PRINCIPAL UNDERWRITING AND DISTRIBUTION AGREEMENT
This Principal Underwriting and Distribution Agreement (the "Agreement") is
made effective as of the 6th day of March, 2017, between New England Life
Insurance Company ("Insurance Company") (on behalf of itself and certain of its
separate accounts (the "Separate Accounts")) and Brighthouse Securities, LLC
("Principal Underwriter"). The Insurance Company and Principal Underwriter are
herein sometimes referred to individually as a "party" and collectively as the
"parties."
WHEREAS, the Insurance Company desires to obtain from the Principal
Underwriter the underwriting and distribution services provided for herein; and
WHEREAS, the Principal Underwriter desires to provide to the Insurance
Company the underwriting and distribution services provided for herein;
NOW, THEREFORE, the parties agree as follows:
1. ISSUE AND SALE OF CONTRACTS.
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Insurance Company proposes to issue and sell certain variable, registered
fixed, fixed, and privately placed annuity contracts; and variable, fixed and
privately placed life insurance policies (collectively the "Contracts") to the
public through various third party broker dealers and insurance agencies with
the Principal Underwriter serving as distributor. The Principal Underwriter
agrees to provide underwriting and distribution services subject to the terms
and conditions hereof. The Contracts to be offered are more fully described in
the policy forms, registration statements and prospectuses hereinafter
mentioned.
2. GRANT AND ACCEPTANCE OF RIGHTS TO DISTRIBUTE VARIABLE CONTRACTS.
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Insurance Company grants Principal Underwriter the exclusive right, during
the term of this Agreement, subject to applicable insurance law requirements and
registration requirements of the Securities Act of 1933 (the "1933 Act") and the
Investment Company Act of 1940 (the "Investment Company Act") (as applicable)
and the provisions of the Securities Exchange Act of 1934 (the "1934 Act"), to
be the wholesale distributor of the variable Contracts (the "Variable
Contracts") issued through the Separate Accounts, the registered fixed Contracts
(the "Registered Fixed Contracts") and the privately placed Contracts (the
"Private Placement Contracts"), and the Principal Underwriter accepts such
rights. Principal Underwriter will wholesale the Variable, Registered Fixed and
Private Placement Contracts under such terms as set by Insurance Company and
will make such contracts available to duly registered broker dealers and their
registered representatives for sale to the public. As such, Principal
Underwriter is authorized to enter into selling agreements with duty registered
broker dealers authorizing them to sell the Variable, Registered Fixed and
Private Placement Contracts to customers appropriately suited to buy such
Variable, Registered Fixed or Private Placement Contracts as specified in the
applicable prospectus or offering memorandum. All registered broker dealers must
be acceptable to the Insurance Company. All such selling agreements with
registered broker dealers entered into by Principal Underwriter shall provide
that each such broker-dealer will assume full responsibility for continued
compliance by itself and its associated
persons with the Financial Industry Regulatory Authority ("FINRA") Rules
(including applicable rules that are still referred to as "NASD Rules" because
such rules were originally adopted by FINRA's predecessor organization, the
National Association of Securities Dealers, Inc.) and applicable federal and
state securities laws. The selling agreements shall require that all associated
persons of such registered broker-dealers soliciting applications for the
Contracts shall be duly and appropriately licensed or appointed for the sale of
the Contracts under the Federal and state securities laws and the insurance laws
of the applicable states or jurisdictions in which such Contracts may be
lawfully sold.
3. GRANT AND ACCEPTANCE OF RIGHTS TO DISTRIBUTE FIXED CONTRACTS.
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Insurance Company grants Principal Underwriter the right, during the term
of this Agreement, subject to applicable insurance law requirements, to be the
wholesale distributor of the fixed Contracts (the "Fixed Contracts"), and the
Principal Underwriter accepts such rights. Principal Underwriter will wholesale
the Fixed Contracts under such terms as set by Insurance Company. Principal
Underwriter is authorized to contract with duly licensed insurance agencies,
agents and brokers reasonably acceptable to Insurance Company for the sale of
the Fixed Contracts to purchasers permitted to buy such Contracts as specified
in the applicable policy form.
4. PERFORMANCE OF SERVICES.
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In performing the underwriting and distribution services under this
Agreement, Principal Underwriter agrees as follows:
(a) Principal Underwriter shall use its best efforts to wholesale the
Contracts, and otherwise to perform all duties and functions
which are necessary and proper for the wholesale distribution of
the Contracts.
(b) Principal Underwriter shall offer the Variable, Registered Fixed
and Private Placement Contracts for sale in accordance with the
prospectuses or offering memoranda then in effect, as applicable.
(c) Principal Underwriter shall be responsible for any filings of
advertisements, marketing literature and educational materials
required to be made with the FINRA.
(d) Principal Underwriter agrees to join the Insurance Company, upon
the Insurance Company's request and after independent review of
such matters, in any joint applications required to be filed with
the Securities and Exchange Commission ("SEC") under the 1934
Act, the 1933 Act and the Investment Company Act.
5. COMPENSATION.
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As further provided in this Section, Insurance Company agrees to reimburse
Principal Underwriter at cost for services provided by Principal Underwriter
pursuant to this Agreement. Insurance Company shall pay to Principal Underwriter
a fee in an amount equal to all expenses, direct and indirect, reasonably and
equitably determined by Principal Underwriter to be
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attributable to the underwriting and wholesale distribution services provided by
Principal Underwriter to Insurance Company pursuant hereto, including
commissions and other compensation related costs paid by Principal Underwriter,
except to the extent that applicable law requires otherwise.
The bases for determining all such charges to Insurance Company shall be
consistent with applicable law. Such bases shall be modified and adjusted where
necessary or appropriate to reflect fairly and equitably the actual incidence of
cost incurred by Principal Underwriter on behalf of Insurance Company.
6. PAYMENT.
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Principal Underwriter shall submit to Insurance Company, within thirty (30)
business days after the end of each calendar month (or such other interval not
greater than quarterly as such parties may agree), a written statement showing
in reasonable detail the charges estimated to be due from Insurance Company to
Principal Underwriter for services pursuant to this Agreement in the preceding
calendar month (or interval), as well as any charges not included in any
previous statement. Any balance payable as shown in such written statement shall
be paid within thirty (30) days following receipt of such written statement by
Insurance Company, subject to later adjustment if and as determined in
accordance with Section 6 hereof. The charges shown in any such statement may be
based on good faith estimates by Principal Underwriter of the charges
attributable to such services, which estimate may take into account charges for
services provided hereunder in the preceding billing periods. The settlement of
any balance payable pursuant to this Section 6 shall be in accordance with the
requirements in the National Association of Insurance Commissioners' Accounting
Practices and Procedures Manual.
No later than the end of the first quarter of the calendar year following
the calendar year in which the services charged for hereunder were provided.
Principal Underwriter shall submit to Insurance Company a statement showing in
reasonable detail the actual charges for such services. Any difference between
such actual charges and the estimated charges for such services as shown in any
previous statement provided by Principal Underwriter to the Insurance Company
pursuant to this Section 6 shall be paid by Principal Underwriter or Insurance
Company, as the case may be, within thirty (30) days following receipt of such
written statement by Insurance Company, subject to later adjustment if and as
determined in accordance with the next paragraph of this Section 6.
Principal Underwriter's determination of the charges hereunder shall be
conclusive as between the parties, except that if Insurance Company objects to
any such determination, it shall so advise Principal Underwriter in accordance
with Section 19(i) hereof within thirty (30) days of receipt of notice of said
determination. Unless the parties can reconcile such objection, or otherwise
agree, they shall select a firm of independent accountants which shall determine
the charges properly allocable to Principal Underwriter and shall, within a
reasonable time not to exceed one hundred eighty (180) days, submit such
determination, together with the basis therefor, in writing to both parties,
whereupon such determination shall be binding. The expenses of any such
determination by a firm of independent certified public accountants shall be
borne as determined to be equitable by such accountants.
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If Insurance Company is required to refund premiums or return accumulation
values and waive surrender charges on any Contract for any reason; then no
commission will be payable on such payments, and previously paid commissions,
shall be refunded to the Insurance Company. Insurance Company shall not advance
funds to Principal Underwriter except in respect of satisfying Insurance
Company's obligations under this Agreement and to pay for services pursuant to
this Agreement.
7. INDEMNIFICATION.
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Insurance Company shall indemnify, defend, and hold harmless Principal
Underwriter from and against all liabilities and expenses arising out of any
claims, demands, proceedings, suits, or actions, and any reasonable attorney's
fees and costs in connection therewith (collectively the "Legal Expenses"),
arising out of Principal Underwriter's underwriting and Wholesaling distribution
services and its promotion of the Contracts pursuant to this Agreement; provided
that Insurance Company shall not indemnify Principal Underwriter for any Legal
Expenses arising out of any intentional, willful, or grossly negligent act or
omission by Principal Underwriter, or its officers or employees.
Principal Underwriter shall indemnify, defend, and hold harmless Insurance
Company from and against all liabilities and expenses, including any reasonable
attorney's fees and costs in connection therewith (collectively the "Legal
Expenses") arising out of any intentional, bad faith, willful, grossly
negligent, fraudulent or unauthorized acts or omissions by Principal
Underwriter, its employees, wholesalers, agents or principals (a) in the
performance of the services hereunder, or (b) including but not limited to
improper promotion and/or marketing of the Contracts, unauthorized use of sales
materials or advertisements, or any oral or written misrepresentations.
8. DOCUMENTS TO BE FURNISHED.
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On behalf of the Separate Accounts, Insurance Company shall furnish
Principal Underwriter with copies of all prospectuses, financial statements,
offering memoranda and other documents which Principal Underwriter reasonably
requests for use in connection with the distribution of the Variable, Registered
Fixed and Private Placement Contracts. Insurance Company shall provide to
Principal Underwriter such number of copies of the current effective
prospectuses or offering memoranda as Principal Underwriter shall request.
Insurance Company shall also furnish Principal Underwriter with copies of
all documents which Principal Underwriter reasonably requests for use in
connection with the distribution of the Fixed Contracts.
9. RESTRICTIONS ON REPRESENTATIONS.
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Principal Underwriter is not authorized to give any information or to make
any representations concerning the Contracts or the Separate Accounts of
Insurance Company other than those contained in the current registration
statements or prospectuses relating to the Separate Accounts filed with the SEC
or such offering memoranda or sales literature as may be authorized for use by
Insurance Company. Principal Underwriter shall not have authority, on behalf of
Insurance Company, to waive any Contract provision, to extend the time of paying
any purchase payments, or to receive any monies or purchase payments (except for
the sole purpose of forwarding monies or purchase
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payments to Insurance Company). Principal Underwriter shall not expend, nor
contract for the expenditure of, the funds of Insurance Company, Principal
Underwriter acknowledges and agrees that Insurance Company shall have the right
at any time to suspend or limit the offering of the Contracts.
10. PREPARATION AND FILING OF CONTRACTS AND PROSPECTUSES.
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Insurance Company shall be responsible for preparing the Contract forms and
filing them with applicable state insurance regulatory authorities, and for
preparing the prospectuses and registration statements and filing them with the
SEC and state regulatory authorities, to the extent required. Insurance Company
also shall be responsible for any filings of advertising and sales literature
required to be made with state regulatory authorities. Insurance Company agrees
to forward to Principal Underwriter copies of any and all amendments to the
registration statement. Insurance Company agrees to advise Principal Underwriter
immediately of: (1) any request by the SEC (i) for amendment of the registration
statement or (ii) for additional information that Insurance Company determines
is material to Principal Underwriter; (2) the issuance by the SEC of any stop
order suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose; and (3) the occurrence of any
material event, if known by Insurance Company, that makes untrue any material
statement made in the registration statement or that requires the making of a
change therein in order to make any material statement made therein not
misleading.
Insurance Company represents to Principal Underwriter that the prospectus
included in a Separate Account's Registration Statement for each Variable or
Registered Fixed Contract, post-effective amendments thereto and any supplements
thereto, as filed or to be filed with the SEC, and that the offering documents
for each Private Placement Contract, as of their effective dates, contain or
will contain, all statements and information which are required to be stated
therein by the 1933 Act and/or any state law or regulation and in all respects
conform or will conform to the requirements thereof. Neither any prospectus, nor
any supplement thereof, or offering memorandum or other offering document,
includes or will include, any untrue statement of a material fact, or omits or
will omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, provided, however, that the
foregoing representations shall not apply to information contained in or omitted
from any prospectus or supplement or offering memorandum or other offering
document in reliance upon, and in conformity with, written information furnished
to Insurance Company by Principal Underwriter specifically for use in the
preparation thereof. The foregoing representation also shall not apply to
information contained in or omitted from any prospectus or supplement of any
underlying mutual fund.
11. RULE 10B-10 REQUIREMENTS.
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Insurance Company, or its appointed designee, as agent for Principal
Underwriter, shall confirm to each applicant for and purchaser of a Contract in
accordance with Rule 10b-10 under the 1934 Act the acceptance of purchase
payments and such other transactions as are required by Rule 10b-10 or
administrative interpretations thereunder, or by any other SEC or FINRA rule
requiring the delivery of such information.
12. OTHER REGULATORY MATTERS.
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Insurance Company and Principal Underwriter hereby agree to comply with all
applicable laws and regulations intended to prevent, detect, and report money
laundering and suspicious transactions and will take all necessary and
appropriate steps, consistent with applicable regulations and generally accepted
industry practices, to (1) obtain, verify, and retain information with regard to
customer identification and source of funds, and (2) to maintain records of all
Separate Account transactions.
The parties to this Agreement shall (to the extent consistent with
applicable law) cooperate in providing information requested by any law
enforcement, regulatory or administrative authority. To the extent permitted by
applicable law and/or regulation, each party shall notify the other party of any
concerns that shall arise in connection with any Contract in the context of
relevant anti-money laundering legislation/regulations. Each party to this
Agreement shall hold harmless the other party for any actions that may arise for
good faith attempts to comply with all applicable laws, rules and/or regulations
of governmental agencies, law enforcement organizations and/or Self Regulatory
Organizations.
The parties agree that all Nonpublic Personal Information obtained in the
performance of duties and obligations under the Agreement shall be held in the
strictest confidence and will not be used for any other purpose except to
perform duties under the Agreement. Such information shall not be disclosed to
any third party without the express written consent of the affected individual
or as may be required by law. Each party will establish procedures to protect
the security and confidentiality of such information. Nonpublic Personal
Information shall mean any information about an individual, including financial
and health information, that is not publicly available.
13. MAINTENANCE OF BOOKS.
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Each party shall maintain its own books, accounts and records in such a way
to disclose clearly and accurately the nature and details of the transactions
between them, including such accounting information as is necessary to support
the charges under this Agreement, and such additional information as either of
the parties may reasonably request for purposes of its internal bookkeeping and
accounting operations, Principal Underwriter shall keep such books, accounts and
records, insofar as they pertain to the computation of charges hereunder,
available for audit, inspection and copying by Insurance Company and persons
authorized by it or any governmental agency having jurisdiction over the parties
during all reasonable business hours upon reasonable prior notice.
14. OWNERSHIP AND CUSTODY OF RECORDS.
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All records, books and files established and maintained by Principal
Underwriter by reason of its performance of services under this Agreement, which
absent this Agreement would have been held by Insurance Company, shall be deemed
the property of Insurance Company and shall be maintained in accordance with
applicable law and regulation. Such records shall be available, upon reasonable
prior notice, during normal business hours for inspection by Insurance Company,
anyone authorized by Insurance Company, and any governmental agency that has
regulatory authority over Insurance Company's business activities. Such records
shall also be available upon reasonable prior notice, during normal business
hours for inspection by any governmental agency or self-regulatory organization
that has regulatory authority over Principal Underwriter's business activities.
Copies of such records, books and files shall be delivered to
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Insurance Company upon reasonable prior notice. Principal Underwriter shall
promptly deliver to Insurance Company such records, books and files upon
termination of this Agreement.
Both parties to this Agreement agree to keep the necessary records as
indicated by applicable state and federal law and to render the necessary
assistance to one another for the accurate and timely preparation of such
records. The books, accounts and records of Insurance Company, the Separate
Accounts and Principal Underwriter as to all transactions hereunder shall be
maintained so as to disclose clearly and accurately the nature and details of
the transactions. Insurance Company shall maintain such books and records of
Principal Underwriter pertaining to the sale of the Contracts and required by
the 1934 Act as may be mutually agreed upon from time to time by Insurance
Company and Principal Underwriter, provided that such books and records shall be
the property of Principal Underwriter, and shall at all times be subject to such
reasonable periodic, special or other examination by the SEC and all other
regulatory bodies having jurisdiction.
15. OVERSIGHT & AUDIT.
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Notwithstanding anything to the contrary herein, the business and
operations of Insurance Company shall at all times be subject to the direction
and control of the board of directors (or similar governing body) of Insurance
Company. The activities of Principal Underwriter hereunder shall be subject to
the supervision and oversight of Insurance Company, and Insurance Company shall
monitor the services performed by Principal Underwriter no less than annually
for quality assurance.
Insurance Company and persons authorized by it or any governmental agency
having jurisdiction over Insurance Company shall have the right, at Insurance
Company's expense, to conduct an audit of the relevant books, accounts and
records of Principal Underwriter upon giving reasonable notice of its intent to
conduct such an audit. In the event of such audit, Principal Underwriter shall
give to the party requesting the audit reasonable cooperation and access to all
books, accounts and records necessary to audit during normal business hours.
16. BOOKS OF ACCOUNT.
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During the term of this Agreement, all of Insurance Company's books of
account shall be maintained by Insurance Company and no books of account of
Insurance Company shall be maintained by Principal Underwriter. All of Insurance
Company's books of account shall be maintained in accordance with applicable law
and regulations. Principal Underwriter shall cause Insurance Company to be
furnished with such reports as Insurance Company may reasonably request for the
purpose of meeting reporting and recordkeeping requirements under the insurance
laws of the Commonwealth of Massachusetts and any other applicable states or
jurisdictions. Principal Underwriter acknowledges that all books and records
provided for pursuant to this Section 16 shall be the property of Insurance
Company and are subject to the control of the Insurance Company. A computer
terminal linked to an electronic system that generates the electronic records
that constitute Insurance Company's books of account shall be kept and
maintained at Insurance Company's principal office. During all normal business
hours, upon reasonable prior notice, there shall be ready availability and easy
access through such terminal (either directly by insurance regulatory personnel
or indirectly with the aid of Insurance Company's personnel) to the electronic
media used to maintain the records comprising Insurance Company's books of
account. The electronic records shall be convertible into records that are in a
readable form.
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17. CONFIDENTIALITY.
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The parties agree that during the term of this Agreement they may wish to
exchange information which the party providing such information deems
confidential. Therefore, the parties agree that the recipient of Confidential
Information (as defined below) shall not, at any time, duplicate or disclose
such information to any other person, firm, corporation or entity or use it for
its own benefit except to faithfully perform its obligations under this
Agreement and shall use the same degree of care to avoid disclosure, duplication
or use of such Confidential Information as the recipient of the Confidential
Information employs with respect to its own confidential information of like
importance.
The obligation of confidentiality with respect to Confidential Information
will not apply to any information disclosed by the recipient of Confidential
Information (a) if and to the extent that disclosure by such recipient is
required by applicable law or any court, governmental agency or regulatory
authority or by subpoena or discovery request in pending litigation, (b) if the
information is or becomes available from public information (other than as a
result of prior unauthorized disclosure by such recipient), (c) if the
information is or was received from a third party not known by such recipient to
be under a confidentiality obligation with regard to such information or (d) if
the information was in the possession of such recipient other than by reason of
the services performed pursuant to this Agreement.
The term "Confidential Information" shall include any trade secret or
information that is for the time being confidential to the provider of the
information and is not in the public domain.
Except as provided herein, no rights to the Confidential Information are
transferred to the recipient of the Confidential Information. All Confidential
Information and any copies shall, at the option and written request of the
provider of the Confidential Information, either be promptly returned to the
provider of the Confidential Information or be destroyed.
18. EFFECTIVENESS AND TERMINATION.
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This Agreement shall be effective upon the execution hereof and will remain
in effect unless terminated as hereinafter provided. This Agreement may at any
time be terminated by any party hereto upon 60 days written notice to the other
parties. Notwithstanding the foregoing, this entire Agreement will immediately
terminate, including during its term, upon written notice being given by
Insurance Company to Principal Underwriter in the event of: (i) Principal
Underwriter's willful misconduct, gross negligence or bad faith in performing
the services hereunder; provided, that Principal Underwriter shall have 60 days
after receipt of written notice detailing such alleged willful misconduct, gross
negligence or bad faith to cure such matter to Insurance Company's reasonable
satisfaction or to agree with Insurance Company to a plan to remediate such
matter before Insurance Company shall be permitted to deliver a termination
notice to Principal Underwriter, (ii) liquidation, conservatorship or
receivership of Principal Underwriter or (iii) Insurance Company's receipt of a
definitive ruling from a state insurance regulatory authority that such
termination is required to comply with insurance laws and regulations applicable
to Insurance Company; provided, that Principal Underwriter shall have 60 days
after receipt of such definitive ruling to (x) agree with Insurance Company to
modify this Agreement or the provision of services hereunder to the least extent
necessary to enable Insurance Company to comply with such ruling or (y) contest
or obtain a
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modification or reversal of such ruling, in either case before Insurance Company
shall be permitted to deliver a termination notice to Principal Underwriter.
19. MISCELLANEOUS.
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(a) Amendment. This Agreement may be amended only upon mutual agreement of
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the parties hereto in writing.
(b) Successors and Assigns. This Agreement shall be binding upon the
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parties hereto and their transferees, successors and assigns. The benefits of
and the right to enforce this Agreement shall accrue to the parties and their
transferees, successors and assigns.
(c) Assignment. Neither this Agreement nor any of the rights, obligations
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or liabilities of either party hereto shall be assigned without the written
consent of the other party.
(d) Interpretation. This Agreement is subject to and its terms are to be
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interpreted and construed in accordance with the provisions of the Investment
Company Act, the 1933 Act, the 0000 Xxx. and the rules, regulations, and rulings
thereunder and is subject to the provisions of the FINRA Rules. Without limiting
the generality of the foregoing, the term "assigned" shall not include any
transaction exempted from section 15(b)(2) of the Investment Company Act.
The Underwriter shall submit to all regulatory and administrative entities
having jurisdiction over the operations of the Accounts, present or future; and
will provide any information, reports or other material which any such entity by
reason of this Agreement may request or require pursuant to applicable laws or
regulations.
(e) Intended Beneficiaries. Nothing in this Agreement shall be construed to
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give any person or entity other than the parties hereto any legal or equitable
claim, right or remedy. Rather, this Agreement is intended to be for the sole
and exclusive benefit of the parties hereto.
(f) Counterparts. This Agreement may be executed in counterparts, each of
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which shall be deemed an original but all of which shall together constitute one
and the same instrument.
(g) Applicable Law. This Agreement shall be interpreted, construed, and
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enforced in accordance with the laws of the State of Massachusetts without
reference to the conflict of law provisions thereof.
(h) Severability. If any portion of this Agreement shall be found to be
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invalid or unenforceable by a court or tribunal or regulatory agency of
competent jurisdiction, the remainder shall not be affected thereby, but shall
have the same force and effect as if the invalid or unenforceable portion had
not been inserted.
(i) Notices. All notices, requests, demands and other communications under
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this Agreement shall be in writing and shall be deemed to have been given on the
date of service if served personally on the party to whom notice is to be given,
or on the date of mailing if sent by First Class Mail, Registered or Certified,
postage prepaid and properly addressed.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
signed on their behalf by their respective officers thereunto duly authorized.
NEW ENGLAND LIFE INSURANCE COMPANY
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
Title Vice President
BRIGHTHOUSE SECURITIES, LLC
By: /s/ P. Xxxxx X. Xxxxxxxx
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Name: P. Xxxxx X. Xxxxxxxx
Title VP & Treasurer
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