WHOLESALE LEVEL
SERVICING AGREEMENT
FOR IN-FORCE MLOA PRODUCTS
AGREEMENT dated as of October 1, 2013 by and among MONY Life Insurance
Company of America ("MLOA") and AXA Distributors, LLC (the "BROKER-DEALER",
"WHOLESALE SERVICER" or "ADL").
W I T N E S S E T H :
WHEREAS, prior to April 1, 2005 MLOA and/or MONY Securities Corp.
("MSC"), its affiliated broker-dealer, insurance agency and the principal
underwriter of its variable life insurance and annuity products, had authorized
third party insurance agencies to sell and service fixed life insurance policies
and annuity contracts issued by MLOA and had authorized third-party insurance
agents, agencies and/or broker-dealers, as the case may be, to sell and service
variable life insurance policies and annuity contracts issued by MLOA pursuant
to sales agreements between MLOA and/or MSC and such third party insurance
agents, agencies and/or broker-dealers, as the case may be (the "PRE-4/1/2005
RETAIL SALES AGREEMENTS") and Wholesale Servicer currently acts as the principal
underwriter and wholesale servicer with respect to products sold pursuant to the
Pre-4/1/2005 Retail Sales Agreements;
WHEREAS, on April 1, 2005 MLOA and MSC entered into a Wholesaler
Distribution Agreement with the Wholesale Servicer, authorizing the Wholesale
Servicer to distribute fixed and variable MLOA life insurance and annuity
products to third party insurance agencies and broker-dealers (the "2005
DISTRIBUTION AGREEMENT") pursuant to which ADL agreed to act as a principal
underwriter of MLOA's variable life insurance and annuity products, to provide
wholesale level services to MLOA in respect of in-force MLOA fixed and variable
life insurance and annuity products sold by independent third-party insurance
agents, agencies and/or broker-dealers, pursuant to sales agreements between ADL
and independent third-party insurance agents, agencies and/or broker-dealers
(the "ADL SALES AGREEMENTS" and together with the Pre-4/1/2005 Retail Sales
Agreements, the "IN-FORCE RETAIL SALES AGREEMENTS");
WHEREAS, third party agents, agencies and/or broker-dealers are no longer
permitted to sell MLOA life and annuity products pursuant to the In-Force Retail
Sales Agreements but continue to be the broker(s)-of-record (as the same may
change from time to time, the "BROKERS-OF-RECORD") of the MLOA fixed and
variable life insurance and annuity products that correspond to the policy forms
to be listed on Schedule A upon delivery by ADL pursuant to Section 1.1 hereof
(the "IN-FORCE POLICIES AND CONTRACTS" and individually referred to herein as a
"POLICY" or a "CONTRACT") and are currently servicing the In-Force Policies and
Contracts (and selling conversion policies to the owners thereof) pursuant to
the In-Force Retail Sales Agreements;
WHEREAS, MLOA has appointed the Broker-Dealer as the principal underwriter
of the variable In-Force Policies and Contracts;
WHEREAS, MLOA and the Wholesale Servicer are simultaneously herewith
modifying and amending the 2005 Distribution Agreement to terminate the
agreement provided with respect to the In-Force Policies and Contracts as of the
date hereof;
WHEREAS, MLOA and Wholesale Servicer wish to enter into this Servicing
Agreement, simultaneously with the modification and amendment of the 2005
Distribution Agreement, to enable the Wholesale Servicer to continue to service
the In-Force Policies and Contracts;
WHEREAS, MLOA wishes to retain the Wholesale Servicer, from and after the
date hereof to pay the compensation, if any, due and payable to the third party
agents, agencies and/or broker-dealers with respect to the In-Force Policies and
Contracts pursuant to the In-Force Retail Sales Agreements, provide the other
wholesale level services with respect to the In-Force Policies and Contracts
more particularly described herein.
NOW THEREFORE in consideration of the premises and of the mutual covenants
and promises herein contained, the parties hereto agree as follows:
ARTICLE I
AUTHORIZATION TO PROVIDE WHOLESALE SERVICES
Section 1.1 WHOLESALE LEVEL SERVICING. MLOA hereby retains the Wholesale
Servicer to provide the wholesale level services more particularly described on
Annex 1 with respect to the In-Force Policies and Contracts in accordance with
the terms and conditions of this Agreement and the In-Force Retail Sales
Agreements. The servicing to be provided by the Wholesale Servicer shall
include, without limitation, the payment of all compensation due and payable to
the Brokers-of-Record pursuant to the In-Force Retail Sales Agreements. Except
to the extent arising out of the negligence or willful misconduct of the
Wholesale Servicer or its Associates with respect to the services described on
Annex 1, the Wholesale Servicer shall have no liability to MLOA for failure of a
Broker-of-Record to perform its obligations under the In-Force Retail Sales
Agreements. The Wholesale Servicer shall not be responsible for overseeing or
supervising the performance of the Brokers-of-Record of their obligations under
the In-Force Retail Sales Agreements and shall have no obligation hereunder to
take any action against a Broker-of-Record for failing to perform any of its
obligations thereunder or any liability hereunder for failing to do so. Each
party shall notify the other if it becomes aware of material violations of
applicable law or of the In-Force Retail Sales Agreements by the
Brokers-of-Record. As promptly as reasonably practicable (and in any event
within 30 days) following the date hereof, Wholesale Servicer shall provide to
MLOA (a) a list of the policy forms that correspond to the In-Force Policies and
Contracts (the "POLICY FORM LIST") and (b) a representative sample of the
In-Force Retail Sales Agreements (the "SAMPLE SALES AGREEMENTS"). The Policy
Form List and the Sample Sales Agreements so provided shall upon delivery be
attached hereto as Schedule A and Schedule E, respectively, and shall be made a
part hereof as though attached as schedules to this Agreement on the date
hereof. Wholesale Servicer represents and warrants to MLOA that, except with
respect to compensation terms, the terms of the In-Force Retail Sales Agreements
are consistent in all material respects with the terms of the Sample Sales
Agreements. Wholesale Servicer agrees that without the prior written consent of
MLOA (which shall not be unreasonably withheld, conditioned or delayed), during
the term of this Agreement, it will not terminate, assign (except as provided in
the last sentence of this Section 1.1) or enter into a written amendment or
issue any written waiver amending or waiving any of its rights or obligations
under the In-Force Retail Sales Agreements, except such rights or obligations
relating to the rates and terms of compensation payable to the Brokers-of-Record
serviced by Wholesale Servicer hereunder. For the avoidance of doubt, the prior
written consent of MLOA is not required for the Wholesale Servicer to consent to
and effect the assignment of an In-Force Retail Sales Agreement from one
Broker-of-Record to another Broker-of-Record.
Section 1.2 CONVERSION SALES. MLOA also authorizes the Wholesale Servicer
to distribute the Conversion Policies and Contracts (as hereinafter defined) to
the Brokers-of-Record for sale pursuant to the In-Force Retail Sales Agreements
to the owners of the MLOA Policies and Contracts (as hereinafter defined) who
elect to exercise the conversion rights, if any, available to them thereunder.
As used herein, "CONVERSION POLICIES AND CONTRACTS" (and, individually, as the
case may be, a "CONVERSION POLICY" or "CONVERSION CONTRACT") shall mean (i) such
MLOA life insurance and/or annuity contracts as MLOA is obligated to make
available to such owners and (ii) such other life insurance and/or annuity
contracts
2
issued by MLOA and/or the "Administrator", as defined under the Administrative
Services Agreement by and between MLOA and Protective Life Insurance Company,
dated as of October 1, 2013 (the "ADMINISTRATIVE SERVICES AGREEMENT") or any of
the Administrator's affiliated insurance companies. The Wholesale Servicer shall
have the exclusive right to distribute Conversion Policies and Contracts to the
Brokers-of-Record and each Broker-of-Record shall have the exclusive right offer
to sell Conversion Policies and Contracts to its customers who are the owners of
the MLOA Policies and Contracts. MLOA shall not offer Conversion Policies and
Contracts directly to the owners of the MLOA Policies and Contracts or
authorize, permit or pay compensation or other sums to any other retail or
wholesale insurance agent, insurance agency and/or broker/dealer in connection
with the sale of Conversion Policies and Contracts to the owners of the MLOA
Policies and Contracts. The Wholesale Servicer will provide wholesale level
services, including payment of compensation, with respect to all Conversion
Policies and Contracts sold to the owners of the MLOA Policies and Contracts in
accordance with the terms and conditions of this Agreement (and the term "MLOA
POLICIES AND CONTRACTS" shall include Conversion Policies and Contracts for such
purposes), and the Brokers-of-Record will be permitted to continue to service
the Conversion Policies and Contracts pursuant to the In-Force Retail Sales
Agreements. MLOA will pay first year and renewal compensation to the Wholesale
Servicer on all Conversion Policies and Contracts sold to owners of MLOA
Policies and Contracts that is consistent with the commission paid by MLOA as
set by the Administrator pursuant to the Administrative Services Agreement in
accordance with its then-current practice, provided that, in the case of
Conversion Policies and Contracts issued by the Administrator or an affiliated
insurance company of the Administrator, the Wholesale Servicer shall receive
from the Administrator or such affiliated insurance company compensation
consistent with the commission paid by the Administrator or such affiliated
insurance company in accordance with its then-current practice and the Wholesale
Servicer shall enter into a selling agreement with Administrator or such
affiliate providing protections to the Administrator or such affiliate that will
issue the Conversion Policy or Contract substantially similar to the protections
provided to MLOA hereunder; provided that such selling agreement shall also
include obligations of Administrator or such affiliate substantially similar to
the obligations of MLOA hereunder. The Wholesale Servicer will pay first year
and renewal compensation to Brokers-of-Record on all Conversion Policies and
Contracts in accordance with the terms and conditions of the In-Force Retail
Sales Agreements.
Section 1.3 ENHANCEMENT OFFERS. MLOA may from time to time during the term
of this Agreement offer directly to any holder of an In-Force Policy or Contract
that is at or near the end of its level-premium term period (an "ENHANCED
POLICY") any enhancement or modification of the terms of such In-Force Policy or
Contract (collectively, the "ENHANCEMENT OFFERS") (which enhancement or
modification, for the avoidance of doubt, shall not include issuance of a new
policy or contract). MLOA shall notify Wholesale Servicer of its intention to
commence any program for Enhancement Offers to holders of such Enhanced Policies
no later than 45 days prior to the start of any such program and such notice
shall include reasonable detail as to the specific Enhanced Policies, or holders
thereof, that will receive such offers and the schedule for contacting such
holders; provided further that if the duration of such program is longer than
six months, MLOA shall deliver a new notice pursuant to this Section 1.3 with
the detail specified above prior to continuing such program for longer than six
months. MLOA will only make Enhancement Offers to owners of Enhanced Policies
directly as the issuer of the Enhanced Policies and shall not authorize, permit
or pay compensation or other sums to any insurance agent or agency in connection
with any Enhancement Offers made to the owners of the Enhanced Policies or the
acceptance of any Enhancement Offers by any of such owners. The Wholesale
Servicer will continue to provide wholesale level services with respect to all
Enhanced Policies, modified and/or amended pursuant to the Enhancement Offers,
in accordance with the terms and conditions hereof (and the term "MLOA POLICIES
AND CONTRACTS" shall continue to include all Enhanced Policies, whether or not
so modified or amended), and the Brokers-of-Record will be permitted to continue
to service all Enhanced Policies, modified and/or amended pursuant to the
Enhancement Options, in accordance with the terms and conditions of the In-Force
Retail Sales Agreements. MLOA will continue to pay compensation, if any, payable
hereunder with
3
respect to such Enhanced Policies as provided in Section 5.1 hereof (but no
additional compensation shall be due or payable to the Wholesale Servicer
hereunder as a result of such modifications and/or amendments). MLOA may from
time to notify Wholesale Servicer that it proposes to commence any other program
in response to complaints of holders of MLOA Policies and Contracts to make
direct offers to holders of MLOA Policies and Contracts for the enhancement or
modification of such MLOA Policies and Contracts in situations other than when
they are at or near the end of the level-premium term period, if the
commencement of such program would not reasonably be expected to impact the
ability of Wholesale Servicer and its affiliates to sell contracts to such
holders in the future in compliance with the terms of this Agreement. If MLOA
proposes to commence any such additional program, Wholesale Distributor shall
consider the proposed commencement of such additional program in good faith;
provided that (i) MLOA may commence any such program only with the express
approval of Wholesale Servicer, and Wholesale Servicer may not unreasonably
withhold, condition or delay its approval of such proposal and (ii) such
approval will be deemed for all purposes hereunder conclusively to have been
granted if, at a time when MLOA is an affiliate of AXA Financial, Inc.
("PARENT"), Parent has approved such program pursuant to the terms of the Master
Agreement, dated as of April 10, 2013, among Parent, AXA Equitable Financial
Services, LLC (the "SELLER") and Protective Life Insurance Company (the "MASTER
AGREEMENT").
Section 1.4 LIMITATIONS ON AUTHORITY. The Wholesale Servicer shall not
possess or exercise any authority on behalf of MLOA other than that expressly
conferred on it by this Agreement. In particular, and without limiting the
foregoing, the Wholesale Servicer shall not have any authority, nor shall it
grant such authority to any Associate (as hereinafter defined), to alter,
modify, waive or change any of the terms, rates, or conditions of any Policy or
Contract or under any circumstances pay or allow, or offer to pay or allow, any
rebate of premium or consideration in any manner whatsoever, directly or
indirectly.
Section 1.5 INDEPENDENT STATUS. The parties acknowledge that MLOA is
retaining the Wholesale Servicer as an independent contractor. Nothing herein
contained shall constitute the Wholesale Servicer or any officers, employees,
agents or representatives thereof as being employees of MLOA or any affiliate or
subsidiary thereof.
ARTICLE II
PRINCIPAL UNDERWRITER; LICENSING AND REGISTRATION
Section 2.1 PRINCIPAL UNDERWRITER. Each of MLOA and the Broker-Dealer
warrants and represents that MLOA has appointed the Broker-Dealer as the
principal underwriter of the variable In-Force Policies and Contracts and agree
that, except as set forth in this Section 2.1, the Broker-Dealer will continue
to be the principal underwriter of the variable In-Force Policies and Contracts
at all times during the term. If at any time, MLOA ceases to be a Subsidiary (as
defined in the Master Agreement) of Parent, the Broker-Dealer may terminate its
obligations hereunder as principal underwriter of the variable In-Force Policies
or Contracts in accordance with, and subject to the relevant terms of, the
Administrative Services Agreement, and thereafter such obligations of
Broker-Dealer hereunder shall automatically cease and be of no further force and
effect. For clarity, after such termination, Broker-Dealer shall continue to be
obligated to perform all of the services required of Wholesale Servicer
hereunder in accordance with the term hereof. Effective upon the appointment of
a replacement principal underwriter for the variable In-Force Policies and
Contracts, Broker-Dealer shall cooperate in amending this Agreement to the
extent necessary to make the replacement principal underwriter as a party hereto
and/or shall enter into such other agreements on commercially reasonable terms
with the replacement underwriter and MLOA as may be necessary to authorize and
permit ADL to continue to perform its obligations as Wholesale Servicer under
this Agreement on the terms set forth herein.
4
Section 2.2 BROKER-DEALER QUALIFICATIONS. The Wholesale Servicer warrants
and represents that it is a broker-dealer registered with the United States
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended (the "1934 ACT") and is a member in good standing of Financial
Industry Regulatory Authority ("FINRA"). The Wholesale Servicer will, at all
times during the term hereof, be duly registered as a broker-dealer under the
1934 Act and in each state or other jurisdiction in which it is required to be
so registered to perform its functions and fulfill its obligations, and be a
member in good standing of FINRA.
Section 2.3 GENERAL AGENT QUALIFICATIONS. The Wholesale Servicer will, at
all times when performing its functions and fulfilling its obligations under
this Agreement, be duly licensed in each state and other jurisdictions in which
the Wholesale Servicer is required by law or regulation to be licensed to
perform its functions and fulfill its obligations hereunder.
Section 2.4 QUALIFICATIONS OF THE WHOLESALE SERVICER'S ASSOCIATES. The
Wholesale Servicer represents and warrants that each officer, employee, agent or
representative of the Wholesale Servicer (any officer, employee, agent or
representative of the Wholesale Servicer being hereinafter referred to as an
"ASSOCIATE") who is required by law or regulation to be registered with the SEC,
FINRA and any applicable state securities regulatory authority to provide
wholesale services with respect to variable In-Force Policies and Contracts,
including Policy conversion transactions, on behalf of the Wholesale Servicer is
so registered, and Wholesale Servicer agrees that no Associate will provide such
services requiring registration unless such Associate is so registered.
Wholesale Servicer shall be responsible for all fees, including registration and
examination fees, necessary to maintain the Associates' continuing compliance
with applicable securities registration requirements. As used herein, the term
"Associates" shall not include any Broker-of-Record or any officer, employee,
agent or representative of a Broker-of-Record.
Section 2.5 QUALIFICATIONS AND APPOINTMENT OF ASSOCIATES. The Wholesale
Servicer represents and covenants that each Associate who is providing services
with respect to fixed or variable In-Force Policies and Contracts in any state
or jurisdiction who is required by law or regulation to be licensed and/or
appointed in such state or jurisdiction to provide such services, including
Policy conversion transactions, on behalf of the Wholesale Servicer is licensed
in such state or other jurisdiction and Wholesale Servicer agrees that no
Associate will provide such services unless such Associate is so licensed and/or
appointed. Wholesale Servicer may designate Associates to be appointed as agents
of MLOA or the Administrator and its affiliates (solely with respect to
Conversion Policies and Contracts issued by them), and MLOA shall appoint, and
shall use reasonable efforts to cause Administrator and its affiliates to
appoint, the Associates designated from time to time by the Wholesale Servicer
for appointment. The Wholesale Servicer shall assist MLOA in the appointment of
Associates under applicable insurance laws to service the Policies and
Contracts. MLOA reserves the right to refuse to appoint any such Associate or,
once appointed, to terminate or refuse to renew such Associate's appointment but
only if MLOA has a bona fide reason to believe that such Associate is not
competent or qualified to sell and/or service life insurance and annuity
products or that renewal of such license or appointment would violate applicable
law, and MLOA reasonably in advance gives written notice of such reason to the
Wholesale Servicer. MLOA shall bear the cost of appointing and renewing the
appointment of each such Associate in all states and other jurisdictions in
which such Associate does business. By proposing an Associate for appointment,
the Wholesale Servicer shall be deemed to warrant and represent to MLOA that
such Associate is competent and qualified to act as an insurance agent for MLOA
and to hold himself or herself out in good faith as such to the general public.
5
ARTICLE III
COMPLIANCE WITH LAWS
Section 3.1 SUPERVISORY RESPONSIBILITIES OF WHOLESALE SERVICER. The
Wholesale Servicer will train, supervise and be responsible for the conduct of
the Associates to ensure their compliance with the terms and conditions of this
Agreement, all federal and state securities laws and regulations and FINRA rules
and requirements and all insurance laws and regulations and the applicable rules
and regulations of all governmental or other insurance authorities that have
jurisdiction over insurance contract activities including without limitation
applicable federal, state and FINRA requirements regarding compliance programs
and procedures. The Wholesale Servicer shall be solely responsible for
background investigations of each of its Associates to determine his or her
qualifications, good character and moral fitness. Notwithstanding anything to
the contrary contained herein, the Wholesale Servicer shall have no obligation
hereunder with respect to, and no liability for, the suitability under insurance
law, securities law or otherwise of any sales of Conversion Policies and
Contracts, whether sold by MLOA directly or through the Wholesale Servicer,
except to the extent that the Wholesale Servicer makes a recommendation or
participates in making a recommendation in connection with the sale of
Conversion Policies and Contracts or as imposed under applicable law in the
absence of a recommendation.
Section 3.2 COMPLIANCE WITH APPLICABLE LAWS. Each party hereto warrants
and represents that it is in compliance in all material respects with all
applicable federal and state laws and regulations, including, without
limitation, all applicable securities and insurance laws and regulations and
FINRA rules relating to variable annuities and life insurance products, and has
adequate supervisory systems in place reasonably designed to detect and prevent
violations of such laws, regulations, rules and requirements by their
Associates. All parties hereto will perform their obligations under this
Agreement in continuous compliance in all material respects with all applicable
laws and regulations.
Section 3.3 MISDIRECTED PAYMENTS. In the event that premiums,
contributions or loan repayments are sent to the Wholesale Servicer, rather than
to MLOA, the Wholesale Servicer shall promptly remit such premiums,
considerations and loan repayments to MLOA. The Wholesale Servicer agrees that
if at any time it holds any premium or other payment, such premium, contribution
or other payment shall be held on behalf of the client and will segregate such
payment from their own funds and promptly remit such premium, consideration or
other payment to MLOA.
Section 3.4 RESTRICTIONS ON COMMUNICATIONS. The Wholesale Servicer will
not, and will not permit any of the Associates to, give any information or make
any representations or statements, written or oral, concerning the In-Force
Policies and Contracts to the Brokers-of-Record or the owners or beneficiaries
thereof which are contrary to or inconsistent with the information contained in
the In-Force Policies and Contracts themselves, the prospectuses and statements
of additional information for the variable In-Force Policies and Contracts
and/or in any reports or proxy statements therefor, or in promotional, product
or advertising material or other information supplied and approved in writing by
MLOA. Wholesale Servicer and its Associates may not modify or represent that
they are authorized to modify any such prospectus, statement of additional
information or other materials authorized by MLOA for use in connection with
servicing the Policies and Contracts; provided that the Wholesale Servicer may
review and comment on such materials as provided in the Administrative Services
Agreement.
Section 3.5 TAX REPORTING RESPONSIBILITY. The Wholesale Servicer shall be
solely responsible for fulfilling all reporting obligations under applicable tax
laws with respect to compensation paid to the Associates and Brokers-of-Record
and for any withholding of taxes from compensation paid to the Associates,
including, without limitation, FICA, FUTA, and federal, state and local income
taxes.
6
Section 3.6 BONDING OF WHOLESALE SERVICER'S ASSOCIATES. The Wholesale
Servicer warrants and represents that all its Associates who have or may have
access to funds of MLOA are, and agrees that they will continue to be, covered
during the term hereof by a blanket fidelity bond, including coverage for
larceny and embezzlement, issued by a reputable bonding company. This bond shall
be maintained by the Wholesale Servicer at the Wholesale Servicer's expense.
Such bond shall be, at least, of the form, type and amount required under the
FINRA Rules of Fair Practice. MLOA may require evidence, satisfactory to it,
that such coverage is in force, and the Wholesale Servicer shall give prompt
written notice to the MLOA of any cancellation or change of coverage. The
Wholesale Servicer assigns any proceeds received from the fidelity bonding
company to MLOA to the extent of MLOA's loss due to activities covered by the
bond. If there is any deficiency amount, as a result of a deductible provision
or otherwise, the Wholesale Servicer shall promptly pay MLOA such amount on
demand, and the Wholesale Servicer hereby indemnifies and holds harmless MLOA
from any such deficiency and from the costs of collection thereof (including
reasonable attorneys' fees).
Section 3.7 PROFESSIONAL LIABILITY INSURANCE. The Wholesale Servicer will
at all times during the term hereof maintain, or cause to be maintained,
professional liability insurance for the Wholesale Servicer in the amount of at
least $1 million per occurrence and at least $1 million in the aggregate, issued
by an insurer having an A.M. Best's rating of A- or better.
ARTICLE IV
PRODUCT MATERIALS
Section 4.1 PRODUCT MATERIALS. The Wholesale Servicer will not use, and
will not permit any of the Associates to use, any product materials other than
those provided by MLOA or approved in writing by MLOA. MLOA will file such
materials or will cause such materials to be filed with the SEC and FINRA, and
applicable state securities regulatory authorities, as required. For purposes of
this Agreement, all references to product materials shall include, without
limitation, advertisements (such as material published, or designed for use in,
a newspaper, magazine or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures or other
public media), product literature (i.e., any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, product literature or published
article), prospectuses, applications and other forms, and educational or
training materials or other communications distributed or made generally
available to or approved for use by the Wholesale Servicer. MLOA reserves the
right to require at any time for any reason the recall of any material approved
by them, and the Wholesale Servicer shall promptly comply with any such request,
shall not use such material thereafter and shall forward notice of such request
to the Brokers- of-Record.
ARTICLE V
COMPENSATION AND EXPENSES
Section 5.1 COMPENSATION. MLOA will pay the Wholesale Servicer, as full
compensation for the services being performed by the Wholesale Servicer
hereunder with respect to the In-Force Policies and Contracts pursuant to this
Agreement and the sale of Conversion Policies and Contracts, the compensation
more specifically set forth in Schedule B attached hereto and made a part hereof
or, with respect to Conversion Policies and Contracts, as set forth in Section
1.3.
Section 5.2 PAYMENT OF COMPENSATION. All compensation due and payable
hereunder shall be paid in the manner and in accordance with the time periods
set forth in Schedule C attached hereto.
7
Section 5.3 TOTAL COMPENSATION. The Wholesale Servicer acknowledges and
agrees that the compensation due and payable pursuant to this Article
constitutes the total compensation due and payable by MLOA or the Administrator
and its affiliates on account of the services being provided by Wholesale
Servicer pursuant hereto and, the Wholesale Servicer shall make payments to the
Brokers-of-Record of all compensation due and payable to such Brokers-of-Record
pursuant to the In-Force Retail Sales Agreements; provided that in the event
that the Wholesale Servicer is not permitted by applicable law to pay such
compensation to a Brokers-of-Record, the Wholesale Servicer and MLOA shall
cooperate to develop a payment structure for compensation to such
Broker-of-Record that complies with applicable law. MLOA, the Administrator and
its affiliates shall not have any obligation to pay any compensation to the
Wholesale Servicer's Associates or the Brokers-of-Record.
Section 5.4 EXPENSES. Neither MLOA nor the Wholesale Servicer shall,
directly or indirectly, expend or contract for the expenditure of any funds of
any other party. Except as otherwise provided herein to the contrary, each party
shall be solely responsible for all expenses incurred by such party in the
performance of its obligations pursuant to this Agreement.
Section 5.6 REPAYMENT. The Wholesale Servicer will promptly repay any
compensation received by the Wholesale Servicer from the MLOA with respect to
this Agreement which it is not entitled to retain pursuant to the terms and
conditions hereof.
Section 5.7 RIGHT OF SET-OFF. MLOA may, in addition to any other remedies
available, set off against any compensation due and payable hereunder any
compensation previously received by the Wholesale Servicer from MLOA with
respect to this Agreement they are not entitled to retain.
ARTICLE VI
ACCOUNTING, REPORTS AND AUDIT RIGHTS
Section 6.1 ACCOUNTING. Each of the parties hereto shall keep true and
accurate books and records with respect to the subject matter of this Agreement
in accordance with applicable laws and regulations and (x) Generally Accepted
Accounting Principles ("GAAP"), in the case of MLOA and (y) GAAP or
International Financial Reporting Standards ("IFRS"), in the case of the
Wholesale Servicer.
Section 6.2 REPORTS AND INTERFACE. MLOA shall furnish such data, reports,
interfaces and other information and perform such automated and manual
procedures as may be reasonably requested from time to time by the Wholesale
Servicer (collectively "REPORTS AND PROCESSES") in order to track and verify the
proper payment of sums due and payable to the Wholesale Servicer hereunder. MLOA
shall provide such information to the Wholesale Servicer in accordance herewith
as is necessary to enable the Wholesale Servicer to provide Brokers-of-Record
with the information necessary to service customers with respect to the In-Force
Policies and Contracts and to provide Associates with the information necessary
to perform the services described in Annex 1. The parties shall promptly furnish
each other any reports or information that another party may reasonably request
consistent with industry practice (a) to reflect transactions effected under the
Policies and Contracts and proper payment of sums due and payable to the
Wholesale Servicer hereunder and (b) for the purpose of meeting its reporting
and recordkeeping requirements under the insurance laws of any state, applicable
federal or state securities laws, rules or regulations, under the rules of FINRA
or under applicable federal or state tax law. All reports and information will
be provided in such electronic and/or manual format as may be reasonably agreed
upon by the parties and shall include, without limitation, the journal entry,
reports, interfaces and information indicated in a separate interface and
accounting requirements more particularly described in Schedule D attached
hereto. All reports and information provided under this Section 6.2 shall be
accurate in all material respects. If additional reports or information are
required by the Wholesale Servicer from
8
time to time as a result of changes in applicable state insurance laws, federal
or state securities laws, rules or regulations, FINRA rules, or U.S. accounting
pronouncements, MLOA shall provide such reports or information.
Section 6.3 AUDIT RIGHTS. (a) The Wholesale Servicer will have the right
(but not the obligation), upon not less than ten (10) days prior written notice
and at its own expense, to conduct reasonable periodic inspections, during
normal business hours, of all books and records maintained by MLOA relating to
the servicing of the Policies and Contracts pursuant to this Agreement. The
Wholesale Servicer may request access on an expedited basis if expedited access
is needed for such party to conduct its day-to-day business or to satisfy its
obligations to maintain books and records under applicable law. MLOA shall
permit the Wholesale Servicer, during normal business hours and upon reasonable
advance notice and at its own expense, to audit MLOA's records to verify their
compliance with their obligations under Section 6.2 and Articles V and IX of
this Agreement, but the Wholesale Servicer may not conduct such audit more
frequently than once every six months.
(b) MLOA will have the right (but not the obligation), upon not less than
ten (10) days prior written notice and at its own expense, to conduct reasonable
periodic inspections, during normal business hours, of all books and records
maintained by the Wholesale Servicer relating to the servicing of the Policies
and Contracts pursuant to this Agreement. MLOA may request access on an
expedited basis if expedited access is needed for such party to conduct its
day-to-day business or to satisfy its obligations to maintain books and records
under applicable law. The Wholesale Servicer shall permit MLOA, during normal
business hours and upon reasonable advance notice and at its own expense, to
audit the Wholesale Servicer's records to verify its compliance with its
obligations under Sections 2.4, 2.5, 3.5 and 6.2 and Articles V and IX of this
Agreement, but MLOA may not conduct such audit more frequently than once every
six months. In addition, Wholesale Servicer shall permit MLOA during normal
business hours and upon reasonable advance notice and at its own expense, (1) to
interview its service center or home office employees to review compliance by
Wholesale Servicer and its affiliates with the covenants set forth in Section
14.9 and (2) if following such interviews MLOA has a reasonable good faith basis
to believe Wholesale Servicer and its affiliates are not in compliance with such
covenants, to audit their records to verify compliance with such covenants, but
such audits may not be conducted more frequently than once every six months
ARTICLE VII
TERM AND TERMINATION
Section 7.1 TERM. The term of this Agreement will commence on the date
hereof and continue in full force and effect for as long as any of the Policies
and/or Contracts remains in force.
Section 7.2 TERMINATION WITH RESPECT TO POLICIES AND CONTRACTS. This
Agreement will terminate as to any individual Policy or Contract on the date
such Policy or Contract is cancelled or surrendered in accordance with the terms
thereof or on the date the In-Force Retail Sales Agreement with respect to such
Policy or Contract is terminated by any party thereto in accordance with the
terms thereof, subject to Section 1.2 hereof.
Section 7.3 TERMINATION.
(a) This Agreement may be terminated at any time upon the mutual written
consent of the Parties hereto, which written consent shall state the effective
date and relevant terms of termination.
(b) This Agreement is subject to immediate termination at the option of
MLOA, upon written notice to the Wholesale Servicer, in the event that the
Wholesale Servicer becomes insolvent or is placed
9
into liquidation, rehabilitation, conservation, supervision, receivership or
similar proceedings (whether voluntary or involuntary), or there is instituted
against it proceedings for the appointment of a receiver, liquidator,
rehabilitator, conservator or trustee in bankruptcy, or other agent known by
whatever name, to take possession of its assets or assume control of its
operations, and, in any case, such proceeding shall continue undismissed for 45
days.
(c) This Agreement is subject to immediate termination at the option of
MLOA if there is a material and continuing breach by the Wholesale Servicer of
this Agreement and such breach is not cured within twenty business days
following receipt by the relevant Wholesale Servicer of written notice of such
breach from MLOA; provided, however, if such material breach is not curable
within such twenty business day period, MLOA may not terminate the Wholesale
Servicer's performance of services under this Agreement if the Wholesale
Servicer has, within such twenty business day period, provided MLOA with a
detailed, written description of the Wholesale Servicer's good faith plan to
cure such material and continuing breach; provided, further, if such material
and continuing breach is not cured within 45 days following the Wholesale
Servicer's delivery to MLOA of such plan, the MLOA may terminate this Agreement.
Section 7.4 SURVIVAL. Notwithstanding the other provisions of this Article
VII, Articles X and XII and Sections 5.4, 14.4 and 14.5 shall remain in full
force and effect after the termination of this Agreement. ARTICLE VIII
COMPLAINTS AND INVESTIGATIONS
Section 8.1 COOPERATION IN INVESTIGATIONS AND PROCEEDINGS. Each party
hereto shall, except to the extent their interests are adverse, cooperate in all
insurance or securities regulatory investigations, proceedings and inquiries and
in all judicial proceedings concerning any other party hereto or any of its
parents or affiliates with respect to the In-Force Policies and Contracts.
Section 8.2 CUSTOMER COMPLAINTS. Each party hereto shall cooperate in
investigating and responding to all customer complaints with respect to the
In-Force Policies and Contracts received by another party.
Section 8.3 NOTIFICATION. Each party hereto will promptly notify the other
parties of any customer complaint or notice of a regulatory investigation,
proceeding or inquiry or of a judicial proceeding received by such party. Each
party shall promptly deliver to the other parties copies of all such customer
complaints and notices and all other documents received by such party in
connection therewith.
ARTICLE IX
AMENDMENT, ASSIGNMENT AND SUB-SERVICING
Section 9.1 AMENDMENTS AND MODIFICATIONS. Neither this Agreement nor any
of the schedules hereto may not be modified or amended in whole or part except
in a writing signed by all parties hereto.
Section 9.2 ASSIGNMENTS.
(a) Except as otherwise expressly permitted in this Section 9.2,
this Agreement may not be assigned by any party hereto without the prior written
consent of all the other parties.
(b) MLOA may assign all of its right, title and interest under this
Agreement, without the prior written consent of any other party, to another
United States insurance company into which it is being
10
merged or to which all or substantially all of its assets, including, without
limitation, the In-Force Policies and Contracts, are being transferred; provided
that (i) the merger or transfer is approved by the applicable insurance
regulator in MLOA's state of domicile, (ii) the insurance company into which it
is being merged or which is acquiring its assets has an A.M. Best rating equal
to or better than MLOA's then current A.M. Best rating, (iii) Wholesale Servicer
or a permitted successor continues to be the principal underwriter of the
variable In-Force Policies and Contracts or Wholesale Servicer or a permitted
successor simultaneously assigns it rights hereunder, as permitted herein, to
another broker-dealer and (iv) MLOA and the other insurance company comply with
the provisions of Section 9.2(d) below.
(c) The Wholesale Servicer may assign all of its right, title and
interest under this Agreement, without the prior written consent of any other
party, to (i) an entity which is both a registered broker-dealer and a licensed
insurance agency into which the Wholesale Servicer is being merged or which is
acquiring all or substantially all of the assets of the Wholesale Servicer;
provided that (i) all or substantially all of the registered representatives and
insurance agents of the Wholesale Servicer are becoming registered
representatives and insurance agents of the entity; (ii) the entity is owned by
the Wholesale Servicer or a parent of the Wholesale Servicer and (iii) the
Wholesale Servicer and the other entity comply with the provisions of Section
9.2(e) below. The Wholesale Servicer may also assign all of its right, title and
interest under this Agreement, without the prior written consent of any other
party, jointly and severally to two entities, one of which is a registered
broker-dealer and the second of which is a licensed insurance agency; provided
that (i) all of the assets of the Wholesale Servicer are being transferred, by
merger or otherwise, to one or both of the entities, (ii) all or substantially
all of the Associates become registered representatives of the broker-dealer and
insurance agents of the insurance agency, (iii) both entities are owned by the
Wholesale Servicer or a parent of the Wholesale Servicer and (iv) the Wholesale
Servicer and the two entities comply with the provisions of Section 9.2(d)
below.
(d) No assignment permitted hereunder will be of any force or
effect, notwithstanding anything to the contrary contained herein, unless and
until an original assignment and assumption executed by both the assignor and
the assignee is delivered to the other parties to this Agreement, pursuant to
which:
(i) The assignor assigns all of its right, title and interest
in, to and under this Agreement to the assignee;
(ii) The assignee accepts such assignment and assumes and
agrees to perform all of the undertakings and obligations of the assignor under
this Agreement, whether absolute or contingent, presently existing or thereafter
arising;
(iii) The assignee warrants and represents for the benefit of
the other parties to this Agreement that (1) the assignment satisfies all the
conditions with respect thereto set forth above and (2) all warranties and
representations made by the assignor (or the predecessor in interest of the
assignor, as the case may be) in this Agreement are true and complete as to the
assignee as of the date of the assignment; and
(iv) The assignor and assignee each warrants and represents
for the benefit of the other parties to this Agreement that it has full power
and authority to enter into the assignment and assumption, this Agreement is in
full force and effect in accordance with its terms and all consents and
approvals, if any, from governmental entities, owners of the In-Force Policies
and Contracts and others required by law or regulation with respect to the
transaction of which the assignment is a part have been obtained.
11
Section 9.3 SUBSERVICING. The Wholesale Servicer may from time to time
enter into agreements with third parties to provide all or part of the services
which the Wholesale Servicer has agreed to provide hereunder. Such
sub-contracting shall not relieve the Wholesale Servicer of any of its
obligations to MLOA hereunder, and MLOA shall not be liable to such third
parties for any of the Wholesale Servicer's obligations to such third parties
under their sub-servicing agreements, including without limitation the payment
of any compensation and other sums due and payable to such third parties
thereunder.
ARTICLE X
CONFIDENTIALITY AND PRIVACY
Section 10.1 CONFIDENTIALITY.
(a) As used herein, "Confidential Information" of a party shall mean
all confidential or proprietary information, including trade secrets,
expressions, ideas, business practices and agents of such party in any medium,
as well as the terms of this Agreement, but shall not include Nonpublic Personal
Information (as defined below) which is subject to separate provisions of this
Agreement. For purposes of this Agreement and unless otherwise indicated,
reference to each party shall include their affiliates and the officers,
directors, employees, agents and representatives of such party and its
affiliates.
(b) All Confidential Information relating to a party shall be held in
confidence by the other party to the same extent and in at least the same manner
as such party protects its own confidential or proprietary information, but in
no case to a lesser extent than reasonable care under the circumstances
requires. Except as otherwise provided herein, no Confidential Information shall
be used by any party hereto or disclosed by any party to any third party for any
purpose other than to carry out the transactions contemplated under this
Agreement, provided that either party may provide Confidential Information to
any regulator as provided in clause (c). No party shall disclose, publish,
release, transfer or otherwise make available Confidential Information of any
other party in any form to, or for the use or benefit of, any person or entity
without the other parties' consent. Each party shall, however, be permitted to
disclose relevant aspects of the other parties' Confidential Information to its
officers, directors, employees, agents and representatives to the extent that
such disclosure is reasonably necessary for the performance of its duties and
obligations under this Agreement; provided, however, that such party shall take
all reasonable measures to ensure that Confidential Information of the other
party or parties is not disclosed or duplicated in contravention of the
provisions of this Agreement by such officers, directors, employees, agents and
representatives. A party may share Confidential Information of the other parties
or its affiliates with a third party that is performing services for the party
sharing such Confidential Information only if the Party sharing such
Confidential Information has in place a written agreement with such third party
that includes a confidentiality provision prohibiting disclosure or use of
Confidential Information other than to carry on the purposes for which the
information was provided.
(c) The confidentiality obligations of this Section shall not restrict
disclosure by any party to (i) any regulatory authority having jurisdiction over
such party, pursuant to any applicable state or federal laws, as part of any
regulatory inspection, review or audit in the ordinary course or (ii) any
regulatory authority having jurisdiction over such party, pursuant to any
applicable state or federal laws, other than as part of a regulatory inspection,
review or audit in the ordinary course or (iii) by order of any court or
government agency (provided that the disclosing party shall give prompt notice
to the non-disclosing party or parties of such order) and (iv) shall not apply
with respect to Confidential Information which (1) is developed by the other
party independently of the Confidential Information of the disclosing party
without violating the disclosing party's proprietary rights, (2) is or becomes
publicly known (other than through unauthorized disclosure), (3) is disclosed by
the owner of such information to a third party free of any obligation of
confidentiality, (4) is already known by such party from a source other than the
12
disclosing party without an obligation of confidentiality to the disclosing
party, or (5) is rightfully received by a party from a source other than the
disclosing party without an obligation of confidentiality to the disclosing
party or from publicly available sources without an obligation of
confidentiality to the disclosing party. If a party is requested or compelled to
disclose Confidential Information of the other party or its affiliates as
provided in clauses (i), (ii) or (iii) above, the disclosing party shall, to the
extent reasonably feasible under the circumstances, promptly notify in writing
the party whose Confidential Information or whose affiliate's Confidential
Information is to be disclosed to enable such party or the affected affiliate to
seek to prevent or limit such disclosure as it deems appropriate; provided,
however, that nothing contained herein shall require such notification if the
disclosing party is required by law or requested by a governmental authority to
maintain the confidentiality of an ongoing investigation or prevent the
disclosing party from disclosing such Confidential Information if as and when
counsel for the disclosing party advises the disclosing party that it is
required to do so.
Section 10.2. PRIVACY.
(a) As used herein, "Nonpublic Personal Information" shall include all
information about customers and potential customers subject to the protections
of Title V of the Xxxxx-Xxxxx-Xxxxxx Act or any other federal or state laws or
regulations relating to or protecting the privacy of customers and/or consumers,
including Regulation S-P of the Exchange Act any comparable state insurance laws
(the "PRIVACY LAWS").
(b) Each party hereto shall comply with applicable Privacy Laws with
respect to the In-Force Policies and Contracts. Each party shall maintain
appropriate policies and procedures relating to administrative, technical, and
physical safeguards (i) to ensure the confidentiality of Nonpublic Personal
Information; (ii) to protect against any anticipated threats or hazards to the
security or integrity of Nonpublic Personal Information; and (iii) to protect
against unauthorized access to or use of Nonpublic Personal Information.
(c) Except as otherwise provided herein, no Nonpublic Personal
Information shall be used by any party hereto or disclosed by any party to any
third party for any purpose other than to carry out the transactions
contemplated under this Agreement, the Master Agreement or the Ancillary
Agreements (as defined in the Master Agreement) or as otherwise required or
permitted under the Privacy Laws. For the avoidance of doubt, among other
things, MLOA and the Wholesale Servicer may use the Nonpublic Personal
Information to service the Contracts and Policies as permitted by Section 5.2
and Section 5.14 of the Master Agreement.
(d) Each party hereto shall inform the other of any violation of this
Section by such individual or entity, and the other parties hereto shall be
entitled to take, or require such party to take, any reasonable measures to
mitigate any harm, whether potential or actual, to customers or consumers
resulting from any violation of this Section, including, but not limited to,
termination of this Agreement.
ARTICLE XI
PATRIOT ACT
Section 11.1 PATRIOT ACT. Each party hereto warrants and represents that
it is, and agrees that it will remain throughout the term hereof, in compliance
with all applicable provisions of the USA Patriot Act of 2001 and the
regulations adopted with respect thereto (collectively, the "PATRIOT ACT") and
the applicable requirements of the SEC and FINRA with respect thereto, including
to the extent applicable the obligations therein to establish and maintain an
anti-money laundering (AML) program in accordance with Section 352 of the
Patriot Act and a customer identification program in accordance with the Section
13
326 of the Patriot Act. The parties agree to reasonably cooperate with each
other in their compliance with the Patriot Act and related SEC and FINRA
requirements, including providing each other with such information as they may
reasonably request in order to comply with suspicious activity reporting
requirements and maintaining appropriate records and documentation demonstrating
compliance with the Patriot Act for the periods prescribed by applicable laws
and regulations.
ARTICLE XII
INDEMNIFICATION AND REMEDIES
Section 12.1 INDEMNIFICATION BY WHOLESALE SERVICER The Wholesale Servicer,
shall indemnify and hold harmless MLOA, and each person who controls or is
associated with it within the meaning of such term under the federal securities
laws, and any officer, director, employee or agent of the foregoing
(collectively, the "MLOA INDEMNIFIED PARTIES"), against any and all losses,
claims, damages or liabilities, joint or several (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amounts
paid in settlement of, any action, suit or proceeding or any claim asserted),
insofar as such losses, claims, damages or liabilities arise out of or are based
upon (a) the failure of the Wholesale Servicer to perform any of its
undertakings and/or obligations hereunder (including losses resulting from a
violation of an In-Force Retail Sales Agreement by a Broker-of-Record, to the
extent arising out of or based upon such a failure by the Wholesale Servicer),
(b) any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, contained in any
registration statement or prospectus relating to any In-Force Policy or Contract
or any interest offered under any In-Force Policy or Contract or any amendment
thereof, to the extent based on information provided in writing by the Wholesale
Servicer from time to time following the date hereof and designated for use by
MLOA in the preparation of such registration statement or prospectus, (c) the
inaccuracy of any warranty or representation of the Wholesale Servicer herein in
any material respect (including without limitation the representation set forth
in the second to last sentence of Section 1.1), (d) any claim for compensation
by any Associate, (e) any claim for compensation under any In-Force Retail Sales
Agreement by any Broker-of-Record or any officer, employee agent or
representative of a Broker-of-Record and/or (f) any negligence or willful
misconduct or violation of applicable law by the Wholesale Servicer or any
Associate thereof in performing the Wholesale Servicer's undertakings and/or
obligations hereunder with respect to the In-Force Policies and Contracts. This
indemnification will be in addition to any liability that the Wholesale Servicer
may otherwise have hereunder at law or equity.
Section 12.2 INDEMNIFICATION BY MLOA. MLOA shall indemnify and hold
harmless the Wholesale Servicer and each person who controls or is associated
with it within the meaning of such term under the federal securities laws, and
any officer, director, employee or agent of the foregoing (collectively, the
"ADL INDEMNIFIED PARTIES"), against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon (a) the failure of MLOA to perform any of its
obligations hereunder, (b) the inaccuracy of any warranty or representation of
MLOA herein in any material respect, (c) any violation of applicable law by MLOA
(including without limitation under the Securities Act of 1933 or otherwise
arising from any untrue statement or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, contained in any
registration statement or prospectus relating to the In-Force Policies and
Contracts or any interest offered under an In-Force Policy or Contract or any
amendment thereof, excluding to the extent based on any information provided in
writing by Wholesale Servicer or its
14
Affiliates from time to time after the date hereof and designated for use by
MLOA in the preparation of such registration statement or prospectus) and/or (d)
any negligence or willful misconduct or violation of applicable law by MLOA
and/or any officer, employee, agent or representative thereof with respect to
the In-Force Policies and Contracts. This indemnification will be in addition to
any liability that MLOA may otherwise have hereunder at law or equity.
Section 12.3 LIMITATION OF LIABILITY. No party shall be liable to any
other party for any indirect, punitive or consequential (other than lost profits
to the extent provided in the third sentence of this Section 12.3) damages for
claims arising under or in connection with the performance of this Agreement,
except for indemnification claims under Sections 12.1 and 12.2 of this Agreement
of amounts recovered by or payable to third parties in connection with third
party claims. This limitation shall not apply to claims of fraud on the part of
any of the parties or their affiliates. Notwithstanding the foregoing, at any
time that the Wholesale Servicer ceases to be an affiliate of the Parent,
liability for claims arising under or in connection with the performance of this
Agreement may include damages for (or calculated on the basis of) lost profits,
but only to the extent that (i) such damages for lost profits are recoverable
under the laws of the State of New York and (ii) such lost profits can be
demonstrated by reference to the actuarial report prepared by Xxxxxxxx, Inc.
with respect to, among other things, the In-Force Policies and Contracts dated
November 5, 2012 (the "ACTUARIAL REPORT") and therefore are within the
reasonable contemplation of the parties to this Agreement; provided further that
lost profits with respect to the reduction or elimination of any profits
contemplated by the Actuarial Report shall in no event exceed the present value
ascribed to any such remaining profits contemplated by the Actuarial Report as
of the date of the loss giving rise to the related claim, calculated based on
the assumptions on which the Actuarial Report was prepared and discounted using
a 10% discount rate.
Section 12.4 SPECIFIC PERFORMANCE; JURISDICTION.
(a) The parties agree that irreparable damage would occur if any provision
of this Agreement were not performed in accordance with the terms hereof and
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement or to enforce specifically the performance of the
terms and provisions hereof in any court specified in this SECTION 12.4, in
addition to any other remedy to which they are entitled at law or in equity. The
parties hereby waive, in any action for specific performance, the defense of
adequacy of a remedy at law and the posting of any bond or other security in
connection therewith.
(b) The parties each irrevocably submit to the jurisdiction of the courts
of the State of New York or federal court of the United States of America
located in the State, City and County of New York solely in respect of the
interpretation and enforcement of the provisions of this Agreement and in
respect of the transactions contemplated hereby. The parties irrevocably agree
that all claims in respect of the interpretation and enforcement of the
provisions of this Agreement and in respect of the transactions contemplated
hereby shall be heard and determined in such a New York State or federal court,
and that such courts shall have exclusive jurisdiction with respect to such
actions, except solely to the extent that all such courts shall lawfully decline
to exercise such jurisdiction. Each of the parties hereby waives, and agrees not
to assert, as a defense in any such action that it is not subject to such
jurisdiction. The parties hereby waive, and agree not to assert, to the maximum
extent permitted by law, as a defense in any such action, that such action may
not be brought or is not maintainable in such courts or that the venue thereof
may not be appropriate or that this Agreement may not be enforced in or by such
courts. The parties hereby consent to and grant any such court jurisdiction over
the person of such parties and over the subject matter of any such dispute and
agrees that mailing of process or other papers is connection with any such
action in the manner provided in SECTION 14.4 or in such other manner as may be
permitted by law, shall be valid and sufficient service thereof. Notwithstanding
the foregoing, any party to this
15
Agreement may assert a cross-claim or a third party claim against another party
to this Agreement in any pending litigation filed by a third party.
Section 12.5 APPLICABILITY OF THE MASTER AGREEMENT. The limitations,
procedures and qualifications set forth in SECTIONS 10.2, 10.3 (other than the
last sentence thereof, which shall not apply), 10.4, and SECTIONS 10.5(d)
through (f) of the Master Agreement shall apply, MUTATIS MUTANDI to losses,
claims, damages or liabilities indemnified under this ARTICLE XII.
Section 12.6 THIRD-PARTY BENEFICIARY. The parties hereto acknowledge and
agree that Administrator is an express third-party beneficiary of, and shall be
entitled to enforce all of the rights of MLOA under this Agreement.
Section 12.7 NO DUPLICATION; EXCLUSIVE REMEDY. If any losses, claims,
damages or liabilities are indemnified under SECTION 10.1 of the Master
Agreement, the ADL Indemnified Parties or the MLOA Indemnified Parties, as
appropriate, shall not be entitled to indemnification with respect to such
losses, claims, damages or liabilities pursuant to SECTION 12.1 of this
Agreement.
ARTICLE XIII
ARBITRATION
Section 13.1 ARBITRATION. To the extent required by FINRA, any
controversy, claim or dispute of any kind whatsoever arising out of or relating
to this Agreement or any actual or alleged breach thereof shall be resolved by
submitting such controversy, claim or dispute to binding arbitration
administered by the FINRA under the arbitration rules of FINRA then in effect.
In the event FINRA declines to hear such controversy, claim or dispute, it shall
be resolved in accordance with Section 12.4(b).
ARTICLE XIII
MISCELLANEOUS
Section 14.1 HEADINGS. The headings 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.
Section 14.2 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
Section 14.3 SEVERABILITY. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
Section 14.4 NOTICES. All notices under this Agreement shall be given in
writing and addressed as follows:
if to MLOA:
MONY Life Insurance Company of America
1290 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
with a copy, not to constitute notice, to:
16
Protective Life Insurance Company, as Administrator
0000 Xxxxxxx 000 Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Legal Department
If to the Wholesale Servicer:
AXA Distributors, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
with a copy, not to constitute notice, to:
AXA Equitable Life Insurance Company
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
or to such other address or addresses as such party may hereafter specify in
writing. Each such notice shall be either hand delivered or transmitted by
certified United States mail, return receipt requested, and shall be effective
upon delivery.
Section 14.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, excluding its
conflict of laws provisions to the extent such provisions are not mandatorily
applicable by statute and would permit or require the application of the laws of
the another jurisdiction. This Agreement shall also be subject to the rules of
FINRA, including its By-Laws.
Section 14.6 MERGER. This Agreement constitutes the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes any and all prior understandings or agreements between the
parties with respect thereto.
Section 14.7 NO WAIVER OF RIGHTS. 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. Failure of any party to insist
upon strict compliance with any of the conditions of this Agreement shall not be
construed as a waiver of any of the conditions, but the same shall remain in
full force and effect. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any other provisions, whether
or not similar, nor shall any waiver constitute a continuing waiver.
Section 148 USE OF INFORMATION. Except as set forth in the last sentence
of this Section 14.8 or in Section 5.14(f) of the Master Agreement, the
Wholesale Servicer shall, and shall cause its affiliates to, use any information
relating to the Business or the holders of such Policies and Contracts only for
the purpose of complying, or causing its applicable affiliates to comply, with
the obligations of the Wholesale Servicer under this Agreement (including any
purpose relating to compliance with applicable law or to dealings with any
governmental authority). Neither the Wholesale Servicer nor any of its
affiliates may, from and after the date hereof or as promptly thereafter as is
reasonably practicable, include any information relating to the In-Force
Policies and Contracts in any "data mining" program or process that is designed
or intended to identify any holder of an In-Force Policy or Contract for
targeted marketing or solicitation of other products offered, distributed or
administered by such person; PROVIDED that,
17
notwithstanding the foregoing, neither Wholesale Servicer nor any of its
affiliates shall be prohibited from including information relating to insurance
or annuity contracts not included in the Business (as defined in the Master
Agreement), and any holder thereof, in any such "data mining" program or process
even though such holder of such insurance or annuity contract that is not
included in the Business and Contracts is also a holder of an In-Force Policy
and Contract.
Section 14.9 ADDITIONAL COVENANTS OF THE WHOLESALE SERVICER. (a) The
Wholesale Servicer shall not, and shall cause each of its affiliates not to,
directly or indirectly: (i) solicit or endeavor to entice or induce any
Associate, Broker-of -Record or other person who has placed, marketed, sold,
administered or provided services with respect to any In-Force Policy or
Contract to alter its relationship with MLOA, other than terminations for cause
or for underperformance effected in the ordinary course of business consistent
with past practice or consistent with the then-current practices that Wholesale
Servicer and its affiliates generally employ with respect to persons who place,
market, sell, administer or provide services with respect to the Reference
Business (as hereinafter defined); (ii) solicit or endeavor to entice or induce
any such Associate, Broker-of -Record or other person to replace any In-Force
Policy or Contract (or any insurance policy or other contract issuable upon
conversion of any such In-Force Policy or Contract) with a policy or contract
issued by an affiliate of Wholesale Servicer or any other person; or (iii)
target any In-Force Policy or Contract for replacement with a policy or contract
issued by an affiliate of Wholesale Servicer or any other person (pursuant to
any directed, programmatic or systematic exchange or replacement program or
otherwise, and through the use of information or data of MLOA in the possession
of the Wholesale Servicer or any of their affiliates); provided, however, that
the restrictions in this Section 14.9 shall not restrict general marketing and
solicitation activities (x) not specifically targeted or directed to such
holders (as applicable) or (y) targeted or directed to holders of insurance
policies and contracts not included in the In-Force Policies and Contracts
regardless of whether such holders are also holders of In-Force Policies and
Contracts; provided, further that for the avoidance of doubt the restrictions in
this Section 14.9 shall not restrict Wholesale Servicer and its affiliates from
paying compensation to Associates and Brokers-of-Record consistent with past
practice or the then-current practices that Wholesale Servicer and its
affiliates generally employ with respect to persons who place, market, sell,
administer or provide services with respect to the Reference Business. For
purposes of hereof, the "REFERENCE BUSINESS" means (1) the life insurance,
annuity, investment or other contracts written, issued or sold by affiliates of
Wholesale Servicer in the United States, if such affiliates write, issue or sell
such contracts or (2) the life insurance, annuity, investment or other contracts
written, issued or sold by Parent, Seller or any of their respective affiliates
in the United States, irrespective of whether Parent, Seller or any of their
affiliates has disposed of all or a material portion of such business, whether
by means of a stock or asset sale, merger, reinsurance transaction, spin-off
transaction, initial public offering or otherwise or whether all or any portion
of such business continues to be owned by Parent, Seller or any their affiliates
as of the date hereof, otherwise.
(b) Wholesale Servicer shall, and shall cause its affiliates to, employ
practices, policies and procedures (including with respect to the review and
application of replacement suitability requirements to proposed replacements of
the In-Force Policies and Contracts) to prevent Associates and Brokers-of-Record
from soliciting or causing holders of In-Force Policies and Contracts to
surrender (in whole or in part), exchange, replace, terminate or permit to lapse
any In-Force Policy or Contract which practices, policies and procedures are
substantially similar to the then-current practices, policies and procedures
employed with respect to the surrender (in whole or in part), exchange,
replacement, termination or lapse of contracts included in the Reference
Business.
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized officers.
MONY Life Insurance Company of America
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Senior Executive Vice President and
Chief Financial Officer
AXA Distrutors, LLC
By: /s/ Xxxx Xxxxxx
-------------------------
Name: Xxxx Xxxxxx
Title: Vice President and Treasurer
[Signature Page to Wholesale Servicing Agreement for In-Force MLOA Products]
SCHEDULES
Schedule A: In-Force Policies and Contracts
Schedule B: Compensation Schedules
Schedule C: Payment Details
Schedule D: Reports and Processes
Schedule E: Sample Sales Agreements
ANNEX
Annex 1: Services
20
SCHEDULE A
IN-FORCE POLICIES AND CONTRACTS
POLICY FORMS
21
SCHEDULE B
COMPENSATION SCHEDULES
COMPENSATION DUE AND PAYABLE PURSUANT TO THIS AGREEMENT WILL BE CALCULATED AS A
PERCENTAGE OF THE PREMIUMS/CONSIDERATIONS RECEIVED BY MLOA IN THE AGGREGATE BY
EACH LINE OF BUSINESS SHOWN BELOW AND THE ASSETS UNDER MANAGEMENT OF MLOA
POLICIES IN THE AGGREGATE BY EACH LINE OF BUSINESS SHOWN BELOW AS MORE
PARTICULARLY SET FORTH IN THE FOLLOWING TABLE:
% OF ASSETS UNDER
% OF PREMIUMS MANAGEMENT
RECEIVED (ANNUAL)
-------------------------- ---------------------
All Closed Block Life business 1.15% n/a
----------------------------------- -------------------------- ---------------------
Whole Life* 3.50% n/a
----------------------------------- -------------------------- ---------------------
Term Life* 0.50% n/a
----------------------------------- -------------------------- ---------------------
Variable Universal Life* 2.50% 0.10%
----------------------------------- -------------------------- ---------------------
Universal Life* 3.80% 0.10%
----------------------------------- -------------------------- ---------------------
Fixed Annuity 5.50% n/a
----------------------------------- -------------------------- ---------------------
Variable Annuity 3.50% 0.20%
----------------------------------- -------------------------- ---------------------
Disability Income 7.00% n/a
----------------------------------- -------------------------- ---------------------
Major Medical (actual commission n/a
generated x 1.4)
----------------------------------- -------------------------- ---------------------
* Other than closed block
22
SCHEDULE C
PAYMENT DETAILS
Pursuant to Schedules B and D and Section 5.1 of this Agreement, payment should
be remitted to the Wholesale Servicer no later than the 15th business day
following the end of each month.
Payment information:
Bank: JPMorgan Chase
ABA 000000000
Name: AXA Distributors LLC - Concentration
Acct # 000-0-000000
The method of remittance may be updated at any time by the Wholesale Servicer
upon written notice to MLOA.
An accrual should be provided on the fourth business day following the end of
each month, to allow Wholesale Servicer and its affiliates to close their IFRS
books on schedule. MLOA will have time to review the detail and reconcile fully
to the underlying records and submit the final report for the month with the
cash payment on business day 15.
23
SCHEDULE D
REPORTS AND PROCESSES
1) REQUIRED REPORTS AND PROCESSES (MLOA TO WHOLESALE SERVICER) FOR
ADMINISTRATION BY WHOLESALE SERVICER OF WHOLESALE COMPENSATION PAYMENTS AND
RELATED MATTERS
The four major MONY/MLOA policy administrative systems (plus SciCom) must
continue to provide the source data needed by the Wholesale Servicer's
commissions systems to calculate commission by agent, broker, or firm.
Specifically, by Policy Admin system, the following feeds:
- TOPS: Daily feed for commission transactions, plus quarterly feed
for trails:
TS2200 & TS2200P - DAILY
TOPS.PB.TS2011.CCSFUSS.BKUPGDG.FILE(0)
TOPS.PB.TS0260.TSMSFEES.FILE(0)
TS2200Q & TS2200L - QUARTERLY - TOPS.PB.TS0200.QTRTRLS.OUTPUT.FILE(0)
- CYBERLIFE: Daily feed for commission transactions, plus quarterly
feed for trails.
MT7171 - DAILY - MONYTS.PB.PROD.MTTCEN07.FILE(0)
MT7177 - QUARTERLY - MONYTS.PB.PROD.MTTTEN07.FILE(0)
MT7177W - QUARTERLY - MONYTS.PB.PROD.MTTWEN07.FILE(0)
- EPIC: Daily feed for commission transactions
AN5305U - DAILY - COMMISSIONS.XML
- GUL: Daily Feed for commission transactions
GU0264 - DAILY - GUL.PB.MYCOMXTR.ROLLUP.FILE(0)
- SCICOM: Daily feed for commission transactions (old Group
Association - less than 30 per month)
TC2200U DAILY
SCICOM.TXT
- DISABILITY MANAGEMENT SERVICES: same feed format and frequency
currently provided by DMS.
These systems are to continue transmitting policy compensation data to IBM
middleware which is used to transform data into the TrueComp MS SQL server
environment. The following data items should be included in the data feeds as
they are currently (not all items for all transactions):
ContrNo AddrLine1 TrgtPremAmt
FPNo AddrLine2 RplcmntContrNo
24
TransDte AddrLine3 RplcmntTypeCd
CreateChkInd AddrCityName RplcdPremAmt
AccumInd AddrStCd SubProdCdDesc
CrRptngInd AddrZipCd SubProdCd
HeldCommInd BtchNo PymntModeCd
RecapInd AcctShortName ModalPremAmt
StmntDtlInd AgyOfRecCd PymntDueDte
StmntDesc IssueAge UnitValAmt
Text1Ind ContrIssueDte TotUnits
Text2Ind InsdFullName TransTypeCd
HonorClubInd RltnshpCd CvrgCd
MDRTInd CaseNo TotValAmt
TotFundValAmt MSCAcctNo NoOfMnthsPd
BuySellCd NFSAcctNo FinActvtyDte
CoCd FinActvtyFeeAmt ProdCdDesc
SubsidId PayoutAmt PlanName
PremPstngDte SplitPctAmt ProdCd
AdminSrcSysCd SplitRepNo RnwlInd
ContrCd GDCAmt DrtnCd
AppRecDte FYCEquivAmt PremTypeCd
AppCrAmt GridPayoutCd PymntTypeCd
AppJrsdctnCd FinActvtyNetAmt IntrnlCntlNo
PremPymntAmt CommRate ExtrctDte
LineOfBusCd CommSchedCd RecTypeCd
WrtngFPNo CommonRmtrNo AdvncCommInd
AltTaxId CusipNo RstrctnCd
CarrCd CusipDesc RgnDrctrId
GrossCncssnsAmt CommPrdStartDte LifeAnntyCd
ContrStatCd CommPrdEndDte LAProdName
ContrStatEffDte StlmntDte CompProdName
AnnlzdPymntAmt TradeDte ProcDte
MBIAsgnNo ExamName
AddrLine1 FaceAmt
Compensation data for older MONY/MLOA systems should continue to be transmitted
manually via spreadsheet in the circumstances of a commissionable event:
NATURE OF FEED PASS
SOURCE SYSTEM M-MANUAL TRANSACTION TYPE FREQUENCY THROUGH COMMISSION RATE CURRENT TRANSACTION
A-AUTOMATIC FLAG HOUSING. FREQUENCY
------------------------------------------------------------------------------------------------------------------------------------
M / Key-in by User
CAPS through GUI into Calculate Monthly Y NA Years since the last
Valid Transaction Compensation transaction
M / Key-in by User Send along with
IVA through GUI into Raw Premium Monthly N transaction in Discount- Several transactions
Valid Transaction percentage Field. per year to one FP
M / Key-in by User Send along with
MONY Accum through GUI into Raw Premium Semi-Monthly N transaction in Discount- Years since the last
Valid Transaction percentage Field. transaction
M / Key-in by User Send along with
MONY MAX through GUI into Raw Premium Semi-Monthly N transaction in Discount- Several transactions
Valid Transaction percentage Field. per year to one FP
25
2) REQUIRED REPORTS AND PROCESSES (BOTH WAYS) FOR ACCOUNTING
MLOA shall provide an estimate for amounts due under this Agreement for Schedule
B for MLOA (By Legal Entity) no later than the 4th business day following the
close of each month that will provide the estimated amounts due to Wholesale
Servicer. Such estimate will be based on preliminary, unverified data and could
be different from the amount ultimately funded as described in Schedule C.
MLOA shall provide a report that supports the cash settlement as outlined in
Schedule B of the Servicing Agreement to the Wholesale Servicer's Treasury and
Controller's Area due on the same day as the cash settlement to Wholesale
Servicer as described in Schedule C. Such report will include premiums and asset
balances summarized by component as described in Schedule C for the payment
month. The premium and asset summary balances will be accumulated from and
reconciled to the daily feeds. , as described in 1) above correlating to the
period being covered by the cash settlement.
3) REQUIRED REPORTS AND PROCESSES FOR MANAGEMENT OF SERVICE AGENT ASSIGNMENTS ON
MONY/MLOA POLICIES
The only service agent assignment changes processed on wholesale business are
client requests. These would come into the policy service unit and managed by
the buyer.
4) REQUIRED REPORTS AND PROCESSES (BOTH WAYS) FOR MANAGEMENT OF AGENT
APPOINTMENTS AND TERM CONVERSIONS
It is anticipated that there will be few and rare appointments to MLOA. To the
extent such appointment becomes necessary, Wholesale Servicer will communicate
the need, relevant names, dates, etc., to the designated party at Administrator.
With regard to appointments to Administrator and its affiliates of Brokerage
General Agents and/or their representatives, for the sole purpose of sale of a
product of Administrator or one of its affiliates in concert with a term
conversion, a process will need to be developed whereby the rep initiates the
request with Wholesale Servicer and Wholesale Servicer subsequently communicates
with its counterpart at the Administrator.
26
SCHEDULE E
SAMPLE SALES AGREEMENTS
27
ANNEX 1
SERVICES
1) pay commissions to Brokers-of-Record consistent with the In-Force Retail
Sales Agreements in place, and any amendment thereto or new selling
agreement necessary or appropriate in connection with the sale of a
Conversion Policy issued by Administrator or an affiliated insurance
company of Administrator;
2) maintain records regarding such payments;
3) tax reporting of compensation paid to Brokers-of-Record, to the extent
MLOA has any such obligation under applicable law.
4) accept calls to the sales desk and refer them to the carrier, as
appropriate; and
5) provide website access and functionality to Brokers-of-Record to access
information with respect to In-Force Policies and Contracts consistent
with such support provided for AXA Equitable Life Insurance Company ("AXA
Equitable") products, to the extent that carrier administrative systems
provide required data feeds to Wholesale Servicer, and for so long as AXA
Equitable provides such support for its own products.
28
