PARTICIPATION AGREEMENT
Among
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO FUNDS GROUP, INC.
INVESCO DISTRIBUTORS, INC.
and
METROPOLITAN LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into this 17 day of, August, 1998 by and
among METROPOLITAN LIFE INSURANCE COMPANY, (hereinafter the "Insurance
Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Insurance Company set forth on Schedule A hereto
as may be amended from time to time (each such account hereinafter referred to
as the "Account"), INVESCO VARIABLE INVESTMENT FUNDS, INC., a Maryland
corporation (the "Company"), INVESCO DISTRIBUTORS, INC., a Delaware corporation
("Distributors"), and INVESCO FUNDS GROUP, INC. ("INVESCO"), a Delaware
corporation.
WHEREAS, the Company engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable annuity and life insurance contracts
to be offered by insurance companies which have entered into or will enter into
and maintain participation agreements substantially identical to this Agreement
("Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Company is divided into several
series of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Company 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 (hereinafter the "1933 Act"); and
WHEREAS, INVESCO is duly registered as an investment adviser under the
Investment Advisers Act of 1940 and any applicable state securities; and
WHEREAS, Distributors is duly registered as a broker dealer under the
Securities Exchange Act of 1934, as amended, (the "1934 Act"), and is a member
in good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Insurance Company has registered interests in the separate
account under the 1933 Act, or will register such interests under the 1933 Act,
as identified in Schedule B attached hereto, which may be amended from time to
time; and
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WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the board of directors of the
Insurance Company on the date shown for that Account on Schedule A hereto, to
set aside and invest assets attributable to the Contracts; and
WHEREAS, the Insurance Company has registered or will register each Account
as a unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Insurance Company intends to purchase shares in the Funds on
behalf of the Accounts to fund the Contracts and Distributors is authorized to
sell such shares to unit investment trusts such as the Account at net asset
value;
NOW, THEREFORE, in consideration of their mutual promises, the Insurance
Company, the Company, Distributors, and INVESCO agree as follows:
ARTICLE I. SALE OF COMPANY SHARES
1.1 Distributors agrees to sell to the Insurance Company those shares of
the Company which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Company or its designee
of the order for the shares of the Company. For purposes of this Section 1.1,
the Insurance Company shall be the designee of the Company for receipt of such
orders from the Accounts that correspond to Contract transactions that are not
within the Insurance Company's discretion and receipt by such designee shall
constitute receipt by the Company; provided that the Company receives notice of
such order by 8:00 a.m., Mountain 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 Company calculates its net asset value pursuant to
the rules of the Commission.
1.2 The Company agrees to make its shares available for purchase at the
applicable net asset value per share by the Insurance Company and its Accounts
on those days on which the Company calculates its Funds' net asset values
pursuant to rules of the Commission and the Company shall use reasonable efforts
to calculate its Funds' net asset values on each day on which the New York Stock
Exchange is open for trading. Notwithstanding the foregoing, the board of
directors of the Company (hereinafter the "Board") 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 Board 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 that Fund. When
practicable, the Company will provide Insurance Company with thirty (30) days
written notice of its intention to refuse to sell Company shares pursuant to
this Agreement.
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1.3. The Company and Distributors agree that shares of the Company will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Fund will be sold to the general public.
1.4. The Company and Distributors will not sell Company shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Sections 2.1, 2.4, 3.4, 3.5, 4.2, 4.6 and 8.1 and
Article VII of this Agreement is in effect to govern such sales.
1.5. The Company agrees to redeem, on the Insurance Company's request, any
full or fractional shares of the Company held by the Insurance Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Company or its designee of the request for redemption. For
purposes of this Section 1.5, the Insurance Company shall be the designee of the
Company for receipt of requests for redemption from each Account that correspond
to Contract transactions that are not within the Insurance Company's discretion
and receipt by that designee shall constitute receipt by the Company; provided
that the Company receives notice of the request for redemption by 8:00 a.m.,
Mountain Time, on the next following Business Day.
1.6. (a) The Insurance Company shall pay for Company shares by 9:00
a.m., Mountain Time, on the next Business Day after an order to purchase Company
shares is made in accordance with the provisions of Section 1.1 hereof. Payment
shall be in federal funds transmitted by wire. For the purpose of Sections 2.10
and 2.11, upon transmission by Insurance Company of the federal funds so wired,
such funds shall cease to be the responsibility of the Insurance Company and
shall become the responsibility of the Company.
(b) Payment of aggregate redemption proceeds (aggregate redemptions
of a Fund's shares by an Account) of less than $1 million for a given Business
Day will be made by wiring federal funds to the Insurance Company on the next
Business Day after receipt of the redemption request. Payment of aggregate
redemption proceeds of $1 million or more will be by wiring federal funds within
seven days after receipt of the redemption request. Notwithstanding the
foregoing, in the event that one or more Funds has insufficient cash on hand to
pay aggregate redemptions on the next Business Day, and if such Fund has
determined to settle redemption transactions for all of its shareholders on a
delayed basis (more than one Business Day, but in no event more than seven
calendar days, after the date on which the redemption order is received, unless
otherwise permitted by an order of the Commission under Section 22(e) of the
1940 Act), the Company shall be permitted to delay sending redemption proceeds
to the Insurance Company by the same number of days that the Company is delaying
sending redemption proceeds to the other shareholders of the Fund.
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(c) Redemptions of up to the lesser of $250,000 or 1% of the net
asset value of the Fund whose shares are to be redeemed in any 90-day period
will be made in cash. Redemptions in excess of that amount in any 90-day period
may, in the sole discretion of the Company, be in-kind redemptions, with the
securities to be delivered in payment of redemptions selected by the Company and
valued at the value assigned to them in computing the Fund's net asset value per
share.
(d) The Company anticipates making delayed-settlement redemptions or
in-kind redemptions, pursuant to Paragraphs 1.6(b) and 1.6(c), only in
circumstances where extraordinary market conditions, or the size of the
redemption relative to the size of a given Fund, will work to the detriment of
remaining shareholders if made immediately, in cash. INVESCO and Company agree
to consult with Insurance Company, in good faith, to determine a plan for the
orderly disposition of assets to meet redemption requests from contract owners
prior to invoking the provisions of Paragraphs 1.6(b) and 1.6(c), None of the
foregoing provisions shall diminish the Company's rights under the Investment
Company Act of 1940.
1.7. Issuance and transfer of the Company's shares will be by book entry
only. Stock certificates will not be issued to the Insurance Company or any
Account. Shares ordered from the Company will be recorded in an appropriate
title for each Account or the appropriate subaccount of each Account.
1.8. The Company shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Insurance Company of any income,
dividends or capital gain distributions payable on the Funds' shares. The
Insurance Company hereby elects to receive all income dividends and capital gain
distributions payable on a Fund's shares in additional shares of that Fund. The
Insurance Company reserves the right to revoke this election and to receive all
such income dividends and capital gain distributions in cash. The Company shall
notify the Insurance Company of the number of shares issued as payment of
dividends and distributions.
1.9. The Company shall make the net asset value per share for each Fund
available to the Insurance Company on a daily basis, in accordance with mutually
agreed upon guidelines for electronic transmission, as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make those per-share net asset values available by 6:00 p.m.,
Mountain Time.
1.10. INVESCO represents and warrants that any sale or redemption by a
participating Insurance Company of the Company's shares that does not
correspond to Contract transactions that are outside that Participating
Insurance Company's discretion, will receive the next net asset value
computed after actual receipt by the Company of the order for such sale or
redemption of and that the Participating Insurance Company shall not be
deemed to be the Company's designee with respect to such discretionary orders.
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ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Insurance Company represents and warrants that interests in the
Separate Account funding the Contracts are, or will be, registered under the
1933 Act; that the Contracts will be issued and sold in compliance in all
material respects with all applicable federal and state laws and that the sale
of the Contracts shall comply in all material respects with applicable state
insurance suitability requirements. The Insurance 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
prior to any issuance or sale thereof as a segregated asset account under
Section 4240 of the New York Insurance Code and has registered, or prior to any
issuance or sale of the Contracts will register, the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
2.2. The Company represents and warrants that Company shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sale in compliance with all applicable State and federal
securities laws and that the Company is and shall remain registered under the
1940 Act. The Company 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 Company shall register and
qualify the shares for sale in accordance with all applicable state and federal
laws.
2.3. The Company 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 maintain that qualification
(under Subchapter M or any successor or similar provision) and that it will
notify the 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.
2.4. The Insurance Company represents and warrants that the Contracts are
currently treated as [annuity / life insurance / endowment / modified endowment]
contracts, under applicable provisions of the Code and that it will make
commercially reasonable efforts to maintain such treatment and that it will
notify the Company and INVESCO upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be so treated
in the future.
2.5. The Company currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future provided however that in such
event, the Company will provide 60 days prior written notice thereof to the
Insurance Company. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Company undertakes to have a board of
directors, a majority of whom are not interested persons of the Company,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
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2.6. The Company 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,
except to the extent that any such aspect is subject to insurance laws and
regulations.
2.7. INVESCO Distributors, Inc. represents and warrants that it is a
member in good standing of the NASD and is registered as a broker-dealer with
the Commission. INVESCO Distributors, Inc. further represents and warrants that
it will sell and distribute the Company shares in accordance with all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 0000 Xxx.
2.8. The Company represents and warrants that it is lawfully organized
and validly existing under the laws of the State of Maryland and that it does
and will comply in all material respects with the 1940 Act.
2.9. INVESCO represents and warrants that it is and shall remain duly
registered under all applicable federal and state securities laws and that it
shall perform its obligations for the Company in compliance in all material
respects with the laws of the State of Colorado and all applicable state and
federal laws; and that all Participating Insurance Companies have entered into
or will enter into and continue to be subject to participation agreements
containing provisions substantially identical to Sections 2.1, 2.4, 3.4, 3.5,
4.2, 4.6 and 8.1 and Article VII of this Agreement.
2.10. The Company, Distributors, and INVESCO represent and warrant that
all of their officers, employees, investment advisers, investment sub-advisers,
and other individuals or entities dealing with the money and/or securities of
the Company are, and shall continue to be at all times, covered by a blanket
fidelity bond or similar coverage for the benefit of the Company in an amount
not less than the minimum coverage required currently by Section 17g-(1) of the
1940 Act or related provisions as may be promulgated from time to time. That
fidelity bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
2.11. The Insurance Company represents and warrants that all of its
officers and other individuals that are so required by Rule 17g-1 of the 1940
Act are and shall continue to be at all times covered by a blanket fidelity bond
or similar coverage in an amount not less than the minimum coverage required
currently for entities subject to the requirements of Rule 17g-1 of the 1940 Act
or related provisions or may be promulgated from time to time. The Insurance
Company further represents and warrants that the employees of Insurance Company,
or such other persons designated by Insurance Company, listed on Schedule C have
been authorized by all necessary action of Insurance Company to give directions,
instructions and certifications to the Company and INVESCO on behalf of
Insurance Company. The Company and INVESCO are authorized to act and rely upon
any directions, instructions and certifications received from such persons
unless and until they have been notified in writing by the Insurance Company of
a change in such persons, and the Company and INVESCO shall incur no liability
in doing so.
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2.12. The Insurance Company represents and warrants that it will not
purchase Company shares with Account assets derived from tax-qualified
retirement plans except indirectly, through Contracts purchased in connection
with such plans.
2.13 The Company represents that it has obtained an order from the
Securities and Exchange Commission (the "Commission"), dated December 29, 1993
(File No. 812-8590), 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 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 Company 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 (the "Mixed and Shared Funding
Exemptive Order"); and
2.14. INVESCO represents and warrants that the investment advisory or
management fees paid to INVESCO by the Company are legitimate and not excessive
and are derived from an advisory contract which does not result in a breach of
fiduciary duty.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1 At least 5 business days prior to the legally required distribution
dates, INVESCO shall provide Insurance Company with the following documents on
diskette (post-script format), and such other formats as Insurance Company shall
reasonably request. Insurance Company will be responsible for distributing the
documents to its contract owner.
a. Alternate forms of prospectus for each funding option or any combination of
funding options that Insurance Company is offering and that is reasonably
requested by Insurance Company.
b. Periodic financial reports for the Company.
The Company and INVESCO agree that they will cooperate with the Insurance
Company to make the Prospectuses of the Funds available to Insurance Company in
a format which will facilitate making the Prospectuses available to contract
holders and prospects on the internet. (E.g. in HTML or PDF file formats). The
Insurance Company will be familiar with all federal, state, and SRO rules and
regulations concerning: the electronic offer and sale of securities; and the
electronic distribution of advertising and sales literature, and will conform
its material and procedures to these rules and regulations, in the event that
these means are used by the Insurance Company with respect to any offer or sale
of the Company's shares.
3.2. The Company's prospectus shall state that the Statement of Additional
Information for the Company (the "SAI") is available from INVESCO (or in the
Company's discretion, the Prospectus shall state that the SAI is available from
the Company), and INVESCO (or the company), at its expense shall print the SAI
free of charge to the Insurance Company and to any owner of a Contract or
prospective owner who requests the SAI.
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3.3. The Company, at its expense, shall provide the Insurance Company with
copies of its proxy material, voting instruction material as required under
Section 3.4, reports to stockholders and other communications to stockholders in
such quantity as the Insurance Company shall reasonably require for distributing
to Contract owners.
3.4. If and to the extent required by law, the Insurance Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Company shares in accordance with instructions
received from Contract owners in each Account; and
(iii) vote Company shares in each Account, for which no instructions
have been received in the same proportion as Company shares of
such Fund in that Account for which instructions have been
received:
so long as and to the extent that the Commission continues to interpret the 1940
Act to require pass-through voting privileges for variable contract owners. The
Insurance Company reserves the right to vote Company 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 Company calculates voting
privileges in a manner consistent with the standards set forth on Schedule D
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies. The Insurance
Company shall fulfill its obligations under, and abide by the terms and
conditions of, the Mixed and Shared Funding Exemptive Order as described in this
paragraph.
3.5. The Company will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Company will either provide for
annual meetings (except insofar as the Commission may interpret Section 16 of
the 1940 Act not to require such meetings) or, as the Company currently intends,
comply with Section 16(c) of the 1940 Act (although the Company 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, the Company will act in
accordance with the Commission's interpretation of the requirements of Section
16(a) with respect to periodic elections of directors and with whatever rules
the Commission may promulgate with respect thereto.
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ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Insurance Company represents and warrants that it is familiar
with all NASD requirements for the filing and review of investment company
advertising and sales literature. Insurance Company assumes all responsibility
for filing with the NASD of advertising and sales literature created by
Insurance Company pursuant to this Agreement. Insurance Company intends to
create, and provide to contract holders, monthly performance reports of
participating Funds. Insurance Company will initially provide a sample format
of these monthly performance reports to INVESCO for INVESCO's approval.
Thereafter, Insurance Company will be required to provide INVESCO with samples
of the monthly performance reports, for approval by INVESCO, only if the content
or format of the monthly performance reports changes substantially. Generally,
INVESCO and Insurance Company agree to good faith mutual cooperation in the
resolution of novel or controversial issues concerning advertising and sales
literature that may arise pursuant to this Agreement.
4.2. The Insurance Company shall not give any information or make any
representations or statements on behalf of the Company or concerning the Company
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Company's shares, as such registration statement and prospectus may be amended
or supplemented from time to time, or in reports or proxy statements for the
Company, or in sales literature or other promotional material approved by the
Company or its designee or by INVESCO, except with the permission of the Company
or INVESCO.
4.3. The Company, INVESCO, or its designee shall furnish, or shall cause
to be furnished, to the Insurance Company or its designee, each piece of sales
literature or other promotional material in which the Insurance Company and/or
its separate account(s), is named at least fifteen calendar days prior to its
use. No such material shall be used if the Insurance Company or its designee
reasonably object to such use within ten calendar days after receipt of that
material.
4.4. The Company, distributors, and INVESCO shall not give any information
or make any representations on behalf of the Insurance Company or concerning the
Insurance Company, the Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as that registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for the Account which
are in the public domain or approved by the Insurance Company for distribution
to Contract owners, or in sales literature or other promotional material
approved by the Insurance Company or its designee, except with the permission of
the Insurance Company.
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4.5. The Company will provide to the Insurance Company at least one
complete copy of each registration statement, prospectus, statement of
additional information, report, proxy statement, piece of sales literature or
other promotional material, application for exemption, request for no-action
letter, and any amendment to any of the above, that relate to the Company or its
shares, contemporaneously with the filing of the document with the Commission,
the NASD, or other regulatory authorities.
4.6. The Insurance Company will provide to the Company at least one
complete copy of each registration statement, prospectus, statement of
additional information, report, solicitation for voting instructions, piece of
sales literature and other promotional material, application for exemption,
request for no action letter, and any amendment to any of the above, that
relates to use of the Company in the Contracts or the Account, contemporaneously
with the filing of the document with the Commission, the NASD, or other
regulatory authorities.
4.7. For purposes of this Agreement, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements,
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 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, prospectuses, statements of additional information, shareholder
reports, and proxy materials.
4.8. At the request of any party to this Agreement, each other party will
make available to the other party's independent auditors and/or representative
of the appropriate regulatory agencies, all relevant records, data and access to
operating procedures that may be reasonably requested. Company agrees that
Insurance Company shall have the right to inspect, audit and copy all relevant
records pertaining to the performance of services under this Agreement pursuant
to the requirements of any state insurance regulator(s). However, Company and
INVESCO shall own and control all of their respective records pertaining to
their performance of the services under this Agreement.
4.9. If the Fund provides incorrect share net asset value information,
the Insurance Company shall receive adjustment to the number of shares purchased
or redeemed to reflect the correct net asset value per share (and, if and to the
extent necessary, the Insurance Company shall make adjustments to the number of
units credited, and/or unit values for the Contracts for the periods affected).
In the event adjustments are required to correct any error in the computation of
the Company's net asset value per share, or dividend or capital gain
distribution, INVESCO or the Fund shall promptly notify the Insurance Company
after discovering the need for such adjustments. If an adjustment is necessary
to correct an error which has caused Contract owners to be credited with more
or less than the amount to which they are entitled, INVESCO shall make all
necessary
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adjustments to the number of shares owned by the Account and distribute to the
Account the amount of the underpayment. The Insurance Company will adjust the
number of units of each Contract owner and credit the appropriate amount of such
payment to each Contract owner. In no event shall the Insurance Company be
liable to Contract owners for any such adjustments or underpayments amounts,
provided that the underpayments was not caused by the Insurance Company. In no
event shall the Insurance Company be liable to the Fund or the Adviser for any
such adjustments or overpayment amounts, provided that the overpayment was not
caused by the Insurance Company. In the event that any known overpayments are
made to Contract owners, as a result of any such error, Insurance Company will
take commercially reasonable steps, within the constraints of state and federal
law, to recover overpaid amounts on behalf of the Fund, and promptly notify
INVESCO of the existence of the overpayment and the steps taken to attempt to
recover overpayment amounts. All of the Insurance Company's reasonable expenses
incident to any adjustments required hereunder (including any uncollected,
overpaid amounts) shall be borne by INVESCO, provided that the need for the
adjustment was not caused by the Insurance Company.
4.10. The Company shall send to the Insurance Company, (i) confirmations
of activity in the Separate Account within five (5) business days after each
date on which a purchase or redemptions of shares of the Company is effected for
the Account, and (ii) statements detailing activity in the Account no less
frequently than quarterly.
4.11. The Company and INVESCO shall provide the Insurance Company with any
information it reasonably requests from time to time, in connection with the
Insurance Company's performance of this Agreement, and reporting to management
and customers. This information will be provided by the Company or INVESCO
within five (5) days after receiving such requests from the Insurance Company.
ARTICLE V. FEES AND EXPENSES
5.1. In order to appropriately adjust the respective interest of INVESCO
and the Insurance Company (taking into consideration, among other things, the
services to be provided and the expenses and risks to be borne by each, as well
as the revenues and other benefits expected to accrue to each, directly or
indirectly as a result of this Agreement), INVESCO shall pay a fee to the
Insurance Company for services provided by Insurance Company under this
agreement, at the rate designated in Schedule E attached hereto. No such
payments shall be made by the Company. It is understood that the Insurance
Company may make prospectus disclosure of the amount of this compensation. The
parties to this Agreement recognize and agree that INVESCO's payments to the
Insurance Company are in consideration of administrative services provided by
Insurance Company to the Company only, and do not constitute payment in any
manner for administrative services provided by the Insurance Company to the
Accounts or to the Contracts, for investment advisory services or for costs of
distributions of Contracts or of shares of the Company, and that these payments
are not otherwise related to investment advisory or distributions services or
expenses.
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5.2. All expenses incident to performance by the Company under this
Agreement shall be paid by the Company. The Company shall see to it that all
its shares are registered and authorized for issuance in accordance with any
applicable federal law and, in accordance with applicable state laws prior to
their sale. The Company shall bear the expenses for the cost of registration
and qualification of the Company's shares, preparation and filing of the
Company'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 (including the costs of printing a prospectus that
constitutes an annual report), the preparation of all statements and notices
required by any federal or state law, and all taxes on the issuance or transfer
of the Company's shares.
5.3. The Insurance Company shall bear the expenses of printing and
distributing to Contract owners the Contract prospectuses and of distributing to
Contract owners the Company's prospectus, proxy materials and reports.
ARTICLE VI. DIVERSIFICATION
6.1. The Company represents, warrants and covenants that each Account may
"look through" to the investments of each Fund in which it holds shares in
accordance with the "look through" rules found in Treasury Regulation 1.817-5
and that each Fund will at all times, comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5 relating to the diversification requirements for
variable annuity, endowment, modified endowment or life insurance contracts and
any amendments or other modifications to that Section or Regulation. The
Company shall provide the Insurance Company with a certificate of compliance
with such diversification requirement for each fund within 20 days of the close
of each calendar quarter in substantially the form attached hereto as Schedule
F.
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ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Company for the existence of any material
irreconcilable conflict between the interests of the variable contract owners of
all separate accounts investing in the Company. 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 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 any Fund 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 a Participating Insurance Company to
disregard the voting instructions of variable contract owners. The Board shall
immediately inform the Insurance Company in writing if it determines that an
irreconcilable material conflict exists and the implications thereof. The Board
shall have sole authority to determine whether an irreconcilable material
conflict exists and such determination shall be binding upon the Insurance
Company.
7.2 The Insurance Company will report promptly any potential or existing
conflicts of which it is aware to the Board. The Insurance Company will assist
the Board in carrying out its responsibilities under the Mixed and 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 Insurance Company to inform the Board
whenever Contract owner voting instructions are to be disregarded. Such
responsibilities shall be carried out by Insurance Company with a view only to
the interests of the Contract owners.
7.3. If it is reasonably determined by a majority of the Board, or a
majority of its directors who are not interested persons of the Company,
INVESCO, or any sub-adviser to any of the Funds (the "Independent Directors"),
that a material irreconcilable conflict exists, the Insurance Company and/or
other Participating Insurance Companies shall, at their expense and to the
extent reasonably practicable (as determined by a majority of the Independent
Directors), take commercially reasonable steps to remedy or eliminate the
irreconcilable material conflict, which may include (1), withdrawing the assets
allocable to some or all of the separate accounts from the Company or any Fund
and reinvesting those assets in a different investment medium, including (but
not limited to) another Fund of the Company, or submitting the question 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 (E.G., 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 variable
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account and
obtaining approval thereof by the Commission.
13
7.4. If a material irreconcilable conflict arises because of a decision by
the Insurance Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Insurance Company may be required, at the Company's reasonable election, to
withdraw the affected Account's investment in the Company and terminate this
Agreement with respect to that Account; provided, however that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as reasonably determined by a majority of the
Independent Directors. Any such withdrawal and termination must take place
within six (6) months after the Company gives written notice that this provision
is being implemented, and until the end of that six month period INVESCO and the
Company shall continue to accept and implement orders by the Insurance Company
in accordance with the terms of this Agreement for the purchase (and redemption)
of shares of the Company.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Insurance Company
conflicts with the majority of other state regulators, then the Insurance
Company will withdraw the affected Account's investment in the Company and
terminate this Agreement with respect to that Account within six months after
the Board's reasonable determination and notice thereof to the Insurance Company
in writing that the state insurance regulator's 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 Independent
Directors. Until the end of the foregoing six month period, INVESCO and the
Company shall continue to accept and implement orders by the Insurance Company
for the purchase (and redemption) of shares of the Company.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the Independent Directors shall reasonably 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. In the event that the Board reasonably determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Insurance Company will withdraw the Account's investment in the Company and
terminate this Agreement within six (6) months after the Board informs the
Insurance Company in writing of the foregoing determination, provided, however,
that the withdrawal and termination shall be limited to the extent required by
the material irreconcilable conflict, as reasonably determined by a majority of
the Independent Directors.
7.7. 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 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 Company 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 those rules are applicable; and (b)
14
Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue
in effect only to the extent that terms and conditions substantially identical
to those Sections are contained in the Rule(s) as so amended or adopted.
15
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE INSURANCE COMPANY
8.1(a). The Insurance Company agrees to indemnify and hold harmless the
Company and each director of the Board and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Insurance Company), which consent
shall not be withheld for any settlement that would be commercially reasonable
for the indemnified Parties in the absence of this Section 8.1) 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, holding , or
acquisition of the Company's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus for the Contracts or contained in the
Contracts or sales 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 in writing to the
Insurance Company by or on behalf of the Company for use in the
registration statement or prospectus 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 Company;
(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 Company
not supplied by the Insurance Company, or persons under its control)
or wrongful conduct of the Insurance Company or persons under its
control, with respect to the sale or distribution of the Contracts or
Company Shares; or
16
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement, prospectus,
or sales literature of the Company or any amendment thereof or
supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such a statement or
omission was made in reliance upon, and in conformity with,
information furnished in writing to the Company by the Insurance
Company; or
(iv) arise as a result of any failure by the Insurance 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 Insurance Company in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Insurance Company, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Insurance 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 that
may arise from that Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of that Indemnified Party's duties or by reason of
that Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to the Company, whichever is applicable.
8.1(c). The Insurance Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless that Indemnified Party shall have notified the Insurance 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 that
Indemnified Party (or after the Indemnified Party shall have received notice of
such service on any designated agent). Notwithstanding the foregoing, the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Insurance Company of its obligations hereunder except to the extent
that the Insurance Company has been prejudiced by such failure to give notice.
In addition, any failure by the Indemnified Party to notify the Insurance
Company of any such claim shall not relieve the Insurance Company from any
liability which it may have to the Indemnified Party against whom the action is
brought otherwise than on account of this indemnification provision. In case
any such action is brought against the Indemnified Parties, the Insurance
Company shall be entitled to participate, at its own expense, in the defense of
the action. The Insurance Company also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action; PROVIDED,
HOWEVER, that if the Indemnified Party shall
17
have reasonably concluded that there may be defenses available to it which are
different from or additional to those available to the Insurance Company, the
Insurance Company shall not have the right to assume said defense, but shall pay
the costs and expenses thereof (except that in no event shall the Insurance
Company be liable for the fees and expenses of more than one counsel for
Indemnified Parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from the Insurance Company to the
Indemnified Party of the Insurance Company's election to assume the defense
thereof, and in the absence of such a reasonable conclusion that there may be
different or additional defenses available to the Indemnified Party, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Insurance Company will not be liable to that party under
this Agreement for any legal or other expenses subsequently incurred by the
party independently in connection with the defense thereof other than reasonable
costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Insurance Company
of the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Company's shares or the Contracts or the
operation of the Company.
8.2. INDEMNIFICATION BY INVESCO
8.2(a). INVESCO agrees to indemnify and hold harmless the Insurance
Company and each of its directors, officers and, contract owners, each person,
if any, who controls the Insurance Company within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.2) against any and all losses, claims, damages, liabilities (including
reasonable amounts paid in settlement with the written consent of INVESCO, which
consent shall not be withheld for any settlement that would be commercially
reasonable for the Indemnified Parties in the absence of this Section 8.2) 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 are related to the sale, holding, or acquisition of the
Company's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or sales literature of the Company (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 the statement
or omission or alleged statement or omission was made in reliance upon
and in conformity with information furnished in writing to INVESCO or
the Company by or on behalf of the
18
Insurance Company for use in the registration statement or prospectus
for the Company or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Company 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 for the
Contracts not supplied by INVESCO or persons under its control) or
wrongful conduct of the Company, INVESCO or persons under their
control, with respect to the sale or distribution of the Contracts or
shares of the Company; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement, prospectus,
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
in writing to the Insurance Company by or on behalf of INVESCO or the
Company;
(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
without in any way limiting or restricting any other remedies
available to the Insurance Company, INVESCO will pay all costs
associated with, or arising out of any failure, or any anticipated or
reasonably foreseeable failure to comply with Section 6.1 hereof, and
all costs associated with correcting or responding to any such
failure, on behalf of Insurance Company or its contract owners; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by INVESCO in this Agreement or
arise out of or result from any other material breach of this
Agreement by INVESCO; as limited by and in accordance with the
provisions of Sections 8.2(b) and 8.2(c) hereof.
19
8.2(b) INVESCO 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 that may arise from the Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of the Indemnified Party's duties or by reason of the Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to the
Insurance Company or the Account, whichever is applicable.
8.2(c) INVESCO shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless the
Indemnified Party shall have notified INVESCO 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 the Indemnified Party (or after
the Indemnified Party shall have received notice of such service on any
designated agent). Notwithstanding the foregoing, the failure of any
Indemnified Party to give notice as provided herein shall not relieve INVESCO of
its obligations hereunder except to the extent that INVESCO has been prejudiced
by such failure to give notice. In addition, any failure by the Indemnified
Party to notify INVESCO of any such claim shall not relieve INVESCO 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, INVESCO will be
entitled to participate, at its own expense, in the defense thereof. Unless the
Indemnified Party releases INVESCO from any further obligation under this
Section 8.2, INVESCO also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action; PROVIDED, HOWEVER, that
if the Indemnified Party shall have reasonably concluded that there may be
defenses available to it which are different from or additional to those
available to INVESCO, INVESCO shall not have the right to assume said defense,
but shall pay the costs and expenses thereof (except that in no event shall
INVESCO be liable for the fees and expenses of more than one counsel for
Indemnified Parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from INVESCO to the Indemnified
Party of INVESCO's election to assume the defense thereof, and in the absence of
such a reasonable conclusion that there may be different or additional defenses
available to the Indemnified Party, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and INVESCO will not be
liable to that party under this Agreement for any legal or other expenses
subsequently incurred by that party independently in connection with the defense
thereof other than reasonable costs of investigation. Notwithstanding any other
provision of this Paragraph 8.2(c) the Insurance Company shall be entitled to
refuse any request by INVESCO to assume the defense of any action brought
against Insurance Company by the Internal Revenue Service ("IRS") or any other
tax authority, provided that following such refusal, INVESCO shall be released
from any further obligation for costs of defense under this section 8.2. If
they are so allowed by rules of procedure, however, INVESCO and Company will be
entitled to participate in the defense of any action brought against Insurance
Company by the IRS or any other tax authority, with any and all costs associated
with INVESCO's or the Company's defense to be the responsibility of INVESCO or
the Company.
20
8.2(d) The Insurance Company agrees to notify INVESCO promptly of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
8.3 INDEMNIFICATION BY THE COMPANY
8.3(a). The Company agrees to indemnify and hold harmless the Insurance
Company, and each of its directors and officers and each person, if any, who
controls the Insurance Company within the meaning of Section 15 of the 1933 Act
(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 Company, which consent shall not
be withheld for any settlement that would be commercially reasonable for the
Indemnified Parties in the absence of this Section 8.3) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as those losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements result from the gross negligence, bad faith, willful misconduct, or
reckless disregard of duty of the Board , the directors, officers, employees, or
agents that are related to the operations of the Company and:
(i) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company;
as limited by, and in accordance with the provisions of, Sections 8.3(b) and
8.3(c) hereof.
8.3(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 that may arise from the
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of the Indemnified Party's duties or by reason of the Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Insurance Company, the Company, INVESCO or the Account, whichever is
applicable.
8.3(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless the
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 the Indemnified Party (or after
the Indemnified Party shall have received notice of such service on any
designated agent).
21
Notwithstanding the foregoing, the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Company of its obligations
hereunder except to the extent that the Company has been prejudiced by such
failure to give notice. In addition, any failure by the Indemnified Party 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 will be
entitled to participate, at its own expense, in the defense thereof. Unless the
Indemnified Party releases Company from any further obligation under this
Section 8.3, the Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action; PROVIDED, HOWEVER,
that if the Indemnified Party shall have reasonably concluded that there may be
defenses available to it which are different from or additional to those
available to the Company, the Company shall not have the right to assume said
defense, but shall pay the costs and expenses thereof (except that in no event
shall the Company be liable for the fees and expenses of more than one counsel
for Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances). After notice from the Company to the
Indemnified Party of the Company's election to assume the defense thereof, and
in the absence of such a reasonable conclusion that there may be different or
additional defenses available to the Indemnified Party, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Company will not be liable to that party under this Agreement for any legal
or other expenses subsequently incurred by that party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.3(d). The Insurance Company and INVESCO agree promptly to notify the
Company of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Company.
8.4 INVESCO Distributors, Inc., shall be jointly and severally liable for
all of INVESCO's obligations under this Article VIII.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and provisions hereof interpreted
under and in accordance with the laws of the State of New York.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934,
and 1940 acts, and the rules and regulations and rulings thereunder, including
any exemptions from those statutes, rules and regulations the Commission may
grant (including, but not limited to, the Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in accordance
therewith.
22
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon six (6) months advance written
notice to the other parties; provided, however such notice shall not
be given earlier than one year following the date of this Agreement;
or
(b) at the option of the Insurance Company to the extent that shares
of Funds are not reasonably available to meet the requirements of the
Contracts as determined by the Insurance Company, provided however,
that such a termination shall apply only to the Fund(s) not reasonably
available. Prompt written notice of the election to terminate for
such cause shall be furnished by the Insurance Company; or
(c) at the option of the Company in the event that formal
administrative proceedings are instituted against the Insurance
Company by the NASD, the Commission, an insurance commissioner or any
other comparable regulatory body regarding the Insurance Company's
duties under this Agreement, the operation of any Account, or the
purchase of the Company's shares, provided, however, that the Company
determines in its judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon
the ability of the Insurance Company to perform its obligations under
this Agreement. Prompt written notice of election to terminate for
such cause shall be furnished by the Company to the Insurance Company;
or
(d) at the option of the Insurance Company in the event that formal
administrative proceedings are instituted against the Company or
INVESCO by the NASD, the Commission, or any state securities or
insurance department or any other comparable regulatory body,
provided, however, that the Insurance Company determines in its
judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of
the Company or INVESCO to perform its obligations under this
Agreement. Prompt written notice of election to terminate for such
cause shall be furnished by Insurance Company to Company.; or
(e) with respect to any Account, upon requisite vote of the Contract
owners having an interest in that Account (or any subaccount) to
substitute the shares of another investment company for the
corresponding Fund shares in accordance with the terms of the
Contracts for which those Fund shares had been selected to serve as
the underlying investment media. The Insurance Company will give at
least 30 days' prior written notice to the Company of the date of any
proposed vote to replace the Company's shares; or
23
(f) at the option of the Insurance Company, in the event any of the
Company's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or exemptions therefrom, or such
law precludes the use of those shares as the underlying investment
media of the Contracts issued or to be issued by the Insurance
Company; or
(g) at the option of the Insurance Company, if the Company ceases to
qualify as a regulated investment company under Subchapter M of the
Code or under any successor or similar provision, or if the Insurance
Company reasonably believes that the Company may fail to so qualify;
or
(h) at the option of the Insurance Company, if the Company fails to
meet the diversification requirements specified in Article VI hereof;
or
(i) at the option of either the Company or INVESCO, if (1) the
Company or INVESCO, respectively, shall determine, in their judgment
reasonably exercised in good faith, that the Insurance Company has
suffered a material adverse change in its business or financial
condition that will have a material adverse impact upon the business
and operations of either the Company or INVESCO, (2) the Company or
INVESCO shall notify the Insurance Company in writing of that
determination and its intent to terminate this Agreement, and (3)
after considering the actions taken by the Insurance Company and any
other changes in circumstances since the giving of such a notice, the
determination of the Company or INVESCO shall continue to apply on the
sixtieth (60th) day following the giving of that notice, which
sixtieth day shall be the effective date of termination; or
(j) at the option of the Insurance Company, if (1) the Insurance
Company shall determine, in its judgment reasonably exercised in good
faith, that either the Company or INVESCO has suffered a material
adverse change in its business or financial condition that will have a
material adverse impact upon the business and operations of the
Insurance Company, (2) the Insurance Company shall notify the Company
and INVESCO in writing of the determination and its intent to
terminate the Agreement, and (3) after considering the actions taken
by the Company and/or INVESCO and any other changes in circumstances
since the giving of such a notice, the determination shall continue to
apply on the sixtieth (60th) day following the giving of the notice,
which sixtieth day shall be the effective date of termination.
10.2 NOTICE REQUIREMENT. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to
terminate, which notice shall set forth the basis for the termination.
Furthermore,
24
(a) in the event that any termination is based upon the provisions of
Article VII, or the provisions of Section 10.1(a), 10.1(i), 10.1(j),
or 10.1(k) of this Agreement, the prior written notice shall be given
in advance of the effective date of termination as required by those
provisions; and
(b) in the event that any termination is based upon the provisions of
Section 10.1(c) or 10.1(d) of this Agreement, the prior written notice
shall be given at least ninety (90) days before the effective date of
termination.
10.3. EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Company and INVESCO shall at the option of the Insurance Company,
continue to make available additional shares of the Company pursuant to the
terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement ("Existing Contracts").
Specifically, without limitation, the owners of the Existing Contracts shall be
permitted to maintain their investments in the Company, to reallocate
investments in the Company, redeem investments in the Company and/or invest in
the Company upon the making of additional purchase payments under the Existing
Contracts and that all relevant provisions of this Agreement shall remain in
effect for those purposes (including any payments due to Insurance Company
pursuant to Section 5.1). The parties agree that this Section 10.3 shall not
apply to any terminations under Article VII and the effect of Article VII
terminations shall be governed by Article VII of this Agreement.
10.4. The Insurance Company shall not redeem Company shares attributable
to the Contracts (as opposed to Company shares attributable to the Insurance
Company's assets held in the Account) except (i) as necessary to implement
Contract-owner-initiated transactions, (ii) as permitted by state and/or
federal laws or regulations or judicial or other legal precedent of general
application (a "Legally Permitted Redemption"), or (iii) as otherwise specified
in the insurance contract. Upon request, the Insurance Company will promptly
furnish to the Company and INVESCO the opinion of counsel for the Insurance
Company (which counsel shall be reasonably satisfactory to the Company and
INVESCO) to the effect that any redemption pursuant to clause (ii) above is a
Legally Permitted Redemption.
10.5. In the event of any termination of this Agreement pursuant to
this Article X or Article VII, the following provisions shall survive: Sections
4.9, 5.1 and 12.1 and Article VIII.
ARTICLE XI. NOTICES.
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of that other party set forth below or at
such other address as the other party may from time to time specify in writing.
25
If to the Company:
X.X. Xxx 000000
Xxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
If to the Insurance Company
Metropolitan Life Insurance
000-X Xxxxx 0 Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Mr. G. Xxxxx Xxxxx-Vice-President
With a copy to:
Metropolitan Life Insurance
0 Xxxxxxx Xxxxxx - Law Department
Xxx Xxxx XX 00000
Attention: Ms. Xxxxx Xxxxxx
If to INVESCO:
X.X. Xxx 000000
Xxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
ARTICLE XII. MISCELLANEOUS
12.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement or as required by applicable law, shall not disclose, disseminate
or utilize such names and addresses and other confidential information without
the express written consent of the affected party unless and until that
information may come into the public domain.
12.2. 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.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. 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.
26
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the NASD and state insurance regulators) and shall permit those
authorities reasonable access to its relevant books and records in connection
with any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.6. 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.
12.7. No party may assign this Agreement without the prior written consent
of the others.
THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK
27
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
Insurance Company:
METROPOLITAN LIFE INSURANCE COMPANY
By its authorized officer,
By: Xxxx X. Xxxx /s/ Xxxx X. Xxxx Title: Vice-President
----------------------------
Date: August 13, 1998
-----------------
Company:
INVESCO VARIABLE INVESTMENT FUNDS, INC.
By its authorized officer,
By: Xxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxx Title: Treasurer
------------------------
Date: August 18, 1998
-----------------
INVESCO:
INVESCO FUNDS GROUP, INC.
By its authorized officer,
By: Xxxx X. Xxxxx /s/ Xxxx X. Xxxxx Title: Sr. Vice-President
----------------------
Date: August 17, 1998
-----------------
INVESCO DISTRIBUTORS, INC.
By its authorized officer,
By: Xxxx X. Xxxxx /s/ Xxxx X. Xxxxx Title: Sr. Vice-President
------------------------
Date: August 17, 1998
-----------------
28
SCHEDULE A
ACCOUNTS
Name of Account Date of Resolution of Insurance Company's Board which
Established the Account
Separate Account UL December 13, 1988
29
SCHEDULE B
CONTRACTS
1. Contract Form 7FV-93 Flexible Premium Variable Life Insurance Policy
(a.k.a. MetFlex-SM-)
30
SCHEDULE C
PERSONS AUTHORIZED TO GIVE INSTRUCTIONS TO THE COMPANY AND INVESCO
As of August 17, 1998
NAME ADDRESS AND PHONE NUMBER
(1) G. Xxxxx Xxxxx, Vice-President 000-X Xxxxx Xxx Xxxxx, Xxxxxx, XX 00000
Print or Type Name
Phone: 000-000-0000
------------------------------------
Signature
(2) Xxxxxxx Xxxxxxxx, Vice-President 000-X Xxxxx Xxx Xxxxx, Xxxxxx, XX 00000
& Actuary
Print or Type Name
Phone: 000-000-0000
------------------------------------
Signature
(3) Xxxxx Xxxxxxxxx, Director 000-X Xxxxx Xxx Xxxxx, Xxxxxx, XX 00000
Print or Type Name
Phone: 000-000-0000
------------------------------------
Signature
It is understood that the above names are subject to change. Changes to this
schedule will be done in writing.
31
Schedule D
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Company by INVESCO, the Company and the
Insurance Company. The defined terms herein shall have the meanings assigned in
the Participation Agreement except that the term "Insurance Company" shall also
include the department or third party assigned by the Insurance Company to
perform the steps delineated below.
1. The number of proxy proposals is given to the Insurance Company by INVESCO
as early as possible before the date set by the Company for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time INVESCO will inform the Insurance 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 Insurance 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 of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Insurance Company will use its best
efforts to provide all required contract holder information to
INVESCO, as soon as possible, but no later than one week after
the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Insurance Company by the Company. The Company or INVESCO
, at its expense, shall produce and personalize the Voting Instruction
cards. The Legal Department of INVESCO ("INVESCO Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and
verification of votes (already on Cards as printed by the Company).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
32
4. During this time, INVESCO Legal will develop, produce, and the Company will
pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Insurance Company
for insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Insurance Company). Contents of envelope sent to
customers by Insurance Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. Return envelope (postage pre-paid by Insurance Company) addressed
to the Insurance Company or its tabulation agent
d. "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 Company.)
e. Cover letter - optional, supplied by Insurance Company and
reviewed and approved in advance by INVESCO Legal.
5. The above contents should be received by the Insurance Company
approximately 3-5 business days before mail date. Individual in charge at
Insurance Company reviews and approves the contents of the mailing package
to ensure correctness and completeness. Copy of this approval sent to
INVESCO Legal.
6. Package mailed by the Insurance Company.
* The Company MUST allow at least a 15-day solicitation
time to the Insurance Company as the shareowner. (A 5-week period is
recommended.) Solicitation time is calculated as calendar days from
(but NOT including) the meeting, counting backwards.
7. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal
procedure.
8. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to the Customer with an explanatory letter, a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Such mutilated or illegible Cards are "hand verified," I.E.,
examined as to why they did not complete the system. Any questions on
those Cards are usually remedied individually.
33
9. There are various control procedures used to ensure proper tabulation of
votes and accuracy of the tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; 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.
10. The actual tabulation of votes is done in units which are then converted to
shares. (It is very important that the Company receives the tabulations
stated in terms of a percentage and the number of SHARES.) INVESCO Legal
must review and approve tabulation format.
11. Final tabulation in shares is verbally given by the Insurance Company to
INVESCO Legal on the morning of the meeting not later than 10:00 a.m.
Denver time. INVESCO Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
12. A Certificate of Mailing and Authorization to Vote Shares will be required
from the Insurance Company as well as an original copy of the final vote.
INVESCO Legal will provide a standard form for each Certification.
13. The Insurance 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,
INVESCO Legal will be permitted reasonable access to such Cards.
14. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
15. INVESCO will bear all costs associated with producing voting instruction
materials, whether such materials are produced by INVESCO or by Insurance
Company. Insurance Company will bear all costs associated with
distributing voting materials to contract holders, tabulating votes, and
archiving voting Cards, as described herein, whether such activities are
performed by Insurance Company or INVESCO.
34
Schedule E
SERVICE FEE
In consideration of the administrative services performed by the Insurance
Company on behalf of INVESCO, INVESCO agrees to pay the Insurance Company a
fee ("Service Fee"). This fee will be computed daily and paid quarterly in
arrears, at an annual rate equal to XXXXXXXXX of the average quarterly value
of the shares of the Company held in the accounts, such payments to commence
with the first dollar of contribution or purchase of shares.
For purposes of this Schedule E, the average quarterly value of the shares of
the Company will be based on the sum of the daily net asset values of the Funds
(as calculated by the Funds) on each calendar day in a quarter divided by the
number of calendar days in the quarter. The applicable portion of the Service
Fee is payable within 15 business days following the end of each calendar
quarter.
The Insurance Company reserves the right to have the service fee paid in a
payment frequency other than quarterly. The Insurance Company will provide
INVESCO with reasonable notice thereof.
35
Schedule F
CERTIFICATE OF COMPLIANCE
Name of Funds:
Variable Universal Life Insurance Policy
To:
G. Xxxxx Xxxxx
Vice President
Metropolitan Life Insurance Company
000-X Xxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxx XX 00000
We have reviewed compliance of the Fund(s) named above with respect to
certain investment diversification requirements for the Fund(s) for the quarter
ending ______________. The review was limited to verifying whether the Fund
complied with the quarterly diversification requirements described in Section
817(h) of the Internal Revenue Code of 1986, as amended, and the regulations
thereunder (the "Section 817(h) Diversification Requirements").
The Review did not include testing compliance with any other investment
limitations in the prospectus or Statement of Additional Information of the
Fund(s).
As of ____________ the Fund was in compliance with the Section 817(h)
Diversification Requirements.
Dated:
--------------------
By:
--------------------
Name:
--------------------
Title:
--------------------
36
JANUS ASPEN SERIES
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 12th day of March, 1999, between JANUS ASPEN
SERIES, an open-end management investment company organized as a Delaware
business trust (the "Trust"), JANUS CAPITAL CORPORATION, a Colorado corporation
(the "Adviser"), 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 has registered the offer
and sale of its shares 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 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 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 "Participating Plans") (the "Exemptive
Order"); and
WHEREAS, the Adviser serves as the Trust investment adviser; 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
-1-
WHEREAS, the Company has registered or will register (unless registration
is not required under applicable law in proper reliance on Section 3(c)(11) of
the 0000 Xxx) each Account as a unit investment trust under the 1940 Act; 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, upon prior written notice to the Company, if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
reasonable 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 reasonably 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 and
other transactions under the Contracts that are not within the Company's
discretion. 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 11:00 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 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.
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 in accordance with mutually agreed
upon guidelines for electronic transmission (which transmission will be by
electronic file) as soon as reasonably practical after the net asset value per
share is calculated and shall use its best efforts to make such net asset value
per share available by 6 p.m. New York time.
1.8 The Trust agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain Participating
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 The Trust and the Adviser agree that Trust shares will not be sold to
any Participating Insurance Company or Plan that owns more than 10% of the
outstanding shares of the Trust that has not entered into an agreement that
imposes on that purchaser substantially the same obligations as are imposed on
the Company by the following provisions of this Agreement: 1.8, 5.1, 6.2, 6.3.
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 reports and other
-3-
documentation for which filing is required, including but not limited to
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 current
prospectus, annual report for any specific Portfolio, semi-annual report and
other shareholder communications, including any amendments or supplements to any
of the foregoing, as the Company shall reasonably request; or (b) provide the
Company with a camera ready copy of such documents in a form suitable for
printing, or in a computer diskette or Internet format that cannot be changed by
the Company (i.e. read-only or PDF format). The Trust will provide the Company
with the prospectus (pursuant to either (a) or (b) above) as soon as reasonably
possible after it receives final SEC comments and before the date of the
prospectus (if reasonably possible). If the Company elects to include any
materials provided by the Trust, specifically prospectuses, SAIs, shareholder
reports and proxy materials, on its web site or any other computer or electronic
format, the Company assumes sole responsibility for maintaining such materials
in the form provided by the Trust and for replacing such materials with all
updates provided by the Trust. The prospectus will contain only those
Portfolios specified by the Company, upon reasonable notice by the Company. The
Trust shall provide the Company with a copy of its statement of additional
information in a form suitable for duplication by the Company. The Trust (at
its expense) shall provide the Company with copies of any Trust-sponsored proxy
materials in such quantity as the Company shall reasonably require for
distribution to Contract owners. The Trust or the Adviser shall bear the costs
of distributing such proxy materials (or similar materials such as voting
solicitation instructions) to the Company's Contract owners, including expenses
associated with the production and personalization of the voting instruction
materials.
2.3 The Company shall bear the costs of printing and distributing the
Trust's prospectus, statement of additional information, shareholder reports and
other shareholder communications to owners of and applicants for policies for
which the Trust is serving or is to serve as an investment vehicle. The Company
assumes responsibility for ensuring the delivery of such materials as well as
proxy materials to Contract owners in accordance with applicable federal and
state securities laws pursuant to the terms of the letter agreement between the
Company and Janus Capital Corporation dated ___________, 1998.
2.4
(a) The Adviser represents that it is the sole owner of the name and xxxx
"Xxxxx." Based on that representation the Company agrees 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 the
-4-
Adviser. Upon termination of this Agreement for any reason, the Company shall
cease all use of any Xxxxx Xxxx(s) as soon as reasonably practicable.
(b) The Company represents that it is the sole owner of the name and xxxx
"MetLife." Based on that representation the Trust agrees that all use of any
designation comprised in whole or part of MetLife (a "MetLife Xxxx") under this
Agreement shall inure to the benefit of the Company. Upon termination of this
Agreement for any reason, the Trust shall cease all use of any MetLife Xxxx(s)
as soon as reasonably practicable.
2.5
(a) The Company shall furnish, or cause to be furnished, to the Trust or
its designee, a copy of each Contract prospectus 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 described in a material manner, at least
ten Business Days prior to its use. 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.
(b) The Trust shall furnish, or cause to be furnished, to the Company or
its designee, a copy of each Trust prospectus or statement of additional
information in which the Company is named prior to the filing of such document
with the Securities and Exchange Commission. The Trust shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company is described in a
material manner, at least ten 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 Business Days after receipt of such material.
(c) The Company intends to create and provide Contract owners with "fact
sheets" of participating funds on a regular basis. The Company will initially
provide a template fact sheet to the Trust for the Trust's approval.
Thereafter, the Company will provide the Trust with samples of the fact sheets
for approval by the Trust only if the content or format of the report changes
substantially. Generally, the Trust and the Company agree to good faith mutual
cooperation in the resolution of novel or controversial issues concerning sales
literature that may arise pursuant to this Agreement. The Trust and the Adviser
agree to provide the Company with the information necessary to complete the fact
sheet no later than 7 to 10 business days after the end of a calendar quarter.
2.6 The Company shall not give any material 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
-5-
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. The
Company assumes all responsibility for filing with the NASD of advertising and
sales literature created by the Company pursuant to this Agreement.
2.7 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.
2.8 The Company shall notify the Trust of any applicable state insurance
laws of which it is aware that restrict the Portfolios' investments or otherwise
materially affect the operation of the Trust and shall notify the Trust of any
material changes in such laws.
2.9 The Adviser agrees to establish and carry out written procedures
reasonably designed to ensure that (a) all contracts of any Participating
Insurance Company that invest in the Trust are and will continue to be treated
as annuity, life insurance or endowment contracts, under applicable provisions
of the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations thereunder; (b) each separate account that funds any such contracts
is and will be a "segregated asset account" and that interests in such accounts
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; and (c) each Participating Plan is a "qualified
pension or retirement plan" within the meaning of those terms under such
regulations. The Adviser will notify the Company immediately upon having a
reasonable basis for believing that any of such requirements has ceased to be
met or might not be met in the future.
2.10 At the request of any party to this Agreement, each other party will
make available to the other party's independent auditors and/or representative
of the appropriate regulatory agencies, all relevant records, data and access to
operating procedures that may be reasonably requested. Trust agrees that
Company shall have the right to inspect, audit and copy all relevant records
pertaining to the performance of services under this Agreement pursuant to the
requirements of any state insurance regulator(s). However, Trust and Adviser
shall own and control all of their respective records pertaining to their
performance of the services under this Agreement.
-6-
2.11 The Trust shall send to the Company, monthly confirmations of activity
in the Separate Account detailing activity in the Account, and shall provide
daily electronic account look-up functions.
2.12 The Trust and Adviser shall provide the Company with any information
it reasonably requests from time to time, in connection with the Company's
performance of this Agreement, and reporting to management and customers. This
information will be provided by the Trust or Adviser within a commercially
reasonable time after receiving any such request from the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of New York and
that it has legally and validly established each Account as a segregated asset
account under such law on the date set forth in Schedule A.
3.2 The Company represents and warrants that each Account (1) has been
registered or, prior to any issuance or sale of the Contracts, will be
registered as a unit investment trust in accordance with the provisions of the
1940 Act or, alternatively (2) has not been registered in proper reliance upon
an exclusion from registration under the 0000 Xxx.
3.3 The Company represents and warrants that the 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 state insurance suitability requirements.
3.4 The Company represents and warrants that it is actively working on
necessary changes to its computer systems that interact with the Trust via any
form of automated feed so that the systems can distinguish the year 2000 from
the year 1900. The Company expects that its systems will be adapted in time for
that event although there cannot be assurance of success.
3.5 The Trust represents and warrants that it is duly organized and
validly existing under the laws of the State of Delaware.
3.6 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
-7-
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.
3.7 The Trust represents, warrants and covenants that the Trust is managed
so that each Account may "look through" to the investments of each Portfolio in
which it holds shares in accordance with the "look through" rules found in
Treasury Regulation 1.817-5 and that each Portfolio will at all times comply
with Section 817(h) of the Code and Treasury Regulation 1.817-5 relating to the
diversification requirements for variable annuity, endowment, modified endowment
or life insurance contracts and any amendments or other modifications to that
Section or Regulation. Upon the request of the Company, the Trust shall provide
the Company with a certificate of compliance with such diversification
requirement for each Portfolio within 20 days of the close of each calendar
quarter in substantially the form attached hereto as Schedule B.
3.8 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 Code, and the rules and regulations thereunder; that each
Portfolio of the Trust does and will at all times continue to qualify as a
regulated investment company under subchapter M of the Code, and that no other
Participating Insurance Company or Participating Plan will purchase shares in
any Portfolio for any purpose or under any circumstances that would preclude the
Company from "looking through" to the investment of each Portfolio in which it
invests, pursuant to the "look through" rules found in Treasury Regulation
1.817-5; and the Trust and the Adviser will promptly notify the Company if at
any time they have a reasonable basis for believing that any of such
representations and warranties have become, or are likely to become, untrue.
3.9 The Trust represents and warrants that it 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 Participating Plans.
3.10 The Adviser represents and warrants that the investment advisory or
management fees paid to the Adviser by the Trust are and will be legitimate and
not excessive and are derived from an advisory contract which does not result in
a breach of fiduciary duty.
-8-
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 and Plans. 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 immediately inform the Company in writing 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 reasonably 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, and any affected Participating Plans, at its expense and to
the extent reasonably practicable (as determined by the Trustees) take
commercially reasonable steps 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
-9-
or would preclude a majority vote, the Company may be required, at the Trust's
reasonable 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 reasonably 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 in
accordance with the terms of this Agreement 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' reasonable
determination and notice thereof to the Company in writing 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 reasonably 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 reasonably 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
(a) 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 carry out the duties imposed upon them by the Exemptive Order, and
said reports, materials and data shall be submitted more frequently if
reasonably deemed appropriate by the Trustees.
(b) The Trust shall at least annually submit to the Company such reports,
materials or data as the Company may reasonably request so that the Company may
carry out the duties
-10-
imposed upon it under this Agreement, and said reports, materials and data shall
be submitted more frequently if reasonably deemed appropriate by the Company.
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
Section 5.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company, which
consent shall not be withheld for any settlement that would be commercially
reasonable for the Indemnified Parties in the absence of this Section 5.1) or
expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses:
(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 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
-11-
(b) arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived from
Trust Documents as defined in Section 5.2(a)) 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
Section 5.2) 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 withheld for any settlement that would be commercially reasonable
for the Indemnified Parties in the absence of this Section 5.2) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute 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 or the Adviser
by or on behalf of the
-12-
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 INDEMNIFICATION BY THE ADVISER. The Adviser agrees to indemnify and
hold harmless the Company and each of its directors, officers, employees, agents
and Contract owners and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 5.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Adviser, which consent shall not be withheld for any settlement that would
be commercially reasonable for the Indemnified Parties in the absence of this
Section 5.3), 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 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 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 or the Adviser by or on behalf of the
-13-
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, the Adviser or
persons under their 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 the Adviser; or
(d) arise out of or result from any failure by the Trust or the Adviser 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 or the Adviser in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Trust.
Without in any way limiting the effect of this Section 5.3 and without in
any way limiting or restricting any other remedies available to the Company, the
Adviser will pay all costs associated with or arising out of any failure, or any
anticipated or reasonably foreseeable failure, to comply with Section 3.6
hereof, and all costs of the Company associated with correcting or responding to
any such failure on behalf of itself or of Contract owners.
5.4 Neither the Company nor the Trust nor the Adviser shall be liable
under the indemnification provisions of Sections 5.1, 5.2 or 5.3, 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.
5.5 Neither the Company nor the Trust nor the Adviser shall be liable
under the indemnification provisions of Sections 5.1, 5.2 or 5.3, 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
-14-
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, 5.2 and 5.3.
5.6 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. Unless the Indemnified Party releases indemnifying
party from any further obligation under this Article V 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. Notwithstanding any other
provision of this Article V, the Company shall be entitled to refuse any request
by the Adviser or the Trust, as the case may be, to assume the defense of any
action brought against the Company by the Internal Revenue Service ("IRS") or
any other tax authority; provided that, following any such refusal, the Adviser
or the Trust, as the case may be, shall be released from any obligation for
further costs of defense under this Article V. If allowed by the applicable
rules of procedure, however, the Adviser and/or the Trust will be entitled to
participate in the defense of any action brought against the Company by the IRS
or any other tax authority, with any and all costs of such participation being
the responsibility of the Adviser and/or the Trust.
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 applicable costs set
forth in Section 2.3; and all relevant provisions of this Agreement shall remain
in effect for these purposes.
-15-
6.3 The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.7 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
000-X Xxxxx 0 Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxxx
Vice President
cc: Ms. Xxxxx Xxxxxx, Esq.
If to Janus Capital Corporation:
Janus Capital Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
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.
-16-
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 and each other reasonable access to its relevant 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.
-17-
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: /s/ Xxxxxx X. Xxxx
----------------------------------------------
Name: Xxxxxx X. Xxxx
----------------------------------------------
Title: Assistant Vice-President
---------------------------------------------
METROPOLITAN LIFE INSURANCE
COMPANY
By: /s/ Xxxx Xxxx
----------------------------------------------
Name: Xxxx Xxxx
----------------------------------------------
Title: Vice-President
----------------------------------------------
JANUS CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxx
----------------------------------------------
Name: Xxxxxx X. Xxxx
----------------------------------------------
Title: Assistant Vice-President
----------------------------------------------
-18-
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 Contract Form 7FV-93
Date of Resolution: December 13, 1998 Flexible Premium Variable
Life Insurance Policy
(a.k.a. MetFlexK)
-19-
SCHEDULE B
CERTIFICATE OF COMPLIANCE
NAME OF FUND(S):
----------------
Janus Aspen Series -
To:
Xxxxxxx Xxxxxxxx
Vice President
Metropolitan Life Insurance Company
000-X Xxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
We have reviewed compliance of the Fund(s) named above with respect to
certain investment diversification requirements for the Fund(s) for the quarter
ending ____________. The review was limited to verifying whether the Fund
complied with the quarterly diversification requirements described in Section
817(h) of the Internal Revenue Code of 1986, as amended, and the regulations
thereunder (the "Section 817(h) Diversification Requirements").
The Review did not include testing compliance with any other
investment limitations in the prospectus or Statement of Additional Information
of the Fund(s).
As of ________________ the Fund was in compliance with the Section
817(h) Diversification Requirements.
Dated:
----------------------------------
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
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