materials for
the Contracts and Trust except where other arrangements are made in
advance.
7.4. 12b-1 Payments. The Trust shall pay no fee or other compensation to
the Company under this Agreement, except that if the Trust or any Series or
Class adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act to
finance distribution expenses, then payments may be made to the Company in
accordance with such plan. The Trust currently does not intend to make any
payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940
Act or in contravention of such rule, although it may make payments pursuant to
Rule 12b-1 in the future. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1 and such formulation is required by the 1940 Act
or any rules or order thereunder, the Trust undertakes to have a Board of
Trustees, a majority of whom are not interested persons of the Trust, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
ARTICLE VIII
Potential Conflicts
8.1. Exemptive Order. The parties to this Agreement acknowledge that the
Trust has received an exemptive order from the SEC (the "Exemptive Order")
granting relief from various provisions of the 1940 Act and the rules thereunder
to the extent necessary to permit Trust shares to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and other
Qualified Persons (as defined in Section 2.8 hereof). The Exemptive Order
requires the Trust and each Participating Insurance Company to comply with
conditions and undertakings substantially as provided in this Article VIII. The
Trust will not enter into a participation agreement with any other Participating
Insurance Company unless it imposes the same conditions and undertakings on that
company as are imposed on the Company pursuant to this Article VIII.
13
8.2. Company Monitoring Requirements. The Company will monitor its
operations and those of the Trust for the purpose of identifying any material
irreconcilable conflicts or potential material irreconcilable conflicts between
or among the interests of Participating Plans, Product Owners of variable life
insurance policies and Product Owners of variable annuity contracts.
8.3. Company Reporting Requirements. The Company shall report any conflicts
or potential conflicts to the Trust Board and will provide the Trust Board, at
least annually, with all information reasonably necessary for the Trust Board to
consider any issues raised by such existing or potential conflicts or by the
conditions and undertakings required by the Exemptive Order. The Company also
shall assist the Trust Board in carrying out its obligations including, but not
limited to: (a) informing the Trust Board whenever it disregards Contract Owner
voting instructions with respect to variable life insurance policies, and (b)
providing such other information and reports as the Trust Board may reasonably
request. The Company will carry out these obligations with a view only to the
interests of Contract Owners.
8.4. Trust Board Monitoring and Determination. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans, Product Owners of
variable life insurance policies and Product Owners of variable annuity
contracts and determine what action, if any, should be taken in response to
those conflicts. A majority vote of Trustees who are not interested persons of
the Trust as defined in the 1940 Act (the "disinterested trustees") shall
represent a conclusive determination as to the existence of a material
irreconcilable conflict between or among the interests of Product Owners and
Participating Plans and as to whether any proposed action adequately remedies
any material irreconcilable conflict. The Trust Board shall give prompt written
notice to the Company and Participating Plan of any such determination.
8.5. Undertaking to Resolve Conflict. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans, the Company will, at its own expense, take whatever action
is necessary to remedy such conflict as it adversely affects Contract Owners up
to and including (1) establishing a new registered management investment
company, and (2) withdrawing assets from the Trust attributable to reserves for
the Contracts subject to the conflict and reinvesting such assets in a different
investment medium (including another Fund of the Trust) or submitting the
question of whether such withdrawal should be implemented to a vote of all
affected Contract Owners, and, as appropriate, segregating the assets supporting
the Contracts of any group of such owners that votes in favor of such
withdrawal, or offering to such owners the option of making such a change. The
Company will carry out the responsibility to take the foregoing action with a
view only to the interests of Contract Owners.
8.6. Withdrawal. If a material irreconcilable conflict arises because of
the Company's decision to disregard the voting instructions of Contract Owners
of variable life insurance policies and that decision represents a minority
position or would preclude a majority vote at any Fund shareholder meeting,
then, at the request of the Trust Board, the Company will redeem the shares of
the Trust to which the disregarded voting instructions relate. No charge or
penalty, however, will be imposed in connection with such a redemption.
8.7. Expenses Associated with Remedial Action. In no event shall the Trust
be required to bear the expense of establishing a new funding medium for any
Contract. The Company shall not be required by this Article to establish a new
funding medium for any Contract
14
if an offer to do so has been declined by vote of a majority of the Contract
Owners materially adversely affected by the irreconcilable material conflict.
8.8. Successor Rules. 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
provisions of the 1940 Act or the rules promulgated thereunder with respect to
mixed and shared funding on terms and conditions materially different from those
contained in the Exemptive Order, then (i) the Trust and/or the Company, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the extent
such rules are applicable, and (ii) Sections 8.2 through 8.5 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.
ARTICLE IX
Indemnification
9.1. Indemnification by the Company. The Company hereby agrees to, and
shall, indemnify and hold harmless the Trust, the Distributor and each person
who controls or is affiliated with the Trust or the Distributor within the
meaning of such terms under the 1933 Act or 1940 Act (but not any Participating
Insurance Companies or Qualified Persons) and any officer, trustee, partner,
director, employee or agent of the foregoing, against any and all losses,
claims, damages or liabilities, joint or several (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amounts
paid in settlement of, any action, suit or proceeding or any claim asserted), to
which they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any material
fact contained in the Contracts Registration Statement, Contracts
Prospectus, sales literature or other promotional material for the
Contracts or the Contracts themselves (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made; provided that this
obligation to indemnify shall not apply if such statement or omission
was made in reliance upon and in conformity with information furnished
in writing to the Company by the Trust or the Distributor for use in
the Contracts Registration Statement, Contracts Prospectus or in the
Contracts or sales literature or promotional material for the
Contracts (or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Contracts or
Trust shares; or
(b) arise out of any untrue statement of a material fact contained in the
Trust Registration Statement, any Prospectus for Series or Classes or
sales literature or other promotional material of the Trust (or any
amendment or supplement to any of the foregoing), or the omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon and in conformity with information
furnished to the Trust or Distributor in writing by or on behalf of
the Company; or
(c) arise out of or are based upon any wrongful conduct of, or violation
of federal or state law by, the Company or persons under its control
or subject to its authorization, including without limitation, any
broker-dealers or agents authorized
15
to sell the Contracts, with respect to the sale, marketing or
distribution of the Contracts or Trust shares, including, without
limitation, any impermissible use of broker-only material, unsuitable
or improper sales of the Contracts or unauthorized representations
about the Contracts or the Trust; or
(d) arise as a result of any failure by the Company or persons under its
control (or subject to its authorization) to provide services, furnish
materials or make payments as required under this Agreement; or
(e) arise out of any material breach by the Company or persons under its
control (or subject to its authorization) of this Agreement; or
(f) arise out of any breach of any warranties contained in Article III
hereof, any failure to transmit a request for redemption or purchase
of Trust shares or payment therefor on a timely basis in accordance
with the procedures set forth in Article II, or any unauthorized use
of the names, trade names or trademark of the Trust or the
Distributor.
This indemnification is in addition to any liability that the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the
willful misfeasance, bad faith, gross negligence or reckless disregard of duty
by the party seeking indemnification.
9.2. Indemnification by the Trust. The Trust hereby agrees to, and shall,
indemnify and hold harmless the Company and each person who controls or is
affiliated with the Company within the meaning of such terms under the 1933 Act
or 1940 Act and any officer, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any material
fact contained in the Trust Registration Statement, any Prospectus for
Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in
which they were made; provided that this obligation to indemnify shall
not apply if such statement or omission was made in reliance upon and
in conformity with information furnished in writing by the Company to
the Trust or the Distributor for use in the Trust Registration
Statement, Trust Prospectus or sales literature or promotional
material for the Trust (or any amendment or supplement to any of the
foregoing) or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(b) arise out of any untrue statement of a material fact contained in the
Contracts Registration Statement, Contracts Prospectus or sales
literature or other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or the omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the
16
circumstances in which they were made, if such statement or omission
was made in reliance upon information furnished in writing by the
Trust to the Company; or
(c) arise out of or are based upon wrongful conduct of the Trust or its
Trustees or officers with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Trust to provide services,
furnish materials or make payments as required under the terms of this
Agreement; or
(e) arise out of any material breach by the Trust of this Agreement
(including any breach of Section 6.1 of this Agreement and any
warranties contained in Article III hereof);
it being understood that in no way shall the Trust be liable to the Company with
respect to any violation of insurance law, compliance with which is a
responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Trust in accordance with Section 4.4 hereof.
This indemnification is in addition to any liability that the Trust may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the
willful misfeasance, bad faith, gross negligence or reckless disregard of duty
by the party seeking indemnification.
9.3. Indemnification by the Distributor. The Distributor hereby agrees to,
and shall, indemnify and hold harmless the Company and each person who controls
or is affiliated with the Company within the meaning of such terms under the
1933 Act or 1940 Act and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities, joint or
several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they or any of them may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any material
fact contained in the Trust Registration Statement, any Prospectus for
Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in
which they were made; provided that this obligation to indemnify shall
not apply if such statement or omission was made in reliance upon and
in conformity with information furnished in writing by the Company to
the Trust or Distributor for use in the Trust Registration Statement,
Trust Prospectus or sales literature or promotional material for the
Trust (or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Contracts or
Trust shares; or
(b) arise out of any untrue statement of a material fact contained in the
Contracts Registration Statement, Contracts Prospectus or sales
literature or other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or the omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing by
the Distributor to the Company; or
17
(c) arise out of or are based upon wrongful conduct of the Distributor or
persons under its control with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Distributor or persons under
its control to provide services, furnish materials or make payments as
required under the terms of this Agreement; or
(e) arise out of any material breach by the Distributor or persons under
its control of this Agreement (including any breach of Section 6.1 of
this Agreement and any warranties contained in Article III hereof);
it being understood that in no way shall the Distributor be liable to the
Company with respect to any violation of insurance law, compliance with which is
a responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Distributor in accordance with Section 4.4
hereof. This indemnification is in addition to any liability that the
Distributor may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is caused
by the willful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
9.4. Rule of Construction. It is the parties' intention that, in the event
of an occurrence for which the Trust has agreed to indemnify the Company, the
Company shall seek indemnification from the Trust only in circumstances in which
the Trust is entitled to seek indemnification from a third party with respect to
the same event or cause thereof.
9.5. Indemnification Procedures. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the indemnifying party will
not relieve it from any liability under this Article IX, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the failure
to give such notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
18
ARTICLE X
Relationship of the Parties; Termination
10.1. Relationship of Parties. The Company is to be an independent
contractor vis-a-vis the Trust, the Distributor, or any of their affiliates for
all purposes hereunder and will have no authority to act for or represent any of
them (except to the limited extent the Company acts as agent of the Trust
pursuant to Section 2.3(a) of this Agreement). In addition, no officer or
employee of the Company will be deemed to be an employee or agent of the Trust,
Distributor, or any of their affiliates. The Company will not act as an
"underwriter" or "distributor" of the Trust, as those terms variously are used
in the 1940 Act, the 1933 Act, and rules and regulations promulgated thereunder.
10.2. Non-Exclusivity and Non-Interference. The parties hereto acknowledge
that the arrangement contemplated by this Agreement is not exclusive; the Trust
shares may be sold to other insurance companies and investors (subject to
Section 2.8 hereof) and the cash value of the Contracts may be invested in other
investment companies, provided, however, that until this Agreement is terminated
pursuant to this Article X:
(a) the Company shall promote the Trust and the Funds made available
hereunder on the same basis as other funding vehicles available under
the Contracts;
(b) the Company shall not, without prior notice to the Distributor (unless
otherwise required by applicable law), take any action to operate the
Account as a management investment company under the 1940 Act;
(c) the Company shall not, without the prior written consent of the
Distributor (unless otherwise required by applicable law), solicit,
induce or encourage Contract Owners to change or modify the Trust to
change the Trust's distributor or investment adviser, to transfer or
withdraw Contract Values allocated to a Fund, or to exchange their
Contracts for contracts not allowing for investment in the Trust;
(d) the Company shall not substitute another investment company for one or
more Funds without providing written notice to the Distributor at
least 60 days in advance of effecting any such substitution; and
(e) the Company shall not withdraw the Account's investment in the Trust
or a Fund of the Trust except as necessary to facilitate Contract
Owner requests and routine Contract processing.
10.3. Termination of Agreement. This Agreement shall not terminate until
(i) the Trust is dissolved, liquidated, or merged into another entity, or (ii)
as to any Fund that has been made available hereunder, the Account no longer
invests in that Fund and the Company has confirmed in writing to the
Distributor, if so requested by the Distributor, that it no longer intends to
invest in such Fund. However, certain obligations of, or restrictions on, the
parties to this Agreement may terminate as provided in Sections 10.4 through
10.6 and the Company may be required to redeem Trust shares pursuant to Section
10.7 or in the circumstances contemplated by Article VIII. Article IX and
Sections 5.7, 10.8 and 10.9 shall survive any termination of this Agreement.
10.4. Termination of Offering of Trust Shares. The obligation of the Trust
and the Distributor to make Trust shares available to the Company for purchase
pursuant to Article II of
19
this Agreement shall terminate at the option of the Distributor upon written
notice to the Company as provided below:
(a) upon institution of formal proceedings against the Company, or the
Distributor's reasonable determination that institution of such
proceedings is being considered by the NASD, the SEC, the insurance
commission of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of the
Contracts, the operation of the Account, the administration of the
Contracts or the purchase of Trust shares, or an expected or
anticipated ruling, judgment or outcome which would, in the
Distributor's reasonable judgment exercised in good faith, materially
impair the Company's or Trust's ability to meet and perform the
Company's or Trust's obligations and duties hereunder, such
termination effective upon 15 days prior written notice;
(b) in the event any of the Contracts are not registered, issued or sold
in accordance with applicable federal and/or state law, such
termination effective immediately upon receipt of written notice;
(c) if the Distributor shall determine, in its sole judgment exercised in
good faith, that either (1) the Company shall have suffered a material
adverse change in its business or financial condition or (2) the
Company shall have been the subject of material adverse publicity
which is likely to have a material adverse impact upon the business
and operations of either the Trust or the Distributor, such
termination effective upon 30 days prior written notice;
(d) if the Distributor suspends or terminates the offering of Trust shares
of any Series or Class to all Participating Investors or only
designated Participating Investors, if such action is required by law
or by regulatory authorities having jurisdiction or if, in the sole
discretion of the Distributor acting in good faith, suspension or
termination is necessary in the best interests of the shareholders of
any Series or Class (it being understood that "shareholders" for this
purpose shall mean Product Owners), such notice effective immediately
upon receipt of written notice, it being understood that a lack of
Participating Investor interest in a Series or Class may be grounds
for a suspension or termination as to such Series or Class and that a
suspension or termination shall apply only to the specified Series or
Class;
(e) upon the Company's assignment of this Agreement (including, without
limitation, any transfer of the Contracts or the Account to another
insurance company pursuant to an assumption reinsurance agreement)
unless the Trust consents thereto, such termination effective upon 30
days prior written notice;
(f) if the Company is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction of the
Trust within 10 days after written notice of such breach has been
delivered to the Company, such termination effective upon expiration
of such 10-day period; or
(g) upon the determination of the Trusts Board to dissolve, liquidate or
merge the Trust as contemplated by Section 10.3(i), upon termination
of the Agreement pursuant to Section 10.3(ii), or upon notice from the
Company pursuant to Section 10.5 or 10.6, such termination pursuant
hereto to be effective upon 15 days prior written notice.
20
Except in the case of an option exercised under clause (b), (d) or (g), the
obligations shall terminate only as to new Contracts and the Distributor shall
continue to make Trust shares available to the extent necessary to permit owners
of Contracts in effect on the effective date of such termination (hereinafter
referred to as "Existing Contracts") to reallocate investments in the Trust,
redeem investments in the Trust and/or invest in the Trust upon the making of
additional purchase payments under the Existing Contracts.
10.5. Termination of Investment in a Fund. The Company may elect to cease
investing in a Fund, promoting a Fund as an investment option under the
Contracts, or withdraw its investment or the Account's investment in a Fund,
subject to compliance with applicable law, upon written notice to the Trust
within 15 days of the occurrence of any of the following events (unless provided
otherwise below):
(a) if the Trust informs the Company pursuant to Section 4.4 that it will
not cause such Fund to comply with investment restrictions as
requested by the Company and the Trust and the Company are unable to
agree upon any reasonable alternative accommodations;
(b) if shares in such Fund are not reasonably available to meet the
requirements of the Contracts as determined by the Company (including
any non-availability as a result of notice given by the Distributor
pursuant to Section 10.4(d)), and the Distributor, after receiving
written notice from the Company of such non-availability, fails to
make available, within 10 days after receipt of such notice, a
sufficient number of shares in such Fund or an alternate Fund to meet
the requirements of the Contracts;
(c) if such Fund fails to meet the "look-through" and diversification
requirements specified in Section 817(h) of the Code and any
regulations thereunder and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure or
correct such failure; or
(d) if such Fund ceases to qualify as a regulated investment company under
Subchapter M of the Code, as defined therein, or any successor or
similar provision, or if the Company reasonably believes that the Fund
may fail to so qualify, and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure or
correct such failure within 30 days; or
Such termination shall apply only as to the affected Fund and shall not apply to
any other Fund in which the Company or the Account invests.
10.6. Termination of Investment by the Company. The Company may elect to
cease investing in all Series or Classes of the Trust made available hereunder,
promoting the Trust as an investment option under the Contracts, or withdraw its
investment or the Account s investment in the Trust, subject to compliance with
applicable law, upon written notice to the Trust within 15 days of the
occurrence of any of the following events (unless provided otherwise below):
(a) upon institution of formal proceedings against the Trust or the
Distributor (but only with regard to the Trust) by the NASD, the SEC
or any state securities or insurance commission or any other
regulatory body; or
21
(b) if the Trust or Distributor is in material breach of a provision of
this Agreement, which breach has not been cured to the satisfaction of
the Company within 10 days after written notice of such breach has
been delivered to the Trust or the Distributor, as the case may be.
10.7. Company Required to Redeem. The parties understand and acknowledge
that it is essential for compliance with Section 817(h) of the Code that the
Contracts qualify as annuity contracts or life insurance policies, as
applicable, under the Code. Accordingly, if any of the Contracts cease to
qualify as annuity contracts or life insurance policies, as applicable, under
the Code, or if the Trust reasonably believes that any such Contracts may fail
to so qualify, the Trust shall have the right to require the Company to redeem
Trust shares attributable to such Contracts upon notice to the Company and the
Company shall so redeem such Trust shares in order to ensure that the Trust
complies with the provisions of Section 817(h) of the Code applicable to
ownership of Trust shares. Notice to the Company shall specify the period of
time the Company has to redeem the Trust shares or to make other arrangements
satisfactory to the Trust and its counsel, such period of time to be determined
with reference to the requirements of Section 817(h) of the Code. In addition,
the Company may be required to redeem Trust shares pursuant to action taken or
request made by the Trust Board in accordance with the Exemptive Order described
in Article VIII or any conditions or undertakings set forth or referenced
therein, or other SEC rule, regulation or order that may be adopted after the
date hereof. The Company agrees to redeem shares in the circumstances described
herein and to comply with applicable terms and provisions. Also, in the event
that the Distributor suspends or terminates the offering of a Series or Class
pursuant to Section 10.4(c) of this Agreement, the Company, upon request by the
Distributor, will cooperate in taking appropriate action to withdraw the
Account's investment in the respective Fund.
10.8. Confidentiality. The Company will keep confidential any information
acquired as a result of this Agreement regarding the business and affairs of the
Trust, the Distributor, and their affiliates. (We want a reciprocal provision
for the Company)
ARTICLE XI
Applicability to New Accounts and New Contracts
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Contracts, any Series or Class, additions of new classes of Contracts to be
issued by the Company and separate accounts therefor investing in the Trust.
Such amendments may be made effective by executing the form of amendment
included on each schedule attached hereto. The provisions of this Agreement
shall be equally applicable to each such class of Contracts, Series, Class or
separate account, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all of
the parties.
22
ARTICLE XII
Notice, Request or Consent
Any notice, request or consent to be provided pursuant to this Agreement is
to be made in writing and shall be given:
If to the Trust:
Xxxxx XxXxxxxx
President
Xxxxxxx Sachs Variable Insurance Trust
00 Xxx Xxxx
Xxx Xxxx, XX 00000
If to the Distributor:
Xxxxx XxXxxxxx
Managing Director
Xxxxxxx Sachs & Co.
00 Xxx Xxxx
Xxx Xxxx, XX 00000
If to the Company:
Xxxxxx Xxxxxx, Counsel
Metropolitan Life Insurance Company
1 MetLife Plaza
00-00 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
With Copy To:
Xxxxxxx Model
Director, Product Development
Metropolitan Life Insurance Company
000X XX Xxxxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent by facsimile to the person designated in writing for such notices.
ARTICLE XIII
Miscellaneous
13.1. Interpretation. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the state of
Delaware, without giving effect to the principles of conflicts of laws, subject
to the following rules:
(a) This Agreement shall be subject to the provisions of the 1933 Act,
1940 Act and Securities Exchange Act of 1934, as amended, and the
rules, regulations and rulings thereunder, including such exemptions
from those statutes, rules, and
23
regulations as the SEC may grant, and the terms hereof shall be
limited, interpreted and construed in accordance therewith.
(b) 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.
(c) 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.
(d) 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.
13.2. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which together shall constitute one and the same
instrument.
13.3. No Assignment. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Company, the Distributor or the
Trust without the prior written consent of the other parties.
13.4. Declaration of Trust. A copy of the Declaration of Trust of the Trust
is on file with the Secretary of State of the State of Delaware, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as trustees, and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually, but binding only upon the assets and
property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
24
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized officer on the date
specified below.
XXXXXXX XXXXX VARIABLE INSURANCE TRUST
(Trust)
Date: By:
--------------------------- ----------------------------------------
Name:
Title:
XXXXXXX, SACHS & CO.
(Distributor)
Date: By:
--------------------------- ----------------------------------------
Name:
Title:
METROPOLITAN LIFE INSURANCE COMPANY
(Company)
Date: By:
--------------------------- ----------------------------------------
Name:
Title:
25
Schedule 1
Accounts of the Company
Investing in the Trust
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
========================================================================================
Date Established by
Name of Account and Board of Directors of SEC 1940 Act Type of Product
Subaccounts the Company Registration Number Supported by Account
----------------------------------------------------------------------------------------
Separate Account UL 811-06025 MetFlex
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
========================================================================================
================================================================================
[Form of Amendment to Schedule 1]
Effective as of , the following separate accounts of the Company
--------------
are hereby added to this Schedule 1 and made subject to the Agreement:
========================================================================================
Date Established by
Name of Account and Board of Directors of SEC 1940 Act Type of Product
Subaccounts the Company Registration Number Supported by Account
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
========================================================================================
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 1 in accordance with Article XI of the Agreement.
-------------------------------------- -----------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust Metropolitan Life Insurance Company
--------------------------------------
Xxxxxxx, Sachs & Co.
26
Schedule 2
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 1
Effective as of the date the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
====================================================================================
SEC 1933 Act
Policy Marketing Name Registration Number Contract Form Number Annuity or Life
------------------------------------------------------------------------------------
MetFlex 033-57320 7FV-93 Life
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
====================================================================================
================================================================================
[Form of Amendment to Schedule 2]
Effective as of , the following classes of Contracts are hereby added to
-------
this Schedule 2 and made subject to the Agreement:
==========================================================================================
SEC 1933 Act
Policy Marketing Name Registration Number Name of Supporting Account Annuity or Life
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
==========================================================================================
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 2 in accordance with Article XI of the Agreement.
-------------------------------------- -----------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust Metropolitan Life Insurance Company
--------------------------------------
Xxxxxxx, Sachs & Co.
27
Schedule 3
Trust Classes and Series
Available Under
Each Class of Contracts
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Contracts:
===================================================================
Contracts Marketing Name Trust Classes and Series
-------------------------------------------------------------------
MetFlex CORE Small Cap Equity Fund
-------------------------------------------------------------------
Mid Cap Value Fund
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
===================================================================
================================================================================
[Form of Amendment to Schedule 3]
Effective as of , this Schedule 3 is hereby amended to reflect
------------------
the following changes in Trust Classes and Series:
===================================================================
Contracts Marketing Name Trust Classes and Series
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
===================================================================
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 3 in accordance with Article XI of the Agreement.
---------------------------------------- -------------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust Metropolitan Life Insurance Company
----------------------------------------
Xxxxxxx, Sachs & Co.
28
Schedule 4
Investment Restrictions
Applicable to the Trust
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Trust:
================================================================================
[Form of Amendment to Schedule 4]
Effective as of , this Schedule 4 is hereby amended to
-------------------
reflect the following changes:
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 4 in accordance with Article XI of the Agreement.
---------------------------------------- -------------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust Metropolitan Life Insurance Company
----------------------------------------
Xxxxxxx, Sachs & Co.
29
PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
----------
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into this 30th day of April 2004, by and
among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the
"Trust"), Metropolitan Life Insurance Company, a/an New York corporation (the
"Company") on its own behalf and on behalf of each of the segregated asset
accounts of the Company set forth in Schedule A hereto, as may be amended from
time to time (the "Accounts"), and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a
Delaware corporation ("MFS").
WHEREAS, the Trust 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 or will be registered under the Securities Act of
1933, as amended (the "1933 Act");
WHEREAS, shares of beneficial interest of the Trust are divided into
several series of shares, each representing the interests in a particular
managed pool of securities and other assets;
WHEREAS, certain series of shares of the Trust are divided into two
separate share classes, an Initial Class and a Service Class, and the Trust on
behalf of the Service Class has adopted a Rule 12b-1 plan under the 1940 Act
pursuant to which the Service Class pays a distribution fee;
WHEREAS, the series of shares of the Trust (each, a "Portfolio," and,
collectively, the "Portfolios") and the classes of shares of those Portfolios
(the "Shares") offered by the Trust to the Company and the Accounts are set
forth on Schedule A attached hereto;
WHEREAS, MFS is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
law, and is the Trust's investment adviser;
WHEREAS, the Company will issue certain variable annuity and/or variable
life insurance contracts (individually, the "Policy" or, collectively, the
"Policies") which, if required by applicable law, will be registered under the
1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolution of the Board of Directors of the Company, to
set aside and invest assets attributable to the aforesaid variable annuity
and/or variable life insurance contracts that are allocated to the Accounts (the
Policies and the Accounts covered by this
Agreement, and each corresponding Portfolio covered by this Agreement in which
the Accounts invest, is specified in Schedule A attached hereto as may be
modified from time to time);
WHEREAS, the Company has registered or will register the Accounts as unit
investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, MFS Fund Distributors, Inc. (the "Underwriter") is registered as a
broker-dealer with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), and is
a member in good standing of the National Association of Securities Dealers,
Inc. (the "NASD");
WHEREAS, Metropolitan Life Insurance Company, the underwriter for the
individual variable annuity and the variable life policies, is registered as a
broker-dealer with the SEC under the 1934 Act and is a member in good standing
of the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase the Shares of the Portfolios as
specified in Schedule A attached hereto on behalf of the Accounts to fund the
Policies, and the Trust intends to sell such Shares to the Accounts at net asset
value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust, MFS,
and the Company agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Trust agrees to sell to the Company those Shares which the
Accounts order (based on orders placed by Policy holders prior to the close
of regular trading on the New York Stock Exchange, Inc. (the "NYSE") on
that Business Day, as defined below) and which are available for purchase
by such Accounts, executing such orders on a daily basis at the net asset
value next computed after receipt by the Trust or its designee of the order
for the Shares. For purposes of this Section 1.1, the Company shall be the
designee of the Trust for receipt of such orders from Policy owners and
receipt by such designee shall constitute receipt by the Trust; provided
that the Trust receives notice of such orders by 9:00 a.m. New York time on
the next following Business Day. "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.
1.2. The Trust agrees to make the Shares available indefinitely for
purchase at the applicable net asset value per share by the Company and the
Accounts on those days on which the Trust calculates its net asset value
pursuant to rules of the SEC and the Trust shall calculate such net asset
value on each day which the NYSE is open for trading. Notwithstanding the
foregoing, the Board of Trustees of the Trust (the "Board") may refuse to
sell any Shares to the Company and the Accounts, or suspend or terminate
the offering of the Shares if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of
the Board acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary in the best interest of
the Shareholders of such Portfolio.
1.3. The Trust and MFS agree that the Shares will be sold only to insurance
companies which have entered into participation agreements with the Trust
and MFS (the "Participating Insurance Companies") and their separate
accounts, qualified pension and retirement plans and MFS or its
-2-
affiliates. The Trust and MFS will not sell Trust shares to any insurance
company or separate account unless an agreement containing provisions
substantially the same as Articles III and VII of this Agreement is in
effect to govern such sales. The Company will not resell the Shares except
to the Trust or its agents.
1.4. The Trust agrees to redeem for cash, on the Company's request, any
full or fractional Shares held by the Accounts (based on orders placed by
Policy owners prior to the close of regular trading on the NYSE on that
Business Day), executing such requests on a daily basis at the net asset
value next computed after receipt by the Trust or its designee of the
request for redemption. For purposes of this Section 1.4, the Company shall
be the designee of the Trust for receipt of requests for redemption from
Policy owners and receipt by such designee shall constitute receipt by the
Trust; provided that the Trust receives notice of such request for
redemption by 9:30 a.m. New York time on the next following Business Day.
1.5. Each purchase, redemption and exchange order placed by the Company
shall be placed separately for each Portfolio and shall not be netted with
respect to any Portfolio. However, with respect to payment of the purchase
price by the Company and of redemption proceeds by the Trust, the Company
and the Trust shall net purchase and redemption orders with respect to each
Portfolio and shall transmit one net payment for all of the Portfolios in
accordance with Section 1.6 hereof.
1.6. In the event of net purchases, the Company shall pay for the Shares by
2:00 p.m. New York time on the next Business Day after an order to purchase
the Shares is made in accordance with the provisions of Section 1.1.
hereof. In the event of net redemptions, the Trust shall pay the redemption
proceeds by 2:00 p.m. New York time on the next Business Day after an order
to redeem the shares is made in accordance with the provisions of Section
1.4. hereof. All such payments shall be in federal funds transmitted by
wire.
1.7. Issuance and transfer of the Shares will be by book entry only. Stock
certificates will not be issued to the Company or the Accounts. The Shares
ordered from the Trust will be recorded in an appropriate title for the
Accounts or the appropriate subaccounts of the Accounts.
1.8. The Trust shall furnish same day notice (by wire or telephone followed
by written confirmation) to the Company of any dividends or capital gain
distributions payable on the Shares. The Company hereby elects to receive
all such dividends and distributions as are payable on a Portfolio's Shares
in additional Shares of that Portfolio. The Trust shall notify the Company
of the number of Shares so issued as payment of such dividends and
distributions.
1.9. The Trust or its custodian shall make the net asset value per share
for each Portfolio available to the Company on each Business Day as soon as
reasonably practical after the net asset value per share is calculated and
shall use its best efforts to make such net asset value per share available
by 6:30 p.m. New York time. In the event that the Trust is unable to meet
the 6:30 p.m. time stated herein, it shall provide additional time for the
Company to place orders for the purchase and redemption of Shares. Such
additional time shall be equal to the additional time which the Trust takes
to make the net asset value available to the Company. If the Trust provides
materially incorrect share net asset value information, the Trust shall
make an adjustment to the number of shares purchased or redeemed for the
Accounts to reflect the correct net asset value per share. Any material
error in the calculation or reporting of net asset value per share,
dividend or capital gains information shall be reported promptly upon
discovery to the Company.
-3-
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. The Company represents and warrants that the Policies are or will be
registered under the 1933 Act or are exempt from or not subject to
registration thereunder, and that the Policies will be issued, sold, and
distributed in compliance in all material respects with all applicable
state and federal laws, including without limitation the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the 1940
Act. The Company further represents and warrants that it is an insurance
company duly organized and in good standing under applicable law and that
it has legally and validly established the Account as a segregated asset
account under applicable law and has registered or, prior to any issuance
or sale of the Policies, will register the Accounts as unit investment
trusts in accordance with the provisions of the 1940 Act (unless exempt
therefrom) to serve as segregated investment accounts for the Policies, and
that it will maintain such registration for so long as any Policies are
outstanding. The Company shall amend the registration statements under the
1933 Act for the Policies and the registration statements under the 1940
Act for the Accounts from time to time as required in order to effect the
continuous offering of the Policies or as may otherwise be required by
applicable law. The Company shall register and qualify the Policies for
sales in accordance with the securities laws of the various states only if
and to the extent deemed necessary by the Company.
2.2. The Company represents and warrants that the Policies are currently
and at the time of issuance will be treated as life insurance, endowment or
annuity contract under applicable provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), that it will maintain such treatment and
that it will notify the Trust or MFS immediately upon having a reasonable
basis for believing that the Policies have ceased to be so treated or that
they might not be so treated in the future.
2.3. The Company represents and warrants that it, as the underwriter for
the individual variable annuity and the variable life policies, is a member
in good standing of the NASD and is a registered broker-dealer with the
SEC. The Company represents and warrants that the Company will sell and
distribute such policies in accordance in all material respects with all
applicable state and federal securities laws, including without limitation
the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.4. The Trust and MFS represent and warrant that the Shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized
for issuance and sold in compliance with the laws of The Commonwealth of
Massachusetts and all applicable federal and state securities laws and that
the Trust is and shall remain registered under the 1940 Act. The Trust
shall amend the registration statement for its Shares 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 the
Shares for sale in accordance with the laws of the various states only if
and to the extent deemed necessary by the Trust.
2.5. MFS represents and warrants that the Underwriter is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Trust and MFS represent that the Trust and the Underwriter will sell and
distribute the Shares in accordance in all material respects with all
applicable state and federal securities laws, including without limitation
the 1933 Act, the 1934 Act, and the 1940 Act.
-4-
2.6. The Trust represents that it is lawfully organized and validly
existing under the laws of The Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act and any
applicable regulations thereunder.
2.7. MFS represents and warrants that it is and shall remain duly
registered under all applicable federal securities laws and that it shall
perform its obligations for the Trust in compliance in all material
respects with any applicable federal securities laws and with the
securities laws of The Commonwealth of Massachusetts. MFS represents and
warrants that it is not subject to state securities laws other than the
securities laws of The Commonwealth of Massachusetts and that it is exempt
from registration as an investment adviser under the securities laws of The
Commonwealth of Massachusetts.
2.8. No less frequently than annually, the Company shall submit to the
Board such reports, material or data as the Board may reasonably request so
that it may carry out fully the obligations imposed upon it by the
conditions contained in the exemptive application pursuant to which the SEC
has granted exemptive relief to permit mixed and shared funding (the "Mixed
and Shared Funding Exemptive Order").
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1. At least annually, the Trust or its designee shall provide the
Company, free of charge, with as many copies of the current prospectus
(describing only the Portfolios listed in Schedule A hereto) for the Shares
as the Company may reasonably request for distribution to existing Policy
owners whose Policies are funded by such Shares. The Trust or its designee
shall provide the Company, at the Company's expense, with as many copies of
the current prospectus for the Shares as the Company may reasonably request
for distribution to prospective purchasers of Policies. If requested by the
Company in lieu thereof, the Trust or its designee shall provide such
documentation (including a "camera ready" copy of the new prospectus as set
in type or, at the request of the Company, as a diskette in the form sent
to the financial printer) and other assistance as is reasonably necessary
in order for the parties hereto once each year (or more frequently if the
prospectus for the Shares is supplemented or amended) to have the
prospectus for the Policies and the prospectus for the Shares printed
together in one document; the expenses of such printing to be apportioned
between (a) the Company and (b) the Trust or its designee in proportion to
the number of pages of the Policy and Shares' prospectuses, taking account
of other relevant factors affecting the expense of printing, such as
covers, columns, graphs and charts; the Trust or its designee to bear the
cost of printing the Shares' prospectus portion of such document for
distribution to owners of existing Policies funded by the Shares and the
Company to bear the expenses of printing the portion of such document
relating to the Accounts; provided, however, that the Company shall bear
all printing expenses of such combined documents where used for
distribution to prospective purchasers or to owners of existing Policies
not funded by the Shares. In the event that the Company requests that the
Trust or its designee provides the Trust's prospectus in a "camera ready"
or diskette format, the Trust shall be responsible for providing the
prospectus in the format in which it or MFS is accustomed to formatting
prospectuses and shall bear the expense of providing the prospectus in such
format (e.g., typesetting expenses), and the Company shall bear the expense
of adjusting or changing the format to conform with any of its
prospectuses.
3.2. The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from the Trust or its
designee. The Trust or its designee, at its expense, shall
-5-
print and provide such statement of additional information to the Company
(or a master of such statement suitable for duplication by the Company) for
distribution to any owner of a Policy funded by the Shares. The Trust or
its designee, at the Company's expense, shall print and provide such
statement to the Company (or a master of such statement suitable for
duplication by the Company) for distribution to a prospective purchaser who
requests such statement or to an owner of a Policy not funded by the
Shares.
3.3. The Trust or its designee shall provide the Company free of charge
copies, if and to the extent applicable to the Shares, of the Trust's proxy
materials, reports to Shareholders and other communications to Shareholders
in such quantity as the Company shall reasonably require for distribution
to Policy owners.
3.4. Notwithstanding the provisions of Sections 3.1, 3.2, and 3.3 above, or
of Article V below, the Company shall pay the expense of printing or
providing documents to the extent such cost is considered a distribution
expense. Distribution expenses would include by way of illustration, but
are not limited to, the printing of the Shares' prospectus or prospectuses
for distribution to prospective purchasers or to owners of existing
Policies not funded by such Shares.
3.5. The Trust hereby notifies the Company that it may be appropriate to
include in the prospectus or disclosure documents pursuant to which a
Policy is offered disclosure regarding the potential risks of mixed and
shared funding.
3.6. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Policy owners;
(b) vote the Shares in accordance with instructions received from
Policy owners; and
(c) vote the Shares for which no instructions have been received in
the same proportion as the Shares of such Portfolio for which
instructions have been received from Policy owners;
so long as and to the extent that the SEC continues to interpret the 1940
Act to require pass through voting privileges for variable contract owners.
The Company will in no way recommend action in connection with or oppose or
interfere with the solicitation of proxies for the Shares held for such
Policy owners. The Company reserves the right to vote shares held in any
segregated asset account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts holding Shares calculates voting privileges
in the manner required by the Mixed and Shared Funding Exemptive Order. The
Trust and MFS will notify the Company of any changes of interpretations or
amendments to the Mixed and Shared Funding Exemptive Order.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. 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, MFS, any other investment adviser to the
Trust, or any affiliate of MFS are named, at least three (3) Business Days
prior to its
-6-
use. No such material shall be used if the Trust, MFS, or their respective
designees reasonably objects to such use within three (3) Business Days
after receipt of such material.
4.2. The Company shall not give any information or make any representations
or statement on behalf of the Trust, MFS, any other investment adviser to
the Trust, or any affiliate of MFS or concerning the Trust or any other
such entity in connection with the sale of the Policies other than the
information or representations contained in the registration statement,
prospectus or statement of additional information for the Shares, as such
registration statement, prospectus and statement of additional information
may be amended or supplemented from time to time, or in reports or proxy
statements for the Trust, or in sales literature or other promotional
material approved by the Trust, MFS or their respective designees, except
with the permission of the Trust, MFS or their respective designees. The
Trust, MFS or their respective designees each agrees to respond to any
request for approval on a prompt and timely basis. The Company shall adopt
and implement procedures reasonably designed to ensure that information
concerning the Trust, MFS or any of their affiliates which is intended for
use only by brokers or agents selling the Policies (i.e., information that
is not intended for distribution to Policy owners or prospective Policy
owners) is so used, and neither the Trust, MFS nor any of their affiliates
shall be liable for any losses, damages or expenses relating to the
improper use of such broker only materials.
4.3. The Trust or its designee 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 and/or the Accounts is
named, at least three (3) Business Days prior to its use. No such material
shall be used if the Company or its designee reasonably objects to such use
within three (3) Business Days after receipt of such material.
4.4. The Trust and MFS shall not give, and agree that the Underwriter shall
not give, any information or make any representations on behalf of the
Company or concerning the Company, the Accounts, or the Policies in
connection with the sale of the Policies other than the information or
representations contained in a registration statement, prospectus or
disclosure documents, or statement of additional information for the
Policies, as such registration statement, prospectus and statement of
additional information may be amended or supplemented from time to time, or
in reports for the Accounts, or in sales literature or other promotional
material approved by the Company or its designee, except with the
permission of the Company. The Company or its designee agrees to respond to
any request for approval on a prompt and timely basis. The Trust and MFS
may not alter any material so provided by the Company or its designee
(including, without limitation, presenting or delivering such material in a
different medium, e.g., electronic or internet) without the prior written
consent of the Company. The parties hereto agree that this Section 4.4. is
neither intended to designate nor otherwise imply that MFS is an
underwriter or distributor of the Policies.
4.5. The Company and the Trust (or its designee in lieu of the Company or
the Trust, as appropriate) will each provide to the other at least one
complete copy of all registration statements, prospectuses or disclosure
documents, statements of additional information, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of
the above, that relate to the Policies, or to the Trust or its Shares,
prior to or contemporaneously with the filing of such document with the SEC
or other regulatory authorities. The Company and the Trust shall also each
promptly inform the other of the results of any examination by the SEC (or
other regulatory authorities) that relates to the Policies, the Trust or
its Shares, and the party that was the subject of the examination shall
provide the other
-7-
party with a copy of relevant portions of any "deficiency letter" or other
correspondence or written report regarding any such examination.
4.6. No party shall use any other party's names, logos, trademarks or
service marks, whether registered or unregistered, without the prior
written consent of such other party, or after written consent therefor has
been revoked, provided that separate consent is not required under this
Section 4.6 to the extent that consent to use a party's name, logo,
trademark or service xxxx in connection with a particular piece of
advertising or sales literature has previously been given by a party under
Sections 4.2 and 4.4 of this Agreement. The Company shall not use in
advertising, publicly or otherwise the name of the Trust, MFS or any of
their affiliates nor any trade name, trademark, trade device, servicemark,
symbol or any abbreviation, contraction or simulation thereof of the Trust,
MFS, or their affiliates without the prior written consent of the Trust or
MFS in each instance. The Trust and MFS shall not use in advertising,
publicly or otherwise the name of the Company or any of its affiliates nor
any trade name, trademark, trade device, servicemark, symbol or any
abbreviation, contraction or simulation thereof of the Company or its
affiliates without the prior written consent of the Company in each
instance.
4.7. The Trust and MFS will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Portfolio, and of
any material change in the Trust's registration statement, particularly any
change resulting in change to the registration statement or prospectus or
statement of additional information for any Account. The Trust and MFS will
cooperate with the Company so as to enable the Company to solicit proxies
from Policy owners or to make changes to its prospectus, statement of
additional information or registration statement, in an orderly manner. The
Trust and MFS will make reasonable efforts to attempt to have changes
affecting Policy prospectuses become effective simultaneously with the
annual updates for such prospectuses.
4.8. For purpose of this Article IV and Article VIII, the phrase "sales
literature or other promotional material" includes but is not limited to
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures, or
other public media), and sales literature (such as brochures, circulars,
reprints or excerpts or any other advertisement, sales literature, or
published articles), distributed or made generally available to customers
or the public, educational or training materials or communications
distributed or made generally available to some or all agents or employees.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust shall pay no fee or other compensation to the Company under
this Agreement, and the Company shall pay no fee or other compensation to
the Trust, except that, to the extent the Trust or any Portfolio has
adopted and implemented a plan pursuant to Rule 12b-1 under the 1940 Act to
finance distribution and for Shareholder servicing expenses, then the Trust
may make payments to the Company or to the underwriter for the Policies in
accordance with such plan. Each party, however, shall, in accordance with
the allocation of expenses specified in Articles III and V hereof,
reimburse other parties for expenses initially paid by one party but
allocated to another party. In addition, nothing herein shall prevent the
parties hereto from otherwise agreeing to perform, and arranging for
appropriate compensation for, other services relating to the Trust and/or
to the Accounts.
-8-
5.2. The Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable federal
and state laws, including preparation and filing of the Trust's
registration statement, and payment of filing fees and registration fees;
preparation and filing of the Trust's proxy materials and reports to
Shareholders; setting in type and printing its prospectus and statement of
additional information (to the extent provided by and as determined in
accordance with Article III above); setting in type and printing the proxy
materials and reports to Shareholders (to the extent provided by and as
determined in accordance with Article III above); the preparation of all
statements and notices required of the Trust by any federal or state law
with respect to its Shares; all taxes on the issuance or transfer of the
Shares; and the costs of distributing the Trust's prospectuses and proxy
materials to owners of Policies funded by the Shares and any expenses
permitted to be paid or assumed by the Trust pursuant to a plan, if any,
under Rule 12b-1 under the 1940 Act. The Trust shall not bear any expenses
of marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Shares'
prospectus or prospectuses in connection with new sales of the Policies and
of distributing the Trust's Shareholder reports to Policy owners. The
Company shall bear all expenses associated with the registration,
qualification, and filing of the Policies under applicable federal
securities and state insurance laws; the cost of preparing, printing and
distributing the Policy prospectus or disclosure document and statement of
additional information; and the cost of preparing, printing and
distributing annual individual account statements for Policy owners as
required by state insurance laws.
5.4. MFS will monthly reimburse the Company certain of the administrative
costs and expenses incurred by the Company as a result of operations
necessitated by the beneficial ownership by Policy owners of shares of the
Portfolios of the Trust, equal to 25% per annum of the aggregate net assets
of the Trust attributable to variable life or variable annuity contracts
offered by the Company or its affiliates. In no event shall such fee be
paid by the Trust, its shareholders or by the Policy holders.
ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS
6.1. The Trust and MFS represent and warrant that each Portfolio of the
Trust will meet the diversification requirements of Section 817 (h) (1) of
the Code and Treas. Reg. 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts,
as they may be amended from time to time (and any revenue rulings, revenue
procedures, notices, and other published announcements of the Internal
Revenue Service interpreting these sections), as if those requirements
applied directly to each such Portfolio.
6.2. The Trust and MFS represent that each Portfolio will elect to be
qualified as a Regulated Investment Company under Subchapter M of the Code
and that they will maintain such qualification (under Subchapter M or any
successor or similar provision).
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
7.1. The Trust agrees that the Board, constituted with a majority of
disinterested trustees, will monitor each Portfolio of the Trust for the
existence of any material irreconcilable conflict between the interests of
the variable annuity contract owners and the variable life insurance policy
owners of the Company and/or affiliated companies ("contract owners")
investing in the Trust. The Board shall
-9-
have the sole authority to determine if a material irreconcilable conflict
exists, and such determination shall be binding on the Company only if
approved in the form of a resolution by a majority of the Board, or a
majority of the disinterested trustees of the Board. The Board will give
prompt notice of any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the Board
in carrying out its responsibilities under the conditions set forth in the
Trust's exemptive application pursuant to which the SEC has granted the
Mixed and Shared Funding Exemptive Order by providing the Board, as it may
reasonably request, with all information necessary for the Board to
consider any issues raised and agrees that it will be responsible for
promptly reporting any potential or existing conflicts of which it is aware
to the Board including, but not limited to, an obligation by the Company to
inform the Board whenever contract owner voting instructions are
disregarded. The Company also agrees that, if a material irreconcilable
conflict arises, it will at its own cost remedy such conflict up to and
including (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 to a vote of all affected contract
owners whether to withdraw assets from the Trust or any Portfolio and
reinvesting such assets in a different investment medium and, as
appropriate, segregating the assets attributable to any appropriate group
of contract owners that votes in favor of such segregation, or offering to
any of the affected contract owners the option of segregating the assets
attributable to their contracts or policies, and (b) establishing a new
registered management investment company and segregating the assets
underlying the Policies, unless a majority of Policy owners materially
adversely affected by the conflict have voted to decline the offer to
establish a new registered management investment company.
7.3. A majority of the disinterested trustees of the Board shall determine
whether any proposed action by the Company adequately remedies any material
irreconcilable conflict. In the event that the Board determines that any
proposed action does not adequately remedy any material irreconcilable
conflict, the Company will withdraw from investment in the Trust each of
the Accounts designated by the disinterested trustees 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 to
remedy any such material irreconcilable conflict as determined by a
majority of the disinterested trustees of the Board.
7.4. 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 funding (as defined in the Mixed and Shared Funding Exemptive Order)
on terms and conditions materially different from those contained in the
Mixed and Shared Funding Exemptive Order, then (a) the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such steps as
may be necessary to comply with Rule 6e-2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
3.5, 3.6, 7.1, 7.2, 7.3 and 7.4 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.
ARTICLE VIII. INDEMNIFICATION
8.1. Indemnification by the Company
-10-
The Company agrees to indemnify and hold harmless the Trust, MFS, any
affiliates of MFS, and each of their respective directors/trustees,
officers and each person, if any, who controls the Trust or MFS within the
meaning of Section 15 of the 1933 Act, and any agents or employees of the
foregoing (each an "Indemnified Party," or collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Company) or expenses (including reasonable counsel
fees) to which any Indemnified Party may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Shares or the
Policies and:
(a) 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 disclosure document or
statement of additional information for the Policies or contained
in the Policies or sales literature or other promotional material
for the Policies (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission 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 reasonable
reliance upon and in conformity with information furnished to the
Company or its designee by or on behalf of the Trust or MFS for
use in the registration statement, prospectus or statement of
additional information for the Policies or in the Policies or
sales literature or other promotional material (or any amendment
or supplement) or otherwise for use in connection with the sale
of the Policies or Shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or disclosure document,
statement of additional information or sales literature or other
promotional material of the Trust not supplied by the Company or
its designee, or persons under its control and on which the
Company has reasonably relied) or wrongful conduct of the Company
or persons under its control, with respect to the sale or
distribution of the Policies or Shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in the registration statement,
prospectus or disclosure document, statement of additional
information, or sales literature or other promotional literature
of the Trust, 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
Trust by or on behalf of the Company; or
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company; or
(e) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement;
-11-
as limited by and in accordance with the provisions of this Article VIII.
8.2. Indemnification by the Trust
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, and any agents or
employees of the foregoing (each an "Indemnified Party," or 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 Trust) or expenses (including
reasonable counsel fees) to which any Indemnified Party may become subject
under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Shares or the
Policies and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional material of
the Trust (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 statement 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
reasonable reliance upon and in conformity with information
furnished to the Trust, MFS, the Underwriter or their respective
designees by or on behalf of the Company for use in the
registration statement, prospectus or statement of additional
information for the Trust or in sales literature or other
promotional material for the Trust (or any amendment or
supplement) or otherwise for use in connection with the sale of
the Policies or Shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional material for
the Policies not supplied by the Trust, MFS, the Underwriter or
any of their respective designees or persons under their
respective control and on which any such entity has reasonably
relied) or wrongful conduct of the Trust or persons under its
control, with respect to the sale or distribution of the Policies
or Shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in the registration statement,
prospectus, statement of additional information, or sales
literature or other promotional literature of the Accounts or
relating to the Policies, 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, MFS or the
Underwriter; or
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this
Agreement (including a failure, whether unintentional or in
-12-
good faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement) or arise
out of or result from any other material breach of this Agreement
by the Trust; or
(e) arise out of or result from the materially incorrect or untimely
calculation or reporting of the daily net asset value per share
or dividend or capital gain distribution rate; or
(f) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of the
Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.3. In no event shall the Trust be liable under the indemnification
provisions contained in this Agreement to any individual or entity,
including without limitation, the Company, or any Participating Insurance
Company or any Policy holder, with respect to any losses, claims, damages,
liabilities or expenses that arise out of or result from (i) a breach of
any representation, warranty, and/or covenant made by the Company hereunder
or by any Participating Insurance Company under an agreement containing
substantially similar representations, warranties and covenants; (ii) the
failure by the Company or any Participating Insurance Company to maintain
its segregated asset account (which invests in any Portfolio) as a legally
and validly established segregated asset account under applicable state law
and as a duly registered unit investment trust under the provisions of the
1940 Act (unless exempt therefrom); or (iii) the failure by the Company or
any Participating Insurance Company to maintain its variable annuity and/or
variable life insurance contracts (with respect to which any Portfolio
serves as an underlying funding vehicle) as life insurance, endowment or
annuity contracts under applicable provisions of the Code.
8.4. Neither the Company nor the Trust shall be liable under the
indemnification provisions contained in this Agreement with respect to any
losses, claims, damages, liabilities or expenses to which an Indemnified
Party would otherwise be subject by reason of such Indemnified Party's
willful misfeasance, willful misconduct, or 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.
8.5. Promptly after receipt by an Indemnified Party under this Section 8.5.
of notice of commencement of any action, such Indemnified Party will, if a
claim in respect thereof is to be made against the indemnifying party under
this section, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it
from any liability which it may have to any Indemnified Party otherwise
than under this section. In case any such action is brought against any
Indemnified Party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, assume the defense
thereof, with counsel satisfactory to such Indemnified Party. After notice
from the indemnifying party of its intention to assume the defense of an
action, the Indemnified Party shall bear the expenses of any additional
counsel obtained by it, and the indemnifying party shall not be liable to
such Indemnified Party under this section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation.
-13-
8.6. Each of the parties agrees promptly to notify the other parties of the
commencement of any litigation or proceeding against it or any of its
respective officers, directors, trustees, employees or 1933 Act control
persons in connection with the Agreement, the issuance or sale of the
Policies, the operation of the Accounts, or the sale or acquisition of
Shares.
8.7. A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
SEC may grant and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. NOTICE OF FORMAL PROCEEDINGS
The Trust, MFS, and the Company agree that each such party shall promptly
notify the other parties to this Agreement, in writing, of the institution of
any formal proceedings brought against such party or its designees by the NASD,
the SEC, or any insurance department or any other regulatory body regarding such
party's duties under this Agreement or related to the sale of the Policies, the
operation of the Accounts, or the purchase of the Shares.
ARTICLE XI. TERMINATION
11.1. This Agreement shall terminate with respect to the Accounts, or one,
some, or all Portfolios:
(a) at the option of any party upon 90 days advance written notice to
the other parties; or
(b) at the option of the Company to the extent that the Shares of
Portfolios are not reasonably available to meet the requirements
of the Policies or are not "appropriate funding vehicles" for the
Policies, as reasonably determined by the Company. Without
limiting the generality of the foregoing, the Shares of a
Portfolio would not be "appropriate funding vehicles" if, for
example, such Shares did not meet the diversification or other
requirements referred to in Article VI hereof; or if the Company
would be permitted to disregard Policy owner voting instructions
pursuant to Rule 6e-2 or 6e-3(T) under the 1940 Act. Prompt
notice of the election to terminate for such cause and an
explanation of such cause shall be furnished to the Trust by the
Company; or
(c) at the option of the Trust or MFS upon institution of formal
proceedings against the Company by the NASD, the SEC, or any
insurance department or any other
-14-
regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Policies, the operation
of the Accounts, or the purchase of the Shares; or
(d) at the option of the Company upon institution of formal
proceedings against the Trust by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body
regarding the Trust's or MFS' duties under this Agreement or
related to the sale of the Shares; or
(e) at the option of the Company, the Trust or MFS upon receipt of
any necessary regulatory approvals and/or the vote of the Policy
owners having an interest in the Accounts (or any subaccounts) to
substitute the shares of another investment company for the
corresponding Portfolio Shares in accordance with the terms of
the Policies for which those Portfolio Shares had been selected
to serve as the underlying investment media. The Company will
give thirty (30) days' prior written notice to the Trust of the
Date of any proposed vote or other action taken to replace the
Shares; or
(f) termination by either the Trust or MFS by written notice to the
Company, if either one or both of the Trust or MFS respectively,
shall determine, in their sole judgment exercised in good faith,
that the Company has suffered a material adverse change in its
business, operations, financial condition, or prospects since the
date of this Agreement or is the subject of material adverse
publicity; or
(g) termination by the Company by written notice to the Trust and
MFS, if the Company shall determine, in its sole judgment
exercised in good faith, that the Trust or MFS has suffered a
material adverse change in this business, operations, financial
condition or prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(h) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(i) upon assignment of this Agreement, unless made with the written
consent of the parties hereto.
11.2. The notice shall specify the Portfolio or Portfolios, Policies and,
if applicable, the Accounts as to which the Agreement is to be terminated.
11.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1(a) may be exercised for
cause or for no cause.
11.4. Except as necessary to implement Policy owner initiated transactions,
or as required by state insurance laws or regulations, the Company shall
not redeem the Shares attributable to the Policies (as opposed to the
Shares attributable to the Company's assets held in the Accounts), and the
Company shall not prevent Policy owners from allocating payments to a
Portfolio that was otherwise available under the Policies, until thirty
(30) days after the Company shall have notified the Trust of its intention
to do so.
-15-
11.5. Notwithstanding any termination of this Agreement, the Trust and MFS
shall, at the option of the Company, continue to make available additional
shares of the Portfolios pursuant to the terms and conditions of this
Agreement, for all Policies in effect on the effective date of termination
of this Agreement (the "Existing Policies"), except as otherwise provided
under Article VII of this Agreement. Specifically, without limitation, the
owners of the Existing Policies shall be permitted to transfer or
reallocate investment under the Policies, redeem investments in any
Portfolio and/or invest in the Trust upon the making of additional purchase
payments under the Existing Policies.
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail, overnight courier or facsimile 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:
MFS Variable Insurance Trust
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxx, Assistant Secretary
If to the Company:
Metropolitan Life Insurance Company
1 MetLife Plaza
00-00 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Facsimile No.: (212-743-0657
Attn: Xxxxxx Xxxxxx, Counsel
With copy to:
Metropolitan Life Insurance Company
000X XX Xxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile No: 000-000-0000
Attn: Xxxxxxx K Model, Director
If to MFS:
Massachusetts Financial Services Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000)000-0000
Attn: Xxxxxxx X. Carp, General Counsel
-16-
ARTICLE XIII. MISCELLANEOUS
13.1. Subject to the requirement of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of
the owners of the Policies and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted
by this Agreement or as otherwise required by applicable law or regulation,
shall not disclose, disseminate or utilize such names and addresses and
other confidential information without the express written consent of the
affected party until such time as it may come into the public domain.
13.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
13.3. This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the
same instrument.
13.4. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
13.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
13.6. Each party hereto shall cooperate with each other party in connection
with inquiries by appropriate governmental authorities (including without
limitation the SEC, the NASD, and state insurance regulators) relating to
this Agreement or the transactions contemplated hereby.
13.7. 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.
13.8. A copy of the Trust's Declaration of Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. The Company
acknowledges that the obligations of or arising out of this instrument are
not binding upon any of the Trust's trustees, officers, employees, agents
or shareholders individually, but are binding solely upon the assets and
property of the Trust in accordance with its proportionate interest
hereunder. The Company further acknowledges that the assets and liabilities
of each Portfolio are separate and distinct and that the obligations of or
arising out of this instrument are binding solely upon the assets or
property of the Portfolio on whose behalf the Trust has executed this
instrument. The Company also agrees that the obligations of each Portfolio
hereunder shall be several and not joint, in accordance with its
proportionate interest hereunder, and the Company agrees not to proceed
against any Portfolio for the obligations of another Portfolio.
-17-
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified above.
Metropolitan Life Insurance Company,
on behalf of Separate Account UL and
Separate Account DCVL
----------------------------------------
By its authorized officer and not
individually,
By:
------------------------------------
Xxxx X Xxxx
Title: Vice President
MFS VARIABLE INSURANCE TRUST,
on behalf of the Portfolios
By its authorized officer and not
individually,
By:
------------------------------------
Xxxxx X. Xxxxxxxxx, Xx.
Assistant Secretary
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By:
------------------------------------
Xxxxxxx X. Carp
Senior Vice President
-18-
As of 5/1/04
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
===================================================================================================================
Name of Separate
Account and Date
Established by Policies Funded Share Class Portfolios
Board of Directors by Separate Account (Initial or Service Class) Applicable to Policies
===================================================================================================================
Separate Account UL Established MetFlex Service Class Global Equity Series
12/1988 High Income Series
Value Series
New Discovery Series
-------------------------------------------------------------------------------------------------------------------
Separate Account DCVL, 11/2003 PPVL - Group and Individual Initial Global Equity Series
Policy forms High Income Series
Value Series
New Discovery Series
-------------------------------------------------------------------------------------------------------------------
-19-
THIS AGREEMENT is made and entered into as of the 30th day of _April, 2004
by and among [Metropolitan Life Insurance Company] (the "Company"), a life
insurance company organized in the state of New York , on its own behalf and on
behalf of each separate account of the Company set forth on Schedule A hereto as
may be amended from time to time (each such account referred to as an
"Account"), XXX XXXXXX LIFE INVESTMENT TRUST (the "Fund"), a Delaware business
trust, XXX XXXXXX FUNDS INC. (the "Underwriter"), a Delaware corporation, and
XXX XXXXXX ASSET MANAGEMENT INC. (the "Adviser"), a Delaware corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established by insurance companies for individual and group life insurance
policies and annuity contracts with variable accumulation and/or pay-out
provisions (hereinafter referred to individually and/or collectively as
"Variable Insurance Products"); and
WHEREAS, insurance companies desiring to utilize the Fund as an investment
vehicle under their Variable Insurance Products enter into participation
agreements with the Fund, the Underwriter and the Adviser (the "Participating
Insurance Companies"); and
WHEREAS, shares of the Fund are divided into several series of shares, each
representing the interest in a particular managed portfolio of securities and
other assets, any one or more of which may be made available under this
Agreement; and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule B hereto (each such series referred to as a "Portfolio"), as such
Schedule may be amended from time to time by mutual agreement of the parties
hereto, to the Account(s) of the Company (all references herein to "shares" of a
Portfolio shall mean the class or classes of shares specifically identified on
Schedule B); and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC"), dated September 19, 1990 (File No. 812-7552), granting
Participating Insurance Companies and Variable Insurance Product separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended (the "1940 Act"), and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Fund to be sold to and held by Variable Insurance Product
separate accounts of both affiliated and unaffiliated life insurance companies
(the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
laws; and
WHEREAS, the Adviser manages the Portfolios of the Fund; and
WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD") and serves as principal underwriter of the shares of the Fund; and
WHEREAS, the Company offers or proposes to offer certain Variable Insurance
Products that it has registered (or will register) under the 1933 Act (the
"Registered Contracts"), as well as other Variable Insurance Products that are
not registered under the 1933 Act (the "Unregistered Contracts," and together
with the Registered Contracts, the "Contracts"), each as set forth on Schedule A
hereto; and
WHEREAS, each Account is a duly established, validly existing segregated
asset account, established by resolution or under authority 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 the Contracts; and
WHEREAS, the Company has registered (or will register) certain Accounts as
unit investment trusts under the 1940 Act that are attributable to the
Registered Contracts (the "Registered Accounts"), while certain other Accounts
that are attributable to the Unregistered Contracts will not be registered under
the 1940 Act (the "Unregistered Accounts," and together with the Registered
Accounts, the "Accounts"), each as set forth on Schedule A hereto; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Portfolios, on behalf
of each Account or sub-Account thereof (together, as applicable, an "Account"),
to fund the Contracts and the Underwriter is authorized to sell such shares to
each such Account at net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Underwriter and the Adviser agree as follows:
ARTICLE I. Purchase and Redemption of Fund Shares
1.1. The Fund and the Underwriter agree to make available for purchase by
the Company shares of the Portfolio(s) and shall execute purchase orders placed
for each Account on each Business Day at the net asset value next computed after
receipt by the Fund or its designee of such purchase order. For purposes of this
Section 1.1, the Company shall be the designee of the Fund and the Underwriter
for receipt of such purchase orders from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such order by 10:00 a.m. Eastern time on the next following Business
Day. "Business Day" shall mean any day on which the New York Stock Exchange,
Inc. is open for trading and on which the Fund calculates its net asset value
pursuant to SEC rules.
1.2. The Fund, so long as this Agreement is in effect, agrees to make
shares of the Portfolios 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 pursuant to SEC rules
2
and the Fund shall use reasonable efforts to calculate such net asset value on
each day that the New York Stock Exchange, Inc. is open for trading.
Notwithstanding the foregoing, the Board of Trustees of the Fund (the "Board")
may refuse to permit the Fund 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 Board acting in good faith and in light of its fiduciary
duties under federal and any applicable state laws, necessary 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. No
shares of a Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter agree to redeem for cash, on the
Company's request, any full or fractional shares of the Portfolio(s) held by the
Company, executing such redemption requests for each Account on each Business
Day at the net asset value next computed after receipt by the Fund or its
designee of the request for redemption. Subject to and in accordance with
applicable laws and regulations, however, the Fund reserves the right to redeem
shares of the Portfolios for assets other than cash. For purposes of this
Section 1.4, the Company shall be the designee of the Fund and the Underwriter
for receipt of requests for redemption from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such request for redemption by 10:00 a.m. Eastern time on the next
following Business Day.
1.5. The Company agrees that purchases and redemptions of Portfolio shares
offered by the then current prospectus or offering memorandum of the Fund shall
be made in accordance with the provisions of such prospectus or offering
memorandum. The Company will give the Fund, the Underwriter and the Adviser
forty-five (45) days written notice of its intention to make available in the
future any other investment company as a funding vehicle under the Contracts.
1.6. The Company shall pay for Portfolio 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 and
the Company agrees to use its best efforts to transmit such funds by no later
than 2:00 p.m. Eastern time on the day of transmission. For purposes of Sections
2.10 and 2.11, upon receipt by the Fund of the federal funds so wired, such
funds shall cease to be the responsibility of the Company and shall become the
responsibility of the Fund.
1.7. Issuance and transfer of the Fund's shares will be by book entry only.
Share certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate sub-account of each Account.
1.8. The Fund shall use its best efforts to furnish same-day notice (by
wire or telephone, followed by written confirmation) to the Company of any
income dividends or capital gain distributions payable on Portfolio shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional
3
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 each Business Day 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 its best efforts to make such net asset value per share
available by 7:00 p.m. Eastern time.
1.10. The Company shall not redeem Fund shares attributable to the
Contracts (as distinct from Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract owner
initiated or approved transactions, (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") or (iii) as
permitted by an order of the SEC pursuant to Section 26(c) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund the opinion of counsel
for the Company (which counsel shall be reasonably satisfactory to the Fund) to
the effect that any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted under the
terms of the Contracts, the Company shall not prevent Contract owners from
allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund ninety (90) days prior written notice of
its intention to do so.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that: (i) it is an insurance
company duly organized and in good standing under applicable law; (ii) it will
abide by the rules and regulations of the NSCC; (iii) it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under applicable laws and regulations; (iv) it has registered or,
prior to any issuance or sale of the Registered Contracts, will register and
will thereafter maintain the registration of each Registered Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Registered Contracts; (v) the Unregistered
Accounts are exempt from the registration requirements of the 1940 Act under the
provisions of Section 3(c)(1) or 3(c)(7) thereof; and (vi) the Unregistered
Accounts are exempt from the provisions of Section 12(d)(1) of the 1940 Act
under the provisions of Section 12(d)(1)(E) of the 1940 Act. The Company further
represents and warrants that: (i) the Registered Contracts are or will be
registered and shall remain registered under the 1933 Act; (ii) the Unregistered
Contracts are exempt from the registration requirements of the 1933 Act under
the provisions of Section 4(2) thereof; (iii) the Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws; and (iv) the sale of the Contracts shall comply in all material
respects with any applicable state insurance suitability requirements. The
Company shall amend the registration statement for the Registered Accounts and
the Registered Contracts under the 1940 Act and the 1933 Act, respectively, from
time to time as required in order to effect the continuous offering of the
Registered Contracts; moreover, the Company will notify the Fund immediately in
writing of any changes in facts or circumstances leading the Company to believe
that any of the exemptions described above with respect to the Unregistered
Contracts or Unregistered Accounts are not applicable as represented.
4
2.2. The Fund and the Underwriter represent and warrant 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 0000 Xxx. The Fund shall amend the
registration statement for its shares 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 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.
2.3. The Fund represents that the fund and each Portfolio is currently
qualified as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and that it will use its
reasonable efforts to maintain such qualification (under Subchapter M or any
successor or similar provision) and that it will notify the Company immediately
upon having a reasonable basis for believing that it has ceased to so qualify.
2.4. Subject to Section 2.12 and Article VI, the Company represents and
warrants that each Account is and will continue to be a "segregated asset
account" under applicable provisions of the Code and applicable Treasury
Regulations promulgated thereunder and that each Contract is treated as a
"variable contract" under applicable provisions of the Code and applicable
Treasury Regulations promulgated thereunder. The Company further represents and
warrants that it will make every effort to maintain such treatment and that it
will notify the Fund immediately upon having a reasonable basis for believing
that any Account or Contract has ceased to be so treated or that any Account or
Contract might not be so treated in the future.
2.5. The Fund represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund
undertakes to have the Board, a majority of whom are not interested persons of
the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. 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.
2.7. 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.
2.8. The Adviser represents and warrants that it is and shall remain duly
registered in all material respects under all applicable federal and state
securities laws and that it will perform its obligations for the Fund in
compliance in all material respects with the laws of its state of domicile and
any applicable state and federal securities laws.
2.9. The Underwriter represents and warrants that it is and shall remain
duly registered in all material respects under all applicable federal and state
securities laws and that it will perform its obligations for the Fund in
compliance in all material respects with the laws of its state of domicile and
any applicable state and federal securities laws.
5
2.10. The Fund represents and warrants that all of its trustees, officers,
employees, and other individuals/entities 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 for the benefit of the Fund in an
amount not less than the minimum coverage as currently required by Rule 17g-1 of
the 1940 Act or related provisions as may be promulgated from time to time. The
aforesaid blanket fidelity bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the
Account(s) are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the
Company and/or the Account(s) that is reasonable and customary in
light of the Company's obligations under this Agreement. The aforesaid
includes coverage for larceny and embezzlement and shall be issued by
a reputable bonding company in an amount not less than $5 million. 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 Fund, the Underwriter and the Adviser in the
event that such coverage no longer applies.
2.12. The Fund, the Underwriter and Advisor represent that the Fund and
each Portfolio qualify as a "look through" entity under Treasury
Regulation 1.817-5(f) and they will notify the Company upon having a
reasonable basis for believing that this is not the case and, for so
long as he Company own or Portfolio shares they will make every effort
to so qualify.
ARTICLE III. Prospectuses, Reports to Shareholders and Proxy Statements; Voting
3.1. The Fund or its designee shall provide the Company with as many
printed copies of the Fund's current prospectus, offering memorandum and
statement of additional information as the Company may reasonably request. If
requested by the Company, in lieu of providing printed copies the Fund shall
provide camera-ready film or computer diskettes containing the Fund's prospectus
and statement of additional information, and such other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the prospectus, offering memorandum and/or statement of additional
information for the Fund is amended during the year) to have the prospectus or
other disclosure document for the Contracts and the Fund's prospectus (and
statement of additional information for the Fund and the statement of additional
information for the Registered Contracts) printed together in one document.
Alternatively, the Company may print the Fund's prospectus and/or its statement
of additional information in combination with other fund companies' prospectuses
and statements of additional information.
3.2. Except as provided in this Section 3.2, all expenses of preparing,
setting in type, printing and distributing Fund prospectuses and statements of
additional information shall be the expense of the Company. For prospectuses,
offering memorandums and statements of additional information provided by the
Company to its Contract owners who currently own shares of one or
6
more Portfolios ("Existing Contract Owners"), in order to update disclosure as
required by the 1933 Act and/or the 1940 Act, the cost of printing shall be
borne by the Fund. If the Company chooses to receive camera-ready film or
computer diskettes in lieu of receiving printed copies of the Fund's prospectus,
the Fund shall bear the cost of typesetting to provide the Fund's prospectus to
the Company in the format in which the Fund is accustomed to formatting
prospectuses, and the Company shall bear the expense of adjusting or changing
the format to conform with any of its prospectuses or other disclosure
documents. In such event, the Fund will reimburse the Company in an amount equal
to the product of "x" and "y", where "x" is the number of such disclosure
documents distributed to Existing Contract Owners and "y" is the Fund's per unit
cost of printing the Fund's prospectus. The same procedures shall be followed
with respect to the Fund's statement of additional information. The Company
agrees to provide the Fund or its designee with such information as may be
reasonably requested by the Fund to assure that the Fund's expenses do not
include the costs of printing, typesetting or distributing any prospectuses or
statements of additional information other than the costs of printing those
prospectuses or statements of additional information actually distributed to
Existing Contract Owners.
3.3. The statement of additional information of the Fund shall be
obtainable from the Fund, the Underwriter, the Company or such other person as
the Fund may designate.
3.4. The Fund, at its expense, shall provide the Company with copies of its
proxy statements, reports to shareholders, and other communications (except for
prospectuses and statements of additional information, which are covered in
Section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Existing Contract Owners. The Fund shall not pay any
costs of distributing such proxy materials, reports to shareholders and other
communications to prospective Contract owners.
3.5. If and to the extent required by law, the Company shall distribute all
proxy materials furnished by the Fund to Contract owners to whom voting
privileges are required to be extended and shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Portfolio shares in accordance with instructions
received from Contract owners; and
(iii) vote Portfolio shares for which no instructions have been
received in the same proportion as Portfolio shares 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 Portfolio shares held in any segregated asset account
in its own right, to the extent permitted by law. If the Company is required to
solicit voting instructions, the Fund and the Company shall follow the
procedures, and shall have the corresponding responsibilities, for the handling
of proxies and voting instruction solicitations, as set forth in Schedule C
attached hereto and incorporated herein by reference. Participating Insurance
Companies shall be responsible for
7
ensuring that each of their separate accounts participating in the Fund (and for
which the soliciting of voting instructions is required) calculates voting
privileges in a manner consistent with the standards set forth on Schedule C,
which standards will also be provided to the other Participating Insurance
Companies.
3.6. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the 1940
Act not to require such meetings) or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of the
0000 Xxx) as well as with Section 16(a) of the 1940 Act and, if and when
applicable, Section 16(b) of the 1940 Act. Further, the Fund will act in
accordance with the SEC's interpretation of the requirements of Section 16(a) of
the 1940 Act with respect to periodic elections of trustees and with whatever
rules the SEC may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material in
which the Fund, the Underwriter or the Adviser is named, at least ten (10)
Business Days prior to its use. No such material shall be used without the prior
approval of the Fund or its designee. The Fund shall use its reasonable best
efforts to review any such material as soon as practicable after receipt and no
later than ten (10) Business Days after receipt of such material.
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 or prospectus for the Fund shares, as
such registration statement or prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund which are in the
public domain or approved by the Fund for distribution to Fund shareholders, or
in sales literature or other promotional material approved by the Fund or its
designee, except with the permission of the Fund.
4.3. The Fund or its designee 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 and/or its Account(s) or
Contract(s) are named at least ten (10) Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to such
use within ten (10) Business Days after receipt of such material.
4.4. Neither the Fund, the Underwriter nor the Adviser shall give any
information or make any representations on behalf of the Company or concerning
the Company, each Account, or the Contracts, other than the information or
representations contained in a registration statement, prospectus, offering
memorandum or other disclosure document for the Contracts, as such documents may
be amended or supplemented from time to time, or in reports or proxy statements
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.
8
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares and are relevant to
the Company or the Contracts.
4.6. The Company will provide to the Fund, to the extent applicable, at
least one complete copy of all registration statements, prospectuses, statements
of additional information, offering memoranda or other disclosure documents,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to investment in
the Fund or the Portfolios under the Contracts.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following that
refer to the Fund or any affiliate of the Fund: advertisements (such as material
published, or designed for use in, a newspaper, magazine, or other periodical,
radio, television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, or other public media), sales literature (i.e., any
written communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, and registration statements, offering memoranda,
prospectuses, statements of additional information or other disclosure
documents, shareholder reports, and proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund 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
service plan and/or a plan pursuant to Rule 12b-1, then the Underwriter may make
payments to the Company or to the underwriter for the Contracts pursuant to such
plans if and in amounts agreed to by the Underwriter in writing.
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. Except as otherwise set forth in
Section 3.2 of this Agreement, the Fund shall bear the expenses for the cost of
registration and qualification of the Fund's shares, preparation and filing of
the Fund's prospectus and registration statement, proxy materials and reports,
setting the prospectus in type, setting in type and printing the proxy materials
and reports to shareholders, the preparation of all statements and notices
required by any federal or state law, and all taxes on the issuance or transfer
of the Fund's shares.
9
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, statement of additional information, proxy materials and reports to
owners of Contracts issued by the Company.
ARTICLE VI. Diversification
6.1. The Fund , the Underwriter and the Adviser will use its best efforts
to have the Fund and each Portfolio at all times comply with Section 817(h) of
the Code and Treasury Regulation 1.817-5, relating to the diversification
requirements for annuity, endowment, or life insurance contracts and any
amendments or other modifications to such Section or Regulations. In the event
the Fund ceases to so qualify, they will take reasonable steps to (a)
immediately notify the Company of such event and (b) make every effort to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5. The Fund agrees to provide the Company
with a certificate of compliance for each Fund no later than 30 day following
the end of each calendar quarter.
ARTICLE VII. Potential Conflicts
7.1. 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 contract owners; or (f) a decision by a Participating Insurance Company to
disregard the voting instructions of contract owners. The Fund shall promptly
inform the Company if the Board determines that an irreconcilable material
conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order 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 by the Company to
inform the Board whenever Contract owner voting instructions are disregarded.
The Company agrees that these responsibilities will be carried out with a view
only to the interests of Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their 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, up to and including: (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 whether such segregation should be implemented
10
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
policy 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. No charge or penalty will be imposed as a result of such withdrawal.
The Company agrees that it bears the responsibility to take remedial action in
the event of a Board determination of an irreconcilable material conflict and
the cost of such remedial action, and that these responsibilities will be
carried out with a view only to the interests of Contract owners.
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 affected Account's
investment in the Fund and terminate this Agreement with respect to such Account
(at the Company's expense); 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 members
of the Board. No charge or penalty will be imposed as a result of such
withdrawal. The Company agrees that it bears the responsibility to take remedial
action in the event of a Board determination of an irreconcilable material
conflict and the cost of such remedial action, and that these responsibilities
will be carried out with a view only to the interests of Contract owners.
7.5. For purposes of Sections 7.3 and 7.4 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 or 7.4 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.
7.6. 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 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 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;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3 and 7.4 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.
7.7. Each of the Company and the Adviser shall at least annually submit to
the Board such reports, materials or data as the Board may reasonably request so
that the Board may fully carry out the obligations imposed upon it by the
provisions hereof and in the Shared Funding Exemptive Order. Such reports,
materials and data shall be submitted more frequently if deemed appropriate by
the Board.
11
ARTICLE VIII. Indemnification
8.1. Indemnification by the Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund, the
Underwriter, the Adviser and each member of the Board and each officer and
employee of the Fund, and each director, officer and employee of the Underwriter
and the Adviser, and each person, if any, who controls the Fund, the Underwriter
or the Adviser within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" and individually, an "Indemnified Party," 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 reasonable legal and other expenses), to which the
Indemnified Parties may become subject under any statute or 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, prospectus, offering memorandum or other
disclosure document for the Contracts or contained in the
Contracts or sales or other promotional literature 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,
prospectus, offering memorandum or other disclosure document for
the Contracts or in the Contracts or sales or other promotional
literature (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 sales literature of the
Fund not supplied by the Company, or persons under its control
and other than statements or representations authorized by the
Fund, the Underwriter or the Adviser) or unlawful 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 or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature 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
13
such a statement or omission was made in reliance upon and in
conformity with 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.
Each of paragraphs (i) through (v) above is limited by and in accordance with
the provisions of Sections 8.1(b) and 8.1(c) below.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an 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 or duties under this Agreement.
8.1(c). The Company 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 Company 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 otherwise than on
account of this indemnification provision. 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. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the 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.
8.1(d). The Fund, the Underwriter or the Adviser, as applicable, will
promptly notify the Company of the commencement of any litigation or proceedings
against an Indemnified Party in connection with this Agreement, the issuance or
sale of the Fund shares or the Contracts, or the operation of the Fund.
8.2. Indemnification by the Underwriter
14
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors, officers and employees, 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 8.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Underwriter) or litigation (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under any statute
or 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 shares of a Portfolio 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 or prospectus or sales literature 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 Fund, the
Underwriter or the Adviser by or on behalf of the Company for use
in the registration statement or prospectus for the Fund or in
sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Portfolio
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in
registration statement, prospectus, offering memorandum, other
disclosure document or sales or other promotional literature for
the Contracts not supplied by the Fund or the Underwriter or
persons under their respective control and other than statements
or representations authorized by the Company) or unlawful conduct
of the Fund or the Underwriter or persons under their respective
control, with respect to the sale or distribution of the
Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, offering memorandum, other disclosure
document or sales or other promotional 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 Fund or the Underwriter; or
(iv) arise as a result of any failure by the Underwriter to provide
the services and furnish the materials under the terms of this
Agreement; or
15
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter or the
Fund in this Agreement or arise out of or result from any other
material breach of this Agreement by the Underwriter.
Each of paragraphs (i) through (v) above is limited by and in accordance with
the provisions of Sections 8.2(b) and 8.2(c) below.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an 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.
8.2(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 any liability which it 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 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 fees and 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.
8.2(d). The Company will promptly notify the Underwriter of the
commencement of any litigation or proceedings against an Indemnified Party in
connection with this Agreement, the issuance or sale of the Contracts or the
operation of the Account(s).
8.3. Indemnification by the Adviser
8.3(a). The Adviser agrees to indemnify and hold harmless the Company and
each of its directors, officers and employees, 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 8.3) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Adviser) or litigation (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under any statute
or regulation, at common law or otherwise, insofar as such
16
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of shares of a Portfolio
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 or prospectus or sales literature 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 Fund, the
Underwriter or the Adviser by or on behalf of the Company for use
in the registration statement or prospectus for the Fund or in
sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Portfolio
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, offering memorandum, other
disclosure document or sales or other promotional literature for
the Contracts not supplied by the Fund or the Adviser or persons
under their respective control and other than statements or
representations authorized by the Company) or unlawful conduct of
the Fund or the Adviser or persons under their respective
control, with respect to the sale or distribution of the
Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, offering memorandum, other disclosure
document or sales or other promotional 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 Fund or the Adviser; or
(iv) arise as a result of any failure by the Adviser or the Fund 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 Adviser or the Fund in
this Agreement or arise out of or result from any other material
breach of this Agreement by the Adviser.
Each of paragraphs (i) through (v) above is limited by and in accordance with
the provisions of Sections 8.3(b) and 8.3(c) below.
17
8.3(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an 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.
8.3(c). The Adviser 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 Adviser 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 Adviser of any
such claim shall not relieve the Adviser from any liability which it 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 Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Adviser to such party of the Adviser'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 Adviser 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.
8.3(d). The Company will promptly notify the Adviser of the commencement of
any litigation or proceedings against an Indemnified Party in connection with
this Agreement, the issuance or sale of the Contracts or the operation of the
Account(s).
ARTICLE IX. 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 Delaware.
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.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser with respect to any Portfolio based upon
the Company's determination that
18
shares of such Portfolio are not reasonably available to meet the
requirements of the Contracts; provided, however, that said
termination shall become effective ten (10) days after receipt of
notice unless the Fund makes available a sufficient number of shares
of the Portfolio to reasonably meet the requirements of the Contracts
within said ten (10) day period; or
(c) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser with respect to any Portfolio in the event
that any of the Portfolio's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such law
precludes the use of such shares as the underlying investment media of
the Contracts issued or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser with respect to any Portfolio in the event
that such Portfolio ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code or under any successor or
similar provision; or
(e) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser with respect to any Portfolio in the event
that such Portfolio fails to meet the diversification requirements
specified in Article VI hereof; or ceases to qualify as "look through"
entity under Treasury Regulaiton 1.817-5(f) or
(f) termination by the Fund, the Underwriter or the Adviser by written
notice to the Company if the Fund, the Underwriter or the Adviser, as
applicable, shall determine, in its sole judgment exercised in good
faith, that the Company and/or its affiliated companies has suffered a
material adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(g) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser, if the Company shall determine, in its
sole judgment exercised in good faith, that the Fund, the Underwriter
or the Adviser has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity; or
(h) termination by the Fund, the Underwriter or the Adviser by written
notice to the Company, if the Company gives the Fund, the Underwriter
and the Adviser the written notice specified in Section 1.5 hereof and
at the time such notice was given there was no notice of termination
outstanding under any other provision of this Agreement; provided,
however, any termination under this Section 10.1(h) shall be effective
forty-five (45) days after the notice specified in Section 1.5 was
given; or
(i) termination by any party to this Agreement upon another party's
material breach of any provision of this Agreement.
19
10.2. Notwithstanding any termination of this Agreement with respect to a
Portfolio, the Fund and the Underwriter shall at the option of the Company
continue to make available additional shares of the Portfolio, pursuant to the
terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (the "Existing Contracts"),
unless such further sale of Portfolio shares is proscribed by law, regulation or
applicable regulatory authority, or unless the Board determines that liquidation
of the Portfolio following termination of this Agreement is in the best
interests of the Portfolio. Specifically, subject to the foregoing, the owners
of the Existing Contracts shall be permitted to direct reallocation of
investments in the Portfolio, redemption of investments in the Portfolio and/or
investment in the Portfolio upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 10.2 shall not
apply to any terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
Xxx Xxxxxx Life Investment Trust
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: President
If to the Underwriter:
Xxx Xxxxxx Funds Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: President
If to the Adviser:
Xxx Xxxxxx Asset Management Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: President
If to the Company:
Metropolitan Life
0 XxxXxxx Xxxxx
20
00-00 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Counsel
With Copy to :
Metropolitan Life
000X XX Xxxxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx K Model, Director
ARTICLE XII. Miscellaneous
12.1. All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund, as neither the
Board, officers, agents or shareholders of the Fund assume any personal
liability for obligations entered into on behalf of the Fund. Each of the
Company, the Underwriter and the Adviser acknowledges and agrees that, as
provided by the Fund's Agreement and Declaration of Trust, the shareholders,
trustees, officers, employees and other agents of the Fund and the Portfolios
shall not personally be bound by or be liable for matters set forth hereunder,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim hereunder. A Certificate of Trust referring to the Fund's
Agreement and Declaration of Trust is on file with the Secretary of State of
Delaware.
12.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential any "non-public
personal information" about any "consumer" of another party (as such terms are
defined in SEC Regulation S-P) and any other information reasonably identified
as confidential in writing by another party ("Confidential Information"). Each
party agrees not to disclose, disseminate or utilize another party's
Confidential Information except: (i) as permitted by this Agreement, (ii) upon
the written consent of the other party, (iii) where the Confidential Information
comes into the public domain through no fault of the party receiving the
information, or (iv) as otherwise required or permitted under applicable law.
12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
National Association of Securities Dealers 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
21
Agreement or the transactions contemplated hereby. Notwithstanding the
generality of the foregoing, each party hereto further agrees to furnish state
insurance authorities with any information or reports in connection with
services provided under this Agreement which such authorities may request in
order to ascertain whether the insurance operations of the Company are being
conducted in a manner consistent with applicable law and regulations.
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. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Adviser may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Adviser, if such assignee is duly licensed and registered to
perform the obligations of the Adviser under this Agreement.
12.9. If requested by the Fund, the Underwriter or the Adviser, the Company
shall furnish, or shall cause to be furnished, to the requesting party or its
designee copies of the following documents:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon as practical and in
any event within ninety (90) days after the end of each fiscal year;
(b) the Company's quarterly statements (prepared under statutory
accounting principles and GAAP, if any), as soon as practical and in
any event within forty-five (45) days after the end of each quarterly
period;
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial reports of
the Company filed with the SEC or any state insurance regulator, as
soon as practical after the filing thereof; and
(e) any other report submitted to the Company by independent accountants
in connection with any annual, interim or special audit made by them
of the books of the Company, as soon as practical after the receipt
thereof.
12.10. Unless otherwise specifically provided in this Agreement, no
provision of this Agreement may be amended or modified in any manner except by a
written agreement executed by all parties.
22
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the date specified above.
Metropolitan Life Insurance Company
By:
-----------------------------------
Name:
Title:
XXX XXXXXX LIFE INVESTMENT TRUST
By:
-----------------------------------
Name:
Title:
XXX XXXXXX FUNDS INC.
By:
-----------------------------------
Name:
Title:
XXX XXXXXX ASSET MANAGEMENT INC.
23
By:
-----------------------------------
Name:
Title:
24
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Form Number and Name of
Date Established by Board of Directors Contract Funded by Separate Account
-------------------------------------- -----------------------------------
Registered Account(s): Registered Contract(s):
Separate Account UL, 12/1988 MetFlex
Unregistered Account(s): Unregistered Contract(s):
Separate Account DCVL,11/2003] PPVL - Group and Individual
SCHEDULE B
PORTFOLIOS OF THE XXX XXXXXX LIFE INVESTMENT TRUST
AVAILABLE UNDER THIS AGREEMENT
[INSERT] - [Class I/II Shares]
Separate Account DCVL
Xxx Xxxxxx LIT Government Portfolio - Class I
Separate Account UL
Van Kmpen LIT Government Portfolio - Class II
B-1
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. 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.
.. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from Contract owners and to facilitate the establishment of
tabulation procedures. At this time the Fund will inform the Company of the
Record, Mailing and Meeting dates. This will be done verbally approximately
two months before the shareholder meeting.
.. 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
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call in
the number of Customers to the Fund, as soon as possible, but no later than
two weeks after the Record Date.
.. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting instruction
solicitation material. The Fund will provide the last Annual Report to the
Company pursuant to the terms of Section 3.4 of the Participation Agreement
to which this Schedule relates.
.. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Fund or its
affiliate 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:
. name (legal name as found on account registration)
. address
. fund or account number
. coding to state number of units
. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund).
C-2
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
.. During this time, the Fund will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices
and statements will be sent to Company for insertion into envelopes
(envelopes and return envelopes are provided and paid for by the Company).
Contents of envelope sent to Customers by the Company will include:
. Voting Instruction Card(s)
. One proxy notice and statement (one document)
. return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
. "urge buckslip" - optional, but recommended (this is a small, single
sheet of paper that requests Customers to vote as quickly as possible
and that their vote is important; one copy will be supplied by the
Fund.)
. cover letter - optional; supplied by Company and reviewed and approved
in advance by the Fund
.. The above contents should be received by the Company approximately 3-5
Business Days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Fund.
.. Package mailed by the Company.
* The Fund 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
shareholder meeting, counting backwards.
.. 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 data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Fund in the past.
.. Signatures on Card checked against legal name on account registration that
was printed on the Card.
Note: For Example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
C-3
.. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards are usually
remedied individually.
.. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
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.
.. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) The Fund must review
and approve tabulation format.
.. Final tabulation in shares is verbally given by the Company to the Fund on
the morning of the shareholder meeting not later than 10:00 a.m. Eastern
time. The Fund may request an earlier deadline if reasonable and if
required to calculate the vote in time for the shareholder meeting.
.. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Fund will provide a standard form for each Certification.
.. The Company 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 Fund will be
permitted reasonable access to such Cards.
.. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
C-4
PARTICIPATION AGREEMENT
Among
XXX XXXXXX LIFE INVESTMENTS TRUST,
XXX XXXXXX FUNDS INC.,
XXX XXXXXX ASSET MANAGEMENT INC.
and
Metropolitan Life Insurance Company
Dated as of
April 30, 2004_
TABLE OF CONTENTS
ARTICLE I. Purchase and Redemption of Fund Shares.............................2
ARTICLE II. Representations and Warranties....................................4
ARTICLE III. Prospectuses, Reports to Shareholders and
Proxy Statements; Voting...................................................6
ARTICLE IV. Sales Material and Information....................................8
ARTICLE V. Fees and Expenses..................................................9
ARTICLE VI. Diversification..................................................10
ARTICLE VIII. Indemnification................................................13
ARTICLE IX. Applicable Law...................................................18
ARTICLE X. Termination.......................................................18
ARTICLE XI. Notices..........................................................20
ARTICLE XII. Miscellaneous...................................................21
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS...................................A-1
PORTFOLIOS OF THE XXX XXXXXX LIFE INVESTMENT TRUST
AVAILABLE UNDER THIS AGREEMENT............................................B-1
PROXY VOTING PROCEDURES......................................................C-2
PARTICIPATION AGREEMENT
By and Among
XXXXX FARGO VARIABLE TRUST
And
Metropolitan Life on Behalf of Separate Account DCVL and Separate Account UL
And
XXXXXXXX INC.
THIS AGREEMENT, made and entered into this 30th day of April, 2004, by and
among Metropolitan Life Insurance Company, a New York corporation (the
"Company"), on its own behalf and on behalf of each separate account of the
Company named in Exhibit A to this Agreement, as may be amended from time to
time (each separate account, a "Separate Account"), and Xxxxx Fargo Variable
Trust, an open-end diversified management investment company organized under the
laws of the State of Delaware (the "Trust"), and Xxxxxxxx Inc., an Arkansas
corporation (the "Underwriter").
WHEREAS, the Trust engages in business as an open-end diversified,
management investment company and was established for the purpose of serving as
the investment vehicle for separate accounts established for variable life
insurance contracts and variable annuity contracts to be offered by insurance
companies which have entered into participation agreements substantially similar
to this Agreement ("Participating Insurance Companies"); and
WHEREAS, beneficial interests in the Trust are divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets (each, a "Fund"); and
WHEREAS, an order from the U.S. Securities and Exchange Commission (the
"SEC" or "Commission"), dated September 28, 1998 (File No. 812-11158), grants
Participating Insurance Companies and variable annuity separate accounts and
variable life insurance separate accounts relief from the provisions of Sections
9(a), 13(a), 15(a) and 15(b) of the Investment Company Act of 1940, as amended
(the "1940 Act") 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 separate accounts and variable life insurance separate accounts
of both affiliated and unaffiliated Participating Insurance Companies and
qualified pension and retirement plans ("Mixed and Shared Funding Order"), and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has registered or will if required by law register
certain variable annuity and variable life insurance contracts under the 1933
Act and named in Exhibit A to this Agreement, as it may be amended from time to
time (the "Contracts"); and
WHEREAS, the Separate Accounts are duly organized, validly existing
segregated asset accounts, established by resolution of the Board of Directors
of the Company under the insurance laws of the State of New York, to set aside
and invest assets attributable to the Contracts; and
-2-
WHEREAS, the Company has registered where required by law the Separate
Accounts as unit investment trusts under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD");
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds named in
Exhibit B on behalf of the Separate Accounts to fund the Contracts, and the
Underwriter is authorized to sell such shares to unit investment trusts such as
the Separate Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Trust, and the Underwriter agree as follows:
ARTICLE I Sale of Trust Shares
1.1. The Underwriter agrees to sell to the Company those shares of the Trust
which the Company orders on behalf of the Separate Accounts, executing such
orders on a daily basis at the net asset value next computed after receipt
and acceptance by the Trust or its designee of the order for the shares of
the Trust. For purposes of this Section 1.1, the Company shall be the
designee of the Trust for receipt of such orders from each Separate Account
and receipt by such designee shall constitute receipt by the Trust;
provided that (1) the Company's orders for Trust shares on any day are
based exclusively on orders from owners of Contracts received by the
Company before 4:00 pm Eastern Time on that day, and (2) the Trust receives
notice of such order from the Company by 9:00 am Eastern Time on the next
following Business Day. "Business Day" shall mean any day on
-3-
which the New York Stock Exchange is open for trading and on which the
relevant Fund calculates its net asset value.
1.2. The Trust agrees to make its shares available indefinitely for purchase at
the applicable net asset value per share by Participating Insurance
Companies and their separate accounts on those days on which the Trust
calculates its net asset value pursuant to rules of the SEC; provided,
however, that the Board of Trustees of the Trust (hereinafter the
"Trustees") may refuse to sell shares of any Fund to any person, or suspend
or terminate the offering of shares of any Fund, 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, necessary in
the best interests of the shareholders of any Fund. For purposes of this
Section 1.2, the Trust's policy, as amended from time to time, regarding
"market timing" (as defined in such policy) shall be enforced by the
Company and that disclosure of the substance of the policy shall be made by
the Company in the prospectuses for the Contracts.
1.3. The Trust and the Underwriter agree that shares of the Trust will be sold
only to Participating Insurance Companies and their separate accounts, and
to qualified pension and retirement plans. No shares of the Trust will be
sold to the general public.
1.4. The Trust and the Underwriter will not sell Trust shares to any insurance
company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII, and Section 2.6 of
Article II of this Agreement are in effect to govern such sales.
-4-
1.5. The Trust will not accept a purchase order from qualified pension or
retirement plan if such purchase would make the plan shareholder an owner
of 10 percent or more of the assets of a Fund unless such plan executes an
agreement with the Trust governing participation in such Fund that includes
the conditions set forth herein to the extent applicable. A qualified
pension or retirement plan will execute an application containing an
acknowledgment of this condition at the time of its initial purchase of
shares of any Fund. Provided, however, that shares will not be sold to
qualified pension and retirement plans unless the Trust adopts procedures
reasonably designed to provide assurances that any such plan is in fact tax
qualified at the time shares are purchased and when held.
1.6. The Trust agrees to redeem for cash, upon the Company's request, any full
or fractional shares of the Trust held by the Company, executing such
requests on a daily basis at the net asset value next computed after
receipt and acceptance by the Trust or its designee of the request for
redemption. For purposes of this Section 1.6, the Company shall be the
designee of the Trust for receipt of requests for redemption from each
Separate Account and receipt by such designee shall constitute receipt by
the Trust; provided that (1) the Company's orders for redemption of Trust
shares on any day are based exclusively on orders from owners of Contracts
received by the Company before 4:00 pm Eastern Time on that day, and (2)
the Trust receives notice of such order from the Company by 9:00 am Eastern
Time on the next following Business Day. Payment shall be in federal funds
transmitted by wire to the Company's account as designated by the Company
in writing from time to time.
1.7. Each purchase, redemption, and exchange order placed by the Company shall
be placed separately for each Fund and shall not be netted with respect to
any Fund. However, with
-5-
respect to payment of the purchase price by the Company and of redemption
proceeds by the Trust, the Company and the Trust shall net purchase and
redemption orders with respect to each Fund and shall transmit one net
payment for all Funds in accordance with Section 1.8.
1.8. The Company agrees that purchases and redemptions of Fund shares offered by
the then current prospectus of the Fund shall be made in accordance with
the provisions of such prospectus. The Company agrees that all net amounts
available under the variable life insurance contracts with the form
number(s) which are listed on Schedule A attached hereto and incorporated
herein by this reference, as such Schedule A may be amended from time to
time hereafter by mutual written agreement of all the parties hereto (the
"Contracts") shall be invested in the Funds, in such other Funds managed by
Xxxxx Fargo Bank as may be mutually agreed to in writing by the parties
hereto, or in the Company's general account, provided that such amounts may
also be invested in an investment company other than the Trust.
1.9. In the event of net purchase, the Company shall pay for shares by 2:00 p.m.
Eastern Time on the next Business Day after an order to purchase the Shares
is deemed to be received in accordance with the provisions of Section 1.1
hereof. In the event of net redemptions, the Trust shall pay the redemption
proceeds in accordance with the terms of the then-current prospectus for
the Trust. All such payments shall be in federal funds transmitted by wire.
For purposes of Section 2.3 and Section 2.9, 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 Fund.
-6-
1.10. Issuance and transfer of the Trust's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Separate
Account. Purchase and redemption orders for Trust shares will be recorded
in an appropriate title for each Separate Account or the appropriate
subaccount of each Separate Account.
1.11. The Trust shall furnish notice as soon as reasonably practicable to the
Company of any income, dividends, or capital gain distributions payable on
the Trust's shares. The Company hereby elects to receive all such dividends
and distributions as are payable on the Fund shares in the form of
additional shares of that Fund. The Company reserves the right to revoke
this election and to receive all such dividends and distributions in cash.
The Trust shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.12. The Trust shall make the net asset value per share for each Fund 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 5:30 p.m. Pacific Time,
each business day.
1.13. The Company agrees to comply with all applicable laws and regulations
designed to prevent money "laundering," and if required by such laws or
regulations, to share with the Trust information about individuals,
entities, organizations and countries suspected of possible terrorist or
money "laundering" activities in accordance with Section 314(b) of the USA
Patriot Act. In particular, the Company agrees that: (a) as part of
processing an application for a Contract it will verify the identity of
applicants and, if an applicant is not a natural person, will verify the
identity of prospective principal and beneficial owners submitting an
application for a Contract, (b) as part of its ongoing compliance
-7-
with the USA Patriot Act it will from time to time reverify the identity of
Contract owners, including the identity of principal and beneficial owners
of Contracts held by non-natural persons, (c) as part of processing an
application for a Contract it will verify that no applicant, including
prospective principal or beneficial Contract owners is a "specially
designated national" or a person from an embargoed or "blocked" country as
indicated by the Office of Foreign Asset Control ("OFAC") list of such
persons, (d) as part of its ongoing compliance with the USA Patriot Act it
will from time to time reverify that no Contract owner, including an
principal or beneficial Contract owner, is a "specially designated a
national" or a person from an embargoed or "blocked" country as indicated
by the OFAC list of such persons, (e) it will ensure that money tendered to
the Trust as payment for Shares did not originate with a bank lacking a
physical place of business (i.e., a "shell" bank) or from a country or
territory named on the list of high-risk or non-cooperating countries or
jurisdictions published by the Financial Action Task Force, and (f) if any
of (a) through (e) become untrue, then the Trust or its agent(s) in
compliance with the USA Patriot Act or Bank Secrecy Act, may seek authority
to block one or more Contract owner accounts with the Company or one or
more of the Company's accounts with the Trust.
1.14. The Trust agrees to comply with all applicable laws and regulations
designed to prevent money "laundering," and if required by such laws or
regulations, to share with the Company information about individuals,
entities, organizations and countries suspected of possible terrorist or
money "laundering" activities in accordance with Section 314(b) of the USA
Patriot Act.
ARTICLE II Representations and Warranties
-8-
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act, unless exempt therefrom, and that the
Contracts will be issued and sold in compliance with all applicable federal
and state laws and that the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements. The
Company further represents and warrants that: (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it
has legally and validly established each Separate Account as a segregated
asset account under applicable state law and has registered each Separate
Account as a unit investment trust in accordance with the provisions of the
1940 Act, unless exempt therefrom, to serve as segregated investment
accounts for the Contracts; and (c) it will maintain such registration, if
required, for so long as any Contracts are outstanding. The Company shall
amend any registration statement under the 1933 Act for the Contracts and
any registration statement under the 1940 Act for the Separate Accounts
from time to time as required in order to effect the continuous offering of
the Contracts or as may otherwise be required by applicable law. The
Company shall register and qualify the Contracts for sale in accordance
with the securities laws of the various states only if, and to the extent,
deemed necessary by the Company.
2.2. Subject to Section 2.12 and Article VI hereof, the Company represents that:
(a) the Contracts are currently and at the time of issuance will be treated
as life insurance, endowment, or annuity contracts under applicable
provisions of the Internal Revenue Code, (b) for so long as the Separate
Accounts hold shares of the Trust it will make every effort to maintain
such treatment, (c) it will make every effort to comply with any applicable
requirements of the Code or Treasury Regulations as they apply to the
-9-
Separate Accounts or the Contracts (d) it will notify the Trust and the
Underwriter immediately upon having a reasonable basis for believing that
the Contracts will not be treated as life insurance, endowment, or annuity
contracts under applicable provisions of the Code, (e) it will notify the
Trust and the Underwriter immediately upon having a reasonable basis for
believing that the failure of the Company, the Separate Accounts or the
Contracts to comply with any applicable requirements of the Code or
Treasury Regulations will render a Fund ineligible, or jeopardize a Fund's
eligibility, for "look-through" treatment under Treasury Regulation
1.817-5(f).
2.3. The Company represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities dealing with
the money and/or securities of the Trust are covered by a blanket fidelity
bond or similar coverage in an amount not less than $5 million. The
aforesaid includes coverage for larceny and embezzlement and is issued by a
reputable bonding company. The Company agrees that any amounts received
under such bond in connection with claims that derive from arrangements
described in this Agreement will be held by the Company for the benefit of
the Trust. The Company agrees 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.
2.4. The Trust represents and warrants that Trust shares sold pursuant to this
Agreement shall be registered under the 1933 Act and duly authorized for
issuance in accordance with applicable law, and that the Trust is and shall
remain registered under the 1940 Act for as long as the Trust shares are
sold. The Trust shall amend the registration statement for its shares under
the 1933 and the 1940 Acts from time to time as required in order to effect
-10-
the continuous offering of its shares. The Trust 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 Trust or the Underwriter.
2.5. The Trust represents that the Trust and each Fund is currently qualified as
a Regulated Investment Company under Subchapter M of the Internal Revenue
Code, and that it will make every effort to maintain such qualification
(under Subchapter M or any successor or similar provision).
2.6. The Trust makes no representations as to whether any aspect of its
operations, including but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the
various states, except that the Trust represents that it is and shall at
all times remain in compliance with the laws of the state of Delaware to
the extent required to perform this Agreement.
2.7. The Trust represents and warrants that to the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act,
the Trust undertakes to have its Board of Trustees, a majority of whom are
not interested persons of the Trust, formulate and approve any plan under
Rule 12b-1 ("Rule 12b-1 Plan") to finance distribution expenses. The Trust
shall notify the Company immediately upon determining to finance
distribution expenses pursuant to Rule 12b-1.
2.8. The Trust represents that it is lawfully organized and validly existing
under the laws of Delaware and that it does and will comply with applicable
provisions of the 0000 Xxx.
2.9. The Trust represents and warrants that it and all of its trustees,
officers, employees and other individuals/entities having access to the
funds and/or securities of the Trust are and continue to be at all times
covered by a blanket fidelity bond or similar coverage for the
-11-
benefit of the Trust in an amount not less than the minimal coverage as
required currently by Rule 17g-1 of the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid bond includes coverage
for larceny and embezzlement and is issued by a reputable bonding company.
2.10. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Trust's
shares in accordance with all applicable federal and state securities laws,
including without limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.11. The Underwriter represents and warrants that the Trust's investment
manager, Xxxxx Fargo Bank, is exempt from registration as an investment
adviser under all applicable federal and state securities laws and that the
investment manager will perform its obligations to the Trust in accordance
with any applicable state and federal securities laws.
2.12. The Trust and the Underwriter represents (I) that the Trust and each Fund
qualify as a "look-through" entity with the meaning of Treasury Regulation
Section 1.817-5(f) entity, (ii) it will notify the Company upon having
reasonable basis for believing that the Trust or any Fund does not qualify
for "look-through" treatment under Treasury Regulation Section 1.817-5(f)
and for so long as the Company owns shares, it will make every effort to
maintain such look-through treatment.
ARTICLE III Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company, at the Company's expense, with
as many copies of the Trust's current prospectus as the Company may
reasonably request. If
-12-
requested by the Company in lieu thereof, the Trust shall provide such
documentation including a final copy of a current prospectus set in type at
the Trust's expense and other assistance as is reasonably necessary in
order for the Company at least annually (or more frequently if the Trust's
prospectus is amended more frequently) to have the new prospectus for the
Contracts and the Trust's new prospectus printed together in one document;
in such case at the Company's expense.
3.2. The Trust's prospectus shall state that the statement of additional
information for the Trust is available from the Underwriter (or, in the
Trust's discretion, the Prospectus shall state that such statement is
available from the Trust).
3.3. The Trust, at its expense, shall provide the Company with copies of its
proxy material, if any, reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require and
the Company shall bear the costs of distributing them to existing Contract
owners or participants.
3.4. The Trust hereby notifies the Company that it is appropriate to include in
the prospectuses or offering memoranda or other disclosure document
pursuant to which the Contracts are offered disclosure regarding the
potential risks of mixed and shared funding.
3.5. To the extent required by law the Company shall:
(1) solicit voting instructions from Contract owners or
participants;
(2) vote the Trust shares held in each Separate Account in
accordance with instructions received from Contract owners
or participants; and
(3) vote Trust shares held in each Separate Account for which no
timely instructions have been received, in the same
proportion as
-13-
Trust shares of such Fund for which instructions have been
received from the Company's Contract owners or participants;
for so long as and to the extent that the 1940 Act requires 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. Participating Insurance Companies
shall be responsible for assuring that each of their separate accounts
participating in the Trust calculates voting privileges in a manner
consistent with other Participating Insurance Companies and as required by
the Mixed and Shared Funding Order. The Trust will notify the Company of
any changes of interpretation or amendment to the Mixed and Shared Funding
Order.
3.6. The Trust will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular, the Trust will either provide for
annual meetings (except to the extent that the Commission may interpret
Section 16 of the 1940 Act not to require such meetings) or comply with
Section 16(c) of the 1940 Act (although the Trust is not one of the trusts
described in Section 16(c) of that Act) as well as with Sections 16(a) and,
if and when applicable, 16(b) of the 1940 Act. Further, the Trust will act
in accordance with the Commission's interpretation of the requirements of
Section 16(a) with respect to periodic elections of Trustees and with
whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Trust or
the Underwriter, each piece of sales literature or other promotional
material in which the Trust or the Trust's investment manager, sub-advisers
or Underwriter is named, at least
-14-
five business days prior to its use. No such material shall be used if the
Trust or the Underwriter reasonably objects in writing to such use within
five business days after receipt of such material.
4.2. The Company represents and agrees that sales literature for the Contracts
prepared by the Company or its affiliates will be consistent with every
law, rule, and regulation of any regulatory agency or self-regulatory
agency that applies to the Contracts or to the sale of the Contracts,
including, but not limited to, NASD Conduct Rule 2210 and IM-2210-2
thereunder.
4.3. The Company shall not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust in connection
with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for
the Trust shares as such registration statement and prospectus may be
amended or supplemented from time to time, or in reports or proxy
statements for the Trust, or in sales literature or other promotional
material approved by the Trust or by the Underwriter, except with the
permission of the Trust or the Underwriter. The Trust and the Underwriter
agree to respond to any request for approval on a prompt and timely basis.
The Company shall adopt and implement procedures reasonably designed to
ensure that information concerning the Trust, the Underwriter, or any of
their affiliates which is intended for use by brokers or agents selling the
Contracts (i.e., information that is not intended for distribution to
Contract owners or prospective Contract owners) is so used, and neither the
Trust, the Underwriter, nor any of their affiliates shall be liable for any
losses, damages, or expenses relating to the improper use of such broker
only materials by agents of the Company or its affiliates who are
unaffiliated with the Trust or
-15-
the Underwriter. The parties hereto agree that this Section 4.3 is not
intended to designate nor otherwise imply that the Company is an
underwriter or distributor of the Trust's shares.
4.4. The Trust or the Underwriter 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, its Separate Account, or the
Contracts are named, at least five business days prior to its use. No such
material shall be used if the Company reasonably objects in writing to such
use within five business days after receipt of such material.
4.5. The Trust represents and agrees that sales literature for the Trust
prepared by the Trust or its affiliates in connection with the sale of the
Contracts will be consistent with every law, rule, and Regulation of any
regulatory agency or self regulatory agency that applies to the Trust or to
the sale of Trust shares, including, but not limited to, NASD Conduct Rule
2210 and IM-2210-2 thereunder.
4.6. The Trust and the Underwriter shall not give any information or make any
representations on behalf of the Company or concerning the Company, each
Separate 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 Separate
Account which are in the public domain or approved by the Company for
distribution to Contract owners or participants, or in sales literature or
other promotional material approved by the Company, except with the
permission of the Company. The Company agrees to respond to any request for
approval on a prompt and timely basis. The Trust and the Underwriter shall
xxxx information produced by or on
-16-
behalf of the Trust "FOR BROKER USE ONLY" which is intended for use by
brokers or agents selling the Contracts (i.e., information that is not
intended for distribution to Contract owners or prospective Contract
owners), and neither the Company nor any of its affiliates shall be liable
for any losses, damages, or expenses arising on account of the use by
brokers of such information with third parties in the event that is not so
marked.
4.7. The Trust will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Trust
or its shares, contemporaneously with the filing of such document with the
SEC or other regulatory authorities.
4.8. The Company will provide to the Trust at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no action letters, and all amendments to any of the above,
that relate to the Contracts or each Separate Account, contemporaneously
with the filing of such document with the SEC or other regulatory
authorities. The Company shall promptly inform the Trust of the results of
any examination by the SEC (or other regulatory authorities) that relates
to the Contracts, and the Company shall provide the Trust with a copy of
relevant portions of any "deficiency letter" or other correspondence or
written report regarding any such examination.
4.9. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such
as material published, or designed for
-17-
use in, a newspaper, magazine, or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards, motion
pictures, or other public media), sales literature (i.e., any written
communication distributed or made generally available to customers or the
public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports,
and proxy materials and any other material constituting sales literature or
advertising under NASD Conduct Rules, the 1940 Act or the 1933 Act.
ARTICLE V Fees and Expenses
5.1. The Trust and Underwriter shall pay no fee or other compensation to the
Company under this Agreement, except subject to a Rule 12b-1 Plan to
finance distribution expenses, in which case, subject to obtaining any
required exemptive orders or other regulatory approvals, the Underwriter
may make payments to the Company or to the underwriter for the Contracts if
and in amounts agreed to by the Underwriter in writing. Each party,
however, shall, in accordance with the allocation of expenses specified in
this Agreement, reimburse other parties for expenses initially paid by one
party but allocated to another party. In addition, nothing herein shall
prevent the parties hereto from otherwise agreeing to perform, and
arranging for appropriate compensation for, other services relating to the
Trust and/or to the Separate Accounts.
5.2. All expenses incident to performance by the Trust of this Agreement shall
be paid by the Trust to the extent permitted by law. All Trust shares will
be duly authorized for
-18-
issuance and registered in accordance with applicable federal law and to
the extent deemed advisable by the Trust, in accordance with applicable
state law, prior to sale. The Trust shall bear the expenses for the cost of
registration and qualification of the Trust's shares, preparation and
filing of the Trust's prospectus and registration statement, Trust proxy
materials and reports, printing proxy materials and annual reports for
existing Contract owners, setting in type the Trust's prospectuses, the
preparation of all statements and notices required by any federal or state
law, all taxes on the issuance or transfer of the Trust's shares, and any
expenses permitted to be paid or assumed by the Trust pursuant to any Rule
12b-1 Plan under the 1940 Act duly adopted by the Trust.
5.3. The Company shall bear the expenses of printing and distributing the Trust
prospectuses and proxy statements and shareholder reports. The Company
shall bear all expenses associated with the registration, qualification,
and filing of the Contracts under applicable federal securities and state
insurance laws; the cost of preparing, printing, and distributing the
Contracts' prospectuses and statements of additional information; and the
cost of printing and distributing annual individual account statements for
Contract owners as required by state insurance laws.
-19-
ARTICLE VI Diversification
6.1. The Trust represents and warrants that the Trust and each Fund will at all
times invest it's assets in such a manner as to ensure that the Contracts
will be treated as variable contracts under the Internal Revenue Code and
the regulations issued thereunder. Without limiting the scope of the
foregoing, the Trust will comply with Section 817(h) of the Internal
Revenue Code and Treasury Regulation 1. 817-5, relating to the
diversification requirements for variable annuity, endowment, or life
insurance contracts and any amendments or other modifications to such
Section or Regulations or successors thereto. The Trust agrees to provide
the Company with a certificate of compliance for each Fund of the Trust
with Section 817(h) of the Code, and such certificate will be sent to the
Company no later than thirty days following the end of each calendar
quarter.
ARTICLE VII Potential Conflicts
7.1. If and to the extent that the Trust engages in mixed and shared funding as
contemplated by exemptive relief provided by the SEC and applicable to the
Trust, this Article VII shall apply.
7.2. The Board of Trustees of the Trust (the "Trust Board") will monitor the
Trust for the existence of any material irreconcilable conflict among the
interests of the Contract owners of all separate accounts investing in the
Trust. A material irreconcilable 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
-20-
manner in which the investments of any Fund are being managed; (e) a
difference in voting instructions given by variable annuity contract
owners, variable life insurance contract owners, and trustees of qualified
pension or retirement plans; (f) a decision by a Participating Insurance
Company to disregard the voting instructions of Contract owners; or (g) if
applicable, a decision by a qualified pension or retirement plan to
disregard the voting instructions of plan participants. The Trust Board
shall promptly inform the Company if it determines that a material
irreconcilable conflict exists and the implications thereof. A majority of
the Trust Board shall consist of Trustees who are not "interested persons"
of the Trust.
7.3. The Company has reviewed a copy of the Mixed and Shared Funding Order, and
in particular, has reviewed the conditions to the requested relief set
forth therein. The Company agrees to assist the Trust Board in carrying out
its responsibilities under the Mixed and Shared Funding Order, by providing
the Trust Board with all information reasonably necessary for the Trust
Board to consider any issues raised. This includes, but is not limited to,
an obligation by the Company to inform the Trust Board whenever Contract
owner voting instructions are disregarded. The Trust Board shall record in
its minutes or other appropriate records, all reports received by it and
all action with regard to a conflict.
7.4. If it is determined by a majority of the Trust Board, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall, at its 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 material irreconcilable
conflict, up to and including: (a) withdrawing the assets allocable to some
-21-
or all of the Separate Accounts from the relevant Fund and reinvesting such
assets in a different investment medium, including another Fund, or in the
case of insurance company participants submitting the question as to
whether such segregation should be implemented by a vote of all affected
Contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity Contract owners or life insurance 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 (b) establishing a new registered
management investment company or managed separate account.
7.5. If the Company's disregard of voting instructions could conflict with the
majority of Contract owner voting instructions, and the Company's judgment
represents a minority position or would preclude a majority vote, the
Company may be required, at the Trust's election, to withdraw the Separate
Account's investment in the Trust and terminate this Agreement with respect
to such Separate Account, and no charge or penalty will be imposed as a
result of such withdrawal. Any such withdrawal and termination shall take
place within 30 days after written notice is given that this provision is
being implemented, subject to applicable law but in any event consistent
with the terms of the Mixed and Shared Funding Order. Until such withdrawal
and termination is implemented, the Underwriter and the Trust shall
continue to accept and implement orders by the Company for the purchase and
redemption of shares of the Trust. Such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of disinterested Trustees.
-22-
7.6. If a particular state insurance regulator's decision applicable to the
Company conflicts with the majority of other state insurance regulators,
then the Company will withdraw the Separate Account's investment in the
Trust and terminate this Agreement with respect to such Separate Account
within 30 days after the Trust informs the Company of a material
irreconcilable conflict, subject to applicable law but in any event
consistent with the terms of the Mixed and Shared Funding Order. Until such
withdrawal and termination is implemented, the Underwriter and the Trust
shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Trust. Such withdrawal and
termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of
disinterested Trustees.
7.7. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Trust Board shall determine whether any
proposed action adequately remedies any material irreconcilable conflict,
but in no event will the Trust or the Underwriter 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 material irreconcilable conflict.
7.8. The Trust Board's determination of the existence of a material
irreconcilable conflict and its implication will be made known in writing
to the Company.
7.9. The Company shall at least annually submit to the Trust Board such reports,
materials, or data as the Trust Board may reasonably request so that the
Trustees may fully carry out the duties imposed upon the Trust Board by the
Mixed and Shared Funding Order, and
-23-
said reports, materials and data shall be submitted more frequently if
deemed appropriate by the Trust Board.
7.10. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3(T) is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or
shared funding (as defined in the Mixed and Shared Funding Order) on terms
and conditions materially different from those contained in the Mixed and
Shared Funding Order, the Trust and/or the Company, 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 VIII Indemnification
8.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Trust,
the Underwriter, and each of the Trust's or the Underwriter's directors,
officers, employees, or agents and each person, if any, who controls the
Trust or the Underwriter within the meaning of such terms under the federal
securities laws (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 reasonable 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 Trust's shares or
the Contracts and:
-24-
(1) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statements, prospectuses or statements of
additional information 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 in light of the
circumstances in which they were made; 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 Trust for use in the registration
statement, prospectus or statement of information for the
Contracts, or in the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Trust shares; or
(2) arise out of or as a result of statements or representations
by or on behalf of the Company (other than statements or
representations contained in the Trust registration
statement, Trust prospectus or sales literature or other
promotional material of the Trust 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 Trust shares;
or
(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Trust's
registration statement, prospectus, statement of additional
information, or sales literature or other promotional
material of the Trust 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
in light of the circumstances in which they were made, if
such a statement or omission was made in reliance upon and
in conformity with information furnished to the Trust by or
on behalf of the Company or persons under its control; or
(4) arise as a result of any failure by the Company to provide
the services and furnish the materials or to make any
payments under the terms of this Agreement; or
(5) arise out of any material breach of any representation
and/or warranty made by the Company in this Agreement or
arise out of
-25-
or result from any other material breach by the Company of
this Agreement;
except to the extent provided in Sections 8.1(b) and 8.4 hereof. This
indemnificationshall be in addition to any liability which the Company may
otherwise have.
b) No party shall be entitled to indemnification by the Company
if such loss, claim, damage, liability or litigation is due to the willful
misfeasance, bad faith, gross negligence, or reckless disregard of duty by
the party seeking indemnification.
(c) 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.
(d) The Company will take all necessary steps to cure any failure
by the Company, the Separate Accounts or the Contracts to comply with any
applicable requirements of the Code or Treasury Regulations that render a
Fund ineligible, or jeopardize a Fund's eligibility for "look through"
treatment under Treasury Regulation 1.817-5(f), provided such failure was
not the result of any failure by a Fund to comply with applicable rules.
8.2. Indemnification By the Underwriter
(a) The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors, officers, employees, or agents and each
person, if any, who controls the Company within the meaning of such terms
under the federal securities laws (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 Underwriter), or litigation (including reasonable legal and
other
-26-
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 Trust's shares or
the Contracts and:
(1) 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 for the Trust, or sales literature or
other promotional material of the Trust (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 in
light of the circumstances in which they were made; 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 Underwriter
or the Trust by or on behalf of the Company for use in the
registration statement, prospectus, or statement of
additional information for the Trust or in sales literature
of the Trust (or any amendment or supplement thereto) or
otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(2) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Contracts or in the Contract or Trust registration
statement, the Contract or Trust prospectus, statement of
additional information, or sales literature or other
promotional material for the Contracts or of the Trust not
supplied by the Underwriter or persons under the control of
the Underwriter) or wrongful conduct of the Underwriter or
persons under the control of the Underwriter, with respect
to the sale or distribution of the Contracts or Trust
shares; or
(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, 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 statement or statements therein not
misleading in light of the circumstances in which they were
made,
-27-
if such statement or omission was made in reliance upon and
in conformity with information furnished to the Company by
or on behalf of the Underwriter or persons under the control
of the Underwriter; or
(4) arise as a result of any failure by the Underwriter to
provide the services and furnish the materials under the
terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with
the diversification requirements and procedures related
thereto specified in Article VI of this Agreement); or
(5) 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;
except to the extent provided in Sections 8.2(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Underwriter
may otherwise have.
(b) No party shall be entitled to indemnification by the
Underwriter if such loss, claim, damage, liability or litigation is due to
the willful misfeasance, bad faith, gross negligence, or reckless disregard
of duty by the party seeking indemnification.
8.3. (c) The indemnified parties will promptly notify the Underwriter of the
commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Contracts or the operation of each
Separate Account.
Indemnification By the Trust
(a) The Trust agrees to indemnify and hold harmless the Company
and each of its directors, officers, employees, or agents and each person,
if any, who controls the Company within the meaning of such terms under the
federal securities laws (collectively, the "indemnified parties" for
purposes of this Section 8.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the
-28-
written consent of the Trust), or litigation (including reasonable 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 operations of the Trust and:
(1) 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 faith or otherwise, to comply with the diversification
requirements and procedures related thereto specified in
Article VI of this Agreement); or
(2) 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;
except to the extent provided in Sections 8.3(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Trust may
otherwise have.
(b) No party shall be entitled to indemnification by the Trust if
such loss, claim, damage, liability or litigation is due to the willful
misfeasance, bad faith, gross negligence, or reckless disregard of duty by
the party seeking indemnification.
(c) The indemnified parties will promptly notify the Trust of the
commencement of any litigation or proceedings against it in connection with
the issuance or sale of the Contracts or the operation of each Separate
Account.
8.4. Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("indemnifying party" for the purpose of this Section 8.4) shall not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to
-29-
indemnification under this Article VIII ("indemnified party" for the
purpose of this Section 8.4) unless such indemnified party shall have
notified the indemnifying 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 party shall have received notice of such service on any designated
agent), but failure to notify the indemnifying party of any such claim
shall not relieve the indemnifying party from any liability which it may
have to the indemnified party against whom such action is brought under the
indemnification provision of this Article VIII, except to the extent that
the failure to notify results in the failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a
result of failure to give such notice. In case any such action is brought
against the indemnified party, the indemnifying party will be entitled to
participate, at its own expense, in the defense thereof. The indemnifying
party also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the
indemnifying party to the indemnified party of the indemnifying party'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
indemnifying party 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, unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
-30-
inappropriate due to actual or potential differing interests between them.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss
or liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
ARTICLE IX 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 Delaware without
giving effect to conflicts of laws provisions thereof.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934, and
1940 Acts, and the rules, regulations, and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may
grant (including, but not limited to, the Mixed and Shared Funding Order)
and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X Termination
10.1. This Agreement shall terminate automatically in the event of its
assignment, unless made with written consent of each party; or:
(a) at the option of any party upon six months advance written
notice to the other parties; or
-31-
(b) at the option of the Company if shares of the Funds
delineated in Exhibit B are not reasonably available to meet the
requirements of the Contracts as determined by the Company; or
(c) at the option of the Trust upon institution of formal
proceedings against the Company by the NASD, the SEC, the insurance
commission of any state or any other regulatory body, which would have a
material adverse effect on the Company's ability to perform its obligations
under this Agreement; or
(d) at the option of the Company upon institution of formal
proceedings against the Trust or the Underwriter by the NASD, the SEC, or
any state securities or insurance department or any other regulatory body,
which would have a material adverse effect on the Underwriter's or the
Trust's ability to perform its obligations under this Agreement; or
(e) at the option of the Company or the Trust upon a
determination by a majority of the Trust Board, or a majority of the
disinterested Trustees, that a material irreconcilable conflict exists
among the interests of (i) all contract owners of variable insurance
products of all separate accounts, or (ii) the interests of the
Participating Insurance Companies investing in the Trust as delineated in
Article VII of this Agreement; or
(f) at the option of the Company if the Trust or any Fund ceases
to qualify as a Regulated Investment Company under Subchapter M of the
Internal Revenue Code, or under any successor or similar provision, or if
the Company reasonably believes that the Trust may fail to so qualify; or
-32-
(g) at the option of the Company if the Trust or any Fund fails
to meet the diversification requirements specified in Article VI hereof or
fails to qualify as a look-through entity within the meaning of Treasury
Regulation Section 1.817-5(f) if the Company reasonably believes that the
Trust will fail to meet such requirements; or
(h) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(i) at the option of the Company, if the Company determines in
its sole judgment exercised in good faith, that either the Trust or the
Underwriter has suffered a material adverse change in its business,
operations, or financial condition since the date of this Agreement or is
the subject of material adverse publicity which is likely to have a
material adverse impact upon the business and operations of the Company or
the Contracts (including the sale thereof); or
(j) at the option of the Trust or Underwriter, if the Trust or
Underwriter respectively, shall determine in its sole judgment exercised in
good faith, that the Company has suffered a material adverse change in its
business, operations, or financial condition since the date of this
Agreement or is the subject of material adverse publicity which is likely
to have a material adverse impact upon the business and operations of the
Trust or Underwriter; or
(k) subject to the Trust's compliance with Article VI hereof, at
the option of the Trust in the event any of the Contracts are not issued or
sold in accordance with applicable requirements of federal and/or state
law. Termination shall be effective immediately upon such occurrence
without notice.
10.2. Notice Requirement
-33-
(a) In the event that any termination of this Agreement is based
upon the provisions of Article VII, such prior written notice shall be
given in advance of the effective date of termination as required by such
provisions.
(b) In the event that any termination of this Agreement is based
upon the provisions of Sections 10.l(b) - (d) or 10.1(f) - (h), prompt
written notice of the election to terminate this Agreement for cause shall
be furnished by the party terminating the Agreement to the non-terminating
parties, with said termination to be effective upon receipt of such notice
by the non-terminating parties.
(c) In the event that any termination of this Agreement is based
upon the provisions of Sections 10.1(i) or 10. l(j), prior written notice
of the election to terminate this Agreement for cause shall be furnished by
the party terminating this Agreement to the nonterminating parties. Such
prior written notice shall be given by the party terminating this Agreement
to the non-terminating parties at least 30 days before the effective date
of termination.
10.3. It is understood and agreed that the right to terminate this Agreement
pursuant to Section 10.1(a) may be exercised for any reason or for no
reason.
10.4. Effect of Termination
(a) Notwithstanding any termination of this Agreement pursuant to
Section 10.1 of this Agreement and subject to Section 1.3 of this
Agreement, the Company may require the Trust and the Underwriter to
continue to make available additional shares of the Trust for so long after
the termination of this Agreement as the Company desires pursuant to the
terms and conditions of this Agreement as provided in paragraph (b) below,
for all Contracts in effect on the effective date of termination of this
-34-
Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts shall be permitted
to reallocate investments in the Trust, redeem investments in the Trust
and/or invest in the Trust 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 Article VII and the effect of
such Article VII terminations shall be governed by Article VII of this
Agreement.
(b) If shares of the Trust continue to be made available after
termination of this Agreement pursuant to this Section 10.4, the provisions
of this Agreement shall remain in effect except for Section 10.l(a) and
thereafter the Trust, the Underwriter, or the Company may terminate the
Agreement, as so continued pursuant to this Section 10.4, upon written
notice to the other party, such notice to be for a period that is
reasonable under the circumstances but need not be for more than 90 days.
10.5 The Company shall not redeem Fund shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (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"). 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.
Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
-35-
payments to a Fund that was otherwise available under the Contracts without
first giving the Trust or the Underwriter 90 days notice of its intention
to do so.
ARTICLE XI Notices
Any notice shall be deemed duly given only if sent by hand, evidenced by
written receipt or by certified mail, return receipt requested, 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. All notices shall be deemed given three business days after the date
received or rejected by the addressee.
If to the Trust: Xxxxx Fargo Variable Trust
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Secretary
Copy: C. Xxxxx Xxxxxxx, Esq.
Vice President & Senior Counsel
Xxxxx Fargo Bank
Legal Department
000 Xxxxxx Xxxxxx - 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
If to the Company: Xxxxx Xxxxxx, Esq
Associate General Counsel, MetLife
1 MetLife Plaza
00-00 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Copy: Xxxxxxx Model
Director Product
Development, MetLife SBR
000 X XX Xxxxxxx Xxx Xxxxx,
Xxxxx 000 Xxxxxx, XX 00000
-36-
If to the Underwriter: Xxxxxxxx Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Vice President
-37-
ARTICLE XII Miscellaneous
11.1. All persons dealing with the Trust must look solely to the property of the
Trust for the enforcement of any claims against the Trust as neither the
Trustees, officers, agents or shareholders assume any personal liability
for obligations entered into on behalf of the Trust.
11.2. Subject to law and regulatory authority, each party hereto shall treat as
confidential all information reasonably identified as such in writing by
any other party hereto (including without limitation the names and
addresses of the owners of the Contracts) and, except as contemplated by
this Agreement, shall not disclose, disseminate, or utilize such
confidential information until such time as it may come into the public
domain without the express prior written consent of the affected party.
11.3. 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.
11.4. This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
11.5. 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.
11.6. This Agreement shall not be assigned by any party hereto without the prior
written consent of all the parties.
11.7. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD, and state insurance
-38-
regulators) and shall permit each other and 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.
11.8. Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate or trust action, as applicable, by
such party and when so executed and delivered this Agreement will be the
valid and binding obligation of such party enforceable in accordance with
its terms.
11.9. The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts, the
Separate Accounts or the Funds of the Trust.
11.10. The Trust has filed a Certificate of Trust with the Secretary of State of
The State of Delaware. The Company acknowledges that the obligations of or
arising out of the Trust's Declaration of Trust are not binding upon any of
the Trust's Trustees, officers, employees, agents or shareholders
individually, but are binding solely upon the assets and property of the
Trust in accordance with its proportionate interest hereunder. The Company
further acknowledges that the assets and liabilities of each Fund are
separate and distinct and that the obligations of or arising out of this
instrument are binding solely upon the assets or property of the Fund on
whose behalf the Trust has executed this instrument. The Company also
agrees that the obligations of each Fund hereunder shall be several and not
joint, in accordance with its proportionate interest hereunder, and the
Company agrees not to proceed against any Fund for the obligations of
another Fund.
-39-
11.11. Except as otherwise expressly provided in this Agreement, neither the
Trust nor the underwriter nor any affiliate thereof shall use any
trademark, trade name, service xxxx or logo of the Company or any of its
affiliates, or any variation of any such trademark, trade name service xxxx
or logo, without the Company's prior consent, the granting of which shall
be at the Company's sole option. Except as otherwise expressly provided in
this Agreement, neither the Company nor any affiliate thereof shall use any
trademark, trade name, service xxxx or logo of the Trust or of the
Underwriter, or any variation of any such trademark, trade name, service
xxxx or logo, without the prior consent of either the Trust or of the
Underwriter, as appropriate, the granting of which shall be at the sole
option of the Trust or of the Underwriter, as applicable.
-40-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Xxxxx Fargo Variable Trust
By:
-------------------------------
Name: C. Xxxxx Xxxxxxx
Title: Secretary
Metropolitan Life Insurance Company
By:
-------------------------------
Name: Xxxx Xxxx
Title: Vice President
Xxxxxxxx Inc.
By:
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
EXHIBIT A
Separate Accounts and Contracts
Subject to the Participation Agreement
Contracts:
MetLife Group Private Placement Variable Life
MetLife Individual Private Placement Variable Life
MetLife MetFlex Registered Variable Life
Separate Accounts:
Separate Account DCVL
Separate Account UL
-42-
EXHIBIT B
Funds Subject to the Participation Agreement
Variable Trust Total Return Bond
Variable Trust Money Market
Variable Trust Asset Allocation
Variable Trust Growth
Variable Trust Large Company Growth
Variable Trust Equity Income
