Amendment No. 3 to Form 10

As filed with the Securities and Exchange Commission on June 2, 2017

File No. 001-37905

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 3

to

FORM 10

 

 

GENERAL FORM FOR REGISTRATION OF SECURITIES

PURSUANT TO SECTION 12(b) OR 12(g)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

BRIGHTHOUSE FINANCIAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Delaware   81-3846992

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification Number)

Gragg Building, 11225 North Community House Road

Charlotte, North Carolina

  28277
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code:

(212) 578-9500

 

 

Securities to be registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

to be so Registered

 

Name of Each Exchange on

Which Each Class is to be Registered

Common stock, par value $0.01 per share   The NASDAQ Stock Market LLC

Securities to be registered pursuant to Section 12(g) of the Act:

None

 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer   ☒  (Do not check if a smaller reporting company)    Smaller reporting company  
Emerging growth company       

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

 

 

 


Brighthouse Financial, Inc.

Information Required in Registration Statement

Cross-Reference Sheet Between the Information Statement and Items of Form 10

This Registration Statement on Form 10 incorporates by reference information contained in our Information Statement filed as Exhibit 99.1 to this Form 10. For your convenience, we have provided below a cross-reference sheet identifying where the items required by Form 10 can be found in the Information Statement.

 

Item No.

  

Item Caption

  

Location in Information Statement

1.    Business    See “Summary,” “Risk Factors,” “Note Regarding Forward-Looking Statements,” “The Separation and Distribution,” “Formation of Brighthouse and the Restructuring,” “Recapitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Regulation” and “Where You Can Find More Information.”
1A.    Risk Factors    See “Summary,” “Risk Factors” and “Note Regarding Forward-Looking Statements.”
2.    Financial Information    See “Summary,” “Risk Factors,” “Recapitalization,” “Selected Historical Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures About Market Risk.”
3.    Properties    See “Business — Properties.”
4.    Security Ownership of Certain Beneficial Owners and Management    See “Beneficial Ownership of Common Stock.”
5.    Directors and Executive Officers    See “Management.”
6.    Executive Compensation    See “Management” and “Compensation of Executive Officers and Directors.”
7.    Certain Relationships and Related Transactions and Director Independence    See “Risk Factors,” “Certain Relationships and Related Person Transactions” and “Management.”
8.    Legal Proceedings    See “Business — Litigation and Regulatory Matters.”
9.    Market Price of, and Dividends on, the Registrant’s Common Equity and Related Stockholder Matters    See “The Separation and Distribution,” “Dividend Policy,” “Beneficial Ownership of Common Stock,” “Description of Capital Stock” and “Shares Eligible for Future Sale.”
10.    Recent Sales of Unregistered Securities    In the three years preceding the filing of this registration statement, the registrant has not issued any securities that were not registered under the Securities Act, except for the issuance of 100,000 shares of common stock of the registrant to MetLife, Inc. for aggregate consideration of $1,000 on September 28, 2016 in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.
11.    Description of Registrant’s Securities to be Registered    See “Description of Capital Stock.”

 

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Item No.

  

Item Caption

  

Location in Information Statement

12.    Indemnification of Directors and Officers    See “Risk Factors,” “Certain Relationships and Related Person Transactions” and “Description of Capital Stock — Limitation of Liability and Indemnification of Directors and Officers.”
13.    Financial Statements and Supplementary Data    See “Selected Historical Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Index to Combined Financial Statements, Notes and Schedules” and the financial statements referenced therein.
14.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure    None.
15.    Financial Statements and Exhibits   

(a)    Financial Statements

 

See “Index to Combined Financial Statements, Notes and Schedules” and the financial statements referenced therein.

 

(b)    Exhibits

 

See below.

The following documents are filed as exhibits hereto:

 

Exhibit
No.

  

Exhibit Descriptions

  2.1    Form of Master Separation Agreement between MetLife, Inc. and Brighthouse Financial, Inc.
  3.1    Form of Amended and Restated Certificate of Incorporation of Brighthouse Financial, Inc.*
  3.2    Form of Amended and Restated By-laws of Brighthouse Financial, Inc.*
10.1    Form of Transition Services Agreement among MetLife Services and Solutions, LLC, Brighthouse Services, LLC, MetLife, Inc. (but only with respect to certain provisions) and Brighthouse Financial, Inc. (but only with respect to certain provisions)
10.2    Form of Registration Rights Agreement between MetLife, Inc. and Brighthouse Financial, Inc.***
10.3    Form of Investment Management Agreement***
10.4    Form of Intellectual Property License Agreement***
10.5    Form of Tax Receivables Agreement***
10.6    Form of Tax Separation Agreement***
10.8    Revolving Credit Agreement, dated as of December 2, 2016, among Brighthouse Financial, Inc., JP Morgan Chase Bank, N.A., as administrative agent, and the other lenders named therein**
10.9    Term Loan Agreement, dated as of December 2, 2016, among Brighthouse Financial, Inc., JP Morgan Chase Bank, N.A., as administrative agent, and the other lenders named therein**
21.1    List of subsidiaries of Brighthouse Financial, Inc.
99.1    Preliminary Information Statement of Brighthouse Financial, Inc., subject to completion, dated June 2, 2017
99.2    Form of Notice of Internet Availability of Information Statement Materials***

 

* To be filed by amendment.
** Previously filed on December 6, 2016.
*** Previously filed on April 18, 2017.

 

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SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Registration Statement on Form 10 to be signed on its behalf by the undersigned, thereunto duly authorized.

 

BRIGHTHOUSE FINANCIAL, INC.
By:  

/s/ Anant Bhalla

  Name: Anant Bhalla
  Title: Chief Financial Officer

Dated: June 2, 2017

 

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EX-2.1

Exhibit 2.1

MASTER SEPARATION AGREEMENT

BETWEEN

METLIFE, INC.

AND

BRIGHTHOUSE FINANCIAL, INC.

Dated [            ], 2017


TABLE OF CONTENTS

 

          Page  

ARTICLE I.

   DEFINITIONS      2  

1.1.

   Certain Definitions      2  

ARTICLE II.

   THE SEPARATION      17  

2.1.

   Transfer of Assets; Assumption of Liabilities; Consideration      17  

2.2.

   Company Assets      20  

2.3.

   Company Liabilities      22  

2.4.

   Termination of Agreements      24  

2.5.

   DISCLAIMER OF REPRESENTATIONS AND WARRANTIES      25  

2.6.

   Governmental Approvals and Consents      26  

2.7.

   Novation of Assumed Company Liabilities      27  

2.8.

   Novation of Liabilities other than Company Liabilities      27  

ARTICLE III.

   INTERCOMPANY TRANSACTIONS AS OF THE CLOSING DATE      28  

3.1.

   Time and Place of Closing      28  

3.2.

   Closing Transactions      29  

3.3.

   Amended and Restated Certificates of Incorporation and Amended and Restated Bylaws      30  

3.4.

   Conditions to Distribution      30  

3.5.

   Transfers of Assets and Assumption of Liabilities      32  

3.6.

   Transfer of Excluded Assets; Assumption of Excluded Liabilities      32  

3.7.

   Distribution      33  

3.8.

   Fractional Shares      34  

ARTICLE IV.

   ALLOCATIONS AND TREATMENT OF CLAIMS; INDEMNIFICATION      35  

4.1.

   Allocations and Treatment of Claims; Procedures in Respect of Third Party Claims Not Set Forth on Schedule 4.1      35  

4.2.

   General Indemnification by the Company      37  

4.3.

   General Indemnification by MetLife      39  

4.4.

   Contribution      41  

4.5.

   Indemnification Obligations Net of Insurance Proceeds; Other Amounts      42  

4.6.

   Privilege      43  

4.7.

   Additional Matters      43  

4.8.

   Remedies Cumulative; Limitations of Liability      44  

4.9.

   Survival of Indemnities      45  

4.10.

   Release of Terminated Contracts      45  

ARTICLE V.

   OTHER COVENANTS, AGREEMENTS AND OBLIGATIONS      46  

5.1.

   Further Assurances      46  

5.2.

   Confidentiality; Access      47  

 

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5.3.

   Insurance Matters      48  

5.4.

   Covenants Against Taking Certain Actions and to Perform Under Existing Contracts      49  

5.5.

   No Violations      52  

5.6.

   MLIC Loan Participation Program      52  

5.7.

   Credit Support and Other Arrangements      53  

5.8.

   Mutual Non-Solicitation of Employees      57  

5.9.

   Specified Payment Obligations      57  

5.10.

   Obligations with Respect to Records and Non-Records      59  

5.11.

   IFSA      60  

5.12.

   License Grants      61  

5.13.

   Obligations with Respect to Reinsurance Arrangements      67  

ARTICLE VI.

   DISPUTE RESOLUTION      68  

6.1.

   General Provisions      68  

6.2.

   Business Level Resolution      70  

6.3.

   Mediation      70  

6.4.

   Arbitration; Procedures      70  

6.5.

   Equitable Remedies      72  

ARTICLE VII.

   ADDITIONAL AGREEMENTS      72  

7.1.

   Voting of Company Common Stock      72  

7.2.

   MetLife China      73  

ARTICLE VIII.

   MISCELLANEOUS      73  

8.1.

   Corporate Power; Fiduciary Duty      73  

8.2.

   Governing Law      74  

8.3.

   Survival of Covenants      74  

8.4.

   Force Majeure      74  

8.5.

   Notices      74  

8.6.

   Termination      76  

8.7.

   Severability      76  

8.8.

   Entire Agreement      77  

8.9.

   Assignment; No Beneficiaries      77  

8.10.

   Public Announcements      77  

8.11.

   Amendment      77  

8.12.

   Rules of Construction      77  

8.13.

   Coordination with Transaction Documents      78  

8.14.

   Counterparts      78  

 

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TABLE OF EXHIBITS

 

Exhibit A    Intellectual Property License Agreement
Exhibit B    MetLife Retention Policy
Exhibit C    Registration Rights Agreement
Exhibit D    Tax Receivables Agreement
Exhibit E    Tax Separation Agreement
Exhibit F    Transition Services Agreement
Exhibit G
   Amended and Restated Certificate of Incorporation of the Company
Exhibit H    Amended and Restated Bylaws of the Company
Exhibit I    Form of LPA Agreements
Exhibit J    Form of Assumption Reinsurance Agreement

 

iii


TABLE OF SCHEDULES

 

Schedule 1.1    Co-Branded Use
Schedule 1.1(a)    Excluded Contracts
Schedule 1.1(b)    Company Contracts
Schedule 1.1(c)    Company Group
Schedule 1.1(d)    Corporate Reorganization
Schedule 1.1(e)    Novated Policy
Schedule 1.1(e)    Policyholder
Schedule 1.1(f)    Real Property Leases and Subleases
Schedule 1.1(g)    Excluded Non-Records
Schedule 2.2(a)(iii)    Company Assets
Schedule 2.2(a)(iv)    Company Assets – Equity Interests
Schedule 2.2(a)(v)(A)    Company Assets – Intellectual Property
Schedule 2.2(a)(v)(B)    Excluded Assets – Intellectual Property
Schedule 2.2(b)(i)    Excluded Assets – Contracts
Schedule 2.3(a)(i)    Company Liabilities
Schedule 2.4(b)(i)    Surviving Contracts
Schedule 2.4(b)(ii)    Amended Contracts
Schedule 2.4(b)(v)    Guarantees
Schedule 2.4(b)(vi)    Third Party Contracts
Schedule 2.4(c)    DS Agreements
Schedule 3.2(b)(i)    Transaction Documents
Schedule 3.2(b)(ii)    Services Agreements
Schedule 3.2(h)    Certain Persons
Schedule 4.1    Allocation of Certain Liabilities
Schedule 4.1(d)    Procedures
Schedule 4.2(c)    Allocation of Shared Liabilities
Schedule 4.2(d)    Certain Excepted Transaction Documents (MetLife)
Schedule 4.2(g)    Certain Persons Providing Information (MetLife)
Schedule 4.3(d)    Certain Excepted Transaction Documents (Company)
Schedule 4.3(g)    Certain Persons Providing Information (Company)
Schedule 4.3(h)    NELICO Plans and Travelers Plans and Trust Records and Non-Records
Schedule 4.4    Contribution
Schedule 4.10(a)    Company Released Agreements
Schedule 4.10(b)    MetLife Released Agreements
Schedule 5.4(b)    Certain Agreements (MetLife)
Schedule 5.4(c)    Certain Agreements (Company)
Schedule 5.7(b )    Terminating Guarantees
Schedule 5.7(d)    GALIC Guarantees
Schedule 5.9(e)    Commission Payment Procedures
Schedule 5.11(a)    IFSAs
Schedule 5.12(a)    Tagline Uses Allowed
Schedule 5.12(b)    Tagline Uses Not Allowed
Schedule 5.13(a)    Company Group Third Party Reinsurance Arrangements

 

iv


Schedule 5.13(b)    MetLife Third Party Group Reinsurance Arrangements
Schedule 6.1    Dispute Resolution Excepted Transaction Documents
Schedule 7.2    MetLife China

 

v


DEFINITIONS GLOSSARY

 

Access Party

     47  

Aggregate Available Amount

     59  

Aggregate Excess Losses

     59  

Agreement

     1  

Allocated Party

     36  

Amended and Restated Bylaws

     30  

Arbitration Panel

     69  

Arbitration Procedures

     69  

Arbitration Rules

     69  

Available Amount

     59  

BLIC

     1  

Charter

     30  

Claim Notice

     36  

Claiming Party

     36  

Closing

     28  

Closing Date

     28  

Company

     1  

Company Action

     48  

Company Assets

     20  

Company Group Third Party Reinsurance

     66  

Company Indemnified Parties

     39  

Company Liabilities

     21  

Company Public Filings

     38  

Company’s Knowledge

     51  

CPR

     68  

Credit Rating Condition

     53  

Determination

     70  

Dispute

     67  

Excess Loss

     59  

Excluded Assets

     21  

Excluded BA Liabilities

     23  

Excluded Contracts

     6  

Excluded Liabilities

     23  

Excluded Non-Records

     13  

FP

     56  

FP Vested Compensation

     56  

GALIC Guarantees

     53  

Group Individuals

     37  

Guarantees

     24  

IFSA

     59  

IFSA Party

     59  

Indemnified Party

     41  

Indemnifying Party

     41  

Indemnity Payment

     41  

Initial Notice

     68  

Insurers

     57  

LPA

     52  

LPA Effective Date

     52  

LPAs

     52  

Mediation Notice

     68  

MetLife

     1  

MetLife China

     71  

MetLife Group Third Party Reinsurance

     66  

MetLife Indemnified Parties

     37  

MetLife Public Filings

     37  

MetLife Transfer Documents

     31  

MetLife’s Knowledge

     51  

MLIA

     52  

MLIC

     51  

MLR

     15  

MPCG

     15  

MPCG Employee Group

     15  

MSI

     15  

NES

     15  

Objection Notice

     36  

Obligor

     56  

Offer

     69  

Other Party Employee

     47  

Participants

     51  

Participations

     51  

Parties

     1  

Party

     1  

Payor

     56  

PLE&O Coverage

     47  

Policy Novation

     54  

Policy Novation Effective Time

     55  

Quality Standards

     62  

Record Holders

     33  

Relevant Parties

     36  

Representatives

     46  

Response

     68  

Retained Shares

     71  

Separation

     1  

Separation Date

     1  

Tagline Termination Date

     61  

Telecom Equipment

     55  

Terminated Contracts

     23  
 

 

vi


Third Party Claim

     35  

Transaction Communications

     41  

Transaction Documents

     28  

True-Up Statement

     59  

VIT

     57  
 

 

vii


MASTER SEPARATION AGREEMENT

This MASTER SEPARATION AGREEMENT (this “Agreement”) is made effective as of [            ], 2017, by and between MetLife, Inc., a Delaware corporation (“MetLife”), and Brighthouse Financial, Inc., a Delaware corporation (the “Company”). Each of MetLife and the Company shall be referred to herein as a “Party” and, together, the “Parties.”

W I T N E S S E T H:

WHEREAS, as of the Effective Date the Company is a direct, wholly-owned Subsidiary of MetLife;

WHEREAS, the board of directors of MetLife has approved the separation of the Company and each other member of the Company Group into a separate business, whereby MetLife will cease to own a majority of the issued and outstanding equity interests of the Company (the “Separation,” and, such date and time of the Separation, the “Separation Date”);

WHEREAS, the Company has been incorporated solely for purposes of the Separation and has not engaged in business activities other than in preparation for or in connection with the Corporate Reorganization and Separation;

WHEREAS, prior to the Effective Date, the Company, directly or indirectly, acquired certain assets and operations of MetLife’s retail business, including all of the stock of Brighthouse Life Insurance Company (formerly known as MetLife Insurance Company USA) (“BLIC”), and the Company and MetLife have begun the Corporate Reorganization in furtherance of, and in connection with, the Separation;

WHEREAS, the boards of directors of MetLife and the Company have approved the acquisition of all Company Assets not previously transferred in the Corporate Reorganization (or otherwise acquired) by the Company Group and the assumption of the Company Liabilities not previously assumed in the Corporate Reorganization (or otherwise assumed) by the Company Group, all as more fully described in this Agreement and the Transaction Documents;

WHEREAS, the boards of directors of each Party have further determined it is appropriate and advisable, on the terms and conditions contemplated hereby, to cause the Distribution;

WHEREAS, the Parties intend that for U.S. federal income tax purposes, the Distribution, if effected, is intended to qualify as a tax-free reorganization under Sections 368(a)(1)(D), 355, 361 and related provisions of the Code for U.S. federal income tax purposes, and this Agreement, together with the other documents effecting the Distribution and Separation, is intended to constitute a plan of reorganization within the meaning of Treas. Reg. § 1.368-2(g); and


WHEREAS, it is appropriate and desirable to set forth the principal corporate transactions required to effect the Separation and certain other agreements that will, following the Separation, govern certain matters relating to the Separation, the Distribution and the relationship of the Parties and their respective Affiliates.

NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I.

DEFINITIONS

1.1. Certain Definitions. For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1. All other terms used in this Agreement, but not defined in this Section 1.1, are defined throughout this Agreement and listed in the Definitions Glossary that follows the Table of Contents of this Agreement.

Action” means any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority or any arbitration or mediation tribunal.

Affiliate” (and, with a correlative meaning, “affiliated”) means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person; provided, however, that from and after the Separation Date, no member of the Company Group shall be deemed an Affiliate of any member of the MetLife Group for purposes of this Agreement and no member of the MetLife Group shall be deemed an Affiliate of any member of the Company Group for purposes of this Agreement. For purposes of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”) of a Person means the power to, directly or indirectly, direct or cause the direction of the management and policies of such Person or the power to appoint and remove a majority of the members of the board of directors of such Person, whether through the ownership of voting securities or other ownership interests, by contract or otherwise, including, with respect to a corporation, partnership or limited liability company, the direct or indirect ownership of more than fifty percent (50%) of the voting securities of such corporation or the voting interest of such partnership or limited liability company.

After-Tax Basis” means that, in determining the amount of the payment necessary to indemnify any Party against, or reimburse any Party for, Losses, the amount of the Losses shall be determined net of any Tax benefit derived, or reasonably expected to be derived, by the Indemnified Party (or any Affiliate thereof) as the result of sustaining or paying such Losses (including as the result of facts or circumstances due to which the Indemnified Party sustained or

 

2


paid such Losses). Any such Tax benefit shall be computed assuming the Indemnified Party (i) has sufficient taxable income (and character of income) during the period which such Losses are paid to utilize any such Tax benefit and (ii) pays Taxes in the relevant jurisdictions at the highest applicable marginal rates. The Parties shall cooperate in good faith to agree to an After-Tax Basis calculation and, if requested, the Indemnified Party shall provide a schedule describing in reasonable detail any Tax adjustment (or lack thereof) to an indemnified Loss. Notwithstanding use of the term “After-Tax Basis” in this Agreement or the Employee Matters Agreement, there will be no adjustment to any indemnification or other payment if the Party being indemnified or paid can demonstrate in a reasonably satisfactory manner to such other Party that such payment is taxable income to the receiving party.

Assets” means, with respect to any Person, the assets, properties and rights of any kind of such Person, wherever located (including in the possession of vendors or other third parties or elsewhere), whether real, personal or mixed, tangible, intangible (including goodwill, if any), accrued or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the Books and Records of such Person, including the following:

(a) all Books and Records, whether located on systems, applications, SharePoint sites, Shared Drives, local drives, e-mail repositories, databases, document management systems, paper, microfilm, microfiche, computer tape or disc, magnetic tape or any other form or location;

(b) all apparatus, computers and other electronic data processing equipment, fixtures, equipment, furniture, office equipment, and other tangible personal property;

(c) all interests in real property of whatever nature, including easements, whether as owner, mortgagee or holder of a Security Interest in real property, lessor, sublessor, lessee, sublessee or otherwise;

(d) all interests in any capital stock or other equity interests of any Subsidiary or any other Person, all bonds, notes, debentures or other securities issued by any Subsidiary or any other Person, all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other Person and all other investments in securities of any Person;

(e) all license agreements, leases of personal property, open purchase orders for supplies, parts or services and other contracts, agreements or commitments;

(f) all deposits, letters of credit and performance and surety bonds;

(g) all domestic and foreign (if any) intangible personal property, patents, copyrights, trade names, trademarks, service marks and registrations and applications for any of the foregoing, mask works, trade secrets, inventions, algorithms, designs, ideas, improvements, works of authorship, recordings, other proprietary and confidential information and licenses from third Persons granting the right to use any of the foregoing;

 

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(h) all computer applications, programs and other Software, including operating Software, network Software, firmware, middleware, design Software, design tools, systems documentation and instructions;

(i) all prepaid expenses, trade accounts and other accounts and notes receivables;

(j) all rights under contracts or agreements, all claims or rights against any Person, all rights in connection with any bids or offers and all claims, choses in action or similar rights, whether accrued, contingent, whether in tort, contract or otherwise and whether arising by way of counterclaim or otherwise;

(k) all licenses, permits, approvals and authorizations which have been issued by any Governmental Authority and all pending applications therefor;

(l) cash or cash equivalents, bank accounts, lock boxes and other deposit arrangements;

(m) interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements; and

(n) subject to Section 5.3, all rights under existing insurance policies and all rights in the nature of insurance, indemnification or contribution under existing agreements, in each case subject to the terms and conditions of such policies and agreements and solely to the extent such rights survive the Separation and extend to the Company following the Separation, in accordance with the terms of such policies and agreements.

Benefit Plan” means, with respect to an entity, any plan, program, arrangement, agreement or commitment that is a deferred compensation agreement, or an executive compensation, incentive bonus or other bonus, employee pension, profit-sharing, savings, retirement, supplemental retirement, stock option, stock purchase, stock appreciation rights, restricted stock, other equity-based compensation, severance pay, salary continuation, life, health, hospitalization, sick leave, paid time off, disability or accident insurance, corporate-owned or key-man life insurance or other employee benefit plan, program, arrangement, agreement or commitment, including any “employee benefit plan” (as defined in Section 3(3) of ERISA), sponsored or maintained by such entity (or to which such entity contributes or is required to contribute or has any Liabilities, directly or indirectly, contingent or fixed).

BLIC NY” means Brighthouse Life Insurance Company of New York (formerly known as First MetLife Investors Insurance Company).

Books and Records” of a Person means (a) the general ledger and accounting information maintained or that should be maintained under applicable Law used in the preparation of such Person’s financial statements; (b) any other Records of such Person not covered by subsection (a) of this definition; and (c) Non-Records of such Person.

 

4


Business Day” means each day other than Saturday, Sunday and any day on which banking institutions in New York, New York are authorized or required by applicable Law or executive order to close.

Claim” means any Action, cause of action, customer complaint, summons, subpoena, proceeding or investigation of any nature (including related Losses), and any matter that is preliminary to or otherwise reasonably related to the foregoing, whether civil, criminal, administrative, regulatory, or otherwise or whether at law or in equity.

Co-Branded Use” means use of the Tagline in close proximity to, but never before or in front of, any of the design mark versions of any of the Licensee Marks, as exemplified in Schedule 1.1.

Code” means the Internal Revenue Code of 1986, as amended.

Company Balance Sheet” means the MetLife U.S. Retail Separation Business’s combined balance sheet as of [            ], 2017 included in any Form 10 or similar prospectus or information statement concerning the Distribution.

Company Benefit Plan” means any Benefit Plan sponsored, maintained or contributed to by any member of the Company Group.

Company Business” means (a) the current businesses of each of the members of the Company Group; and (b) those terminated, divested or discontinued businesses which are included as historical operations of the Company Group consistent with the methodology applied in the basis of presentation of the Company Carve-Out Financial Statements.

Company Carve-Out Financial Statements” means the MetLife U.S. Retail Separation Business’s audited combined balance sheet as of [        ], the MetLife U.S. Retail Separation Business’s audited combined statements of operations for the [        ] ended [        ], the MetLife U.S. Retail Separation Business’s audited combined statements of comprehensive income (loss) for the [        ] ended [        ], the MetLife U.S. Retail Separation Business’s audited combined statements of shareholder’s net investment for the [        ] ended [        ], and the MetLife U.S. Retail Separation Business’s audited combined statements of cash flows for the [        ] ended [        ], in each case as included in the final Information Statement.

Company Common Stock” means the common stock, $0.01 par value per share, of the Company.

Company Confidential Information” means the Confidential Information of any member of the Company Group or any member of the MetLife Group and relating primarily to the Company Business; provided that other than Personal Information, “Company Confidential Information” does not include, and there shall be no obligation hereunder with respect to, information that (i) is or becomes generally available to the public, other than as a result of a use or disclosure by any member of the MetLife Group or its Representatives not otherwise

 

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permissible hereunder, (ii) MetLife can demonstrate was or became available to a member of the MetLife Group from a source other than the Company or its Affiliates and such source was not subject to confidentiality restrictions with respect to such information or (iii) is developed independently by such member of the MetLife Group without the use of, reference to or reliance on, the Company Confidential Information; provided, however, that, in the case of clause (i), the source of such information was not known by such member of the MetLife Group to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the Company or any other member of the Company Group or their respective Affiliates or any other Person, with respect to such information.

Company Contracts” means the following contracts and agreements, whether or not in writing, except for any such contract or agreement that is contemplated to be retained by MetLife or any other member of the MetLife Group pursuant to any provision of this Agreement or any Transaction Document or Corporate Reorganization Agreement or otherwise as set forth on Schedule 1.1(a) (the “Excluded Contracts”):

(a) any contracts set forth on Schedule 1.1(b);

(b) any contract or agreement entered into in the name of, or expressly on behalf of, any division, business unit or member of the Company Group;

(c) any guarantee, indemnity, representation or warranty of any member of the Company Group or the MetLife Group in respect of (i) any other Company Contract, (ii) any Company Liability or (iii) the Company Business; and

(d) any contract or agreement that is otherwise expressly contemplated pursuant to this Agreement or any of the Transaction Documents, by specific reference herein or therein to such contract or agreement being so assigned, to be assigned to any member of the Company Group.

Company Employee” means any individual who is employed by the Company or any other member of the Company Group as a common law employee, including active employees and employees on paid time off or an approved leave of absence.

Company Employee Liability” means, excluding any Liabilities for Taxes, which shall be governed exclusively by the Tax Separation Agreement and the Tax Receivables Agreement and to the extent not covered by the definition of Specified MetLife Liabilities, Specified Company Liabilities or Specified Shared Liabilities, all Liabilities relating to, arising out of or resulting from (i) any employment, compensation, or employee benefit claims of any Company Employee relating to, arising out of or resulting from such Person’s status as a Company Employee, excluding, to the extent applicable, any Liability relating to, arising out of or resulting from such Person being or having been a MetLife Employee or, as to ERISA benefit claims, such Person having been a MetLife Employee or Company Employee prior to January 1, 2017; (ii) any employment, compensation, or employee benefit claims of any contractor, consultant or

 

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alleged employee (common law or otherwise) who was paid by the Company or any other member of the Company Group or who was compensated by a third party that received payments from the Company or any other member of the Company Group for such Person’s services, or who performed services primarily for the Company or other members of the Company Group, excluding, to the extent applicable, any Liability relating to, arising out of or resulting from such Person being or having been a MetLife Employee or an employee, consultant or contractor who performed services primarily for MetLife or other members of the MetLife Group or, as to ERISA benefit claims, such Person having been a MetLife Employee or Company Employee prior to January 1, 2017; and (iii) any Company Benefit Plan.

Company Group” means the (i) Company, (ii) each Person set forth on Schedule 1.1(c) and each of their Subsidiaries, and (iii) each other Person that is, as of immediately after the Separation, controlled, either directly or indirectly, by (or under common control with) the Company (in the case of each of clauses (ii) and (iii), until such time following the Separation Date, if any, such Person ceases to be, but in any event in respect of the periods prior to the Separation Date and such other periods during which such Person was, a direct or indirect Subsidiary of, or directly or indirectly controlled by or under common control with, the Company). Notwithstanding anything herein to the contrary, for purposes of Section 4.2 (but without effecting the definitions of Specified Company Liabilities, Specified MetLife Liabilities or Specified Shared Liabilities, including the use of the defined term “Company Group” therein), the defined term “Company Group” shall include any Person who becomes a direct or indirect Subsidiary of the Company following the Separation (for so long as such Person is a Subsidiary of the Company).

Company IP Transfer Standard” means all Intellectual Property (other than trademarks and domain names) and Software that is used exclusively in the Company Business.

Confidential Information” of a Person means, irrespective of the form of communication or storage medium, all information, material and documents of such Person that is proprietary and/or non-public related to the past, present and future business activities of such Person, its Affiliates and Representatives, including, all information related to: (a) such Person’s employees, customers, and third-party contractors; (b) such Person’s operational and business proposals and plans, pricing, financial information, methods, processes, code, data, lists (including customer lists), inventions, trade secrets, know-how, apparatus, statistics, programs, Software, research, development, information technology, systems, security controls, network designs, passwords, sign-on codes, and usage data; (c) all Personal Information of or in such Person’s custody or control, and/or (d) any other information that is designated or should reasonably be known as confidential by such Person or its Representatives.

Consents” means any consent, waiver or approval from, or notification requirement to, any third parties (including any Governmental Authority).

 

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Corporate Reorganization” means the reorganization of certain assets and subsidiaries of MetLife to the Company and/or its subsidiaries in connection with the Separation, as further described on Schedule 1.1(d).

Corporate Reorganization Agreements” means the definitive agreements that govern or relate to the Corporate Reorganization.

Distribution” means the distribution or similar transaction pursuant to which the Company Common Stock is distributed to the stockholders of MetLife on or following the Separation Date on a pro rata basis consistent with such stockholders’ ownership of MetLife, such that, on or following the Separation Date, at least eighty and one-tenth percent (80.1%) of the Company Common Stock shall be held by the stockholders of MetLife. The Distribution shall be effective at [Time] Eastern time on the Separation Date.

Effective Date” means the first date listed in this Agreement.

Employee Matters Agreement” means the Employee Matters Agreement in a form and substance reasonably satisfactory to MetLife and the Company, to be entered into by and between MetLife and the Company.

ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time that reference is made thereto.

Fee Agreement” means that certain Fee Agreement, dated as of December 20, 2007, as amended, by and between Morgan Stanley Bank and MetLife.

Force Majeure” means, with respect to a Party, an event beyond the control of such Party (or any Person acting on its behalf), which by its nature could not have been foreseen by such Party (or such Person), or, if it could have been foreseen, was unavoidable, and includes, acts of God, storms, floods, riots, fires, pandemics, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism or failure of energy sources.

GAAP” means accounting principles generally accepted in the United States of America.

GALIC” means General American Life Insurance Company and any successor thereto.

 

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Governmental Approvals” means any Consent, notice, application, report or other filing to be made with, or any license, consent, registration, approval, permit or authorization to be obtained from, any Governmental Authority.

Governmental Authority” means any government, body or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to the government, including any governmental authority, agency, department, board, commission or instrumentality, whether federal, state, provincial, municipal, local or foreign (or any political subdivision thereof), any self-regulatory organization, including FINRA, and any tribunal, court or arbitrator(s) of competent jurisdiction.

Indebtedness” means, with respect to any Person, any Liability of such Person in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments and shall also include (a) any Liability of such Person under any agreement related to the fixing of interest rates on any Indebtedness, (b) any capitalized lease obligations of such Person (if and to the extent the same would appear on a balance sheet of such Person prepared in accordance with GAAP) and (c) obligations of such Person in respect of letters of credit (but only to the extent drawn).

Information Statement” means the Information Statement, attached as an exhibit to the Registration Statement on Form 10 filed in connection with the Distribution, to be sent or otherwise made available to each MetLife stockholder in connection with the Distribution, as such Information Statement may be amended from time to time, including any amendment or supplement thereto.

Infringement” means infringement, dilution, imitation, illegal or other unauthorized use of the Tagline, or any uses of, or making applications or registrations for, Similar Intellectual Property.

Insurance Proceeds” means those monies: (a) received by an insured from an insurance carrier; (b) paid by an insurance carrier on behalf of the insured; or (c) received (including by way of set off) from any third party in the nature of insurance, contribution or indemnification in respect of any Liability; in any such case net of any reserves and net of any costs or expenses incurred in the collection thereof.

Intellectual Property” means all of the following, whether protected, created or arising under the laws of the United States or any other foreign jurisdiction, including: (i) patents, patent applications (along with all patents issuing thereon), statutory invention registrations, divisions, continuations, continuations-in-part, substitute applications of the foregoing and any extensions, reissues, restorations and reexaminations thereof, and all rights therein provided by international treaties or conventions; (ii) Marks; (iii) copyrights and copyrightable works, mask work rights, database rights and design rights, whether or not registered, published or unpublished, and registrations and applications for registration thereof and all rights therein whether provided by international treaties or conventions or otherwise; (iv) trade secrets, know-how, and other

 

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confidential and proprietary information including confidential or proprietary data contained in databases, and confidential or proprietary customer lists; (v) domain names; and (vi) all other applications and registrations related to any of the intellectual property rights set forth in the foregoing clauses (i) – (v) above.

Intellectual Property License Agreement” means the Intellectual Property License Agreement in substantially the form attached hereto as Exhibit A, to be entered into by and between MetLife and the Company.

Investment Management Agreements” means those certain Investment Management Agreements effective on January 1, 2017 by and between MetLife Investment Advisors, LLC, on the one hand, and certain members of the Company Group, on the other hand.

Law” means any federal, state, provincial, municipal, local or foreign law, binding judicial or administrative interpretation or other requirement (including common law), statute, code, ordinance, rule, decree, injunction, regulation or other requirement, in each case, enacted, promulgated, issued, communicated or entered by a Governmental Authority.

Liabilities” means any Indebtedness, loss, damage, adverse claim, liability or obligation of any Person (whether direct or indirect, known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due, and whether in contract, tort, strict liability or otherwise), and all costs, fees and expenses relating thereto, including reasonable attorneys’ fees and expenses and special, indirect, incidental, punitive, consequential, exemplary, statutorily-enhanced, or similar damages.

License Party” and “License Parties” means Licensor and Licensee.

Licensee” means Brighthouse Services, LLC.

Licensee Marks” means Marks that include the word “Brighthouse” that are owned and/or used by Licensee in connection with the Company Business.

Licensor” means MLIC.

Litigation Cooperation Guidelines” means the guidelines to be adopted by the Parties concerning the handling of litigation, regulatory and related matters.

Losses” means all Liabilities, deficiencies, diminution in value, interest and penalties, fines, amounts paid in settlement, but excluding, other than in respect of any Third Party Claim, special, indirect, incidental, punitive, consequential, exemplary, statutorily-enhanced or similar damages.

Mango Purchase Agreement” means that certain Purchase Agreement, dated as of February 28, 2016, as amended on July 1, 2016, by and between MetLife and Massachusetts Mutual Life Insurance Company.

 

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Mango Transition Services Agreement” means that certain Transition Services Agreement, dated as of July 1, 2016, by and between MetLife and Massachusetts Mutual Life Insurance Company.

Marks” means any registered, applied for or unregistered trade, corporate or business names, trademarks, taglines, identifying logos, symbols, emblems, signs or insignia, monograms, slogans, service marks, brand names, brand marks, trade dress, domain names, any other names or source identifiers, any and all common law rights thereto and all extensions, renewals and goodwill associated therewith.

Marked Materials” means materials (including signage, advertising, promotional materials, electronic materials, digital materials, videos, website content, business cards, product, training and service literature and other materials) in Licensee’s possession or control bearing the Tagline.

Market Date” means March 6, 2017.

MetLife Benefit Plan” means any Benefit Plan sponsored, maintained or contributed to by any member of the MetLife Group, excluding any Company Benefit Plans.

MetLife Confidential Information” means the Confidential Information of any member of the MetLife Group; provided that other than Personal Information, “MetLife Confidential Information” does not include, and there shall be no obligation hereunder with respect to, information that (i) is or becomes generally available to the public, other than as a result of a use or disclosure by any member of the Company Group or its Representatives not otherwise permissible hereunder, (ii) the Company can demonstrate was or became available to a member of the Company Group from a source other than MetLife and its Affiliates and such source was not subject to confidentiality restrictions with respect to such information or (iii) is developed independently by such member of the Company Group without the use of, reference to or reliance on, the MetLife Confidential Information; provided, however, that, in the case of clause (i), the source of such information was not known by such member of the Company Group to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to any member of the MetLife Group or any other Person with respect to such information.

MetLife Employee” means any individual who is employed by MetLife or any other member of the MetLife Group as a common law employee, including active employees and employees on paid time off or an approved leave of absence.

MetLife Employee Liability” means, excluding any Liabilities for Taxes, which shall be governed exclusively by the Tax Separation Agreement and the Tax Receivables Agreement and to the extent not covered by the definition of Specified MetLife Liabilities, Specified Company Liabilities or Specified Shared Liabilities, all Liabilities relating to, arising out of or resulting from (i) any employment, compensation, or employee benefit claims of any MetLife Employee

 

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relating to, arising out of or resulting from such Person’s status as a MetLife Employee, excluding, to the extent applicable, any Liability relating to, arising out of or resulting from such Person being or having been a Company Employee; (ii) any employment, compensation, or employee benefit claims of any contractor, consultant or alleged employee (common law or otherwise) who was paid by MetLife or any other member of the MetLife Group or who was compensated by a third party that received payments from MetLife or any other member of the MetLife Group for the Person’s services, or who performed services primarily for MetLife or other members of the MetLife Group, excluding, to the extent applicable, any Liability relating to, arising out of or resulting from such Person being or having been a Company Employee or who performed services primarily for the Company or any other members of the Company Group or an employee, consultant or contractor who performed services primarily for the Company or other members of the Company Group or, as to ERISA benefit claims, such Person having been a Company Employee on or after January 1, 2017; and (iii) any MetLife Benefit Plan.

MetLife Group” means MetLife and each Person (other than any member of the Company Group) that is, as of immediately after the Separation, a direct or indirect Subsidiary or an Affiliate of MetLife (in each case so long as, and in respect of the periods during which, such Subsidiary or Affiliate is a direct or indirect Subsidiary or Affiliate of MetLife). Notwithstanding anything herein to the contrary, for purposes of Section 4.3 (but without effecting the definitions of Specified Company Liabilities, Specified MetLife Liabilities or Specified Shared Liabilities, including the use of the defined term “MetLife Group” therein), the defined term “MetLife Group” shall include any Person who becomes a direct or indirect Subsidiary of MetLife following the Separation (for so long as such Person is a Subsidiary of MetLife).

MetLife IP Transfer Standard” means all Intellectual Property and Software that is not used exclusively in the Company Business.

MetLife Retention Policy” means the policy set forth on Exhibit B, as updated by MetLife in its sole discretion from time to time.

MLR Services Agreement” means that certain Services Agreement, entered into and effective as of July 1, 2016, by and among MetLife Investors Distribution Company, MLIC, BLIC and MSI Financial Services, Inc., as may be amended from time to time.

NELICO” means New England Life Insurance Company.

NELICO Plans” means the following: (i) the New England Life Insurance Company Agency Employees Retirement Plan and Trust (AERP), (ii) the New England Life Insurance Company Agents’ Retirement Plan and Trust, (iii) the New England Supplemental Retirement Plan for the Field Force, (iv) the New England Financial Top Producer Incentive Plan, (v) the New England Financial Renewal Trails Deferred Compensation Plan, (vi) the New England Financial California Renewal Trails Deferred Compensation Plan, (vii) the New England Non-

 

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Qualified Retirement Plan for Managing Partners, (viii) the New England Life Insurance Company Managing Partners Account Balance Plan, (ix) the New England Life Insurance Company California Managing Partners Account Balance Plan, (x) the New England Financial Managing Partners’ Deferred Compensation Plan, (xi) the New England Health and Well Being Plan for the Field Force, and (xii) the New England Long Term Disability Plan – Hartford Contract.

Non-Record” of a Person means any document, data or any other material not included in the definition of Record but generated or received by or otherwise used in such Person’s business other than any such document, data or other material set forth or described on Schedule 1.1(g) (the “Excluded Non-Records”); provided, however, that any such Excluded Non-Records may become Non-Records pursuant to a process to be agreed to between the Company and MetLife. Notwithstanding Section 5.10(d), the requesting Party shall bear one hundred percent (100%) of the cost of delivery of such Excluded Non-Records from the delivering Party, including all costs of any separation of such Excluded Non-Records from any other Records, Non-Records or Excluded Non-Records.

Novated Policy” shall have the meaning set forth on the attached Schedule 1.1(e).

Person” means any individual, corporation, limited liability company, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Authority or other entity.

Personal Information” means any and all information that identifies or is capable of identifying an individual, including (i) an individual’s name, social security number, date of birth or driver’s license or other government-issued identification number; (ii) an individual’s contact information, such as an address or telephone number; (iii) demographic information such as an individual’s gender, race or age; (iv) financial and health information, including credit card information; (v) information about an individual whose disclosure is protected or otherwise regulated by Law; (vi) other information that can be used to authenticate an individual’s identity (including passwords or PINs, biometric data, unique identification numbers, answers to security questions or other personal identifiers); and (vii) any information regarding such Person’s relationship to a member of the Company Group or the MetLife Group.

Policyholder” shall have the meaning set forth on the attached Schedule 1.1(e).

Real Property Leases” means those certain leases entered into by members of the MetLife Group for the orderly operation of its business as detailed on the attached Schedule 1.1(f).

Record” of a Person means a document, data or other material (i) identified on the MetLife Retention Policy and held for the benefit of such Person, (ii) required by such Person to operate, and used exclusively in the operation of, such Person’s business or (iii) required to be maintained by such Person by Law or regulation.

 

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Registration Rights Agreement” means the Registration Rights Agreement in substantially the form attached hereto as Exhibit C, to be entered into by and between MetLife and the Company.

Reimbursement Agreement” means that certain Letter of Credit Reimbursement and Security Agreement, dated as of December 20, 2007, as may be amended from time to time, by and between Morgan Stanley Bank, MetLife Reinsurance Company of Vermont and MetLife.

SEC” means the Securities and Exchange Commission.

Security Interest” means any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever.

Similar Intellectual Property” means any Mark confusingly similar to the Tagline or any of Licensor’s Marks.

Software” means the object and source code versions of computer programs and associated documentation, training materials and configurations to use and modify such programs, including programmer, administrator, end user and other documentation.

Specified Company Liabilities” means, excluding any Liabilities for Taxes, which shall be governed exclusively by the Tax Separation Agreement and the Tax Receivables Agreement, (i) all Liabilities relating to, arising out of or resulting from Tower Square Securities, Inc. and its historical operations, liabilities and obligations, in each case prior to August 30, 2013, (ii) all Liabilities relating to, arising out of or resulting from a breach of the MLR Services Agreement (whether before, at or after the Separation) as a result of any action or inaction on the part of any member of the Company Group, (iii) all Liabilities relating to, arising out of or resulting from (A) any product or the distribution, sale or servicing of any product issued by any member of the Company Group or (B) the supervision of any registered representative or sales office with respect to any product issued by any member of the Company Group, in each case of both subparts (A) and (B) herein, in respect of all products issued by any member of the Company Group regardless of whether the product was issued prior to or following the Separation and without regard to which entity or distribution organization or channel sold the product or may have engaged in any alleged misconduct, excluding any Liabilities described in clauses (i), (iii) and (iv) of the definition of “Specified Shared Liabilities,” and (iv) that portion of the Liabilities in respect of Claims allocated on Schedule 4.1 allocated to any member of the Company Group.

Specified MetLife Liabilities” means, excluding any Liabilities for Taxes, which shall be governed exclusively by the Tax Separation Agreement and the Tax Receivables Agreement, (i) all Liabilities relating to, arising out of or resulting from Walnut Street Securities, Inc. and its historical operations, liabilities and obligations, in each case prior to August 30, 2013, (ii) all Liabilities relating to, arising out of or resulting from a breach of the MLR Services Agreement (whether before, at or after the Separation) as a result of any action or inaction on the part of any

 

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member of the MetLife Group, (iii) all Liabilities relating to, arising out of or resulting from (A) any product or the distribution, sale or servicing of any product issued by any member of the MetLife Group or (B) the supervision of any registered representative or sales office with respect to any product issued by any member of the MetLife Group, in each case of both subparts (A) and (B) herein, in respect of all products issued by any member of the MetLife Group regardless of whether the product was issued prior to or following the Separation and without regard to which entity or distribution organization or channel sold the product or may have engaged in any alleged misconduct, excluding any Liabilities described in clauses (i), (iii) and (iv) of the definition of “Specified Shared Liabilities,” (iv) all Liabilities relating to, arising out of or resulting from a member of the MetLife Group providing administrative services on behalf of an employer’s self-funded benefit plan, other services provided in relation to an employer’s statutory obligations under applicable law, or services where the member is not a fiduciary, but specifically excluding any Liabilities relating to, arising out of or resulting from MetLife’s MetLife Resource division (“MLR”), and (v) that portion of the Liabilities in respect of Claims allocated on Schedule 4.1 allocated to any member of the MetLife Group.

Specified Shared Liabilities” means, excluding any Liabilities for Taxes, which shall be governed exclusively by the Tax Separation Agreement and the Tax Receivables Agreement, and in each case without regard to whether a member of the Company Group or the MetLife Group issued the product giving rise to the Liability:

(i) all Liabilities arising under Section 9.2(a) of the Mango Purchase Agreement, including all Liabilities arising from any Claim that includes, in whole or in part, any such Liabilities, except for any Liabilities arising from a breach of the representations and warranties contained in Section 3.1(a) (Organization, Authority and Enforceability), Section 3.3. (Title to Shares), Section 3.4 (Title to Purchased Property), Section 3.5 (Capitalization) and Section 3.7 (Brokers) of the Mango Purchase Agreement;

(ii) to the extent not covered by subsection (i) of this section, all Liabilities relating to, arising out of or resulting from the operations, liabilities, or obligations of the MetLife Premier Client Group, and its predecessor organizations, including New England Financial (collectively “MPCG”), MetLife Securities, Inc. (now known as MSI Financial Services, Inc.) (“MSI”), and New England Securities (“NES”) prior to July 1, 2016 with respect to the distribution, sale or servicing of any non-proprietary product or other activity where the Loss does not arise from the distribution, sale or servicing of a Company Group or MetLife Group product, including without limitation any theft, Ponzi scheme, fraudulent conduct, or wrongful or unlawful behavior for which any member of the MetLife Group or the Company Group is alleged to have responsibility;

(iii) to the extent not covered by clauses (ii), (iii) or (iv) of the definition of Specified MetLife Liabilities and clauses (ii) and (iii) of the definition of Specified Company Liabilities, all Liabilities relating to, arising out of or resulting from the administration, recordkeeping, enrollment, education and other services that MLR, before or following the Effective Date,

 

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provides to healthcare, educational, governmental and other nonprofit employers and their 403(b) and other similar retirement plan participants;

(iv) all Liabilities relating to any employment, compensation, or employee benefit claims brought by or on behalf of brokers, agents or representatives of MPCG (including any predecessor career distribution channels), as well as any other sales-force, sales agency or sales operation associates or other Persons whose primary responsibility is the provision of firm support services, shared support services or broker-dealer services for MPCG (including employees or independent contractors, consultants or statutory employees, or other Persons serving a similar function) (collectively, the “MPCG Employee Group”) arising from the operations of MLIC or NELICO solely in their capacity as employers and/or employing/contracting entities of the MPCG Employee Group; and

(v) to the extent not covered by the definition of Specified MetLife Liabilities or Specified Company Liabilities or subsection (iv) of this section, all Liabilities relating to any employment, compensation, or employee benefit claims of any employees of any member of the MetLife Group or the Company Group prior to the Separation to the extent incurred in connection with, relating to, arising out of or resulting from the preparation of and transactions contemplated by the Master Separation Agreement, the Transaction Documents, the Corporate Reorganization, the Corporate Reorganization Agreements, the Separation or the Distribution.

Stock” means shares of capital stock (whether denominated as common stock or preferred stock), beneficial, partnership or membership interests, equity interests, participations or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or business trust, whether voting or non-voting.

Subleases” means those certain sublease agreements to and by Brighthouse Services, LLC for all or a portion of certain premises that the MetLife Group members lease under the Real Property Leases, as detailed on the attached Schedule 1.1(f).

Subsidiary” or “subsidiary” means, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (a) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (i) the total combined voting power of all classes of voting securities of such entity, (ii) the total combined equity interests, or (iii) the capital or profit interests, in the case of a partnership; or (b) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the members of the board of directors or similar governing body of such entity.

Tagline” means the endorsement phrase or slogan “Established by MetLife.”

Tax” has the meaning ascribed thereto in the Tax Separation Agreement.

Tax Advisor” means KPMG LLP.

 

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Tax Receivables Agreement” means the Tax Receivables Agreement, substantially in the form attached hereto as Exhibit D, to be entered into by and between MetLife and the Company.

Tax Separation Agreement” means the Tax Separation Agreement, substantially in the form attached hereto as Exhibit E, to be entered into by and between MetLife and the Company.

Territory” means the United States of America.

Transaction Documents” shall have the meaning set forth in Section 3.2(b).

Transactions” means, collectively, (i) the Separation, (ii) the Distribution, and (iii) all other transactions contemplated by this Agreement or any Transaction Document.

Transition Services Agreement” means the Transition Services Agreement in substantially the form attached hereto as Exhibit F, previously entered into by and among MetLife Services and Solutions, LLC and Brighthouse Services, LLC, and, for purposes of Article VIII thereof only, MetLife and the Company.

Travelers Plans and Trust” means the following: (i) Deferred Compensation Plan for Travelers Life and Annuity Agents; (ii) Deferred Compensation Plan for California Travelers Life and Annuity Agents; (iii) Travelers Life and Annuity Division Retirement Plan for Agents; (iv) Travelers Life and Annuity Division Retirement Plan for Senior Agents; and (v) any trust backing these liabilities.

ARTICLE II.

THE SEPARATION

2.1. Transfer of Assets; Assumption of Liabilities; Consideration.

(a) To the extent not already transferred or assumed prior to the Effective Date, following the execution and delivery of this Agreement by each of the Parties hereto (and in any event no later than the Separation):

(i) Except as may be agreed between the Parties, MetLife shall, and shall cause its applicable Subsidiaries to, contribute, assign, transfer, convey and deliver to the Company or certain of its Subsidiaries designated by the Company, and the Company or such Subsidiaries shall accept from MetLife and its applicable Subsidiaries, all of MetLife’s and such Subsidiaries’ respective rights, titles and interests in and to all Company Assets; and

(ii) Subject to Article IV, and as may be agreed between the Parties, (A) the Company and certain of its Subsidiaries designated by the Company shall accept, assume and agree faithfully to perform, discharge when due and fulfill the

 

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Company Liabilities, in accordance with their respective terms and (B) the Company and such Subsidiaries shall be responsible for all Company Liabilities, regardless of when or where such Company Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Separation Date, regardless of where or against whom such Company Liabilities are asserted or determined or whether asserted or determined prior to the Effective Date, and, excluding the Excluded BA Liabilities, regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the MetLife Group or the Company Group, or any of their respective directors, officers, employees, agents, Subsidiaries or Affiliates.

(b) If at any time or from time to time (whether prior to or after the Separation Date), any Party (or any other member of the MetLife Group or the Company Group, as applicable) shall receive or otherwise possess any Asset that is allocated to any other Person pursuant to this Agreement or any Transaction Document or Corporate Reorganization Agreement, such Party shall promptly transfer, or cause to be transferred, such Asset to the Person so entitled thereto. Prior to any such transfer, the Person receiving or possessing such Asset shall hold such Asset in trust for any such other Person.

(c) Notwithstanding anything herein to the contrary, nothing herein shall be deemed to require the transfer, assignment, conveyance or delivery of any Asset that by operation of applicable Law or pursuant to any contract or other agreement cannot be transferred, assigned, conveyed, delivered or assumed, including any Company Asset that cannot be transferred, assigned, conveyed, delivered or assumed without a Consent that has not been obtained. Notwithstanding anything herein to the contrary, following the Separation Date, to the extent any member of the Company Group has not received, or otherwise does not have possession of, a Company Asset or any Claim or benefit arising thereunder or resulting therefrom, due to any failure to receive or procure a Consent required thereby, then (i) MetLife shall, or shall cause the applicable member of the MetLife Group to, in each case, to the extent legally permitted, reasonably practicable and not in violation of any contract or other agreement, provide the applicable member of the Company Group (A) the right to use such Assets or (B) similar goods or services in lieu thereof, (ii) the Parties shall reasonably cooperate, and cause the other applicable members of the MetLife Group or the Company Group, as applicable, to reasonably cooperate, in connection with the covenants set forth in clause (i) of this paragraph, and (iii) each of the Parties shall use reasonable best efforts, and reasonably cooperate with each other, to obtain any necessary Consent and transfer any such Asset as promptly as reasonably practicable. To the extent that any such Company Asset cannot be transferred or the full benefits or use of any such Asset cannot be provided to the Company Group following the Separation Date pursuant to this Section 2.1(c), then the Parties shall use their reasonable best efforts to, or cause their applicable Affiliates to, enter into such arrangements (including subleasing, sublicensing or subcontracting) to provide to the Parties the economic (including, for the avoidance of doubt, taking into account tax costs and benefits) and operational equivalent, to the extent permitted, of obtaining such Consent. MetLife shall hold in trust for, and pay to the

 

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Company, promptly upon receipt thereof, all income, proceeds and other monies received by MetLife derived from its use of any Asset that would be a Company Asset in connection with the arrangements under this Section 2.1(c). The Company shall be responsible for, and shall promptly pay all payment and other obligations relating to any Asset that would be a Company Asset in connection with the arrangements under this Section 2.1(c) and for all reasonable costs of obtaining any Consent to transfer, assign, convey, deliver or assume such Asset; provided that Section 5.10 shall control in the case of Records or Non-Records.

(d) From the Separation Date through the second anniversary of the Separation Date, if any member of the MetLife Group or the Company Group identifies any Intellectual Property or Software not previously assigned or otherwise transferred by MetLife and its Subsidiaries to the Company that meets the Company IP Transfer Standard and is not listed or described on Schedule 2.2(a)(v)(B), then MetLife shall (or shall cause its applicable Subsidiaries to) promptly assign any such Intellectual Property or Software owned by a member of the MetLife Group to the Company or its designee for no additional consideration, subject to the terms and conditions of this Agreement (including Section 2.6) or, upon the request of the Company, transfer the license of any such Intellectual Property or Software licensed from a third party to the Company or its designee (at the Company’s request), subject to the terms of such license and any fees for Consents. To the extent any such transfer requires payment of any additional compensation to any third party, such compensation shall be paid fifty percent (50%) by each of MetLife and the Company, and the Company shall, upon receipt of any invoice from any member of the MetLife Group in respect thereof, promptly, and in any event within ten (10) Business Days, pay all such amounts owed to the applicable member of the MetLife Group.

(e) From the Separation Date through the second anniversary of the Separation Date, if any member of the MetLife Group or the Company Group identifies any item of Intellectual Property or Software that was assigned or otherwise transferred to the Company or one of its Subsidiaries on, prior to, or after the Separation Date that meets the MetLife IP Transfer Standard, then the Company shall (or shall cause its applicable Subsidiaries to) promptly assign and transfer any such Intellectual Property or Software owned by a member of the Company Group to MetLife or its designee for no additional consideration, subject to the terms and conditions of this Agreement (including Section 2.6) or, upon the request of MetLife, transfer the license of such Intellectual Property or Software licensed from a third party to MetLife or its designee (at MetLife’s request) subject to the terms of such license and any fees for Consents. To the extent any such transfer requires payment of any additional compensation to any third party, such compensation shall be paid fifty percent (50%) by each of MetLife and the Company, and MetLife shall, upon receipt of any invoice from the Company or any of its Subsidiaries in respect thereof, promptly, and in any event within ten (10) Business Days, pay all such amounts owed to the applicable member of the Company Group.

(f) From the Separation Date through the second anniversary of the Separation Date, if, following the Separation Date, any member of the MetLife Group or the Company Group identifies any item of Intellectual Property (other than trademarks or domain names) or Software not previously licensed, assigned or otherwise transferred by the MetLife

 

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Group to the Company Group that is primarily, but not exclusively, used in the Company Business and is not listed or described on Schedule 2.2(a)(v)(B), then it will advise the other Party of the same and to the extent that the Company requests that the member of the MetLife Group do so and to the extent that a member of the MetLife Group (i) has the right to do so without paying material (in comparison to the value of such applicable Intellectual Property) additional compensation to a third party, and (ii) has any requisite Consent in connection therewith, MetLife will, and will cause its applicable Subsidiaries to, promptly license or sublicense, on a non-exclusive basis, the applicable Intellectual Property or Software to the Company or its designee (at the Company’s request) for no additional consideration other than as provided in this Section 2.1(f); provided, however, that where the immediately preceding clause (ii) is not satisfied, MetLife will, and will cause its Subsidiaries to, use commercially reasonable efforts to secure any such required Consent. Any such license or sublicense shall be (1) subject to the terms and conditions of this Agreement and the underlying license or similar arrangement in respect of any such Intellectual Property or Software, and (2) consistent, where applicable, with the terms and conditions set forth in the Intellectual Property License Agreement. Any such additional compensation or fee or similar payment in respect of a required Consent shall be paid fifty percent (50%) by each of MetLife and the Company, and the Company shall, upon receipt of any invoice from MetLife or any of its Subsidiaries in respect thereof, promptly, and in any event within ten (10) Business Days, pay all such amounts owed to the applicable member of the MetLife Group. Notwithstanding the foregoing, MetLife shall have no obligations to license or seek to license rights for any member of the Company Group’s use of the Peanuts® characters, copyrights or trademarks after the Separation Date.

(g) MetLife, for itself and its Affiliates, does hereby remise, release and quitclaim to Brighthouse Holdings, LLC, all of the right, title, interest and claim that MetLife or its Affiliates has in and to the original drawing by Tom Everhart on a whiteboard located in the Gragg Building, Room 7.140, Charlotte, North Carolina. At any time, at the reasonable request of any member of the Company Group, MetLife and its Affiliates shall, no later than the tenth (10th) Business Day following the receipt of such request, cause MetLife and its Affiliates, as applicable, to execute and deliver a quitclaim deed and/or other documents in form and substance reasonably acceptable to MetLife reflecting and evidencing the conveyance set forth in this provision.

2.2. Company Assets.

(a) For purposes of this Agreement, “Company Assets” shall mean (without duplication and in each case other than the Excluded Assets):

(i) all Assets primarily relating to the Company Group other than Intellectual Property and Software;

(ii) all Assets reflected as Assets of the Company and its Subsidiaries in the Company Balance Sheet, subject to any dispositions of such Assets subsequent to the date of the Company Balance Sheet;

 

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(iii) the Assets listed or described on Schedule 2.2(a)(iii) and all other Assets that were transferred to the Company or to any member of the Company Group by the Corporate Reorganization Agreements, or designated by this Agreement or any Transaction Document as Assets to be transferred to the Company or any other member of the Company Group;

(iv) (A) all Company Contracts and (B) all issued and outstanding capital stock or membership or partnership interests of the entities listed on Schedule 2.2(a)(iv);

(v) all Intellectual Property and Software listed or described on Schedule 2.2(a)(v)(A) or that meets the Company IP Transfer Standard, in each case excluding (A) any Intellectual Property and Software listed or described on
Schedule 2.2(a)(v)(B), and (B) any Intellectual Property and Software owned or held by any member of the Company Group that is used or held for use primarily, but not exclusively, in the Company Business;

(vi) any Non-Records of any member of the Company Group (A) in the possession of the Company Group or (B) after Separation requested by a member of the Company Group from a member of the MetLife Group as permitted hereunder and delivered thereafter by any member of the MetLife Group or its Representatives, with such Non-Records only becoming Company Assets upon such delivery; and

(vii) any and all Assets (other than Intellectual Property and Software) owned or held immediately prior to the Separation Date by MetLife or any of its Subsidiaries that are used primarily in the Company Business; provided, however, that no Asset shall be deemed a Company Asset solely as a result of this clause (vii) unless a claim with respect thereto is made by the Company on or prior to the first anniversary of the Separation Date.

For the avoidance of doubt, the Company Assets shall not in any event include the Excluded Assets referred to in Section 2.2(b).

(b) For the purposes of this Agreement, “Excluded Assets” shall mean:

(i) the Excluded Contracts and any other contracts and agreements listed or described on Schedule 2.2(b)(i);

(ii) all Assets primarily relating to the MetLife Group; and

(iii) any and all Assets that are expressly contemplated by the Corporate Reorganization Agreements, this Agreement or any Transaction Document as Assets to be retained by MetLife or any other member of the

 

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MetLife Group, or that are not otherwise expressly contemplated as being included as Company Assets.

2.3. Company Liabilities.

(a) For the purposes of this Agreement, “Company Liabilities” shall mean (excluding any Liabilities for Taxes, which shall be governed exclusively by the Tax Separation Agreement and the Tax Receivables Agreement, and in each case other than the Excluded Liabilities):

(i) subject to Section 4.1, the Liabilities listed or described on Schedule 2.3(a)(i), the Specified Company Liabilities, and all other Liabilities that are expressly provided by this Agreement or any Transaction Document or Corporate Reorganization Agreement as Liabilities assumed or to be assumed by the Company or any other member of the Company Group, and all agreements, obligations and Liabilities of the Company or any other member of the Company Group under this Agreement or any of the Transaction Documents or Corporate Reorganization Agreements;

(ii) all Liabilities to the extent relating to, arising out of or resulting from:

(A) the operation of the Company Business, as conducted at any time before, on or after the Separation Date (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));

(B) the operation of any business conducted by any member of the Company Group at any time on or after the Separation Date (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority)); or

(C) any Company Assets (including any Company Contracts and any real property and leasehold interests) or other Assets of the Company Group, in any such case whether arising before, on or after the Separation Date;

(iii) all Liabilities reflected as liabilities or obligations of the Company or its Subsidiaries in the Company Balance Sheet, subject to any discharge of such Liabilities subsequent to the date of the Company Balance Sheet;

 

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(iv) any Liabilities accrued or incurred by any member of the Company Group after the date of the Company Balance Sheet, subject to any discharge of such Liabilities prior to the Separation Date;

(v) all Company Employee Liabilities; and

(vi) subject to Section 4.1, all Liabilities arising out of claims made by MetLife’s or the Company’s respective directors, officers, employees, agents, Subsidiaries or Affiliates against any member of the MetLife Group or the Company Group with respect to the Company Business.

(b) For the purposes of this Agreement, “Excluded Liabilities” shall mean:

(i) (A) subject to Section 4.1, any and all Liabilities that (x) are expressly contemplated by this Agreement, any Transaction Document, Corporate Reorganization Agreement or the basis of presentation underlying the Company Carve-Out Financial Statements as Liabilities to be retained or assumed by MetLife or any other member of the MetLife Group or as operations to be excluded from the historic financial reporting of the Company or (y) should be excluded from the historic financial reporting of the Company consistent with the methodology applied in the basis of presentation of the Company Carve-Out Financial Statements, and (B) all agreements and obligations of any member of the MetLife Group under this Agreement or any of the Transaction Documents or Corporate Reorganization Agreements;

(ii) any and all Liabilities (other than Specified Shared Liabilities) of a member of the MetLife Group relating to, arising out of or resulting from any Excluded Assets;

(iii) all MetLife Employee Liabilities; and

(iv) subject to Section 4.1, and excluding any Specified Company Liabilities or Specified Shared Liabilities, any and all Liabilities arising from the gross negligence or recklessness of, or theft, fraud or a knowing violation of Law by any member of the MetLife Group or any of their respective directors, officers, employees or agents (other than any individual who at the time of such act was acting in his or her capacity as a director, officer, employee or agent of, or otherwise acting on behalf of, any member of the Company Group (including any employee of the MetLife Group who devoted a majority of their working time to, or whose job description was substantially focused on, the operations of the Company Business)) (such Liabilities the “Excluded BA Liabilities”).

 

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(c) Any Liabilities of any member of the MetLife Group not expressly referenced in Section 2.3(a) are Excluded Liabilities and none of the Excluded Liabilities shall be Company Liabilities.

2.4. Termination of Agreements.

(a) Except as provided in Section 2.4(b), the Company, on behalf of itself and each other member of the Company Group, on the one hand, and MetLife on behalf of itself and each other member of the MetLife Group, on the other hand, hereby terminate, effective as of the Separation, any and all agreements, arrangements, commitments or understandings, whether or not in writing, solely between or among the Company or any other member or members of the Company Group, on the one hand, and MetLife or any other member or members of the MetLife Group, on the other hand (such terminated agreements, arrangements, commitments or understandings, excluding any such agreement, arrangement or commitment described in Section 2.4(b), the “Terminated Contracts”). Subject to Section 2.4(b), no such terminated agreement, arrangement, commitment or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Separation. Each Party shall, at the reasonable request of any other Party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.

(b) Notwithstanding the foregoing, the provisions of Section 2.4(a) shall not apply to any of the following agreements, arrangements or commitments (or to any of the provisions thereof):

(i) the agreements, arrangements, commitments and understandings set forth on Schedule 2.4(b)(i);

(ii) the agreements, arrangements, commitments and understandings set forth on Schedule 2.4(b)(ii), which the Parties shall, and shall cause their applicable Subsidiaries to, use reasonable best efforts to amend to reflect such new, arm’s-length terms, to remove the applicable member or members of the Company Group or the MetLife Group as a party to such agreements and to release such Person from any and all obligations thereunder, in each case as the Parties reasonably determine;

(iii) this Agreement and the Transaction Documents (and each other agreement or instrument expressly contemplated by this Agreement or any Transaction Document to be entered into or continued by either of MetLife or the Company or any of the other members of the MetLife Group or the Company Group, as applicable);

(iv) the Corporate Reorganization Agreements;

(v) the guarantees, indemnification obligations, surety bonds and other credit support agreements, and other arrangements, commitments or

 

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understandings listed or described on Schedule 2.4(b)(v) (the “Guarantees”);

(vi) any agreements, arrangements, commitments or understandings to which any Person other than MetLife and the Company and their respective Affiliates is a party listed or described on Schedule 2.4(b)(vi) (it being understood that to the extent that the rights and obligations of the Parties and the other members of the MetLife Group or the Company Group, as applicable, under any such agreements, arrangements, commitments or understandings constitute Company Assets or Company Liabilities, they shall be assigned pursuant to Section 2.1);

(vii) any accounts payable, accounts receivable or loan between a member of the MetLife Group, on the one hand, and a member of the Company Group, on the other hand, accrued or incurred as of the Separation Date; and, each of MetLife and the Company hereby agree to, and to cause their applicable Subsidiaries and the other members of the MetLife Group and Company Group, as applicable, to, make prompt (and in any event within 45 days) payment upon receipt by the applicable member of the MetLife Group or the Company Group of a final invoice or other written record provided to the obligor within one (1) year of the Separation Date in respect of such payable, receivable or loan; and

(viii) any other agreements, arrangements, commitments or understandings that this Agreement or any Transaction Document or Corporate Reorganization Agreement expressly contemplates shall survive the Separation Date.

(c) With respect to the agreements set forth on Schedule 2.4(c), by the Separation Date, the Company hereby agrees that it shall have entered into a new agreement(s) or made other arrangements with the non-MetLife Group entities named in the agreements set forth in Schedule 2.4(c) that result in MetLife and each other applicable member of the MetLife Group being discharged from any liability resulting from the sale of Company products post Separation.

2.5. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. METLIFE (ON BEHALF OF ITSELF AND EACH OTHER MEMBER OF THE METLIFE GROUP) AND THE COMPANY (ON BEHALF OF ITSELF AND EACH OTHER MEMBER OF THE COMPANY GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN, IN ANY TRANSACTION DOCUMENT OR IN ANY CORPORATE REORGANIZATION AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY TRANSACTION DOCUMENT, ANY CORPORATE REORGANIZATION AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, IS REPRESENTING OR WARRANTING OR HAS MADE ANY REPRESENTATION OR WARRANTY IN ANY WAY AS TO THE ASSETS, BUSINESSES

 

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OR LIABILITIES TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR APPROVALS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OF OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS, BUSINESSES OR LIABILITIES OF SUCH PARTY, OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY CLAIM OR OTHER ASSET, INCLUDING ANY ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY ASSIGNMENT, DOCUMENT OR INSTRUMENT DELIVERED HEREUNDER OR THEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN, IN ANY TRANSACTION DOCUMENT OR ANY CORPORATE REORGANIZATION AGREEMENT, ALL SUCH ASSETS ARE BEING OR HAVE BEEN TRANSFERRED ON AN “AS IS, WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST, AND (II) ANY NECESSARY CONSENTS OR GOVERNMENTAL APPROVALS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.

2.6. Governmental Approvals and Consents. To the extent that the Corporate Reorganization, the Separation or the Distribution requires any Governmental Approvals or Consents, the Parties shall use their reasonable best efforts to obtain such Governmental Approvals and Consents, including by preparing all documentation and making all filings necessary to obtain such Governmental Approvals and Consents. Solely and to the extent in connection with obtaining such Governmental Approvals and Consents, each Party shall promptly furnish to the other Party copies of any notices or written communications received by it or any of its Affiliates from any Governmental Authority with respect to the transactions contemplated by the Corporate Reorganization Agreements, this Agreement or any Transaction Document, and subject to applicable Laws, each Party, as applicable, shall, to the extent practicable, permit counsel to the other Party a reasonable opportunity to review in advance, and shall consider in good faith the views of such counsel in connection with, any proposed written communications by it or any of its Affiliates to any Governmental Authority concerning the transactions contemplated by the Corporate Reorganization Agreements, this Agreement or any Transaction Document. Subject to applicable Laws and solely and to the extent in connection with obtaining such Governmental Approvals and Consents, each Party agrees to reasonably cooperate with the other Party in connection with any communications with any Governmental Authorities concerning or in connection with the transactions contemplated by the Corporate Reorganization Agreements, this Agreement or any Transaction Document and, to the extent it deems appropriate under the circumstances in its sole discretion, each Party shall provide the other Party the opportunity, with reasonable advance notice, to participate in substantive meetings or discussions, either in person or by telephone, between such Party or any of its

 

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Affiliates, agents or advisors, on the one hand, and any Governmental Authority, on the other hand, concerning or in connection with the transactions contemplated by the Corporate Reorganization Agreements, this Agreement or any Transaction Document, and each Party further agrees that, to the extent consistent with applicable Laws, it shall use its reasonable best efforts to share with the other Party information received from Governmental Authorities, in substantive meetings or discussions in which such other Party did not participate, that would reasonably be expected to be of interest to the other Party.

2.7. Novation of Assumed Company Liabilities.

(a) Subject to Article IV, each of MetLife and the Company, at the request of the other, shall use its reasonable best efforts to obtain, or to cause to be obtained, any consent, substitution, approval or amendment required to novate or assign all obligations under agreements, leases, licenses and other obligations or Liabilities that constitute Company Liabilities, or to obtain in writing the unconditional release of all parties to such agreements or arrangements other than any member of the Company Group, so that, in any such case, the Company and its Subsidiaries shall be solely responsible for such Liabilities; provided, however, that, unless otherwise contemplated in this Agreement or any Transaction Document, neither MetLife nor the Company shall be obligated to pay any consideration therefor to any third party from whom any such consent, approval, substitution or amendment is requested.

(b) If MetLife or the Company is unable to obtain, or to cause to be obtained, any such required consent, approval, release, substitution or amendment, the applicable member of the MetLife Group shall continue to be bound by such agreement, lease, license or other obligation and, unless not permitted by Law or the terms thereof, the Company shall, as agent or subcontractor for MetLife or such other Person, as the case may be, pay, perform and discharge fully all the obligations or other Liabilities of MetLife or such other Person that constitute Company Liabilities, as the case may be, thereunder from and after the Separation Date. MetLife shall, without further consideration, pay and remit, or cause to be paid or remitted, to the Company, promptly, all money, rights and other consideration received by any member of the MetLife Group in respect of such performance (unless any such consideration is an Excluded Asset) and shall, at the Company’s sole expense, use its reasonable best efforts to collect any such money, rights or other consideration. If and when any such consent, approval, release, substitution or amendment shall be obtained or such agreement, lease, license or other rights or obligations shall otherwise become assignable or able to be novated, MetLife shall thereafter assign, or cause to be assigned, all its rights, obligations and other Liabilities thereunder or any rights or obligations of any other member of the MetLife Group to the Company without payment of further consideration and the Company shall, without the payment of any further consideration, assume such rights and obligations.

2.8. Novation of Liabilities other than Company Liabilities.

(a) Subject to Article IV, each of MetLife and the Company, at the request of the other Party, shall use its reasonable best efforts to (i) obtain, or to cause to be obtained, any

 

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consent, substitution, approval or amendment required to novate or assign all obligations under agreements, leases, licenses and other obligations or Liabilities (A) for which a member of the MetLife Group and a member of the Company Group are jointly or severally liable and that do not constitute Company Liabilities or (B) of MetLife or any other member of the MetLife Group (other than any Company Liability), or (ii) obtain in writing the unconditional release of all parties to such arrangements other than any member of the MetLife Group, so that, in any such case, the members of the MetLife Group shall be solely responsible for such Liabilities; provided, however, that unless otherwise contemplated in this Agreement or any Transaction Document, neither MetLife nor the Company shall be obligated to pay any consideration therefor to any third party from whom any such consent, approval, substitution or amendment is requested.

(b) If MetLife or the Company is unable to obtain, or to cause to be obtained, any such required consent, approval, release, substitution or amendment, the applicable member of the Company Group shall continue to be bound by such agreement, lease, license or other obligation and, unless not permitted by Law or the terms thereof, MetLife shall cause a member of the MetLife Group, as agent or subcontractor for such member of the Company Group, to pay, perform and discharge fully all the obligations or other Liabilities of such member of the Company Group thereunder, solely to the extent they do not constitute Company Liabilities, from and after the Separation Date. The Company shall cause each member of the Company Group, without further consideration, to pay and remit, or cause to be paid or remitted, to MetLife or to another member of the MetLife Group specified by MetLife, promptly, all money, rights and other consideration received by any member of the Company Group in respect of such performance (unless any such consideration is a Company Asset), and shall, at MetLife’s sole expense, use its reasonable best efforts to collect any such money, rights or other consideration. If and when any such consent, approval, release, substitution or amendment shall be obtained or such agreement, lease, license or other rights or obligations shall otherwise become assignable or able to be novated, the Company shall promptly assign, or cause to be assigned, all its rights, obligations and other Liabilities thereunder or any rights or obligations of any other member of the Company Group to MetLife or to another member of the MetLife Group specified by MetLife without payment of further consideration and MetLife, without the payment of any further consideration shall, or shall cause such other member of the MetLife Group to, assume such rights and obligations.

ARTICLE III.

INTERCOMPANY TRANSACTIONS AS OF THE CLOSING DATE

3.1. Time and Place of Closing. Subject to the terms and conditions of this Agreement, including the conditions specified in Section 3.4 and Section 3.7(b), the Transactions shall be consummated on or prior to a closing (the “Closing”) to be held at the offices of Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, New York 10019, at 8:00 a.m., New York City time, on the date on which the Separation is consummated or at such other place or at such other time or on such other date as MetLife and the Company may

 

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mutually agree upon in writing (the day on which the Closing takes place being the “Closing Date”).

3.2. Closing Transactions.

(a) The Separation contemplated by Article II shall be effected on or prior to the Closing.

(b) Other than as set forth on Schedule 3.2(b)(i), on or prior to the Closing Date, the Parties shall enter into, and (as necessary) shall cause their applicable Affiliates to enter into, the agreements set forth below (collectively, the “Transaction Documents”):

(i) the Transition Services Agreement;

(ii) the Registration Rights Agreement;

(iii) the Tax Receivables Agreement;

(iv) the Tax Separation Agreement;

(v) the Intellectual Property License Agreement;

(vi) the Investment Management Agreements; and

(vii) the agreements set forth on Schedule 3.2(b)(ii).

(c) Prior to the Distribution, MetLife shall mail a notice of internet availability of the Information Statement or the Information Statement to the Record Holders and post such notice on its website.

(d) The Company shall prepare, file with the SEC and use its reasonable best efforts to cause to become effective any registration statements or amendments thereto required to effect the establishment of, or amendments to, any employee benefit and other plans necessary or appropriate in connection with the transactions contemplated by the Corporate Reorganization, this Agreement or any Transaction Document or Corporate Reorganization Agreement.

(e) Each of the Parties shall take all such actions as may be necessary or appropriate under federal or state securities laws or blue sky laws of the states or other political subdivisions of the United States or of other foreign jurisdictions in connection with the Distribution.

(f) The Company shall prepare and file, and shall use reasonable best efforts to have approved prior to the Distribution, an application for the listing of the Company

 

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Common Stock to be distributed in the Distribution on the applicable national securities exchange approved by the MetLife board of directors or an applicable committee thereof for such listing, subject to official notice of listing.

(g) Prior to the Separation, each individual who will be an employee of any member of the Company Group from and after the Separation and who is a director or officer of any member of the MetLife Group shall have resigned or been removed from each such directorship and office held by such person at the relevant member(s) of the MetLife Group, effective no later than immediately prior to the Separation.

(h) Prior to the Separation, except as set forth on Schedule 3.2(h), each individual who will be an employee of any member of the MetLife Group from and after the Separation and who is a director or officer of any member of the Company Group shall have resigned or been removed from each such directorship and office held by such person at the relevant member(s) of the Company Group, effective no later than immediately prior to the Separation.

(i) The Parties shall, subject to Section 3.7(b), take all reasonable steps necessary and appropriate to cause the conditions set forth in Section 3.4 to be satisfied and to effect the Separation, including the Distribution, on the Closing Date.

3.3. Amended and Restated Certificates of Incorporation and Amended and Restated Bylaws. At or prior to the Separation, MetLife and the Company shall each take all necessary actions that may be required to provide for the adoption by the Company of the Amended and Restated Certificate of Incorporation of the Company in the form attached hereto as Exhibit G (the “Charter”), and the Amended and Restated Bylaws of the Company in the form attached hereto as Exhibit H (the “Amended and Restated Bylaws”) and the filing of the Charter with the Secretary of State of the State of Delaware.

3.4. Conditions to Distribution. The obligations of the Parties to consummate the Distribution shall be conditioned on the satisfaction, or waiver by the MetLife board of directors, or an applicable committee thereof, of the following conditions:

(a) The MetLife board of directors shall, in its sole and absolute discretion, have authorized and approved the Corporate Reorganization, any other transfers and assumptions of liabilities contemplated by this Agreement, the Transaction Documents and any related agreements, the Separation and the Distribution, and shall not have withdrawn such authorization and approval.

(b) The MetLife board of directors shall have declared the dividend of Company Common Stock to the Record Holders, such dividend to be paid to the Record Holders as part of the Distribution pursuant to the terms and conditions set forth herein.

 

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(c) The SEC shall have declared the Registration Statement on Form 10 in respect of the Distribution, of which the Information Statement is a part, effective under the Exchange Act, no stop order suspending the effectiveness of such Registration Statement on Form 10 shall be in effect, and no proceedings for such purpose shall be pending before or threatened by the SEC.

(d) The notice of internet availability of the Information Statement shall have been mailed to MetLife’s stockholders as contemplated by Section 3.2(c).

(e) The applicable national securities exchange approved by the MetLife board of directors, or an applicable committee thereof, for listing of the Company Common Stock shall have accepted the Company Common Stock for listing, subject to official notice of issuance.

(f) The Corporate Reorganization shall have been completed.

(g) The private letter ruling that MetLife received from the Internal Revenue Service regarding certain significant issues under the Code relating to the transaction will not have been revoked or modified in any material respect as of the Closing Date.

(h) MetLife shall have received an opinion from its Tax Advisor, in form and substance satisfactory to MetLife in its sole and absolute discretion, that, subject to the accuracy of and compliance with certain representations, assumptions and covenants, the Distribution will qualify for non-recognition of gain or loss to MetLife and MetLife’s stockholders pursuant to Section 355 of the Code, except to the extent of cash received in lieu of fractional shares.

(i) No order, injunction or decree that would prevent the consummation of the Distribution shall be threatened, pending or issued (and still in effect) by any Governmental Authority of competent jurisdiction, no other legal restraint or prohibition preventing the consummation of the Distribution shall be in effect, and no other event outside the control of MetLife shall have occurred or failed to occur that prevents the consummation of the Distribution.

(j) No other events or developments shall have occurred prior to the Distribution that, in the judgment of the MetLife board of directors, or an applicable committee thereof, would result in the Distribution having a material adverse effect on MetLife or the MetLife stockholders.

(k) The actions set forth in Sections 3.2(b), (c), (g) and (h) and Section 3.3 shall have been completed.

The foregoing conditions may be waived only by the MetLife board of directors, or an applicable committee thereof, in its sole and absolute discretion, are for the sole benefit of MetLife and shall not give rise to or create any duty on the part of the MetLife board of directors, or any applicable committee thereof, to waive or not waive such conditions or in any way limit

 

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the right of termination of this Agreement set forth in Section 8.6 or alter the consequences of any such termination from those specified in Section 8.6. Any determination made by the MetLife board of directors prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 3.4 shall be conclusive.

3.5. Transfers of Assets and Assumption of Liabilities. In furtherance of the assignment, transfer and conveyance of Company Assets and the assumption of Company Liabilities provided for in Section 2.1(a)(i) and Section 2.1(a)(ii), on or prior to the Separation Date (i) MetLife shall execute and deliver, and shall cause its applicable Subsidiaries to execute and deliver, such bills of sale, stock powers, certificates of title, assignments of contracts and other instruments of transfer, conveyance and assignment as and to the extent necessary to evidence the transfer, conveyance and assignment of all of MetLife’s and its applicable Subsidiaries’ (other than the Company’s and its Subsidiaries’) right, title and interest in and to the Company Assets to the Company and its Subsidiaries, and (ii) the Company shall execute and deliver such assumptions of contracts and other instruments of assumption as and to the extent necessary to evidence the valid and effective assumption of the Company Liabilities by the Company or member of the Company Group, as appropriate. All of the foregoing documents contemplated by this Section 3.5 shall be referred to collectively herein as the “MetLife Transfer Documents.”

3.6. Transfer of Excluded Assets; Assumption of Excluded Liabilities.

(a) To the extent any Excluded Asset or Excluded Liability is transferred to a member of the Company Group at the Separation or is owned or held by a member of the Company Group after the Separation, from and after the Separation:

(i) The applicable member of the Company Group shall promptly assign, transfer, convey and deliver to the applicable member of the MetLife Group, and the applicable member of the MetLife Group shall accept from the applicable member of the Company Group, all of the Company Group’s collective and/or respective, as applicable, rights, titles and interests in and to such Excluded Assets; and

(ii) The applicable member of the MetLife Group shall promptly accept, assume and agree faithfully to perform, discharge and fulfill all such Excluded Liabilities in accordance with their respective terms.

(b) In furtherance of the assignment, transfer and conveyance of Excluded Assets and the assumption of Excluded Liabilities set forth in Section 3.6(a)(i) and Section 3.6(a)(ii): (i) the Company shall execute and deliver, and shall cause its applicable Subsidiaries to execute and deliver, such bills of sale, certificates of title, assignments of contracts and other instruments of transfer, conveyance and assignment as and to the extent necessary to evidence the transfer, conveyance and assignment of all of the Company’s and its applicable Subsidiaries’ right, title and interest in and to the Excluded Assets to MetLife and its

 

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Subsidiaries, and (ii) MetLife shall execute and deliver such assumptions of contracts and other instruments of assumption as and to the extent necessary to evidence the valid and effective assumption of the Excluded Liabilities by MetLife or a member of the MetLife Group, as appropriate.

(c) To the extent that the transfer of such Excluded Assets and the assumption of such Excluded Liabilities require any Governmental Approvals or Consents, the Parties shall use their reasonable best efforts to obtain such Governmental Approvals and Consents.

(d) If and to the extent that the valid, complete and perfected transfer or assignment to the MetLife Group of any Excluded Assets or the assumption by the MetLife Group of any Excluded Liabilities would be a violation of applicable Law or require any Consent or Governmental Approval that has not been obtained, then, unless MetLife and the Company mutually shall otherwise determine, the transfer or assignment to the MetLife Group of such Excluded Assets or the assumption by the MetLife Group of such Excluded Liabilities shall be automatically deemed deferred and any such purported transfer, assignment or assumption shall be null and void until such time as all legal impediments are removed, such Consents or Governmental Approvals have been obtained, or until otherwise mutually determined by MetLife and the Company in each of their sole discretion.

(e) If any transfer or assignment of any Excluded Asset intended to be transferred or assigned hereunder or any assumption of any Excluded Liability intended to be assumed by the MetLife Group hereunder is not consummated on the Separation Date, whether as a result of the failure to obtain any required Governmental Approvals or Consents under Section 3.6(c) or for any other reason, then, insofar as reasonably possible, (i) the member of the Company Group retaining such Excluded Asset shall thereafter hold such Excluded Asset for the use and benefit of MetLife (at MetLife’s expense) and (ii) MetLife shall, or shall cause its applicable Subsidiaries to, pay or reimburse the member of the Company Group retaining such Excluded Liability for all amounts paid or incurred in connection with such Excluded Liability. In addition, the member of the Company Group retaining such Excluded Asset shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Excluded Asset in the ordinary course of business in accordance with past practice and take such other actions as may be reasonably requested by MetLife in order to place MetLife in the same position as if such Excluded Asset had been transferred as contemplated hereby and so that all the benefits and burdens relating to such Excluded Asset, including possession, use, risk of loss, potential for gain, and dominion, control and command over such Excluded Asset, is to inure from and after the Separation Date to the MetLife Group.

3.7. Distribution.

(a) The Company shall, and shall cause its Subsidiaries to, cooperate with MetLife to accomplish the Distribution, and shall, at the direction of MetLife, use its reasonable best efforts to promptly take, or cause its Subsidiaries to promptly take, any and all actions necessary or desirable to effect the Distribution. Each of the Parties will provide, or cause the

 

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applicable member of the MetLife Group or the Company Group, as applicable, to provide, to the transfer agent of MetLife or, at the direction of MetLife, the distribution agent or any other agent assisting in the Distribution, all documents and information required to complete the Distribution.

(b) The board of directors of MetLife, or an applicable committee thereof, shall, in its sole and absolute discretion, determine the record date and distribution date in respect of the Distribution and all terms of the Distribution, including the form, structure and terms of any transactions and/or offerings to effect the Distribution and the timing of and conditions to the consummation thereof. In addition, and notwithstanding anything herein to the contrary, the board of directors of MetLife, or an applicable committee thereof, in its sole and absolute discretion, may at any time and from time to time until the Distribution, decide to abandon the Distribution or modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of all or any part of the Distribution.

(c) Subject to the terms and conditions set forth in this Agreement, (i) prior to the Distribution, for the benefit of and distribution to the MetLife stockholders on the record date for the Distribution (the “Record Holders”), MetLife will deliver to the distribution agent for the Distribution [•]% of the issued and outstanding shares of Company Common Stock then owned by MetLife and book-entry authorizations for such shares and (ii) on or shortly after the Separation Date, MetLife shall instruct the distribution agent to (A) receive and distribute to each Record Holder (including The Depository Trust Company or Cede & Co., if applicable) electronically, by direct registration in book-entry form, the number of whole shares of Company Common Stock to which such Record Holder is entitled as part of the Distribution and (B) receive and hold the aggregate number of fractional shares of Company Common Stock to which all such Record Holders would have been entitled as part of the Distribution, each as calculated by the distribution agent in accordance with Section 3.8 below.

3.8. Fractional Shares. MetLife will direct the distribution agent to, as soon as practicable following execution of this Agreement (including, in the case of clause (b), commencing on the day following the Separation Date, and in the case of clause (c), commencing as soon as practicable after the Separation Date), (a) determine, based, in part, on information received from (i) The Depository Trust Company or Cede & Co., as applicable, and (ii) the custodian of the MetLife Policyholder Trust pursuant to the terms of the MetLife Policyholder Trust Agreement, the number of whole shares of Company Common Stock that each Record Holder (including The Depository Trust Company or Cede & Co., if applicable, and the trustee of the MetLife Policyholder Trust) is entitled to receive in the Distribution, as well as the number of fractional shares to which each such Record Holder would have been entitled to receive in the Distribution, (b) aggregate all such fractional shares into whole shares and sell, or cause to be sold, the whole shares obtained thereby in open market transactions at then prevailing trading prices; provided, however, that any broker-dealer acting on behalf of the distribution agent shall not be an Affiliate of MetLife or the Company, and (c) distribute on a pro rata basis to each such Record Holder, such Record Holder’s ratable share of the net proceeds of such

 

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sales, based upon the weighted average price per share of Company Common Stock after making appropriate deductions for any amount required to be withheld under applicable Tax law and less any transaction fees. Neither MetLife nor the Company will pay any interest on the proceeds from the sale of such shares.

ARTICLE IV.

ALLOCATIONS AND TREATMENT OF CLAIMS; INDEMNIFICATION

4.1. Allocations and Treatment of Claims; Procedures in Respect of Third Party Claims Not Set Forth on Schedule 4.1.

(a) Schedule 4.1 lists the allocation of Liabilities between the Parties for certain Claims. The Parties agree that they are bound by the allocations as set forth on Schedule 4.1 and that they shall not dispute such allocations. The allocations set forth on Schedule 4.1 supersede all prior arrangements among the Parties (or their respective Affiliates) or any of them concerning each Party’s respective Liability in respect of such Claims or any other Claim concerning or arising out of the same facts and circumstances as a Claim so listed on Schedule 4.1. Notwithstanding anything herein to the contrary, any allocation of Liabilities in respect of Claims, including in respect of Specified Shared Liabilities, shall represent the allocation of Liabilities between the Parties for amounts that exceed any litigation reserves in respect of such Claim set forth on the Books and Records of any member of the MetLife Group or the Company Group, as applicable, as of the Separation Date.

(b) The handling of and allocation of Liabilities arising from any Claim made under any Transaction Document shall be governed by the terms of the Transaction Document under which the Claim is made. In respect of direct or indirect Liability for any Claim asserted or otherwise raised by a Person who is not a member of the MetLife Group or the Company Group at the time the Claim is made (a “Third Party Claim”), including any Claims relating to Sections 4.2, 4.3 and 4.4, the Parties shall come to an agreement governing additional procedures, supplementing those provided below in this Section 4.1, governing control of, and responsibility for, the conduct and defense of such Liabilities and Claims, known or unknown and as may arise in the future.

(c) The Losses for any Claim may be allocated to more than one Party or its respective business.

(d)

(i) The Company Group shall assume, be responsible for, and control in its sole discretion the defense or handling, including settlement pursuant to the terms of Schedule 4.1(d), of any Third Party Claim solely involving or in respect of Specified Company Liabilities, regardless of, in the case of a lawsuit,

 

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arbitration or other formal legal proceeding, the party named as a defendant or alleged to be liable for the Claim.

(ii) The MetLife Group shall assume, be responsible for, and control in its sole discretion the defense or handling, including settlement pursuant to the terms of Schedule 4.1(d), of any Third Party Claim solely involving or in respect of Specified MetLife Liabilities, regardless of, in the case of a lawsuit, arbitration or other formal legal proceeding, the party named as a defendant or alleged to be liable for the Claim.

(iii) Subject to Schedules 4.1, 4.1(d) and 4.2(c), the MetLife Group shall have the right to assume, be responsible for, and control in its discretion the defense or handling, including settlement pursuant to the terms of Schedule 4.1(d), of any Third Party Claim solely involving or in respect of Specified Shared Liabilities or that is allocated, in whole or in part, to any member of the MetLife Group on Schedule 4.1, and may, at its sole discretion tender the defense or handling of such Claim to the Company Group, which shall not unreasonably refuse to accept any such tender.

(iv) Subject to clause (iii), the Company Group and the MetLife Group shall cooperate in good faith and as set forth in the Litigation Cooperation Guidelines to be adopted by the Parties and Schedules 4.1 and 4.2(c) hereto on the conduct of the defense or handling of any Third Party Claim. Each Party shall make its employees reasonably available to the other to assist in a Third Party Claim, including acting as a witness, at no hourly or other charge for time, but the requesting party shall bear any out-of-pocket costs associated with such assistance.

(v) To the extent not covered by clauses (i) – (iii), where the Parties agree that all Losses or Liabilities in respect of a Third Party Claim are entirely allocable to one Party (the “Allocated Party”), the Allocated Party shall assume, be responsible for, and control in its sole discretion the defense or handling, including settlement pursuant to the terms of Schedule 4.1(d), of such Third Party Claim, regardless of, in the case of a lawsuit, arbitration or other formal legal proceeding, the party named as a defendant or alleged to be liable for the Claim.

(e) A Party in possession of or receiving notice of any Third Party Claim for which it is not or contends that it is not entirely liable under the terms of this Agreement and for which it intends to demand indemnification pursuant to Section 4.2 or Section 4.3, as applicable (the “Claiming Party”), must send a written notice (a “Claim Notice”) to the other Party and any other Person in the MetLife Group or the Company Group, as applicable, that, according to the Claiming Party, may bear all, or part of, the Losses thereby (each recipient of a Claim Notice, together with the Claiming Party, the “Relevant

 

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Parties”). The Claiming Party must send the Claim Notice as soon as reasonably practicable but in any event within seven (7) days of becoming aware of its claim for indemnification, and such Claim Notice must contain a reasonable explanation of the claim, a proposed allocation of the Losses and attach all papers served in connection with such Third Party Claim, as further described in the Litigation Cooperation Guidelines. Failure to issue a Claim Notice within such seven (7) day period, shall not affect the rights or obligations of such Claiming Party other than if an indemnifying party shall have been actually prejudiced as result of such failure.

(f) Any Party that receives a Claim Notice shall have fourteen (14) days after receipt of the Claim Notice in which to object to the allocation of Losses proposed in the Claim Notice by issuing a written notice of objection setting forth a reasonable explanation of the objection (an “Objection Notice”). Each Objection Notice must be sent to all Relevant Parties. If no Objection Notice is issued within fourteen (14) days of receipt of a Claim Notice, the allocation proposed in the Claim Notice shall become final and binding on the Parties.

(g) The Relevant Parties shall have a period of fifteen (15) Business Days from the date of the Objection Notice to unanimously agree on the allocation of the liability for such Claim (including the related Losses), which agreement shall be final and binding; provided, however, that such period may be extended as mutually agreed by the Relevant Parties. Until the Relevant Parties agree on the allocation of Losses for any Third Party Claim that is the subject of a Claim Notice, the Claiming Party shall not make, and shall procure that there is not made, any admission of liability, agreement, settlement or compromise with any person nor consent, and procure that there is not consented, to the entry of any judgment or final order in relation to any such Claim, except as otherwise agreed among the Relevant Parties or as otherwise required pursuant to applicable Law. If no agreement on allocation is reached by the expiration of the period set forth in this Section 4.1(g), the Relevant Parties shall immediately try to resolve the matter in accordance with Article VI.

4.2. General Indemnification by the Company. Subject to Section 4.8, except (i) as provided in Sections 4.1 or 4.4, (ii) as otherwise provided under any Transaction Document or Corporate Reorganization Agreement, or (iii) as required by applicable Law, the Company shall indemnify, defend and hold harmless (A) each member of the MetLife Group, and (B) each of their respective Affiliates, directors, officers and employees, (collectively, (A) and (B) and each of their respective heirs, executors, successors and assigns, the “MetLife Indemnified Parties” or the “Group Individuals”), from and against any and all Losses actually suffered or incurred by or imposed on such MetLife Indemnified Parties to the extent relating to, arising out of or resulting from any of the following:

(a) (i) the Company and each other member of the Company Group, including the operations, liabilities and obligations of the Company Business or any other of the Company Group’s businesses, and (ii) the failure by the Company Group to pay, perform or otherwise promptly discharge any Liabilities or contractual obligations of the businesses of the Company

 

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and each other member of the Company Group, in each case arising before, on or after the Separation Date and in each case, excluding any Specified MetLife Liabilities or Specified Shared Liabilities;

(b) the Guarantees (including the GALIC Guarantee) and, except to the extent it relates to an Excluded Liability, any other guarantee, indemnification obligation, surety bond, capital maintenance agreement or other credit support agreement, arrangement, commitment or understanding by any member of the MetLife Group for the benefit of any member of the Company Group that survives the Separation;

(c) the Specified Company Liabilities and the Company’s share of any Specified Shared Liability as allocated in Schedule 4.2(c);

(d) any breach by any member of the Company Group of this Agreement or any of the Transaction Documents or Corporate Reorganization Agreements (other than the Transaction Documents and Corporate Reorganization Agreements set forth on Schedule 4.2(d)) or any action by the Company in contravention of its Charter or Amended and Restated Bylaws, which, for the avoidance of doubt, shall be subject to Article VI;

(e) any untrue statement, alleged untrue statement, omission or alleged omission of a material fact disclosed or otherwise contained in any report, schedule, form or other document filed with, or furnished to, the SEC or any other Governmental Authority by any member of the MetLife Group and publicly available (the “MetLife Public Filings”), or any failure or alleged failure to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that those Liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information that is either furnished to any of the MetLife Indemnified Parties by any member of the Company Group or incorporated by reference by the MetLife Group from any report, schedule, form or other document filed with, or furnished to, the SEC or any other Governmental Authority by any member of the Company Group (the “Company Public Filings”) and publicly available, and then only if that statement or omission was made or occurred after the Separation;

(f) any distribution or servicing agreements assigned, in whole or in part (and if in part, solely relating to, arising out of or resulting from such part), to any member of the Company Group by any member of the MetLife Group in connection with the Separation, from and after the effective date of such assignment until such time as such applicable assignor is released from any and all Liabilities in respect of the relevant distribution or servicing agreement, or such Liabilities are otherwise novated from such applicable assignor to the Company Group; provided, however, that nothing in this subsection (f) shall limit the period in which MetLife may make a claim for indemnification;

 

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(g) any untrue statement, alleged untrue statement of or omission to state a material fact contained in any Form 10, information statement or Company Public Filing related to the Separation, except to the extent that the statement was made or omitted in reliance upon information or materials provided to the Company or any other member of the Company Group by any member of the MetLife Group (other than those Persons identified on Schedule 4.2(g)) expressly for use in such Form 10, information statement or Company Public Filing related to the Separation;

(h) the Company Liabilities or the failure by the Company to obtain any required Consent, approval, release, substitution or amendment in connection with the novation of Company Liabilities pursuant to Section 2.7;

(i) the NELICO Plans, including pursuant to any guarantee made by MetLife thereunder or in respect thereof; provided, that the Company may set off against any such indemnification obligation hereunder any unpaid amounts due from MetLife in respect of Article II of the Employee Matters Agreement;

(j) in the case of any NELICO Plan where services continue to be provided by a third party through a contract with MetLife or any other member of the MetLife Group after the Separation Date, any breach by the Company or any other member of the Company Group of such third party contract;

(k) the failure by the Company or any other member of the Company Group to timely provide employment termination information to MetLife or a member of the MetLife Group, as required pursuant to Article V of the Employee Matters Agreement, but only where such failure results in the imposition of penalties under Section 409A of the Code; and

(l) the provision of information by any member of the MetLife Group to any member of the Company Group required to be provided pursuant to, and as and on the terms contemplated by, Section 7.1 of the Employee Matters Agreement.

4.3. General Indemnification by MetLife. Subject to Section 4.8, except (i) as provided in Sections 4.1 or 4.4, (ii) as otherwise provided under any Transaction Document or Corporate Reorganization Agreement or (iii) as required by applicable Law, MetLife shall indemnify, defend and hold harmless (A) each member of the Company Group and (B) each of their respective Affiliates, directors, officers and employees (collectively, (A) and (B) and each of their respective heirs, executors, successors and assigns, the “Company Indemnified Parties”), from and against any and all Losses actually suffered or incurred by or imposed on such Company Indemnified Parties to the extent relating to, arising out of or resulting from any of the following:

(a) (i) MetLife and each other member of the MetLife Group, including the operations, liabilities and obligations of the MetLife Group’s businesses, and (ii) the failure by the MetLife Group to pay, perform or otherwise promptly discharge any Liabilities or contractual

 

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obligations of the businesses of MetLife and each other member of the MetLife Group, in each case arising before, on or after the Separation Date, and in each case, excluding any Specified Company Liabilities or Specified Shared Liabilities;

(b) except to the extent it relates to a Company Liability, any other guarantee, indemnification obligation, surety bond, capital maintenance agreement or other credit support agreement, arrangement, commitment or understanding by any member of the Company Group for the benefit of any member of the MetLife Group that survives the Separation;

(c) the Specified MetLife Liabilities and MetLife’s share of any Specified Shared Liability as allocated in Schedule 4.2(c);

(d) any breach by any member of the MetLife Group of this Agreement or any of the Transaction Documents or Corporate Reorganization Agreements (other than the Transaction Documents and Corporate Reorganization Agreements set forth on Schedule 4.3(d)) or any action by MetLife in contravention of its certificate of incorporation or by-laws, which, for the avoidance of doubt, shall be subject to Article VI;

(e) any untrue statement, alleged untrue statement of, omission or alleged omission to state a material fact contained in any Company Public Filing, or any failure or alleged failure to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that those Liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information that is either furnished to any member of the Company Group by any member of the MetLife Group or incorporated by reference by any member of the Company Group from any MetLife Public Filings, and then only if such statement or omission was made or occurred after the Separation;

(f) the Liabilities of the MetLife Group described in Section 2.8(a) or the failure by MetLife to obtain any required Consent, approval, release, substitution or amendment in connection with the novation of such Liabilities pursuant to Section 2.8 other than Company Liabilities;

(g) any untrue statement, alleged untrue statement of or omission to state a material fact contained in any Form 10, information statement or other Company Public Filing related to the Separation, in each case to the extent, but only to the extent, the statement was made or omitted in reliance upon information or materials provided by the MetLife Group (other than those Persons identified on Schedule 4.3(g)) expressly for use in such Form 10, information statement or other Company Public Filing related to the Separation;

(h) the failure to timely provide or to provide timely access, in each case as required by this Agreement, to the Company or any other applicable member of the Company

 

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Group of the NELICO Plans and Travelers Plans and Trust Records and Non-Records that are set forth on Schedule 4.3(h);

(i) the provision of information by any member of the Company Group to any member of the MetLife Group required to be provided pursuant to, and as and on the terms contemplated by, Section 7.1 of the Employee Matters Agreement;

(j) all Liabilities in any way arising out of or relating to the sale of BLIC’s 27.8% interest in MetLife China to MLIC (excluding any Liabilities for Taxes, which shall be governed exclusively by the Tax Separation Agreement, the Tax Receivables Agreement, and that certain Stock Purchase Agreement, dated December 16, 2016, by and between MLIC and BLIC);

(k) any Liabilities of the Company Group for or related to any obligation pursuant to any abandoned property, unclaimed property, escheatment or similar Law in connection with, relating to, arising out of, or resulting from the delivery of the shares of Company Common Stock distributed in the Distribution, due to a determination by an unclaimed property regulator or a court that the dormancy period applicable to the underlying MetLife stock, as opposed to the issue date of the Company Common Stock, should have been applied to the shares of Company Common Stock distributed in the Distribution; and

(l) any Action in respect of any event or series of events occurring prior to the Separation Date brought by any insurance regulatory authority with jurisdiction over BLIC related to the simplified issue term business sold through MetLife’s US Direct business organization and issued by BLIC prior to the Separation Date.

4.4. Contribution.

(a) If the indemnification provided for in this Article IV is unavailable to, or insufficient to hold harmless, an Indemnified Party under Sections 4.2(e) and (g) or Sections 4.3(e) and (g) hereof in respect of any Losses referred to therein, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and the Indemnified Party in connection with the actions that resulted in Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The information set forth in the Form 10, information statement or other Company Public Filing relating to the Distribution that is supplied by the MetLife Group in writing and is set forth on Schedule 4.4 shall be the only “information supplied by” the MetLife Group for purposes of Sections 4.2(e) and (g) or Sections 4.3(e) and (g) hereof.

 

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(b) MetLife and the Company agree that it would not be just and equitable if any contribution pursuant to this Section 4.4 were determined by a pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 4.4(a). The amount paid or payable by an Indemnified Party as a result of the Liabilities referred to in paragraph (a) above shall be deemed to include, subject to the limitations set forth above, any legal or other out-of-pocket fees or expenses reasonably incurred by such Indemnified Party in connection with investigating any claim or defending any Claim.

4.5. Indemnification Obligations Net of Insurance Proceeds; Other Amounts.

(a) Any Loss subject to indemnification or contribution pursuant to this Article IV shall be calculated on an After-Tax Basis and shall be net of Insurance Proceeds or amounts recovered by the Indemnified Party from any other Person alleged to be responsible therefor or otherwise contractually obligated in connection therewith, in each case that actually reduce the amount of the Loss. Accordingly, the amount that any party (an “Indemnifying Party”) is required to pay to any Person entitled to indemnification hereunder (an “Indemnified Party”) shall be reduced by any Insurance Proceeds theretofore actually recovered by or on behalf of the Indemnified Party in respect of the related Liability. If an Indemnified Party receives a payment (an “Indemnity Payment”) required by this Agreement from an Indemnifying Party in respect of any Liability and subsequently receives Insurance Proceeds or any other applicable amounts from any other Person, then the Indemnified Party shall pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds or other applicable amounts had been received, realized or recovered before the Indemnity Payment was made.

(b) The Parties do not intend for the indemnification provisions hereunder to relieve an insurer who would otherwise be obligated to pay any claim from responsibility, or have any subrogation rights, with respect thereto (including if an indemnification payment is made by the Indemnifying Party to the Indemnified Party prior to resolution of such claim as contemplated in Section 4.5(a)). MetLife and the Company shall, and shall cause each Indemnified Party to, use its commercially reasonable efforts to cooperate and promptly seek to collect or recover any and all available Insurance Proceeds in connection with any Liability for which the Indemnified Party seeks indemnification pursuant to this Article IV; provided that the inability to collect or recover any such Insurance Proceeds shall not limit the Indemnifying Party’s obligations hereunder.

(c) The Indemnified Party shall, and shall cause its Affiliates to use commercially reasonable efforts (including bringing Claims against any insurer or similar counterparty, where applicable) to mitigate any Loss to the extent required under applicable Law upon becoming aware of any event that would reasonably be expected to, or does, give rise to such Loss.

 

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4.6. Privilege. The Company hereby agrees that all privileged communications in any form or format whatsoever between or among MetLife, any other member of the MetLife Group, any member of the Company Group, or any of their respective officers, directors, employees, agents or representatives and their counsel (whether internal or outside), that relate to the negotiation, documentation and consummation of this Agreement, the Distribution, or any associated or affiliated transactions contemplated thereby or preliminary thereto (the “Transaction Communications”) shall remain privileged after the Separation Date, and that the Transaction Communications, any privilege attaching thereto, and the expectation of client confidence relating thereto shall belong solely to MetLife or the other members of the MetLife Group or their employees, as applicable, and not the Company or any other members of the Company Group or their employees, and shall not pass to or be claimed by the Company or any other members of the Company Group or their employees.

In addition, the Company agrees that the transfer of Assets by MetLife or any of its Affiliates to the Company under this Agreement, the Distribution, or any associated or affiliated transactions contemplated thereby or preliminary thereto, shall not constitute, and the Company (on behalf of itself and its Affiliates) agrees not to assert that such transfer constitutes, a waiver of any privilege attaching to the Transaction Communications. The Company agrees that it will not, and will cause each of its Affiliates not to, use in a manner adverse to MetLife or any of its Affiliates any Transaction Communications that are in the possession of the Company or any of its Subsidiaries after Separation.

From and after the Separation Date, upon any legal personnel, manager or executive officer of the Company or any of its Affiliates becoming aware of the existence of Transaction Communications in the possession of the Company or any of its Affiliates that such Person knows or reasonably should know to be Transaction Communications or, if any time after the Separation Date, upon the request of MetLife upon discovering that specified Transaction Communications are in the possession of the Company or any of its Affiliates after Separation, the Company hereby agrees to, and to cause its Affiliates to, reasonably promptly notify, and thereafter reasonably promptly (unless a request for specific Transaction Communications is made by MetLife, in which case, the Company shall promptly identify, and, once identified, immediately) return to MetLife or destroy (at MetLife’s option) such Transaction Communications. The Company and its Affiliates acknowledge and agree that any Transaction Communications that are known to be Transaction Communications shall not be used for any purpose and shall be maintained separately from the Company’s records and kept strictly confidential. Upon notification by MetLife that any specified materials constitute Transaction Communications, the Company and its Affiliates shall, as soon as commercially practicable, cease to use such Transaction Communications and, at MetLife’s expense, return to MetLife or destroy (at MetLife’s option) such Transaction Communications as provided for herein.

4.7. Additional Matters.

(a) Indemnification or contribution payments in respect of any Liabilities for which an Indemnified Party is entitled to indemnification or contribution under this Article IV

 

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shall be paid by the Indemnifying Party to the Indemnified Party as such Liabilities are incurred upon demand by the Indemnified Party, which shall include reasonably satisfactory documentation setting forth the basis for the amount of such indemnification or contribution payment and consideration of any Insurance Proceeds that actually reduce the amount of such Liabilities. The indemnity and contribution agreements contained in this Article IV shall not be affected by (i) any investigation made by or on behalf of any Indemnified Party; (ii) the Indemnified Party’s knowledge of Liabilities for which it might be entitled to indemnification or contribution hereunder; and (iii) any termination of this Agreement.

(b) If payment is made by or on behalf of any Indemnifying Party to any Indemnified Party in connection with any Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnified Party as to any events or circumstances in respect of which such Indemnified Party may have any right, defense or claim relating to such Claim against any claimant or plaintiff asserting such Claim or against any other Person. Such Indemnified Party shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

(c) The provisions of this Article IV shall not apply to Claims or Losses related to Taxes. On or before the Separation Date, the Parties shall enter into the Tax Separation Agreement and Tax Receivables Agreement. To the extent that any representations, warranties, covenants and agreements between the Parties with respect to Tax matters are set forth in the Tax Separation Agreement and Tax Receivables Agreement, such Tax matters shall be governed exclusively by the Tax Separation Agreement and the Tax Receivables Agreement and not by this Agreement.

(d) Other than Losses arising from any Third Party Claim, and notwithstanding anything herein to the contrary, no Indemnifying Party shall be liable for any Losses pursuant to Section 4.2 or Section 4.3 unless and until the amount of Losses from any matter or series of matters relating to the same underlying facts and circumstances exceeds $100,000.

4.8. Remedies Cumulative; Limitations of Liability. The rights provided in this Article IV shall be cumulative and, subject to the provisions of Article VI, shall not preclude assertion by any Indemnified Party of any other rights or the seeking of any and all other remedies against any Indemnifying Party. Notwithstanding the foregoing, neither the Company or any other member of the Company Group, on the one hand, nor MetLife or any other member of the MetLife Group, on the other hand, shall be liable to the other for any special, indirect, incidental, punitive, consequential, exemplary, statutorily-enhanced or similar damages in excess of compensatory damages (provided that any such Loss with respect to a Third Party Claim shall be considered direct damages) of the other arising in connection with the Transactions or any of the other Transaction Documents or Corporate Reorganization Agreements.

 

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4.9. Survival of Indemnities. The rights and obligations of each of MetLife and the Company and their respective Indemnified Parties under this Article IV shall survive the sale or other transfer by any party of any Assets or businesses or the assignment by it of any Liabilities.

4.10. Release of Terminated Contracts.

(a) Except as provided in Section 4.10(c), effective as of the Separation, the Company does hereby, for itself and each other member of the Company Group, remise, release and forever discharge each MetLife Indemnified Party, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), arising under any Terminated Contract and any agreement, arrangement, commitment or understanding set forth on Schedule 4.10(a) hereto, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Separation Date, including in connection with the transactions and all other activities to implement the Transactions.

(b) Except as provided in Section 4.10(c), effective as of the Separation, MetLife does hereby, for itself and each other member of the MetLife Group, remise, release and forever discharge each Company Indemnified Party, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), arising under any Terminated Contract and any agreement, arrangement, commitment or understanding set forth on Schedule 4.10(b) hereto, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Separation Date, including in connection with the transactions and all other activities to implement the Transactions.

(c) Nothing contained in Sections 4.10(a) or (b) shall impair any right of any Person to enforce this Agreement, any Transaction Document, any Corporate Reorganization Agreement or any other agreement that is not a Terminated Contract or set forth on Schedules 4.10(a) or (b) hereto, to the extent any such Person has such right, including any obligation existing prior to the Separation Date of any member of the Company Group or the MetLife Group, as applicable, to indemnify any Person who has been a Representative of any member of the Company Group or the MetLife Group at any time on or prior to the Separation.

(d) The Company shall not make, and shall not permit any other member of the Company Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against MetLife or any other member of the MetLife Group, or any other Person released pursuant to Section 4.10(a), with respect to any Liabilities released pursuant to Section 4.10(a). MetLife shall not make, and shall not permit any other member of the MetLife Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification against the Company or any other member of the Company Group, or any other Person released pursuant to Section 4.10(b), with respect to any Liabilities released pursuant to Section 4.10(b).

 

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(e) It is the intent of each Party, by virtue of the provisions of this Section 4.10, to provide for a full and complete release and discharge of all Liabilities existing or arising from any Terminated Contract or any agreement, arrangement, commitment or understanding set forth on Schedules 4.10(a) or (b) hereto, between or among any member of the Company Group, on the one hand, and any member of the MetLife Group, on the other hand, except as otherwise set forth in Section 4.10(c). At any time, at the request of any member of the MetLife Group or the Company Group, each member of the Company Group or the MetLife Group, respectively, shall, no later than the fifth (5th) Business Day following the receipt of such request, cause each applicable member of the MetLife Group or the Company Group, as applicable, to execute and deliver releases, in form and substance reasonably satisfactory to such delivering party, reflecting the provisions hereof.

ARTICLE V.

OTHER COVENANTS, AGREEMENTS AND OBLIGATIONS

5.1. Further Assurances.

(a) In addition to the actions specifically provided for elsewhere in this Agreement, each of MetLife and the Company shall cooperate with each other and use (and shall cause their respective Affiliates to use) reasonable best efforts, prior to, on and after the Separation Date, to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things reasonably necessary on its part under applicable Law or contractual obligations to consummate and make effective the Transactions and the Transaction Documents.

(b) Without limiting the foregoing, prior to, on and after the Separation Date, each of MetLife and the Company shall cooperate with the other Party, and without any further consideration, but at the expense of the requesting Party from and after the Separation Date, use its reasonable best efforts to execute and deliver, or use its reasonable best efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain all consents, approvals or authorizations of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument (including any Consents or Governmental Approvals), and to take all such other actions as such Party may reasonably be requested to take by any other Party from time to time, consistent with the terms of this Agreement and each of the Transactions, in order to effectuate the provisions and purposes of this Agreement and the Transaction Documents and the transfers of the Company Assets and the assignment and assumption of the Company Liabilities and the other transactions contemplated hereby and thereby. Without limiting the foregoing, each Party shall, at the reasonable request, cost and expense of any other Party, take such other actions as may be reasonably necessary to vest in such other Party good and marketable title to the Assets allocated to such Party under this Agreement or any of the Transaction Documents, free and clear of any Security Interest, if and to the extent it is practicable to do so.

 

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(c) On or prior to the Closing Date, MetLife and the Company in their respective capacities as direct and indirect stockholders of their respective Subsidiaries, shall each ratify any actions that are reasonably necessary or desirable to be taken by MetLife, the Company, any other member of the MetLife Group or the Company Group, as applicable, to effectuate the Transactions. On or prior to the Closing Date, MetLife and the Company shall take all actions as may be necessary, if any, to approve the stock-based employee benefit plans of the Company in order to satisfy the requirements of Rule 16b-3 under the Exchange Act and the applicable rules and regulations of the applicable national securities exchange, if applicable.

5.2. Confidentiality; Access.

(a) From and after the Separation, subject to Section 5.2(c) and except as contemplated by this Agreement or any Transaction Document, MetLife shall not, and shall cause the MetLife Group, their respective Affiliates and their respective officers, directors, employees, and other agents and representatives, including attorneys, agents, customers, suppliers, contractors, consultants and other representatives of any Person providing financing (collectively, “Representatives”), not to, directly or indirectly, disclose, reveal, divulge or communicate to any Person other than Representatives of such Party or of its Affiliates who reasonably need to know such information in providing services to any member of the Company Group or use or otherwise exploit for its own benefit or for the benefit of any third party, any Company Confidential Information. If any uses or disclosures are made in connection with providing services to any member of the Company Group under this Agreement or any Transaction Document, then the Company Confidential Information so used or disclosed shall be used only as required to perform such services. The MetLife Group shall use the same degree of care to prevent and restrain the unauthorized use or disclosure of the Company Confidential Information by any of their Representatives as they currently use for their own confidential information of a like nature, but in no event less than a reasonable standard of care.

(b) From and after the Separation, subject to Section 5.2(c) and except as contemplated by this Agreement or any Transaction Document, the Company shall not, and shall cause the Company Group, its Affiliates and their respective Representatives, not to, directly or indirectly, disclose, reveal, divulge or communicate to any Person other than Representatives of such Party or of its Affiliates who reasonably need to know such information in providing services to MetLife or any other member of the MetLife Group or use or otherwise exploit for its own benefit or for the benefit of any third party, any MetLife Confidential Information. If any uses or disclosures are made in connection with providing services to any member of the MetLife Group under this Agreement or any Transaction Document, then the MetLife Confidential Information so used or disclosed shall be used only as required to perform such services. The Company Group shall use the same degree of care to prevent and restrain the unauthorized use or disclosure of the MetLife Confidential Information by any of their Representatives as they currently use for their own confidential information of a like nature, but in no event less than a reasonable standard of care.

 

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(c) If MetLife or its Affiliates, on the one hand, or the Company or its Affiliates, on the other hand, are requested or required (by rule, regulation, oral question, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) by any Governmental Authority or self-regulatory authority, or pursuant to applicable Law, to disclose or provide any Company Confidential Information or MetLife Confidential Information, as applicable, the entity or person receiving such request or demand shall use all reasonable efforts to provide the other Party with written notice of such request or demand as promptly as practicable, and to the extent permitted by Law, under the circumstances so that such other Party shall have an opportunity to seek an appropriate protective order or other appropriate remedy. The Party receiving such request or demand agrees to take, and cause its Representatives to take, at the requesting Party’s expense, all other reasonable steps necessary to obtain confidential treatment by the recipient. Subject to the foregoing, the Party that received such request or demand may thereafter disclose or provide, without liability hereunder, only that portion of any Company Confidential Information or MetLife Confidential Information, as the case may be, to the extent required by such Law (as so advised by counsel) or by lawful process or such Governmental Authority.

(d) From and after the Separation until the twelve (12) month anniversary of the Separation Date, each of MetLife and the Company (in such capacity, the “Access Party”) shall afford to the other and its Representatives reasonable access upon reasonable notice during normal business hours, at the sole cost and expense of such other Party, to any MetLife Employee or Company Employee, as applicable, who, prior to the Separation Date, worked for or on behalf of such other Party or performed any services in respect of the other Party’s respective businesses (in such capacity an “Other Party Employee”) solely for the purpose of assisting such other Party in receiving information with respect to such other Party, to the extent reasonably required by such other Party, including technical know-how, from such Other Party Employee arising solely from such Person’s capacity as an Other Party Employee. The Access Party shall reasonably cooperate with such other Party, at such other Party’s sole cost and expense, to furnish such access and information; provided that such access does not unreasonably interfere with the conduct of the business of the Access Party or any of its Affiliates. Without limiting the terms thereof, Sections 5.2(a)(c) shall govern the obligations of such other Party and its Representatives with respect to all information of any type furnished or made available to them pursuant to this Section 5.2(d).

5.3. Insurance Matters.

(a) As of the Separation Date, the Company has procured and shall maintain a dedicated six (6) year run-off tail insurance policy for any Group Individuals in respect of: (i) Director and Officer liability coverage, (ii) coverage for liabilities under United States federal and state securities laws and (iii) fiduciary liability coverage in respect of pension plans covering employees of the Company Group. The Parties hereby agree that such tail insurance policy shall provide for policy limits in an amount no less than $200 million, and a deductible or retentions in an amount no higher than $25 million.

 

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(b) As of the Separation Date, with respect to any Company Assets, Company Liabilities, the members of the Company Group and their respective businesses or any pre-Separation event, fact or circumstance relating thereto, the Company has procured and shall maintain a dedicated six (6) year run-off tail insurance policy for Professional Liability/Errors & Omissions liability coverage including Cyber Liability and Employment Practices Liability coverage (the “PLE&O Coverage”). The Parties hereby agree that such PLE&O Coverage shall provide for policy limits in an amount no less than $100 million, and a deductible or retentions in an amount no higher than $10 million. The Company hereby agrees to provide reasonable evidence of the PLE&O Coverage to MetLife on the Separation Date.

(c) This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance, and nothing in this Agreement is intended to waive or abrogate in any way MetLife’s or the Company’s own rights to insurance coverage for any Liability, whether relating to MetLife or any other member of the MetLife Group or the Company Group or otherwise.

5.4. Covenants Against Taking Certain Actions and to Perform Under Existing Contracts.

(a) Except to the extent otherwise contemplated by this Agreement or any Transaction Document (including the Registration Rights Agreement), the Company hereby covenants and agrees that it shall not, and shall cause its Subsidiaries not to take, or cause to be taken, directly or indirectly, any action, including making or failing to make any election under applicable Law (a “Company Action”), which has the effect, directly or indirectly, of restricting or limiting the ability of MetLife or any of its Affiliates to freely sell, transfer, assign, pledge or otherwise dispose of shares of Company Common Stock (a “Restriction”), in each case without the prior written consent of MetLife which consent may not be unreasonably withheld, conditioned or delayed, other than in the case of (i) any Company Action expressly purporting to limit, or directly limiting, by contractual agreement or otherwise, the ability of MetLife or any of its Affiliates to sell, transfer, assign, pledge or otherwise dispose of shares of Company Common Stock, or (ii) any Company Action which would have a disproportionate negative effect (including by absence of any positive effect, right or privilege) on MetLife or its Affiliates as a Company stockholder in relation to any other Company stockholder or Company stockholders generally, in which such cases, such consent shall be at the sole discretion of MetLife. Without limiting the generality of the foregoing, the Company shall not, without the prior written consent of MetLife, take any Company Action, or recommend to its stockholders any action, which would limit the legal rights of, or deny any benefit to, MetLife or its Affiliates as a Company stockholder in a manner not applicable to Company stockholders generally. Notwithstanding anything to the contrary in this Section 5.4(a), no Restriction shall be deemed to have occurred under this Section 5.4(a) from any Company Action solely as a result of any market reaction to such Company Action or any related press release or other disclosure or publication regarding such Company Action, if any, (including any decrease in the stock price or sales volume of the Company Common Stock or

 

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any other market factors that make the sale of Company Common Stock more difficult), so long as the Company Action, including making or failing to make any election under applicable Law, giving rise to such market reaction was not taken with the intent to, directly or indirectly, result in a Restriction.

(b) For a period of one (1) year following the Separation Date, to the extent that any member of the MetLife Group is a party to any contract or agreement with a third party (i) that provides that certain actions of the Company Group may result in any member of the MetLife Group being in breach of or in default under such agreement and any member of the MetLife Group has advised the Company, or the Company is otherwise aware, of the existence of such contract or agreement (or the relevant portions thereof), (ii) to which any member of the Company Group is a party or (iii) under which any member of the Company Group has performed any obligations or received any benefits on or before the Separation Date, the Company shall not take or fail to take, and shall cause each other member of the Company Group not to take or fail to take, any actions that reasonably could result in any member of the MetLife Group being in breach of or in default under any such contract or agreement. As of the Effective Date, the contracts and agreements described in clause (i) above are set forth or described on Schedule 5.4(b). The Company hereby acknowledges and agrees that MetLife has made available to the Company copies of each contract or agreement (or the relevant portions thereof) described on Schedule 5.4(b). Following the Separation, MetLife shall not, and shall cause the other members of the MetLife Group not to, without the Company’s prior written consent (which may be provided by electronic mail to the email addresses set forth in Section 8.5), enter into any agreement or arrangement that, directly or indirectly, binds or purports to bind any member of the Company Group. In the event the Company provides such prior written consent, Schedule 5.4(b) shall be deemed to be automatically amended to reflect the addition of such other contracts or agreements (or relevant portions thereof).

(c) For a period of one (1) year following the Separation Date, (except as may be set forth to the contrary in the Transaction Documents) to the extent that any member of the Company Group is a party to any contract or agreement with a third party (i) that provides that certain actions of the Company Group may result in any member of the MetLife Group being in breach of or in default under such agreement and any member of the Company Group has advised MetLife, or MetLife is otherwise aware, of the existence of such contract or agreement (or the relevant portions thereof), (ii) to which any member of the MetLife Group is a party or (iii) under which any member of the MetLife Group has performed any obligations or received any benefits on or before the Separation Date, MetLife shall not take or fail to take, and shall cause each other member of the MetLife Group not to take or fail to take, any actions that reasonably could result in any member of the Company Group being in breach of or in default under any such contract or agreement. As of the Effective Date, the contracts and agreements described in clause (i) above are set forth or described on Schedule 5.4(c). MetLife acknowledges and agrees that the Company has made available to MetLife copies of each contract or agreement (or the relevant portions thereof) described on Schedule 5.4(c). Following the Separation, the Company shall not, and shall cause the other members of the Company Group not to, without MetLife’s prior written consent (which may be provided by electronic mail

 

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to the email addresses set forth in Section 8.5), enter into any agreement or arrangement that, directly or indirectly, binds or purports to bind any member of the MetLife Group. In the event MetLife provides such prior written consent, Schedule 5.4(c) shall be deemed to be automatically amended to reflect the addition of such other contracts or agreements (or relevant portions thereof).

(d) The Company agrees that in the event that the Company or any other members of the Company Group provide any of the services, facilities, equipment or software provided by or on behalf of MetLife pursuant to the Mango Transition Services Agreement immediately prior to the Separation Date, the Company shall, and shall cause the other applicable members of the Company Group to, continue to provide such services, facilities, equipment and software on behalf of MetLife at the same level of service as set forth in the Mango Transition Services Agreement and otherwise in accordance with the terms and conditions, and for the periods of time, set forth in the Mango Transition Services Agreement. MetLife shall reimburse the Company, or shall cause the Company to be reimbursed, for such services, facilities, equipment and software at the applicable price set forth in the Mango Transition Services Agreement. For the avoidance of doubt, if the Company sells or divests any portion of the Company Group that provides services, facilities, equipment or software pursuant to the Mango Transition Services Agreement, the Company shall, as a necessary, non-waivable condition to such sale or divestiture, provide, or cause a member of the Company Group to provide, for the continuity of such services, facilities, equipment or software, on the price, terms and conditions set forth in the Mango Transition Services Agreement.

(e) Each of the Parties hereby agrees to perform, and they shall each cause their respective Affiliates to perform, all covenants and obligations required to be performed by Affiliates of MetLife pursuant to the Mango Purchase Agreement, as and to the extent applicable, in accordance with the terms and conditions set forth in, and for the periods of time set forth in, the Mango Purchase Agreement. MetLife shall, at the reasonable request and sole expense of the Company, seek to (i) enforce any obligation of Massachusetts Mutual Life Insurance Company under the Mango Purchase Agreement or (ii) enforce any third party counterparty obligations under any nondisclosure agreements between a member of the MetLife Group and any third party under which any member of the Company Group performs any obligations, receives any benefits or is otherwise materially related to the Company Business, in each case providing for any right or benefit to the Company Group.

(f) The Company hereby agrees that in the event that the Company or any other member of the Company Group has entered into or utilized prior to the Separation Date or utilizes or remains a party to on or after the Separation Date any agreement, arrangement, commitment or understanding (including by means of purchase order, unwritten order, telephone, facsimile or email request or otherwise) which any member of the MetLife Group has or previously had with any supplier or vendor for the purchase of any goods or services, the Company shall, and shall cause the other members of the Company Group to, (x) make prompt payment in full when due, and in compliance with the terms of any such agreement, arrangement, commitment or understanding, for any Liability or payment obligation in

 

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connection therewith, and (y) to the extent any member of the MetLife Group makes any such payment or suffers any Liability or Loss as a result thereof (excluding any indirect or consequential damages), upon presentation to the Company of reasonable proof of such payment, Liability or Loss, promptly reimburse the applicable member of the MetLife Group for such payment, Liability or Loss within ten (10) Business Days of notice from the applicable member of the MetLife Group to the Company, in each case of clauses (x) and (y), other than as subject to, and to the extent settled pursuant to, Section 2.4(b)(vii).

5.5. No Violations.

(a) The Company covenants and agrees that it shall not, and shall cause its Subsidiaries not to, take any action or enter into any commitment or agreement which, to the Company’s Knowledge, may reasonably be anticipated to result, with or without notice and with or without lapse of time or otherwise, in a contravention or event of default by any member of the MetLife Group of: (i) any provisions of applicable Law; (ii) any provision of the organizational documents of any member of the MetLife Group; or (iii) any judgment, order or decree of any Governmental Authority having jurisdiction over any member of the MetLife Group or any of its respective Assets. For purposes of this Section 5.5(a), the “Company’s Knowledge” means the actual knowledge, without inquiry, of the executive officers of the Company; provided that the Company shall be deemed to have knowledge of the provisions of the organizational documents of MetLife.

(b) MetLife covenants and agrees that it shall not, and shall cause its Subsidiaries not to take any action or enter into any commitment or agreement which, to MetLife’s Knowledge, may reasonably be anticipated to result, with or without notice and with or without lapse of time or otherwise, in a contravention or event of default by any member of the Company Group of: (i) any provisions of applicable Law; (ii) any provision of the organizational documents of the Company; or (iii) any judgment, order or decree of any Governmental Authority having jurisdiction over the Company or any of its Assets. For purposes of this Section 5.5(b), “MetLife’s Knowledge” means the actual knowledge, without inquiry, of the executive officers of MetLife; provided that MetLife shall be deemed to have knowledge of the provisions of the organizational documents of the Company.

(c) MetLife and the Company each agree to provide to the other Party any information and documentation reasonably requested by the other for the purpose of evaluating and ensuring compliance with Sections 5.5(a) and 5.5(b).

(d) Notwithstanding Section 5.5(b), nothing in this Agreement is intended to limit or restrict in any way any of MetLife’s or its Affiliates’ rights as stockholders of the Company.

5.6. MLIC Loan Participation Program. The Parties hereby acknowledge that (i) Metropolitan Life Insurance Company (“MLIC”) has been offering certain

 

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insurance companies that are or will become a member of the Company Group (“Participants”) the opportunity to acquire participation interests in loans (“Participations”) originated or acquired by MLIC, which may be secured by agricultural or commercial real and/or personal property, (ii) Participations have been offered pursuant to the terms of certain master loan participation agreements between Participants and MLIC (each, an “LPA,” and, collectively, the “LPAs”), and (iii) the LPAs have been managed and serviced by MLIC pursuant to such agreements and the terms of a Master Services Agreement, dated as of the 31st day of December, 2002. The Parties hereby recognize that the LPAs contain provisions that would not typically be made available to unaffiliated third parties and that are not reflective of market terms for participation agreements with unaffiliated third parties. Accordingly, the Parties hereby agree that, no later than the earlier of (1) the date that MetLife Investment Advisors, LLC (“MLIA”) ceases to provide investment management services with respect to loans or Participations secured by agricultural or commercial real and/or personal property on behalf of any Participant pursuant to any investment management agreement between any such Participant and MLIA in effect on January 1, 2017, and (2) the date the Parties cease to be “affiliates” of each other as defined in the applicable state insurance laws (the “LPA Effective Date”), they shall each cause their respective applicable Affiliates to enter into new agreements by the LPA Effective Date, governing both the acquisition of new Participations and existing Participations under the LPAs, containing provisions reflecting rights and obligations of the parties substantially similar to those included in Exhibit I attached hereto. The Company hereby covenants that if such new agreements have not been entered into by Participants by the LPA Effective Date, it shall cause each of the Company’s Affiliates that are parties to an LPA to waive the consent rights in Section 5(c)(ii)(2)-(9) of the LPAs.

5.7. Credit Support and Other Arrangements.

(a) MetLife hereby agrees that each applicable member of the MetLife Group shall maintain in full force and effect each Guarantee which is issued and outstanding as of the date of this Agreement until the earlier of: (i) such time as the contract, or all obligations of any member of the Company Group thereunder, to which such credit support arrangement relates terminates and (ii) such time as such credit support arrangement expires in accordance with its terms or is otherwise released.

(b) MetLife and the Company agree to reasonably cooperate to replace the Guarantees and the Company agrees to secure the release or replacement of any Liability of MetLife and the members of the MetLife Group under any Guarantees and, without limiting the foregoing, prior to the date which is the six-month anniversary of the Separation Date, the Company shall, subject to any applicable regulatory approval or non-objection, cause to be terminated and released all of MetLife’s obligations under the guarantees set forth on Schedule 5.7(b). With respect to all Guarantees, the Company shall be liable to MetLife for (i) all costs borne by any member of the MetLife Group of maintaining such obligations, (ii) fees, as may be agreed between the Parties, to MetLife for maintaining such obligations, and (iii) indemnification and reimbursement obligations with respect to the obligations underlying such

 

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guarantees. For the avoidance of doubt, the Company and its Subsidiaries shall be prohibited from modifying any agreement with a third party underlying a Guarantee that would increase or extend the obligations of a member of the MetLife Group under a Guarantee without the prior written consent of MetLife.

(c) The Company shall provide a guarantee in form and substance reasonably satisfactory to MetLife and the applicable members of the MetLife Group supporting the obligations of any member of the Company Group under any Sublease or similar arrangement with such applicable member of the Company Group, as sublessee, and such applicable member of the MetLife Group, as sublessor, entered into in connection with the Separation.

(d) Pursuant to those certain guarantees made by GALIC and described on Schedule 5.7(d) (the “GALIC Guarantees”), GALIC may assign its obligations under the GALIC Guarantees to any entity having a financial strength, credit-worthiness, or claims-paying ability rating from each of A.M. Best, Duff and Phelps, Moody’s and Standard and Poor’s equal to or better than those of GALIC (the “Credit Rating Condition”).

The Company agrees to use reasonable best efforts, promptly following request by GALIC and subject to applicable Law, to accept, or to cause any other Company Group member to accept, an assignment of the GALIC Guarantees and to enter into any assignment and assumption agreements, or similar documentation, as reasonably requested by GALIC, in respect thereof providing for (i) the assumption by the Company or other applicable Company Group member of all of GALIC’s obligations under the GALIC Guarantees, (ii) GALIC’s right to be reimbursed for all amounts paid by GALIC under the GALIC Guarantees and not reimbursed by other parties, and (iii) as of the date that such assignee satisfies the Credit Rating Condition, the automatic and unconditional release of GALIC under the GALIC Guarantees.

In the event that the GALIC Guarantees are assigned to a Company Group member as contemplated in the preceding paragraph and following such assignment another Company Group member satisfies the Credit Rating Condition, the Company shall, promptly following request by GALIC, use reasonable best efforts, subject to applicable Law, to accept (assuming it is the Company Group member satisfying the Credit Rating Condition), or (assuming it is not the Company Group member satisfying the Credit Rating Condition) to cause the Company Group member satisfying the Credit Rating Condition to accept, an assignment of such GALIC Guarantees and to enter into any assignment and assumption agreements, or similar documentation, as reasonably requested by GALIC, in respect thereof providing for the assumption by such Company Group member of all of GALIC’s obligations under the GALIC Guarantees and for the unconditional release of GALIC under the GALIC Guarantees.

Solely with respect to the Registered Guarantees (as defined on Schedule 5.7(d)), from and after the Separation Date until the earlier of the date on which (i) GALIC registers the Registered Guarantees with the SEC on one or more registration statements filed

 

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separately from any Company Group member registration statement in respect of the products supported by the Registered Guarantees, (ii) GALIC is unconditionally released under the Registered Guarantees, or (iii) claims can no longer be made under any contracts supported by the Registered Guarantees, (x) the Company and GALIC shall use their respective best efforts to cooperate in causing the registration of each Registered Guarantee with the SEC to be timely updated as part of an annual updating amendment filed by BLIC NY to the registration statement of the product supported by such Registered Guarantee, to the extent that such updating is required under applicable Law or controlling SEC guidance, including, for clarity, the Great-West Life and Annuity Insurance Company, SEC No-Action Letter (Oct. 23, 1990), and (y) in connection therewith, (1) MetLife shall provide to the Company, within 90 days of the end of each of GALIC’s fiscal years, a copy of the audited GAAP financial statements of GALIC prepared by GALIC and MetLife in the ordinary course of business, in each case, prepared in all respects in accordance with the policies, procedures and techniques selected by MetLife for the preparation of such financial statements in its sole discretion, and such information concerning GALIC or the Registered Guarantees as BLIC NY reasonably may need for such amendment to meet the requirements of applicable Law, (2) at least 25 calendar days prior to filing, BLIC NY shall provide GALIC with a draft of such amendment that is complete with regard to disclosure related to the Registered Guarantee, (3) BLIC NY shall promptly provide to GALIC such additional information as GALIC reasonably may request in connection with a review of such draft amendment, (4) GALIC shall provide BLIC NY with any comment on such draft amendment at least 18 calendar days prior to filing, (5) BLIC NY shall, subject to applicable Law, incorporate into the draft any comment provided by GALIC as to disclosure directly concerning GALIC or the Registered Guarantees, and BLIC NY shall reasonably consider any other comment provided by GALIC on such draft amendment, (6) BLIC NY shall provide GALIC with a final version of such amendment at least 10 calendar days prior to filing for review and for signature by GALIC and its applicable officers or directors, (7) GALIC shall use its commercially reasonable efforts to execute such final version of such amendment and return such executed signature pages to BLIC NY at least 6 calendar days prior to filing, and (8) MetLife shall use its commercially reasonable efforts to cause GALIC to provide the Company with access to, and applicable signatures from, any GALIC officers or directors as required under applicable Law or controlling SEC guidance to maintain the registration of the Registered Guarantees on the same registration statements as the underlying products. If BLIC NY files any other amendment to the registration statement for a product supported by the Registered Guarantees, the provisions of clause (y) above shall apply to the preparation of such amendment.

Upon GALIC’s request, the Company shall, and shall cause the relevant Company Group members to, at MetLife’s sole cost and expense, reasonably cooperate with respect to, and promptly take all actions reasonably necessary to effect the buyback or exchange of the Guaranteed Products (as defined on Schedule 5.7(d)), including structuring and executing a buyback or exchange program in accordance with SEC rules (including, in the case of exchange offers, Rule 11a-2 under the Investment Company Act of 1940, as amended).

(e) Following the Separation, subject to the receipt by MetLife, the Company, BLIC or MLIC of consent from the Policyholder for the novation or assignment of the Novated

 

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Policy from BLIC to MLIC (the “Policy Novation”), upon the written request of MLIC, the Company hereby agrees to use its reasonable best efforts, and cause BLIC to use its reasonable efforts, to effect the Policy Novation and assign, or cause to be assigned, all rights, assets, revenues, payments, obligations and Liabilities related to the Novated Policy to MLIC, on terms reasonably acceptable to MLIC and pursuant to an Assumption Reinsurance Agreement substantially in the form set forth on Exhibit J hereto. From and after the effective time of the Policy Novation (the “Policy Novation Effective Time”), the Company shall and shall cause BLIC to pay and remit, or cause to be paid or remitted, to MLIC, promptly, all money, rights and other consideration received by it or any member of the Company Group in respect of the Novated Policy, and shall, at MetLife’s sole expense, use its reasonable best efforts to collect any such money, rights or other consideration. From and after the Effective Date until the Policy Novation Effective Time, the Company shall, and shall cause each other member of the Company Group, to cooperate in good faith, and at MetLife’s sole expense, with MetLife and MLIC in making decisions and determinations relating to or affecting the financial performance or value (to MLIC) of the Novated Policy, including in respect of adding new separate accounts and fee structures, managing liquidity requirements and SA allocation restrictions and processing death claims, IBNR and related matters. For the avoidance of doubt, from and after the Effective Date until the Policy Novation Effective Time, the Company shall, and shall cause each member of the Company Group, to use commercially reasonable efforts to maximize the financial performance or value (to MLIC) of the Novated Policy, including in evaluating and making decisions and determinations relating thereto.

(f) Telecom Equipment. For the eighteen (18) month period following the Effective Date, the Company shall have the option, but not the requirement, to purchase from MetLife any portion of the telecommunications equipment (i) located at Separation in each of the premises subject to the Subleases in the designated areas at each premises generally known as “telecom closets” and (ii) mutually agreed by the Parties as being subject to this option (the “Telecom Equipment”). Upon written notice from the Company to MetLife, prior to the end of the period described in the immediately foregoing sentence, identifying the precise Telecom Equipment to be acquired by the Company, MetLife hereby agrees to promptly sell such equipment to the Company upon receipt from the Company of any amount in cash in immediately available funds equal to the then-current book value of such equipment on the books and records of MetLife as of the date of the applicable notice. MetLife shall have ninety (90) days to remove from the applicable premises any Telecom Equipment not purchased by the Company as measured from the earlier of (x) the eighteen (18) month anniversary of the Effective Date or (y) receipt of a notice from the Company with respect to the specific Telecom Equipment, either exercising or declining the Company’s option with respect to such Telecom Equipment. Such removal shall, at MetLife’s sole discretion, be treated as a “Migration Service” (as such term is defined in the Transition Services Agreement) under the Transition Services Agreement and be governed by the terms applicable to such matters therein.

 

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5.8. Mutual Non-Solicitation of Employees.

(a) For the eighteen (18) month period following the Effective Date, neither Party shall, and each Party shall cause their respective Affiliates not to, solicit with respect to employment any current employee of the other Party or its respective Affiliates with a title of vice president or higher or similar position based on practices in effect at the time of the Separation; provided that nothing in this Section 5.8 shall prevent either Party or its respective Affiliates from soliciting any such employee (i) who has ceased to be employed by such other Party or its respective Affiliates prior to the commencement of the earlier of any such solicitation or any employment discussions related thereto, (ii) pursuant to a generalized solicitation for employees through the use of media advertisements, professional search firms or otherwise that does not target or have the effect of targeting the employees of such other Party or its respective Affiliates, or (iii) who contacts a Party on such person’s own initiative and without any prohibited solicitation thereof.

(b) Notwithstanding the foregoing, the restrictive covenants set forth in Section 5.8(a) in respect of MetLife and the MetLife Group shall terminate and be of no further force and effect upon any of the following: (i) a transaction or series of related transactions in which any person, group of related persons or group of persons acting in concert, directly or indirectly acquires shares of the Company and as a result of such acquisition beneficially owns more than fifty percent (50%) of the outstanding capital stock of the Company, or (ii) the entrance or establishment by the Company (whether by acquisition or otherwise) of any new line of business, products, services or the marketing, sale or administration thereof, change in any material respect any existing products or services of the Company or upon the consummation of one or a series of transactions (whether related or unrelated), in any case whereby, after giving effect to which, the business in which the Company Group is then engaged is substantially changed from the business in which the Company Group is directly or indirectly engaged immediately following the Separation Date.

5.9. Specified Payment Obligations.

(a) The Parties hereby acknowledge that pursuant to the Fee Agreement, MetLife has agreed to pay Morgan Stanley Bank a “Periodic Letter of Credit Fee” (as defined in the Fee Agreement) quarterly on the last business day of each March, June, September and December. The Parties hereby agree that, for the period from and after the Effective Date and ending on the day following ten (10) Business Days following the payment of the last fee due under the Fee Agreement, the Company shall promptly, and in any event within three (3) Business Days following the end of each March, June, September and December, pay to MetLife an amount equal to sixty percent (60%) of the Periodic Letter of Credit Fee.

(b) The Parties hereby acknowledge that pursuant to the terms and subject to the conditions of the Fee Agreement, MetLife may be obligated to pay a termination or early termination fee in connection with the termination of the Fee Agreement, which may be triggered under certain circumstances (including the restructuring referred to in the last sentence

 

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of this Section 5.9(b). Unless otherwise agreed by the Parties, the Company shall pay to MetLife an amount equal to sixty percent (60%) of any early termination or similar fee to be payable by MetLife pursuant to the Fee Agreement or the Reimbursement Agreement (triggered by such restructuring or otherwise) by no later than the date any such payment is payable pursuant to the Fee Agreement or the Reimbursement Agreement. If the Company or BLIC desires to restructure the reinsurance arrangement in place between BLIC and MetLife Reinsurance Company of Vermont (“MRV”) and/or any related financing, MetLife shall, and shall cause MRV to, reasonably cooperate with the Company or BLIC in connection with such restructuring.

(c) The Parties hereby acknowledge that pursuant to the Mango Purchase Agreement, MetLife has agreed to make certain payments set forth in Section 7.24 of the Mango Purchase Agreement. The Parties hereby agree that, for the period from and after the Effective Date for so long as such payments are due by MetLife under the Mango Purchase Agreement, the Company shall pay to MetLife an amount equal to 30% of the applicable payment amount set forth in Section 7.24 of the Mango Purchase Agreement for such calendar year (beginning with calendar year 2018), on or before December 15 of the immediately preceding year.

(d) The Parties hereby acknowledge that pursuant to the Mango Purchase Agreement, MetLife has agreed to make certain payments set forth in Section 7.6(e) of the Mango Purchase Agreement. The Parties hereby agree that, for the period from and after the Effective Date for so long as such payments are due by MetLife under the Mango Purchase Agreement, (i) the Company shall make, or cause its applicable Affiliates to make, such payments as, and to the extent, required to be paid by MetLife pursuant to Section 7.6(e) of the Mango Purchase Agreement in respect of any insurance policies, annuity products or other products of the Company or any other member of the Company Group, on the terms and conditions provided therein and (ii) MetLife shall, promptly upon receipt, provide the Company with a copy of any and all information MetLife receives pursuant to Section 7.1(j) of the Mango Purchase Agreement.

(e) The Parties hereby acknowledge that, as of the Effective Date, each of MLIC and NELICO (each, an “Obligor”) has certain contractual obligations to pay former producers (each, an “FP”) renewal commissions for insurance policies and trail commissions for annuity contracts issued by the other or their respective Affiliates (“FP Vested Compensation”). Each Party (in such capacity, a “Payor”) hereby agrees to pay to the other Party, or cause payment to such other Party of, all FP Vested Compensation payments paid or payable by such other Party’s Affiliated Obligor (MLIC or NELICO, as applicable) with respect to insurance policies or annuity contracts issued by such Obligor or its Affiliates, in each case in accordance with the procedures set forth on Schedule 5.9(e) hereto and to the extent consistent with applicable Law. FP Vested Compensation relating to insurance policies or annuity contracts that are subject to regulation under the federal securities Laws shall be paid by each Obligor through, and disbursed to the FP by or on behalf of, an Affiliate of such Obligor that is a registered broker-dealer and member of FINRA.

 

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(f) The Parties hereby acknowledge that, as of the Effective Date, certain separate accounts of the Parties’ insurance company subsidiaries (each “Insurers”) invest contract owner assets in one or more unaffiliated registered investment companies (each, a “VIT”), and certain classes of VIT shares have adopted distribution plans pursuant to Rule 12b-1 of the Investment Company Act of 1940 under which they make payments to the Insurers. The Parties also hereby acknowledge that, as of the Effective Date, in some cases, for administrative ease, a VIT may make a single bundled payment to one Insurer to satisfy its obligations to more than one Insurer. Each Insurer is entitled to its proportionate share of such payments, regardless of which Insurer actually receives the payment; and to the extent that any such commingled payments are made after the Separation, the Parties agree to cooperate with one another to settle accounts promptly and accurately. The Parties further agree that each such Party shall take reasonable steps to provide that, as soon as reasonably possible after the Separation, the VITs shall make any such payments with respect to the Insurers that are members of the Company Group to a post-Separation Subsidiary of the Company and shall make any such payments with respect to Insurers that are members of the MetLife Group to a post-Separation Subsidiary of MetLife.

(g) In connection with the fees and expenses to be incurred under that certain statement of work, dated September 21, 2016, between PricewaterhouseCoopers LLP and MLIC for certain advisory work being provided by PricewaterhouseCoopers LLP related to compliance with the Department of Labor’s fiduciary rule, the Company agrees to promptly pay PricewaterhouseCoopers LP all amounts owed for such fees and expenses when due and payable or, in the event that MLIC first pays such fees and expenses, promptly reimburse MLIC following receipt of a demand for payment, up to $570,926 in the aggregate.

(h) In determining the amount of the payment to be made pursuant to this Section 5.9, other than Sections 5.9(e) and (g), the amount of such payment shall be determined on an After-Tax Basis with the following changes (i) the event giving rise to such payment is the Loss and (ii) the recipient of such payment (or any Affiliate thereof) is the Indemnified Party.

5.10. Obligations with Respect to Records and Non-Records.

(a) With respect to the Records of any member of the Company Group, MetLife and its Affiliates shall have no obligation to maintain or deliver any such Records to the applicable member of the Company Group to extent that if such Records were MetLife Records, they would no longer be required to be retained pursuant to the MetLife Retention Policy or as otherwise required by Law or regulation. For the avoidance of doubt, to the extent a Record has not previously been delivered to the Company Group and its retention period has expired, but it remains subject to a legal hold, MetLife and its Affiliates shall continue to maintain such Record until it is no longer subject to a legal hold or shall deliver such Record to the applicable member of the Company Group or its Representatives.

(b) With respect to Non-Records of any member of the Company Group, MetLife and its Affiliates shall have no obligation to maintain any such Non-Record or deliver

 

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such Non-Record to the applicable member of the Company Group to the extent that the Non-Record is more than six (6) years old unless the Parties otherwise agree in writing to a longer retention; provided that if such Non-Record is older than six (6) years but is subject to a legal hold, or is listed or relates to the information listed on Schedule 4.3(h), MetLife and its Affiliates shall continue to maintain such Non-Record until it is no longer subject to a legal hold or shall deliver such Non-Record to the applicable member of the Company Group or its Representatives.

(c) With respect to the request by the Company for delivery of Records and Non-Records of the Company Group, MetLife and its Affiliates other than the Company Group shall use commercially reasonable efforts to locate and deliver such Records or Non-Records; provided that if the request by the Company for either Records or Non-Records is in connection with a request by a Governmental Authority, a litigation or a subpoena, MetLife and its Affiliates shall, subject to the Litigation Cooperation Guidelines, use reasonable best efforts to locate and deliver such Non-Records, and in all such cases shall apply legal holds to the Records and Non-Records in its possession upon the request of the Company; provided that the Company shall provide reasonable specificity under the circumstances to describe the scope of the legal hold.

(d) The Parties shall cooperate in connection with the potential migration of Records and Non-Records, including in the assessment of costs and effort to locate such Records and Non-Records, and MetLife shall cause MetLife Services and Solutions, LLC to provide migration assistance determined in accordance with Section 2.23 of the Transition Services Agreement, to separate such Records and Non-Records from the Records and Non-Records of MetLife and its Affiliates other than the Company Group and to deliver the Records or Non-Records in the format in which they reside or in a format mutually agreed to by the Parties. To the extent that (A) the Parties agree that it is not commercially reasonable to undertake the identification, separation or delivery of Records or Non-Records, (B) the Parties otherwise conclude that such identification, separation or delivery is not advisable or reasonably practical, or (C) the Parties fail to mutually agree on the allocation of costs, including where such Record or Non-Record is a Company Asset, MetLife shall continue to maintain such Records or Non-Records for as long as required by the MetLife Retention Policy or hereunder and, upon the request of the Company, shall use reasonable efforts to make a subset of the Records or Non-Records or the information contained therein available pursuant to procedures agreed upon by the Parties.

(e) MetLife shall notify the Company of each update to the MetLife Retention Policy within a reasonable time following the effective date of such update.

5.11. IFSA.

(a) Within thirty (30) days of the end of each calendar year, the Company shall provide a statement (the “True-Up Statement”) to MetLife detailing, with respect to each Person that is a party (each, an “IFSA Party”) to one or more investment finance services agreements with MLIA as set forth on Schedule

 

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5.11(a) (each, an “IFSA”) (i) to the extent the total Losses (as defined in, and determined pursuant to, the applicable IFSA(s)) incurred by such IFSA Party during such calendar year exceeded the Liability Cap (as defined in the applicable IFSA(s)) applicable to such IFSA Party for such calendar year, the amount of such excess (the “Excess Loss”) or (ii) to the extent such total Losses during such calendar year did not exceed such Liability Cap, an amount equal to the difference between such Liability Cap and such Losses (the “Available Amount”). For the avoidance of doubt, in the event the same IFSA Party is party to more than one IFSA pursuant to the terms of which MLIA’s potential liability in respect of Losses is determined by reference to an aggregate Liability Cap among all such IFSAs, such aggregate Liability Cap shall be used for all calculations made pursuant to this Section 5.11 in respect of such IFSA Party.

(b) Within thirty (30) days after receipt of such True-Up Statement, MetLife shall cause MLIA to reimburse any IFSA Party for any Excess Loss that but for the Liability Cap applicable to such IFSA Party, MLIA would be obligated to pay pursuant to the terms of the applicable IFSA(s); provided, that if the sum of Excess Losses (the “Aggregate Excess Losses”) exceeds the sum of Available Amounts (the “Aggregate Available Amount”), each as set forth in the True-Up Statement, the amount payable by MLIA in respect of any IFSA Party shall be based on (i) such IFSA Party’s pro rata share of Aggregate Excess Losses multiplied by (ii) the Aggregate Available Amount; provided further that for any calendar year, (x) no amounts payable to an IFSA Party pursuant to this Section 5.11 shall exceed such IFSA Party’s Excess Loss, and (y) the total amount payable hereunder shall not exceed the Aggregate Available Amount. To the extent that in any calendar year, after reimbursing all IFSA Parties for any Excess Losses pursuant to this Section 5.11, an unused portion of the Aggregate Available Amount remains as a result of the Aggregate Available Amount exceeding the Aggregate Excess Losses during such calendar year, such unused portion of the Aggregate Available Amount shall in no case be usable to cover Excess Losses pursuant to this Section 5.11 in any previous or subsequent calendar years.

(c) For the avoidance of doubt, any payments made by MLIA pursuant to this Section 5.11 shall not reduce any reimbursements for Losses payable by MLIA pursuant to any IFSA.

(d) For the avoidance of doubt, any reference to “Loss” or “Losses” in this Section 5.11 shall have the meaning as set forth in, and be determined pursuant to, the applicable IFSA(s) and not as otherwise defined in this Agreement.

5.12. License Grants.

(a) License to Use Tagline. MetLife shall cause Licensor, the legal owner of the “METLIFE” Mark and a wholly-owned subsidiary of MetLife, on behalf of itself and each of its Affiliates as of the Separation Date, to grant to Licensee, a wholly-owned subsidiary of the Company, on the terms and conditions set forth in this Section 5.12, a non-exclusive, royalty-free, non-transferable (except in accordance with Section 8.9), sublicensable in accordance with

 

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Section 5.12(b) right and license to use the Tagline from the Separation Date through the Tagline Termination Date, solely for Co-Branded Use, and solely in the Territory; provided that, (i) the foregoing license is limited to Licensee’s use of the Tagline in the Company Business on the types of materials listed in Schedule 5.12(a), and (ii) Licensee may not use the Tagline in the types of materials listed in Schedule 5.12(b). Nothing herein shall restrict or limit any non-trademark uses of the phrase “Established by MetLife” by any Person in the Company Group.

(b) Additional Limitations.

(i) Licensee may sublicense each of the foregoing rights, without the prior written consent of Licensor, (i) to any Person in the Company Group solely in connection with the conduct of the Company Business; (ii) to advertising agencies solely for developing advertising for the Company Business; or (iii) to third parties solely in connection with the conduct of the Company Business, provided, that if Licensee grants any such sublicense of such rights, Licensee shall ensure that any such sublicensee complies with all terms and conditions applicable to Licensee with respect to such rights in this Section 5.12. Licensee’s (and any sublicensees’) use of the Tagline shall be in accordance with the Quality Standards.

(ii) No license or right of any kind is granted in or to the “Snoopy” and any other “Peanuts” comic strip characters and Marks by virtue of this Section 5.12. For clarification, Licensor agrees that in no event shall any Person in the Company Group use the Tagline in proximity to the “Snoopy” or any other “Peanuts” comic strip characters and Marks after the Separation Date.

(c) Territory. Subject to the licenses granted in Section 5.12(a), Licensor acknowledges that certain permitted uses of the Tagline by Licensee may include use on the Internet which may result in the Tagline being displayed, published or otherwise made available outside the Territory, and that such use, if otherwise in accordance with this Section 5.12, will not constitute use of the Tagline outside the Territory or, in and of itself, constitute a breach of the terms of this Section 5.12.

(d) Transition.

(i) Use of Tagline During Transition. Licensee shall cease use of the Tagline on the earliest of (x) eighteen (18) months after the Separation Date (subject to Section 5.12(d)(ii) or Section 5.12(d)(iii)), or (y) the date on which this Section 5.12 terminates pursuant to Section 5.12(n) (the “Tagline Termination Date”). No extension of the rights granted in this Section 5.12 beyond the Tagline Termination Date shall occur except through a formal written amendment to this Agreement signed by the License Parties.

 

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(ii) Notwithstanding Section 5.12(d)(i), if Licensee is unable to cease use of the Tagline in an area within the Territory because approval to cease use is needed from the applicable Governmental Authority, then Licensee (x) may continue to use the Tagline in accordance with this Section 5.12 but solely to the extent required to comply with Law, (y) shall use commercially reasonable efforts to make all other preparations to cease use of the Tagline upon receipt of approval from such Governmental Authority, and (z) shall use commercially reasonable efforts to cease all use of the Tagline within sixty (60) days after receipt of approval from such Governmental Authority in such area within the Territory (in which case such sixtieth (60th) day shall be deemed the Tagline Termination Date for the Tagline in such area within the Territory, as applicable); provided, however, that this Section 5.12(d)(ii) shall apply only with respect to the Tagline if Licensee, in a timely manner at least six (6) months prior to the expiration of the eighteen (18) month period set forth in Section 5.12(d)(i)(x), makes the required filings with, and takes all actions required by, any applicable Governmental Authorities to obtain any required approvals to transition from use of the Tagline and continues to diligently prosecute such filings.

(iii) Notwithstanding the Tagline Termination Date, it shall not be a breach of the terms of this Agreement if Licensee uses the Tagline solely to the extent required to complete filings with any applicable Governmental Authorities for the purpose of reporting the conduct of the Company Business during the term.

(e) Destruction of Materials. Following the Tagline Termination Date, Licensee shall, subject to Section 5.12(d)(ii) and Section 5.12(d)(iii), immediately cease all use of (x) the Tagline, (y) any other Mark that is used in the Company Business that has the effect of diluting the Tagline, and (z) any Mark that is confusingly similar to the Tagline; provided, however, that if use of the Tagline in the Territory pursuant to the terms of this Section 5.12 is determined by Licensor (in Licensor’s sole good faith judgment) to be confusingly similar to, or to have the effect of diluting, the Tagline, Licensee shall as promptly as practicable (i) remove the Tagline from all web-based materials and any other electronic media under Licensee’s control used for servicing, communication, sales, advertising, promotion or marketing, and (ii) use commercially reasonable efforts to destroy all Marked Materials bearing the Tagline; provided further that, Licensee shall not be required to destroy Marked Materials or any materials that include any Marks owned and/or used by Licensor and which are used by Licensee in connection with the Company Business to the extent any of the foregoing must be retained to comply with applicable Laws or Governmental Authorities, Licensee’s reasonable document retention policies, or non-public archival copies. Furthermore, nothing in this Section 5.12(e) shall limit or require destruction of materials that use the word “MetLife” in a non-trademark sense, to the extent that such is used by Licensee in connection with historical references to the Company’s relationship with Licensor or on historical materials related to the Company Business.

 

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(f) Certification of Destruction. As soon as is reasonably practicable after the Tagline Termination Date, Licensee shall send a written statement to Licensor verifying that it has complied with its obligations in Section 5.12(e).

(g) Representation in the Marketplace. Except as permitted by this Section 5.12 or under applicable Laws, Licensee agrees that, promptly after the Effective Date, but in any event by the Market Date, it will not (i) do business as, or represent itself as, Licensor, (ii) represent that its products or services are those of Licensor or (iii) represent that Licensor backs or financially guarantees any of Licensees products or services.

(h) Quality Control and Standards.

(i) Licensor shall have the right to exercise quality control in accordance with this Section 5.12(h) over Licensee’s use of the Tagline to the extent reasonably necessary to maintain the validity and enforceability of the Tagline and to protect the goodwill associated therewith.

(ii) Licensee shall meet and maintain such quality, appearance and other standards with respect to use of the Tagline as Licensor may reasonably request from time to time and conduct the Company Business at a standard of quality equal to, at minimum, the standard of quality associated with the Company Business, as it was conducted using Licensor’s METLIFE Mark or name prior to the Effective Date in accordance with all applicable Laws. Licensee shall not use the Tagline in any manner that might dilute or tarnish the Licensor’s METLIFE Mark or disparage or reflect adversely on Licensor or the reputation or goodwill associated therewith.

(iii) Licensee shall comply with such other reasonable requests as are made by Licensor to enable Licensor to assure the quality of the Company Business conducted by Licensee and the services offered or provided by Licensee under the Tagline (this clause (iii), together with clause (ii) above, the “Quality Standards”).

(iv) Licensee shall use reasonable efforts to include trademark notices and/or other appropriate disclosures concerning the licensing relationship between the License Parties in connection with the Tagline. Without limiting the generality of the foregoing, Licensee shall use reasonable efforts to include the following written notice, except to the extent that such disclosure would not fit due to size restrictions (e.g., in a banner advertisement), in connection with its use and sublicense of the Tagline (or such other written ownership notice as reasonably requested by Licensor from time to time): “MetLife is the registered service mark of Metropolitan Life Insurance Company or its Affiliates, and is used under license to Brighthouse Services, LLC and its Affiliates.”

 

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(v) In any sales materials using the Tagline created or distributed after the Separation Date, Licensee shall include the following (or a similar) disclosure, except to the extent that such disclosure would not fit due to size restrictions (e.g., in a banner advertisement) or such other disclosure notice as may be reasonably requested by Licensor from time to time: “Annuities and life insurance are issued by Brighthouse Life Insurance Company, Charlotte, NC 28277, and in New York by Brighthouse Life Insurance Company of NY, New York, NY 10017, and Metropolitan Life Insurance Company, New York, NY 10166.”

(i) Audit.

(i) Upon Licensor’s reasonable request in writing, and at Licensee’s expense, Licensee shall provide Licensor with representative samples of ways in which the Tagline is then being used by Licensee (or photographs depicting the same) for Licensor’s inspection of such uses for purposes of monitoring Licensee’s compliance with this Section 5.12.

(ii) In the event that Licensor reasonably finds, using its good faith judgment, that any Marked Materials deviate from the Quality Standards, do not comply with any other terms and conditions of this Section 5.12 or misrepresent the relationship between Licensor and Licensee in violation of Section 5.12(g), Licensee shall, upon notice from Licensor, at Licensor’s option, either (i) promptly take all actions reasonably necessary to correct such deviations prior to any dissemination of such Marked Materials to the public, and provide Licensor with representative samples of the correction, or (ii) as soon as practicable, cease any further dissemination of such Marked Materials.

(j) Ownership. Licensor represents that (i) Licensor or its Affiliates own the Tagline and (ii) Licensor or its Affiliates have the right to grant the rights granted herein with respect to the Tagline. The License Parties acknowledge and agree that as between the License Parties, the portion of the Tagline containing the METLIFE Mark belongs to Licensor or its Affiliates, including all rights therein and thereto, and the goodwill pertaining thereto. Licensee agrees that it has no right, title or interest, express or implied, in and to the Tagline, except as specifically provided, and subject to the terms and conditions stated, in this Section 5.12. Any and all goodwill generated by Licensee’s use of the Tagline, or associated therewith, shall inure solely to the benefit of Licensor. After the Effective Date, if either License Party discovers that Licensee owns or holds any registrations, applications, reservations or other rights in the Tagline, it shall promptly notify the other License Party, and Licensee shall promptly transfer same to Licensor for no additional consideration.

(k) Infringement Notices. From the Separation Date until the Tagline Termination Date, Licensee shall give Licensor prompt written notice if it has knowledge of any use of the Tagline that appears to Licensee to be infringing or likely to infringe on the Tagline in the Territory. From the Separation Date until the Tagline Termination Date, Licensor will give

 

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Licensee prompt written notice of any third-party claim received by Licensor asserting that Licensor’s or Licensee’s (or each of their respective Affiliate’s or sublicensee’s) use of the Tagline infringes or is alleged to infringe any Intellectual Property rights of any third party. If Licensor believes in good faith that Licensee’s (or its Affiliate’s or sublicensee’s) use of the Tagline is likely to result in an adverse claim against Licensor by a third party, (i) Licensor shall have the right to provide Licensee with written notice instructing Licensee to cease use of the Tagline, and (ii) Licensee shall use commercially reasonable efforts to promptly cease use of the Tagline upon receipt of such notice; provided, that if a license or approval from a Governmental Authority is required to cease use of the Tagline, Licensee shall use commercially reasonable efforts to obtain such license or approval and be permitted to use the Tagline until such license or approval is obtained.

(l) No Confusion or Registration. Licensee agrees and covenants that it shall not (i) seek to register any Similar Intellectual Property, (ii) use any Similar Intellectual Property (except as expressly permitted herein, or as otherwise permitted under any other agreement between the Parties), (iii) directly or indirectly contest the ownership, validity or enforceability of any rights of Licensor or any of Licensor’s Affiliates in or to the Tagline, or (iv) contest the fact that Licensee’s rights under this Section 5.12 are solely those of a non-exclusive licensee.

(m) Cooperation; Recovery. Licensee shall reasonably cooperate with Licensor, which cooperation shall be at Licensor’s expense, in the event that Licensor elects to take such steps to stop Infringement by a third Person and/or recover pecuniary remedies as Licensor may, in Licensor’s sole discretion, deem necessary. Any recovery obtained as a result of any such steps taken by Licensor shall be retained by Licensor.

(n) Termination of Tagline Use.

(i) Termination of Tagline License by Licensor. Licensor may terminate the rights granted under Section 5.12(a) upon the failure by Licensee to cure, within thirty (30) days of written notice thereof to Licensee, a breach of any material provision of Section 5.12; provided, however, in the event that there is a Dispute with respect to whether Licensee has breached such material provision or failed to timely cure such a breach, Licensor may not terminate Section 5.12(a) until after the final resolution of the Dispute in favor of Licensor or its Affiliates pursuant to Article VI. For clarification, nothing in this provision shall limit or preclude enforcement of Licensor or its Affiliates’ rights under Article VI.

(ii) Termination of Tagline License by Licensee. Licensee may terminate the rights granted under Section 5.13(a) for any reason, for cause or for no cause, with thirty (30) days of written notice thereof to Licensor.

(o) Effect of Termination. Subject to Section 5.12(n)(ii), upon the Tagline Termination Date, all of Licensee’s trademark rights in the Tagline granted to Licensee under this Agreement shall automatically revert to Licensor. Nothing in the prior sentence will be

 

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deemed to prevent non-trademark uses by Licensee after the Tagline Termination Date, such as referring to Licensee’s history and prior affiliation and association with Licensor, provided that Licensee does not use the Tagline in connection therewith.

(p) Tagline License Indemnification.

(i) Licensee Indemnity. Licensee shall defend, indemnify and hold harmless Licensor and Licensor’s Affiliates, successors and assigns, and its and their respective Representatives, from and against any and all Losses to the extent resulting from or arising out of any legal actions brought by third parties or any of Licensee’s Affiliates against Licensor or Licensor’s Affiliates in connection with (a) Licensee’s (or its Affiliates’ or sublicensees’) use of the Tagline in the conduct of the Company Business, (b) the use by Licensee (or by its Affiliates or sublicensees) of the Tagline outside the scope of this Section 5.12, (c) any use of the “Snoopy” or “Peanuts” comic characters and related Marks after the Separation Date, or (d) Licensee’s breach of this Section 5.12 (including such acts or omissions of Licensee’s Affiliates or sublicensees that would be a breach hereunder if such acts or omissions were by Licensee).

(ii) Licensor Indemnity. Licensor shall defend, indemnify and hold harmless Licensee and Licensee’s Affiliates, successors and assigns, and its and their respective Representatives, from and against any and all Losses to the extent resulting from or arising out of legal actions brought by third parties or any of Licensor’s Affiliates against Licensee or Licensee’s Affiliates in connection with (a) allegations that Licensee’s, Licensee’s Affiliates’ or sublicensees’ use of the Tagline in accordance with the terms and conditions of this Section 5.12 is an infringement, dilution, illegal or other unauthorized use of the Intellectual Property rights of any Person, or (b) Licensor’s breach of this Section 5.12 (including such acts or omissions of Licensor’s Affiliates that would be a breach hereunder if such acts or omissions were by Licensor).

5.13. Obligations with Respect to Reinsurance Arrangements.

(a) The Company shall, and shall cause each other member of the Company Group to, perform all its obligations under the its reinsurance agreements set forth on Schedule 5.13(a) with third-party reinsurers that reinsure the Company Group’s liabilities arising under policies reinsured by any member of the MetLife Group or which inure to the benefit of the reinsured arrangement, in each case set forth on Schedule 5.13(a), in any manner or to any degree (“Company Group Third Party Reinsurance”) in accordance with the terms of each such Company Group Third Party Reinsurance. The Company shall, and shall cause each other applicable member of the Company Group to, not waive, alter, modify or amend any provision or obligation under such Company Group Third Party Reinsurance, or take any other step that might be reasonably expected to diminish the value of such Company Group Third Party Reinsurance, without the prior written

 

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consent (including consent by e-mail) of MetLife. The Company shall, and shall cause each other applicable member of the Company Group to, use its reasonable, good-faith efforts to collect all amounts due under Company Group Third Party Reinsurance, including but not limited to pursuing all reasonable claims in litigation and/or arbitration under such Company Group Third Party Reinsurance for amounts due to the Company Group, and the Company shall not, and shall cause each other applicable member of the Company Group not to, cease efforts to pursue any reasonable claim available to it under Company Group Third Party Reinsurance, or settle any disputed claim for reimbursement on Company Group Third Party Reinsurance, without the prior written consent (including consent by e-mail) of MetLife. The Company shall promptly reimburse MetLife for all amounts not obtained from Company Group Third Party Reinsurance arising from or relating to a breach of this provision, and the Company agrees to waive any defense that such amounts are speculative or not capable of certain calculation to a claim by MetLife for reimbursement under this provision.

(b) MetLife shall, and shall cause each other member of the MetLife Group to, perform all its obligations under its reinsurance agreements with third-party reinsurers that reinsure the MetLife Group’s liabilities arising under policies reinsured by any member of the Company Group or which inure to the benefit of the reinsured arrangement, in each case set forth on Schedule 5.13(b), in any manner or to any degree (“MetLife Group Third Party Reinsurance”) in accordance with the terms of each such MetLife Group Third Party Reinsurance. MetLife shall, and shall cause each other applicable member of the MetLife Group to, not waive, alter, modify or amend any provision or obligation under such MetLife Group Third Party Reinsurance, or take any other step that might be reasonably expected to diminish the value of such MetLife Group Third Party Reinsurance, without the prior written consent (including consent by e-mail) of the Company. MetLife shall, and shall cause each other applicable member of the MetLife Group to, use its reasonable, good-faith efforts to collect all amounts due under MetLife Group Third Party Reinsurance, including but not limited to pursuing all reasonable claims in litigation and/or arbitration under such MetLife Group Third Party Reinsurance for amounts due to the MetLife Group, and MetLife shall not, and shall cause each other applicable member of the MetLife Group not to, cease efforts to pursue any reasonable claim available to it under MetLife Group Third Party Reinsurance, or settle any disputed claim for reimbursement on MetLife Group Third Party Reinsurance, without the prior written consent (including consent by e-mail) of the Company. MetLife shall promptly reimburse the Company for all amounts not obtained from MetLife Group Third Party Reinsurance arising from or relating to a breach of this provision, and MetLife agrees to waive any defense that such amounts are speculative or not capable of certain calculation to a claim by the Company for reimbursement under this provision.

ARTICLE VI.

DISPUTE RESOLUTION

6.1. General Provisions.

 

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(a) Except as otherwise contemplated in Sections 4.1, 6.1(f) and 6.5, any and all disputes, controversies or claims arising out of or relating to this Agreement, the Corporate Reorganization or the Transaction Documents or Corporate Reorganization Agreements (other than the Transaction Documents and Corporate Reorganization Agreements set forth on Schedule 6.1) or to the extent explicitly set forth in another Transaction Document, or the validity, interpretation, breach or termination thereof (a “Dispute”), shall be resolved by mediation or arbitration in accordance with the procedures set forth in this Article VI, which shall be the sole and exclusive procedures for the resolution of any such Dispute unless otherwise specified below.

(b) All communications (including the Initial Notice, Response and the Mediation Notice) between the Parties or their representatives in connection with the attempted resolution of any Dispute, including any mediator’s evaluation referred to in Section 6.4, shall be deemed to have been delivered in furtherance of a Dispute settlement, shall be exempt from discovery and production, and shall be treated under the standards set forth in Rule 408 of the Federal Rules of Evidence and all applicable state counterparts protecting the confidentiality of mediations or settlement discussions.

(c) Except as provided in Section 6.1(f) in connection with any Dispute, the Parties expressly waive and forgo any right to (i) special, indirect, incidental, punitive, consequential, exemplary, statutorily-enhanced or similar damages in excess of compensatory damages (provided that Liability for any such damages with respect to a Claim shall be considered direct damages) and (ii) trial by jury.

(d) The specific procedures set forth below, including, but not limited to, the time limits referenced therein, may be modified by agreement of the Parties in writing.

(e) All applicable statutes of limitations and defenses based upon the passage of time shall be tolled while the procedures specified in this Article VI are pending. The Parties shall take such action, if any, required to effectuate such tolling.

(f) Notwithstanding anything to the contrary contained in this Article VI, any Dispute relating to a member of the MetLife Group’s rights as a stockholder of the Company pursuant to applicable Law, the Company’s Charter, the Company’s Amended and Restated Bylaws or the Registration Rights Agreement, including a member of the MetLife Group’s rights as the holder of Company Common Stock, shall not be governed by or subject to the procedures set forth in this Article VI. The Parties irrevocably submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware or, if such court lacks subject matter jurisdiction, any other state court or federal court having subject matter jurisdiction located within the State of Delaware in connection with any such Dispute and each Party irrevocably agrees that all claims in respect of any such Dispute or any suit, action or proceeding related thereto may be heard and determined in such courts. The Parties irrevocably waive, to the fullest extent permitted by applicable Law, any objection that they may now or hereafter have to the laying of venue of any such Dispute brought in such courts or any defense of inconvenient forum for the maintenance of

 

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such dispute. Each of the Parties agrees that a judgment in any such Dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

6.2. Business Level Resolution. If a Dispute is not resolved in the normal course of business at the operational level, the Parties shall first attempt in good faith to resolve such Dispute by negotiation between executives who hold, at a minimum, the office of Vice President of the respective business entities involved in such Dispute or their respective senior level designees. Either Party may initiate the executive negotiation process by providing a written notice to the other (the “Initial Notice”). Five (5) Business Days after delivery of the Initial Notice, the receiving party shall submit to the other a written response (the “Response”). The Initial Notice and the Response shall include (i) a statement of the Dispute and of each Party’s position, and (ii) the name and title of the executive who will represent that party and of any other person who will accompany the executive. Such executives will meet in person or by telephone within ten (10) Business Days of the date of the Initial Notice to seek a resolution of the Dispute. If such senior executives or their respective designees decline to meet within the allotted time, or if they meet, but fail to resolve the Dispute within twenty (20) Business Days after receipt of the Initial Notice, then, upon the election of either Party in its sole discretion, the Parties shall pursue the remedy set forth in Section 6.3 and, as applicable, Section 6.4.

6.3. Mediation. Except as otherwise contemplated in Sections 4.1, 6.1(f) and 6.5, if the procedures set forth in Section 6.2 have been followed with respect to a Dispute and such Dispute remains unresolved or otherwise following the twentieth (20th) Business Day following receipt of the Initial Notice, the Dispute shall be submitted for resolution to non-binding, confidential mediation by a written notice to the other Party (the “Mediation Notice”), which such submission to mediation shall occur within thirty (30) days of delivery of the Mediation Notice. The Parties shall mutually select a mediator; provided that if the Parties are unable to select a mutually agreeable mediator within twenty (20) days following the Mediation Notice, the International Institute for Conflict Prevention and Resolution (the “CPR”), at the written request of either Party, shall designate a mediator.

6.4. Arbitration; Procedures.

(a) If a Dispute is not resolved by mediation as provided in Section 6.3 within ninety (90) days of the Initial Notice (or any longer period that the Parties may agree to in writing), the mediation contemplated in Section 6.3 shall terminate and the Dispute shall be submitted for resolution to binding arbitration to be held in New York, New York. The arbitration shall be solely between the parties to the Dispute and shall be conducted in accordance with the CPR Rules for Non-Administered Arbitration as then in effect except as modified by the provisions of this Article VI (the “Arbitration Rules”).

 

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(b) The neutral organization for purposes of the Arbitration Rules shall be the CPR. The arbitration shall be conducted before a panel of three arbitrators (the “Arbitration Panel”), of whom each Party shall appoint one arbitrator in accordance with the Arbitration Rules and the two Party-designated arbitrators shall jointly select the third arbitrator in accordance with the Arbitration Rules; provided that no arbitrator may serve on the panel unless (i) such arbitrator has in the past served as an officer of a financial services company and is otherwise reasonably experienced in such industry, and (ii) he or she has agreed in writing to enforce the terms of, and conduct the arbitration in accordance with, the provisions of this Article VI. The arbitration shall be conducted in New York City. A written transcript of the proceedings shall be made and furnished to the Parties. Except with respect to the interpretation and enforcement of the Arbitration Procedures (which shall be governed by the Federal Arbitration Act), the arbitrators shall determine the Dispute and make the Determination in accordance with the law of the State of New York, without giving effect to any conflict of law rules, its choice of law principles or other rules that might render such law inapplicable or unavailable, and shall apply this Agreement, the Transaction Documents and the Corporate Reorganization Agreement according to their respective terms; provided, however, that any Dispute in respect of a Transaction Document or Corporate Reorganization Agreement which by its terms is governed by the law of a jurisdiction other than the State of New York shall be determined by the law of such other jurisdiction.

(c) The Parties agree to be bound by any award or order resulting from any arbitration conducted in accordance with this Section 6.4 and further agree that judgment on any award or order resulting from an arbitration conducted under this Section 6.4 may be entered and enforced in any court having jurisdiction thereof. The Parties agree that each and every arbitration shall be treated as confidential and before making any disclosure permitted by the Arbitration Rules, a Party shall give written notice to the other Party and shall, at such other Party’s request, make reasonable efforts to protect and preserve the confidentiality of any information disclosed in an arbitration.

(d) The Arbitration Panel shall establish a set of procedures for the arbitration (the “Arbitration Procedures”), which shall include but not be limited to (i) that each Party shall submit to the Arbitration Panel, and exchange with the other Party, a written offer of compromise, constituting such Party’s best offer, with terms to resolve the Dispute (each such offer, an “Offer”), (ii) that the Arbitration Panel shall be limited to awarding either (x) only one or the other of the two Offers submitted, or (y) an award that shall not be in excess of the higher, nor less than the lower, of the amounts represented by the Offers, as applicable, or (iii) that discovery shall be conducted in accordance with the Arbitration Rules and (iv) that all aspects of the arbitration shall be treated as confidential. The Arbitration Panel shall deliver a written statement resolving the Dispute (the “Determination”); provided that the Arbitration Panel shall not in its Determination provide either Party with terms more favorable than those set forth in the Offer provided by the other Party. The Arbitration Panel may render the Determination by means of a summary disposition relative to all or some of the issues in the Dispute; provided that the Party that opposes such summary disposition has had an adequate opportunity to respond to the application for such

 

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summary disposition. Except as expressly permitted by this Agreement, no Party shall commence or voluntarily participate in any court action or proceeding concerning a Dispute, except (i) for enforcement as contemplated by Section 6.4(c) or (ii) to restrict or vacate an arbitral decision based on the grounds specified under applicable law. For purposes of the foregoing, the Parties submit to the non-exclusive jurisdiction of the courts of the State of New York.

(e) Each Party shall bear its own attorneys’ fees and costs incurred in connection with the resolution of any Dispute in accordance with this Article VI; provided that the Parties shall share the fees and expenses of both the mediators and Arbitration Panel equally.

6.5. Equitable Remedies. Notwithstanding anything herein to the contrary, the Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement, the Transaction Documents or Corporate Reorganization Agreements were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to seek injunctive relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in each case without posting a bond or undertaking, this being in addition to any other remedy to which they are entitled at Law or in equity. Each of the Parties agrees that it shall not oppose the granting of an injunction, specific performance and other equitable relief on the basis that (i) the Party seeking such remedy has an adequate remedy at Law or (ii) an award of specific performance is not an appropriate remedy for any reason at Law or equity. Each of the Parties further agrees, for purposes of the foregoing, each of the Parties irrevocably submits to the exclusive jurisdiction of any state or federal court located within the County of New York in the State of New York for the purposes of any suit, action or other proceeding arising out of or permitted by this Section 6.5, and agrees to commence any such action, suit or proceeding only in such courts.

ARTICLE VII.

ADDITIONAL AGREEMENTS

7.1. Voting of Company Common Stock.

(a) From the Effective Date and until the date that MetLife and its Subsidiaries cease to own any shares of Company Common Stock not distributed in the Distribution (the “Retained Shares”), MetLife shall, and shall cause its Subsidiaries to (in each case, to the extent that they own any Retained Shares), be present, in person or by proxy, at each and every Company stockholder meeting, and otherwise to cause all Retained Shares owned by them to be counted as present for purposes of establishing a quorum at any such meeting, and to vote or consent on any matter (including waivers of contractual or statutory rights), or cause to be voted or consented on any such matter, all such Retained Shares in proportion to the votes cast by the other holders of Company Common Stock on such matter.

 

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(b) From the Effective Date and until the date that MetLife and its Subsidiaries cease to own any Retained Shares, MetLife hereby grants, and shall cause its Subsidiaries (in each case, to the extent that they own any Retained Shares) to grant, an irrevocable proxy, which shall be deemed coupled with an interest sufficient in law to support an irrevocable proxy to the Company or its designees, to vote, with respect to any matter (including waivers of contractual or statutory rights), all Retained Shares owned by them, in proportion to the votes cast by the other holders of Company Common Stock on such matter; provided, that (i) such proxy shall automatically be revoked as to a particular Retained Share upon any sale, transfer or other disposition of such Retained Share from MetLife or any of its Subsidiaries to a Person other than MetLife or any of its Subsidiaries; and (ii) nothing in this Section 7.1(b) shall limit or prohibit any such sale, transfer or disposition.

(c) MetLife acknowledges and agrees that the Company will be irreparably damaged in the event any of the provisions of this Article VII are not performed by MetLife and its Subsidiaries in accordance with the specific terms of such section or are otherwise breached. Accordingly, it is agreed that the Company shall be entitled to an injunction to prevent breaches of this Article VII and to specific enforcement of the provisions of this Article VII in any action instituted in any court of the United States or any state having subject matter jurisdiction.

7.2 MetLife China. In connection with the sale of BLIC’s 27.8% interest in Sino-US United MetLife Insurance Company Limited (“MetLife China”) to MLIC, MetLife does hereby, for itself and each other member of the MetLife Group, remise, release and forever discharge the Company Group from any and all Liabilities owed to any member of the MetLife Group whatsoever, whether at law or in equity (including any right of contribution), arising under the agreements set forth on Schedule 7.2 hereto.

ARTICLE VIII.

MISCELLANEOUS

8.1. Corporate Power; Fiduciary Duty.

(a) MetLife and the Company each represent on behalf of itself as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and each other Transaction Document or Corporate Reorganization Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby; and

(ii) this Agreement and each Transaction Document or Corporate Reorganization Agreement to which it is a party has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms hereof and thereof.

 

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(b) Notwithstanding any provision of this Agreement or any Transaction Document or Corporate Reorganization Agreement, neither of MetLife nor the Company, nor any other member of the MetLife Group or the Company Group, as applicable, shall be required to take or omit to take any act that would violate its fiduciary duties to any minority stockholders of MetLife, the Company or any non-wholly-owned Subsidiary of MetLife or the Company, as the case may be (it being understood that directors’ qualifying shares or similar interests shall be disregarded for purposes of determining whether a Subsidiary is wholly-owned).

8.2. Governing Law. Subject to the provisions of Article VI, this Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of New York irrespective of the choice of Laws principles of the State of New York other than Section 5-1401 of the General Obligations Law of the State of New York.

8.3. Survival of Covenants. Except as expressly set forth in any Transaction Document or Corporate Reorganization Agreement, the covenants and other agreements contained in this Agreement and each Transaction Document and Corporate Reorganization Agreement, and Liability for the breach of any obligations contained herein or therein, shall survive the Separation and shall remain in full force and effect.

8.4. Force Majeure. No Party (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement or, unless otherwise expressly provided therein, any Transaction Document, so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (i) notify the other Party of the nature and extent of any such Force Majeure condition and (ii) use due diligence to remove any such causes and resume performance under this Agreement as soon as reasonably practicable.

8.5. Notices. Except as otherwise expressly provided herein, all notices, requests, claims, demands and other communications under this Agreement and, to the extent applicable and unless otherwise provided therein, under each of the Transaction Documents and Corporate Reorganization Agreements shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) (i) by delivery in person, (ii) by overnight courier service, (iii) by email with receipt confirmation or (iv) by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 8.5):

 

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If to MetLife:

MetLife, Inc.

200 Park Avenue

New York, NY 10166

Attention: Adam Hodes, Executive Vice President, Mergers &

Acquisitions

Email: ahodes@metlife.com

with a copy to:

MetLife, Inc.

200 Park Avenue

New York, NY 10166

Attention: General Counsel

Email: ranzaldua@metlife.com

With a further copy to the following email address:

TaurusNotices@metlife.com

 

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If to the Company:

Brighthouse Financial, Inc.

Gragg Building

11225 North Community House Road

Charlotte, NC 28277

Attention: Eric T. Steigerwalt, President and CEO

Email: esteigerwalt@brighthousefinancial.com

with a copy to:

Brighthouse Financial, Inc.

Gragg Building

11225 North Community House Road

Charlotte, NC 28277

Attention: Christine M. DeBiase, General Counsel and Secretary

Email: cdebiase@brighthousefinancial.com

With a further copy to the following email address:

TaurusNotices@brighthousefinancial.com

Any notice or communication hereunder shall be deemed to have been given or made as of the date so delivered if personally delivered; when receipt is acknowledged, if sent by email; and five (5) calendar days after mailing if sent by registered or certified mail (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee).

8.6. Termination. This Agreement and any of the Transaction Documents may be terminated by the MetLife board of directors, or an applicable committee thereof, in its sole and absolute discretion, at any time prior to the Distribution. In the event of any such termination of this Agreement or a Transaction Document prior to the Distribution, no Party (or any other member of the MetLife Group or the Company Group, as applicable, or any of such Party’s or their respective directors or officers) shall have any Liability or further obligation to any other Party (or any other member of the MetLife Group or the Company Group, as applicable) with respect to this Agreement or such Transaction Documents.

8.7. Severability. If any term or other provision of this Agreement is deemed by an Arbitration Panel or a court of law to be invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as

 

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possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the greatest extent possible.

8.8. Entire Agreement. Except as otherwise expressly provided in this Agreement, this Agreement (including the Schedules and Exhibits hereto) constitutes the entire agreement of the Parties with respect to the subject matter of this Agreement and supersedes all prior agreements and undertakings, both written and oral, between or on behalf of the Parties with respect to the subject matter of this Agreement.

8.9. Assignment; No Beneficiaries. This Agreement shall not be assigned by any Party without the prior written consent of the other Parties; provided, however, that either Party may assign any or all of its rights and obligations hereunder to any of its Affiliates so long as such assignment does not release such Party from any Liability hereunder incurred prior to such assignment. Except as provided in Article IV with respect to Indemnified Parties, this Agreement is for the sole benefit of the Parties to this Agreement and the members of the MetLife Group or the Company Group, as applicable, and each of their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

8.10. Public Announcements. The Parties shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the Transactions, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system.

8.11. Amendment. No provision of this Agreement may be amended or modified except by a written instrument signed by each of the Parties. Either Party may, in its sole discretion, waive any and all rights granted to it in this Agreement; provided that no waiver by either Party of any provision hereof shall be effective unless explicitly set forth in writing and executed by the Party so waiving. The waiver by either Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof.

8.12. Rules of Construction. Interpretation of this Agreement shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Preamble, Recital, Article, Section, paragraph, Schedule and Exhibit are references to the Preamble, Recitals, Articles, Sections, paragraphs, Schedules and Exhibits to this Agreement unless otherwise specified; (c) references to “$” means U.S. dollars; (d) the word “including” and words of similar import when used in this Agreement means “including without limitation,” unless otherwise specified; (e) the word “or” shall not be

 

77


exclusive; (f) the words “herein,” “hereof,” “hereunder” or “hereby” and similar terms are to be deemed to refer to this Agreement as a whole and not to any specific section unless expressly stated otherwise; (g) the headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (h) this Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting or causing any instrument to be drafted; (i) if a word or phrase is defined, the other grammatical forms of such word or phrase shall have a corresponding meaning; (j) references to any statute, listing rule, rule, standard, regulation or other Law include a reference to (1) the corresponding rules and regulations and (2) each of them as amended, modified, supplemented, consolidated, replaced or rewritten from time to time; (k) references to any section of any statute, listing rule, rule, standard, regulation or other Law include any successor to such section; and (l) for the avoidance of doubt, the Effective Date, the Separation Date and the Closing Date may be the same day or may be two or three distinct days.

8.13. Coordination with Transaction Documents. Except as otherwise expressly provided in this Agreement, in the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of any Transaction Document or Corporate Reorganization Agreement, the provisions of the Transaction Document or Corporate Reorganization Agreement shall control over the inconsistent provisions of this Agreement as to matters specifically addressed in the Transaction Document. For the avoidance of doubt, the Tax Separation Agreement and the Tax Receivables Agreement shall govern all matters (including any indemnities and payments among the Parties and their Affiliates and the allocation of any rights and obligations pursuant to agreements entered into with third parties) relating to Taxes or otherwise specifically addressed in the Tax Separation Agreement and the Tax Receivables Agreement.

8.14. Counterparts. This Agreement may be executed in one or more counterparts, and by the different Parties to each such agreement in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or PDF shall be as effective as delivery of a manually executed counterpart of any such Party.

[The remainder of this page is intentionally left blank]

 

78


IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.

 

METLIFE, INC.
By:  

 

  Name:
  Title:
BRIGHTHOUSE FINANCIAL, INC.
By:  

 

  Name:
  Title:

 

79

EX-10.1

Exhibit 10.1

 

 

 

TRANSITION SERVICES AGREEMENT

dated as of                     , 2017

between

MetLife Services and Solutions, LLC

and Brighthouse Services, LLC

And for purposes of Article VIII only,

MetLife, Inc.

and

Brighthouse Financial, Inc.

 

 

 


TABLE OF CONTENTS

 

     Page  
ARTICLE I DEFINITIONS      1  

Section 1.01.

  

Certain Defined Terms

     1  
ARTICLE II SERVICES AND ACCESS TO FACILITIES      10  

Section 2.01.

  

Services

     10  

Section 2.02.

  

Access to Facilities

     11  

Section 2.03.

  

Omitted Services and Access to Omitted Facilities

     11  

Section 2.04.

  

Knowledge Transfer

     13  

Section 2.05.

  

Third-Party Vendor Services

     13  

Section 2.06.

  

Summary of Services and Access to Facilities.

     14  

Section 2.07.

  

Resumed Services and Resumed Facilities

     14  

Section 2.08.

  

Exception to Obligation to Provide Services or Access to Facilities

     14  

Section 2.09.

  

Standard of the Provision of Services or Access to Facilities

     15  

Section 2.10.

  

Reports

     16  

Section 2.11.

  

Failure to Meet Standards for Services; Inability to Perform

     16  

Section 2.12.

  

Change in Services or Access to Facilities

     17  

Section 2.13.

  

Services and Access to Facilities Provided by Other Persons

     19  

Section 2.14.

  

Consents

     20  

Section 2.15.

  

Personnel

     20  

Section 2.16.

  

Cooperation

     21  

Section 2.17.

  

Security; Electronic and Other Access

     22  

Section 2.18.

  

No Agency

     24  

Section 2.19.

  

Ownership of Intellectual Property

     24  

Section 2.20.

  

Divestitures

     27  

Section 2.21.

  

Reorganization

     27  

Section 2.22.

  

Permits

     27  

Section 2.23.

  

Migration

     28  

Section 2.24.

  

Primary Points of Contact for this Agreement

     29  

Section 2.25.

  

TSA Records

     30  

 

i


ARTICLE III COSTS AND DISBURSEMENTS      31  

Section 3.01.

  

Costs and Disbursements

     31  

Section 3.02.

  

No Right to Set-Off; Disputed Invoice Amounts

     33  
ARTICLE IV WARRANTIES AND COMPLIANCE      34  

Section 4.01.

  

Disclaimer of Warranties

     34  

Section 4.02.

  

Compliance with Laws and Regulations

     34  
ARTICLE V LIMITED LIABILITY AND INDEMNIFICATION      35  

Section 5.01.

  

Indemnification

     35  

Section 5.02.

  

Additional Limitations on Liability

     36  

Section 5.03.

  

Insurance

     39  

Section 5.04.

  

Procedures for Third-Party Claims

     39  

Section 5.05.

  

Indemnification Procedure other than for Third-Party Claims

     40  

Section 5.06.

  

Exclusive Remedy

     41  
ARTICLE VI TERM AND TERMINATION      41  

Section 6.01.

  

Term and Termination

     41  

Section 6.02.

  

Termination Charges

     45  

Section 6.03.

  

Effect of Termination

     46  

Section 6.04.

  

Force Majeure

     47  
ARTICLE VII GENERAL PROVISIONS      48  

Section 7.01.

  

Treatment of Confidential Information

     48  

Section 7.02.

  

Security Incidents

     51  

Section 7.03.

  

Notices

     52  

Section 7.04.

  

Severability

     53  

Section 7.05.

  

Entire Agreement

     53  

Section 7.06.

  

Assignment

     54  

Section 7.07.

  

No Third-Party Beneficiaries

     54  

Section 7.08.

  

Amendment; Waiver

     54  

Section 7.09.

  

Dispute Resolution

     54  

Section 7.10.

  

Governing Law

     55  

Section 7.11.

  

Rules of Construction

     56  

Section 7.12.

  

Obligations of Parties

     56  

 

ii


Section 7.13.

  

Counterparts

     56  
ARTICLE VIII OBLIGATIONS OF PARENT AND BHF      57  

Section 8.01.

  

Obligations of Parent

     57  

Section 8.02.

  

Obligations of BHF

     57  

 

iii


TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (this “Agreement”), dated and effective as of                     , 2017 (the “Effective Date”), is entered into by and between MetLife Services and Solutions, LLC, a Delaware limited liability company (“MSS”), and Brighthouse Services, LLC, a Delaware limited liability company (the “Company”), and for purposes of Article VIII only, among MetLife, Inc., a corporation organized under the laws of Delaware (the “Parent”) and Brighthouse Financial, Inc., a corporation organized under the laws of Delaware (“BHF”).

RECITALS

WHEREAS, the Parent directly owns a one hundred percent (100%) interest in BHF;

WHEREAS, the Parties anticipate that some or all of the Shares will be distributed to shareholders and/or sold in one or more offerings (“Separation”);

WHEREAS, the Parties anticipate that the Company Entities will no longer be Affiliates of the Parent Group at some point in time (“Disaffiliation”); and

WHEREAS, in connection with the Separation and Disaffiliation (which may or may not be the same day), MSS shall provide or cause to be provided to the Company Group Members, and the Company shall provide or cause to be provided to the Parent Group, certain services, access to facilities, equipment, software and other assistance on a transitional basis commencing on the Effective Date and in accordance with the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Certain Defined Terms.

(a) The following capitalized terms used in this Agreement have the meanings set forth below:

Acquired Resource” has the meaning set forth in Section 6.03(c).

Affiliate” (and, with a correlative meaning, “affiliated”) means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person; provided, however, that from and after the Disaffiliation Date, no member of the Company Group shall be deemed an Affiliate of any member of the MetLife Group for purposes of this Agreement and no

 

1


member of the MetLife Group shall be deemed an Affiliate of any member of the Company Group for purposes of this Agreement. For purposes of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”) of a Person means the power to, directly or indirectly, direct or cause the direction of the management and policies of such Person or the power to appoint and remove a majority of the members of the board of directors, whether through the ownership of voting securities or other ownership interests, by contract or otherwise, including, with respect to a corporation, partnership or limited liability company, the direct or indirect ownership of more than fifty percent (50%) of the voting securities of such corporation or the voting interest of such partnership or limited liability company.

Agreed Price” has the meaning set forth in Schedule 3.01(b).

Agreed Service Fee” has the meaning set forth in Schedule 3.01(b).

Agreed Term” has the meaning set forth in Section 6.01(a).

Agreement” has the meaning set forth in the Preamble.

Applicable Rate Card” has the meaning set forth in Schedule 3.01(b).

BHF” has the meaning set forth in the Preamble.

Breakage” means the loss or gain resulting from an administrative transaction involving a variable Insurance Contract for which the accumulation unit value on the actual process date of the transaction is different from the accumulation unit value on the date on which the transaction should have been processed under applicable federal securities Laws.

Business Day” means any day, other than a Saturday, Sunday or other day on which banks located in the State of New York are authorized or required to close.

Change” has the meaning set forth in Section 2.12(a).

Change Request” has the meaning set forth in Section 2.12(b).

Change Request Proposal” has the meaning set forth in Section 2.12(b).

Commitment” has the meaning set forth in Section 2.08.

Company” has the meaning set forth in the Preamble.

Company Contract Manager” has the meaning set forth in Section 2.24(a)(i).

Company Group” means the Company and the entities set forth on Exhibit 1; and “Company Group Member” means any of the Company Group.

Company Indemnified Parties” has the meaning set forth in Section 5.01(a).

Company Indemnitors” has the meaning set forth in Section 5.01(b).

 

2


Company Received Omitted Facilities” has the meaning set forth in Section 2.03(a).

Company Received Omitted Services” has the meaning set forth in Section 2.03(a).

Company Received Facilities” has the meaning set forth in Section 2.02.

Company Received Services” has the meaning set forth in Section 2.01.

Company Work Product” has the meaning set forth in Section 2.19(b).

Confidential Information” has the meaning set forth in Section 7.01(a).

Contract Managers” means the Company Contract Manager and the MSS Contract Manager.

Copyrights” means copyrights and copyrightable works, mask work rights, database rights and design rights, whether or not registered, published or unpublished, and registrations and applications for registration thereof and all rights therein whether provided by international treaties or conventions or otherwise.

Covered Party” means the holder of an individual Insurance Contract (e.g., an individual insured), the holder of a group Insurance Contract (e.g., an employer or other entity or individual who holds a group Insurance Contract covering one or more individuals) or an individual who is covered under a group Insurance Contract, including the insured, annuitant, owner, payor, payee or beneficiary under the Insurance Contract.

Disaffiliation” has the meaning set forth in the Recitals.

Disaffiliation Date” means the first date on which the Company Entities are no longer Affiliates of Parent.

Dispute” has the meaning set forth in Section 7.09(a).

Effective Date” means                     , 2017.

Enabling Changes Anticipated Spend” has the meaning set forth in Section 2.12(d).

EP Amount” means an amount that would not have been paid or payable to (i) a Covered Party, (ii) an insurance producer authorized by a Company Group Member or a Parent Group Member, as applicable, to market, solicit, sell or negotiate Insurance Contracts, or (iii) a Person claiming to be any of the foregoing, if the relevant Provider had performed the applicable Services in accordance with such Provider’s procedures, including: (a) insurance claims payments based upon an Insurance Contract paid by a Provider to a Person other than the beneficiary listed in such Insurance Contract; (b) loan proceeds based upon an Insurance Contract paid by a Provider to a Person other than the owner listed in such Insurance Contract;

 

3


(c) surrenders or withdrawals based upon an Insurance Contract paid by a Provider to a Person other than the owner of such Insurance Contract; and (d) overpayments made to any Person in connection with a claim, loan, surrender or withdrawal.

Extended Scheduled Term” has the meaning set forth in Section 6.01(a).

Facilities” means the Scheduled Facilities, the Omitted Facilities, and the Resumed Facilities.

Force Majeure” means, with respect to a Party, an event (a) beyond the control of such Party (or any Person acting on its behalf), including acts of God, storms, floods, riots, fires, earthquakes, sabotage, civil commotion or civil unrest, strikes, lockouts, labor difficulties, interference by civil or military authorities, riots, insurrections or other hostilities, embargo, fuel or energy shortage, acts of Governmental Entities (including bank Effective Dates and seizures and orders), acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism or failure or interruption of networks or energy sources and (b) that is not reasonably likely to have been prevented by the Party’s commercially reasonable precautions or commercially accepted processes or by the Party’s implementation of its disaster recovery and business continuity plans and policies.

Fully Burdened Cost” has the meaning set forth in Schedule 3.01(b).

Governmental Entity” means any federal, state, local, domestic or foreign agency, court, tribunal, regulatory or administrative body, arbitration panel, department or other legislative, judicial, governmental, quasi-governmental entity or self-regulatory organization (including FINRA) with competent jurisdiction.

Government Recipients” has the meaning set forth in Section 7.01(b).

HIPAA” means the Health Insurance Portability and Accountability Act of 1996.

Indemnified Party” means either a Company Indemnified Party or a MSS Indemnified Party.

Indemnitor” means a Party providing an indemnity hereunder pursuant to ARTICLE V.

Initial Scheduled Term” has the meaning set forth in Section 6.01(a).

Inspection” has the meaning set forth in Section 2.25(b).

Insurance Contract” means a Company Group Member or a Parent Group Member, as applicable, insurance policy or annuity contract, including certificates or any other document confirming coverage, whether a stand-alone individual policy or a group policy, and whether originally issued by the Company Group Member or Parent Group Member or acquired by such Company Group Member or Parent Group Member by assumption, transfer of ownership, reinsurance, coinsurance or otherwise.

 

4


Intellectual Property” means all of the following, whether protected, created or arising under the laws of the United States or any other foreign jurisdiction, including: (i) patents, patent applications (along with all patents issuing thereon), statutory invention registrations, divisions, continuations, continuations-in-part, substitute applications of the foregoing and any extensions, reissues, restorations and reexaminations thereof, and all rights therein provided by international treaties or conventions; (ii) trademarks, service marks, trademark and service mark applications and registrations, trade names, service names, taglines, slogans, industrial designs, brand names, brand marks, trade dress, identifying symbols, logos, emblems, signs or insignia, monograms, domain names, domain name locators, meta tags, website search terms and key words, and other identifiers of source, including all goodwill associated therewith, and any and all common law rights, and registrations and applications for registration thereof, all rights therein provided by international treaties or conventions, and all reissues, extensions and renewals of any of the foregoing; (iii) Copyrights; (iv) trade secrets, know-how, and other confidential and proprietary information including confidential or proprietary data contained in databases, and confidential or proprietary customer lists; (v) domain names and social media accounts; and (vi) all other applications and registrations related to any of the intellectual property rights set forth in the foregoing clauses (i) – (v) above.

Interest Rate” means, on any date, two percent (2%) plus the “effective” federal funds rates reported in the “Money Rates” section of the Eastern Edition of The Wall Street Journal published for such date (or, if the “effective” federal funds rate is not so reported on such date, on the immediately preceding date for which such “effective” federal funds rate was so reported).

Knowledge Transfer Services” has the meaning set forth in Section 2.04.

Law” means, with respect to any Person, any statute, law, principle of common law, code, treaty, ordinance, rule or regulation of any Governmental Entity, including Privacy Laws.

Licensee” has the meaning set forth in Section 2.19(a).

Long-Term Data Access Agreement” means that certain letter agreement to be entered into between MSS and the Company related to the process by which they will agree to provide access to certain commingled information.

Losses” means any actual loss, liability, claim, charge, action, suit, proceeding, assessed interest, penalty, damage, Tax or expense.

Master Separation Agreement” means that certain agreement to be entered into between Parent and BHF, which will govern the parties’ relationship with respect to operations as a result of the Separation.

Migration Services” has the meaning set forth in Section 2.23(a).

MSS” has the meaning set forth in the Preamble.

MSS Contract Manager” has the meaning set forth in Section 2.24(a)(ii).

 

5


MSS Indemnified Parties” has the meaning set forth in Section 5.01(b).

MSS Indemnitors” has the meaning set forth in Section 5.01(a).

MSS Received Facilities” has the meaning set forth in Section 2.02.

MSS Received Omitted Facilities” has the meaning set forth in Section 2.03(a).

MSS Received Omitted Services” has the meaning set forth in Section 2.03(a).

MSS Received Services” has the meaning set forth in Section 2.01.

MSS Work Product” has the meaning set forth in Section 2.19(b).

New Security Threat” means a new security related issue or issues related to new technology or threats, in each case which represents a material threat to the integrity of the System or data so threatened.

Notice of Claim” has the meaning set forth in Section 5.04(a).

Notice of Dispute” has the meaning set forth in Section 7.09(a).

Omitted Facilities” has the meaning set forth in Section 2.03(a).

Omitted Services” has the meaning set forth in Section 2.03(a).

Overhead Cost” has the meaning set forth in Schedule 3.01(b).

Panorama Related Services” has the meaning set forth in Section 6.01(e).

Parent” has the meaning set forth in the Preamble.

Parent Group” means the Parent and its Affiliates, including MSS but excluding the Company Group; and “Parent Group Member” means any of the Parent Group.

Party” means (i) other than for purposes of Article VIII, MSS and the Company individually, and, in each case, their respective successors and permitted assigns, and (ii) for purposes of Article VIII, Parent and BHF, their respective successors and permitted assigns. “Parties” means (i) other than for purposes of Article VIII, MSS and the Company collectively, and, in each case, their respective successors and permitted assigns, and (ii) for purposes of Article VIII, Parent and BHF, their respective successors and permitted assigns.

Pass-Through Charges” has the meaning set forth in Section 3.01(c).

Peanuts Characters” means the “Peanuts” cartoon characters licensed to Metropolitan Life Insurance Company by Peanuts Worldwide LLC.

Permits” has the meaning set forth in Section 2.22.

 

6


Person” means any natural person, corporation, trust, estate, general partnership, limited partnership, limited liability company, proprietorship, other business organization or Governmental Entity or other legal entity.

Personally Identifiable Information” means any information received by a Provider from a Recipient in connection with the performance of such Provider’s obligations hereunder (a) from which an individual may be identified, (b) concerning an individual that would be considered “nonpublic personal information” within the meaning of Title V of the Gramm-Leach Bliley Act of 1999 and the regulations promulgated thereunder or (c) regarding such Recipient’s past, present or prospective customers, claimants, beneficiaries, employees or agents, including (i) any individual’s name, business or home address, e-mail address, computer IP address, telephone number, social security number, passport number or other identification number issued by a Governmental Entity, (ii) the fact that an individual has a relationship with such Recipient or any of its Affiliates, (iii) any information regarding an individual’s bank accounts, securities accounts and other similar accounts, (iv) any information regarding an individual’s medical history or treatment (v) any sensitive information, including non-public information regarding an individual’s human race, religion, family status, legal domicile, medical history or treatment, or criminal record, (vi) any information regarding the ability to repay indebtedness, (vii) other information that can be used to authenticate an individual (including passwords or PINs, biometric data, unique identification numbers, answers to security questions or other personal identifiers), and (viii) any other information of or relating to an individual that is protected from unauthorized disclosure by applicable Privacy Laws.

PHI” or “Protected Health Information” means individually identifiable information that is transmitted or maintained in any medium and relates to the past, present or future physical or mental health or condition of an individual; the provision of health care to an individual; or future payment for the provision of health care to the individual. PHI includes demographic information about individuals, including names, addresses, dates directly related to an individual, including birth date, telephone numbers, fax numbers, e-mail addresses, Social Security numbers, policy numbers, medical record numbers, account numbers, and any other unique identifying number, characteristic, or code. For purposes of this Agreement, PHI is limited to information related to an individual who has or has had a long term care insurance policy or other health care plan or product offered by or through one of the Parties or its Affiliates.

Pre-Effective Date Period” means, with respect to any service or access to any facilities or Systems provided by, or on behalf of, a Provider to a Recipient (a) any time during the two months prior to the Effective Date or (b) with respect to such services or access to such facilities or Systems provided on only a periodic basis, any time during the twelve (12) months prior to the Effective Date (in each case, unless such service or access to such facilities or Systems was terminated in the normal course of business prior to the Effective Date).

Pre-Signing Agreement” has the meaning set forth in Section 2.08.

Privacy Laws” means all Laws related to privacy, security or confidentiality of Personally Identifiable Information including, Laws of the United States of America (including the Health Insurance Portability and Accountability Act of 1996 and Title V of the Gramm-

 

7


Leach Bliley Act of 1999); regulatory policies, guidelines (including guidelines published by a Governmental Entity or relevant self-regulatory organization) or industry codes of any applicable jurisdiction which are relevant and applicable to the privacy of Personally Identifiable Information, during the course of providing a Service, access to Facilities or otherwise.

Process” means any operation or set of operations which is performed upon Personally Identifiable Information, and includes obtaining, recording, transmitting, disseminating, retrieving or holding the information or data or carrying out any operation or set of operations on the information or data.

Project Panorama II” has the meaning set forth in Section 6.01(f).

Provider” means a Person providing a Service or access to a Facility hereunder, in its capacity as the provider of such Service or access to such Facility.

Provider Cost” has the meaning set forth in Schedule 3.01(b).

Provider Work Product” has the meaning set forth in Section 2.19(d).

Recipient” means a Person to whom a Service or access to a Facility is being provided hereunder, in its capacity as the recipient of such Service or access to such Facility.

Reports” has the meaning set forth in Section 2.10.

Representative” means any officer, director, employee, auditor, accountant or attorney of a Person.

Required Change” has the meaning set forth in Section 2.12(c).

Required Technology” has the meaning set forth in Section 2.17(c).

Resumed Facilities” has the meaning set forth in Section 2.07.

Resumed Services” has the meaning set forth in Section 2.07.

Sales Taxes” has the meaning set forth in Section 3.01(e)(i).

Scheduled Facilities” has the meaning set forth in Section 2.02.

Scheduled Service Charges” has the meaning set forth in Section 3.01(a).

Scheduled Services” has the meaning set forth in Section 2.01.

Scheduled Term” has the meaning set forth in Section 6.01(a).

Security Incident” has the meaning set forth in Section 7.02(a).

Security Regulations” has the meaning set forth in Section 2.17(c).

 

8


Separation” has the meaning set forth in the Recitals.

Separation Date” means the date of the first distribution or sale of Shares to the public.

Service Charge” has the meaning set forth in Section 3.01(b).

Services” means the Scheduled Services, the Omitted Services, the Third-Party Vendor Services, the Knowledge Transfer Services, the Migration Services, and the Resumed Services.

Service Shortfall” has the meaning set forth in Section 2.11(a).

Set-Up Costs” means reasonable costs incurred by a Provider (other than Third-Party Consents) after the Effective Date in contemplation of (a) providing any Omitted Service or access to any Omitted Facility to a Recipient, which costs are solely necessary to make changes to such service or access to such facility as it was provided by such Provider to such Recipient during the Pre-Effective Date Period, (b) as a result of a Change required by applicable Law, made in response to a New Security Threat, or made or requested by such Recipient which Change would affect the provision or receipt of the Service or access to the Facility or (c) providing Resumed Services or access to any Resumed Facility to a Recipient, which costs are solely necessary to make changes to such service or access to such facility as it was provided by such Provider to such Recipient before Recipient terminated such service or access to such facility. For the avoidance of doubt, (i) to the extent any Set-Up Costs include Pass-Through Charges for Acquired Resources, the provisions of Section 6.03(c) shall apply and (ii) the costs of actually providing a Service or access to a Facility shall be excluded from Set-Up Costs.

Shares” means the authorized capital stock of BHF.

Systems” means (a) systems, computers, software (including any source code or executable or object code), servers, networks, workstations, routers, hubs, switches, voice or data communication lines, intranet, data, data centers, test environments, and back-ups of all the foregoing, (b) computer-based resources (including third Person services, e-mail and access to computer networks, databases and equipment), and (c) all other information technology, whether tangible or intangible, infrastructure including interfacing infrastructure, databases and related facilities.

Tax” or “Taxes” means any federal, state, local, or foreign income, franchise, profits, gross receipts, capital base, withholding, ad valorem, personal property (tangible and intangible), employment, payroll, sales and use, Social Security, disability, occupation, real property, real property transfer, severance, excise and any other taxes or surcharges imposed by a taxing authority, including any related interest, penalties, or addition thereto.

Third-Party Claim” has the meaning set forth in Section 5.04(a).

Third-Party Consents” has the meaning set forth in Section 2.14.

Third-Party Defense” has the meaning set forth in Section 5.04(b).

 

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Third-Party Vendors” means those unaffiliated third-Persons who are Providers hereunder as of the Effective Date.

Third-Party Vendor Services” has the meaning set forth in Section 2.05.

TPA Services” has the meaning set forth in Section 2.01(b).

Transaction Document” means any agreement between a Company Group Member and a Parent Group Member in contemplation of Separation or Disaffiliation, including the Master Separation Agreement, the Long-Term Data Access Agreement and any other Transaction Document as defined in the Master Separation Agreement.

TSA Broker-Dealer Services” has the meaning set forth in Section 2.01(c).

Virus(es)” means any malicious computer code or instructions that have a material adverse effect on the operation, security or integrity of (a) a computing, telecommunications or other electronic operating or processing system or environment, (b) software programs, data, databases or other computer files or libraries or (c) computer hardware, networking devices or telecommunications equipment, including (i) viruses, Trojan horses, malware, time bombs, undisclosed back door devices, worms or any other software routine or hardware component designed to permit unauthorized access, disable, erase or otherwise harm software, hardware or data or perform any other such harmful or unauthorized actions and (ii) similar malicious code or data.

Work Product” has the meaning set forth in Section 2.19(b). All Work Product is Company Work Product, MSS Work Product or Provider Work Product.

ARTICLE II

SERVICES AND ACCESS TO FACILITIES

Section 2.01. Services.

(a) On the terms and subject to the conditions set forth in this Agreement, from and after the Effective Date and for the periods set forth in Schedule 2.01-1, subject to Section 6.01, MSS shall provide or cause to be provided to the Company Group the services set forth in Schedule 2.01-1 (collectively with any Company Received Omitted Services, the “Company Received Services”). On the terms and subject to the conditions set forth in this Agreement, from and after the Effective Date and for the periods set forth in Schedule 2.01-2, subject to Section 6.01, the Company shall provide or cause to be provided to the Parent Group the services set forth in Schedule 2.01-2 (collectively with any MSS Received Omitted Services, the “MSS Received Services”, and collectively with the Company Received Services, the “Scheduled Services”).

(b) For services on or after the Separation Date that require the Provider to be licensed as a third-party administrator under the applicable insurance laws that require a license for the administration of insurance business by a party other than the applicable insurance company writing such insurance business (“TPA Services”), the Parties intend that the applicable

 

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insurance company and a Provider that is licensed to provide TPA Services as required under applicable insurance law will enter into one or more separate agreements that will set forth additional rights and obligations of such parties with respect to such TPA Services. All charges for TPA Services provided under any such agreement for TPA Services are included within the charges for policy administration Services and will be paid pursuant to the terms of this Agreement. To the extent of any inconsistency between the terms of any separate agreement for TPA Services and the terms of this Agreement, the separate agreement for TPA Services will control with respect to TPA Services.

(c) On or after the date that a subsidiary of BHF is a FINRA registered broker-dealer, for any Services performed by MSS and its Affiliates that require performance by a registered broker-dealer or its registered associated persons on behalf of such subsidiary (the “TSA Broker-Dealer Services”), the Parties intend that the BHF subsidiary broker-dealer and a MSS Affiliate that is also a FINRA registered broker-dealer will enter into one or more separate agreements that will set forth additional rights and obligations of such parties with respect to such TSA Broker-Dealer Services. All charges for TSA Broker-Dealer Services provided under any such agreement are included within the charges for policy administration Services and will be paid pursuant to the terms of this Agreement, except with respect to any registration and continuing education fees paid to third parties for registered associated persons involved in providing the TSA Broker-Dealer Services to the extent such costs are not included in the charges hereunder (and also excluding any charges for services that are not TSA Broker-Dealer Services). To the extent of any inconsistency between the terms of any separate agreement for TSA Broker-Dealer Services and the terms of this Agreement, the separate agreement for TSA Broker-Dealer Services will control with respect to TSA Broker-Dealer Services.

Section 2.02. Access to Facilities. On the terms and subject to the conditions set forth in this Agreement, from and after the Effective Date and for the periods set forth in Schedule 2.02-1, subject to Section 6.01, MSS shall provide or cause to be provided to the Company Group access to the facilities and Systems set forth in Schedule 2.02-1 (collectively with any Company Received Omitted Facilities, the “Company Received Facilities”). On the terms and subject to the conditions set forth in this Agreement, from and after the Effective Date and for the periods set forth in Schedule 2.02-2, subject to Section 6.01, the Company shall provide or cause to be provided to the Parent Group access to the facilities and Systems set forth in Schedule 2.02-2 (collectively with any MSS Received Omitted Facilities, the “MSS Received Facilities”, and collectively with the Company Received Facilities, the “Scheduled Facilities”).

Section 2.03. Omitted Services and Access to Omitted Facilities.

(a) Any services or access to facilities or Systems not agreed upon in a Schedule but provided during the Pre-Effective Date Period by a Parent Group Member to a Company Group Member, or by a Company Group Member to a Parent Group Member, can be requested in writing until the date that is one hundred twenty (120) days after the Disaffiliation Date by a Party to this Agreement upon reasonable notice to the other Party’s applicable service manager and Contract Manager in accordance with Section 7.03(a); provided, that a service or access to a facility or System provided only on a periodic basis not agreed upon in a Schedule but provided during the Pre-Effective Date Period by a Parent Group Member to a Company Group Member, or by a Company Group Member to a Parent Group Member, can be so

 

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requested until the later of the date that is (x) one hundred twenty (120) days after the Disaffiliation Date or (y) after the Disaffiliation Date, forty-five (45) days after the date that such service or access to such facility or System should have been provided by a Party to this Agreement if it were a Scheduled Service or Scheduled Facility (e.g., 45 days after the first calendar year end if the service was only provided at calendar year end). Upon receipt of such notice, within a commercially reasonable period of time under the circumstances, (I) MSS shall provide or cause to be provided to the Company Group such additional services (the “Company Received Omitted Services”) and access to such additional facilities and Systems (the “Company Received Omitted Facilities”), and (II) the Company shall provide or cause to be provided to the Parent Group such additional services (the “MSS Received Omitted Services”, and collectively with the Company Received Omitted Services, the “Omitted Services”) and access to such additional facilities and Systems (the “MSS Received Omitted Facilities”, and collectively with the Company Received Omitted Facilities, the “Omitted Facilities”), in each case (x) only to the extent such Provider owns or has access on commercially reasonable terms to the assets and resources necessary to provide such Omitted Services and access to Omitted Facilities, and (y) on the terms and conditions (other than price) as were applicable to such services or access to such facilities and Systems prior to the Effective Date for a term determined pursuant to Section 6.01 and with any applicable Set-Up Costs and any termination charges, determined pursuant to Section 6.02, which price, terms and charges shall be (1) proposed in writing by the applicable Provider within five (5) Business Days of the request from the applicable Recipient for such Omitted Services or Omitted Facilities, or such longer time as the Contract Managers may agree, and (2) agreed by the Parties on or about the time the Provider begins to provide such Omitted Services or access to such Omitted Facility. If the Parties fail to reach agreement on the amount of the Agreed Price, Initial Scheduled Term, Extended Scheduled Term, or any applicable termination charges or Set-Up Costs, such issues shall be resolved in accordance with Section 7.09(a), but any such failure to reach agreement on the foregoing shall not delay the provision of the Omitted Service or access to Omitted Facilities. In the event a Provider does not provide an Omitted Service or access to an Omitted Facility pursuant to the immediately preceding clause (x), such Provider shall provide commercially reasonable alternative arrangements reasonably acceptable to the applicable Recipient for the provision of such Omitted Service or access to such Omitted Facility consistent with existing service levels and the standards set forth in Section 2.09 and all out-of-pocket costs related thereto shall be equally split between MSS and the Company. The applicable Schedule 2.01-1, Schedule 2.01-2, Schedule 2.02-1 or Schedule 2.02-2 shall be deemed amended to include the Omitted Services and access to Omitted Facilities (along with the Agreed Price, Initial Scheduled Term, and termination charges, if any), which shall be provided in accordance with the terms and conditions of this Agreement and the Omitted Services shall be deemed to be Scheduled Services hereunder and the Omitted Facilities shall be deemed to be Scheduled Facilities hereunder. Notwithstanding the foregoing, nothing in this Section 2.03(a) shall require a Provider to retain any personnel, to maintain any facilities or systems or to take, or refrain from taking, any other action not otherwise expressly required hereunder.

(b) Notwithstanding anything to the contrary set forth herein, (i) MSS shall have no obligation to provide the services or access to the facilities set forth on Schedule 2.03(b)-1, (ii) the Company shall have no obligation to provide the services or access to the facilities set forth on Schedule 2.03(b)-2, (iii) MSS shall have no obligation to provide business-related services in connection with a particular function or work stream for which, in accordance

 

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with Schedule 2.01-1, MSS is only providing IT support or for which MSS is only providing access to facilities or Systems in accordance with Schedule 2.02-1, and (iv) the Company shall have no obligation to provide business-related services in connection with a particular function or work stream for which, in accordance with Schedule 2.01-2, the Company is only providing IT support or for which the Company is only providing access to facilities or Systems in accordance with Schedule 2.02-2.

(c) Notwithstanding anything to the contrary set forth herein, following the Separation Date, (i) MSS shall have no obligation to provide the Company Received Services or access to the Company Received Facilities set forth on Schedule 2.03(c)-1, and (ii) the Company shall have no obligation to provide the MSS Received Services or access to the MSS Received Facilities set forth on Schedule 2.03(c)-2.

(d) Notwithstanding anything to the contrary set forth herein, as of the Disaffiliation Date, (i) MSS shall have no obligation to provide the Company Received Services or access to the Company Received Facilities set forth on Schedule 2.03(d)-1 and (ii) the Company shall have no obligation to provide the MSS Received Services or access to the MSS Received Facilities set forth on Schedule 2.03(d)-2.

Section 2.04. Knowledge Transfer. Each Party shall provide or cause its Affiliates to provide, upon the reasonable request of the other Party, (a) the knowledge transfer with respect to the MSS Received Services, the Company Received Services, the MSS Received Facilities and the Company Received Facilities respectively and (b) knowledge transfer (i) in the case of MSS, to assist the Company Group in the migration and integration of the Company Received Services and use of the Company Received Facilities and (ii) in the case of the Company, to assist the Parent Group in the migration and integration of the MSS Received Services and use of the MSS Received Facilities (collectively, “Knowledge Transfer Services”). Knowledge Transfer Services shall not be provided after the date that is thirty (30) days following termination of the particular associated Service or associated Facility for which such Knowledge Transfer Services are being used (or, with respect to any service or access to a facility that was provided during the Pre-Effective Date Period that will not be provided hereunder following the Effective Date, thirty (30) days following the Effective Date), except to the extent that the applicable Recipient requests a longer period of time for such Knowledge Transfer Services and the applicable Provider consents, such consent not to be unreasonably withheld, conditioned or delayed. For Knowledge Transfer Services for a particular Service or associated Facility that will exceed 40 hours in the aggregate, such Knowledge Transfer Services will be provided at the Agreed Price. For the avoidance of doubt, the termination of any or all Knowledge Transfer Services as contemplated in the immediately preceding sentence shall not affect any of the services and activities contemplated in connection with any cooperation between the parties with respect to litigation matters.

Section 2.05. Third-Party Vendor Services. Upon the Company’s reasonable written request, MSS and the Parent Group shall cooperate in the Company’s negotiation for a direct agreement with any Third-Party Vendor (such negotiation and related activity, “Third-Party Vendor Services”); provided, however, that MSS and the Parent Group shall not be required to materially amend any contract, pay any material amount of consideration or otherwise enter into any material accommodation or undertaking with any such Third-Party

 

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Vendor in connection with these Third-Party Vendor Services. Third-Party Vendor Services shall be provided for no longer than the duration of the particular associated Service or associated Facility for which such Third-Party Vendor Service is being used.

Section 2.06. Summary of Services and Access to Facilities. Schedule 2.06 sets forth at a summary level the Services and Access to Facilities as set forth on Schedule 2.01-1, Schedule 2.01-2, Schedule 2.02-1 and Schedule 2.02-2 as of the Effective Date along with estimates of duration for such Services and Access to Facilities. Immediately prior to the Separation Date, the Contract Managers shall confer and shall make any revisions to the estimates of durations for such Services and Access to Facilities as to which the Parties agree. Schedule 2.06 is not intended to and does not alter Schedule 2.01-1, Schedule 2.01-2, Schedule 2.02-1 and Schedule 2.02-2 nor does Schedule 2.06 create additional obligations beyond what is set forth on Schedule 2.01-1, Schedule 2.01-2, Schedule 2.02-1 and Schedule 2.02-2. In the event of any conflict between Schedule 2.06, on the one hand, and any of Schedule 2.01-1, Schedule 2.01-2, Schedule 2.02-1 or Schedule 2.02-2 on the other hand, the descriptions and durations on of Schedule 2.01-1, Schedule 2.01-2, Schedule 2.02-1 or Schedule 2.02-2 shall control.

Section 2.07. Resumed Services and Resumed Facilities. If, within sixty (60) days following termination by a Recipient of a Service or access to a Facility in accordance with Section 6.01(c), such Recipient concludes that such Service or access to such Facility is still needed, the applicable Party, on behalf of such Recipient, shall so notify the other Party, on behalf of the applicable Provider, in writing, and such Provider shall promptly resume providing such Service or access to such Facility, if commercially reasonable and technologically feasible, which determination shall include consideration of any increased expenses for Provider that cannot be or are not passed on to Recipient (such resumed Services, the “Resumed Services” and such resumed access to Facilities, the “Resumed Facilities”). The Recipient shall be responsible for the Agreed Price, related Pass-Through Charges and any Set-Up Costs of Provider associated with resuming such Services or access to such Facilities, and to the extent practicable, such Provider shall provide such Recipient with an estimate (with reasonably supportive detail) of such Agreed Price, Pass-Through Charges and Set-Up Costs in advance of resuming such Service or access to such Facility. Nothing in this Section 2.07 shall require a Provider to retain any personnel, to maintain any facilities or systems or to take, or refrain from taking, any other action, following a termination by a Recipient of a Service or access to a Facility in anticipation of or preparation for the possibility of such Service or access being resumed pursuant to this Section 2.07. For the avoidance of doubt, (a) no Service or access to a Facility resumed pursuant to this Section 2.07 shall extend the term of such Service or access to such Facility beyond the Scheduled Term thereof and (b) the Set-Up Costs may include incremental increases in Provider commitments to third parties that shall be solely borne by Recipient regardless of whether the duration of the Resumed Service is shorter than the increased commitment to the third party.

Section 2.08. Exception to Obligation to Provide Services or Access to Facilities. Notwithstanding anything to the contrary contained herein, no Provider shall be obligated to (and no Party shall be obligated to cause any Provider to) provide, or continue to provide, any Service or access to any Facility, if the provision of such Service or access to such Facility would (a) violate any applicable Law, (b) violate any agreement, license or documented commitment to customers (“Commitment”); (c) result in the disclosure of information subject to any applicable

 

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privileges (including the attorney-client or similar privilege), or (d) be used by or for any line of business, or other material asset acquired by, assumed or otherwise transferred to, such other Party following the Effective Date; provided, however, that (i) the foregoing limitation with respect to agreements, licenses and Commitments shall only apply to any such agreement, license or Commitment entered into with an unaffiliated third party prior to the Effective Date (each, a “Pre-Signing Agreement”) and Provider shall promptly notify Recipient of any Service or access to any Facility affected thereby; (ii) with respect to (a) and (b) above, Provider shall use commercially reasonable efforts to obtain or cause to be obtained Third-Party Consents such that the Services or access to the Facilities might be provided, or continue to be provided, without violation of Law or any agreement, license or Commitment, including as of the Disaffiliation Date, if applicable; (iii) with respect to (a), (b) and (c) above, Provider shall (x) make any commercially reasonable changes with respect to such Services or access to such Facilities such that they might be provided, or continue to be provided, without violation of Law or any agreement, license or Commitment, or disclosure of information subject to applicable privileges (which changes, for the avoidance of doubt, shall be deemed to be Required Changes), (y) if no such changes are reasonably possible, provide commercially reasonable alternative sources of such Services or Facilities and disclose or cause to be disclosed such information or its substantial equivalent in such a way as to not constitute disclosure of privileged information, and (z) continue to be obligated to provide such Service or access to such Facility to the extent that doing so would not result in a violation of applicable Law, or any Pre-Signing Agreements, or disclosure of privileged information; and (iv) with respect to (d) above, the Recipient may request a Change to a Service or access to a Facility in order for such Service or Facility to be used by or for any line of business, or other material asset acquired by, assumed or otherwise transferred to, the Recipient, and that such Provider will consider such Change Request as contemplated in Section 2.12(b). For the avoidance of doubt, nothing in this Section 2.08 is intended to relieve a Party of its obligations, or to modify the obligations, under Section 2.14.

Section 2.09. Standard of the Provision of Services or Access to Facilities. Each Provider shall provide the Services, access to the Facilities and other services and rights hereunder: (a) in accordance with applicable Law and with such Provider’s written policies and procedures, to the extent applicable, (b) at substantially the same standards of performance, consistent with such Provider’s practices for providing such Services or access to such Facilities during the Pre-Effective Date Period, to the extent applicable, (c) in a competent and workmanlike manner, (d) as if such Provider were performing such services for itself or its Affiliates, and (e) if applicable, in accordance with the service levels identified on Schedule 2.01-1 or Schedule 2.01-2. In instances where such Services or access to such Facilities were provided in accordance with service level agreements or targets in effect during the Pre-Effective Date Period, the Provider shall promptly provide the Recipient with copies of the applicable service level agreements or targets in the event of a written notice by such Recipient to the applicable service manager and Contract Manager of a purported Service Shortfall or a dispute as to whether a Service or access to a Facility is provided in accordance with this Section 2.09. If service or systems enhancements related to any Service or access to any Facility (“Enhancements”) were performed at no additional cost to Recipient during the Pre-Effective Date Period, Provider will continue to provide such Enhancements to Recipient at no additional cost after the Effective Date; provided, however, that with respect to any Enhancement, if Provider also provides such Enhancement to one or more of its Affiliates and begins charging such Affiliates an additional amount for such Enhancement, Recipient’s pro rata portion of such

 

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additional amount shall be added to the Agreed Service Fee or Agreed Price, as applicable, for the relevant Service or access to the relevant Facility. In determining whether a Provider has complied with Section 2.09(b), the Parties shall consider the timing of the delivery of the Service or access to the Facility, the form of the deliverables resulting from the Service, the existing obligations of the Recipient known to Provider with respect to third parties (including regulators) in connection with the Service or deliverables resulting from the Service, whether any Change or Enhancement has been made to the Service or access to Facility, whether there has been a material change in the volume of the Service and whether certain related services have been migrated to the Recipient, its Affiliates or a third party.

Section 2.10. Reports. Each Provider shall provide to its corresponding Recipient the same reports that it provided during the Pre-Effective Date Period (subject to any limitations under contract, privilege or Law applicable upon Disaffiliation) with respect to the Company Received Services, the MSS Received Services, the access to Company Received Facilities and the access to the MSS Received Facilities in the same form and at the same times as provided during the Pre-Effective Date Period or otherwise agreed to in writing by the Parties (the “Reports”).

Section 2.11. Failure to Meet Standards for Services; Inability to Perform.

(a) If a Contract Manager, on behalf of a Party or its Affiliate that is a Recipient, provides the applicable service manager of a Provider and the other Party’s Contract Manager with a written notice of any purported failure to meet any standard of the Services or access to the Facilities required by this Agreement resulting in timing or quality of performance of any Service falling materially below the standard set forth in Section 2.09 (“Service Shortfall”), as determined by such Recipient and the applicable Contract Manager in good faith, and if the other Party’s Contract Manager agrees that a Service Shortfall exists, then the applicable Provider shall promptly rectify such failure at its own expense, using commercially reasonable efforts. Any disagreement as to whether a Service Shortfall has occurred or otherwise relating to any Service Shortfall that is not promptly rectified to the Recipient’s reasonable satisfaction shall be rapidly and timely escalated and resolved in accordance with Section 7.09(a)(i) on an expedited basis. A failure to meet the service level for a particular Service or portion of a Service for which a service level is identified pursuant to Section 2.09(e) three (3) times in any six (6) month period shall automatically be deemed a Service Shortfall; provided that where any Service Shortfall arises from a failure to meet a services level pursuant to Section 2.09(e) and such failure is due to a material change in the volume of the Service, the issue shall be immediately escalated to the members of senior management under Section 7.09(a) to address the Service Shortfall and the change in volume. In no event will a Service Shortfall be the basis for any service credits, financial penalties or other additional liability as between the Parties (but excluding Losses payable to a third party in accordance with and subject to ARTICLE V). For the avoidance of doubt, the procedures set forth in Section 7.09 shall be the exclusive procedures for determining disputes regarding Service Shortfalls and any remedies for such Service Shortfalls.

(b) To the extent that any Provider fails to provide, or fails to timely provide, any Service or access to any Facility as required hereunder or fails to meet the applicable standards for any Service or access to any Facility as set forth herein, unless such failure resulted

 

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primarily from the act or omission of the Recipient (even if such failure to provide a Service or access to a Facility is excused by Force Majeure pursuant to Section 6.04), then such Recipient and its Affiliates shall have no obligations or liability hereunder or under any other Transaction Document for failure to meet their obligations hereunder or under any other Transaction Document to the extent such failure by such Recipient or its Affiliates is primarily attributable to the Provider’s failure to provide, to timely provide, or to meet the applicable standards with respect to such Service or access to a Facility until such time as such Provider cures such failure to the extent required to enable such Recipient or its Affiliates to resume fulfilling such obligations hereunder or under the other applicable Transaction Documents.

Section 2.12. Change in Services or Access to Facilities.

(a) Subject to Section 2.09, a Provider may, from time to time, reasonably add, supplement, modify, substitute or otherwise alter (“Change”) the Services and access to the Facilities provided by it in a manner that does not (i) adversely affect in any material respect (x) the quality or availability of such Services or access to such Facilities or (y) with respect to Changes made by a Provider that are not pursuant to a Change Request from a Recipient, the liability or risk associated with receiving the applicable Services or access to the Facilities, or (ii) increase the cost to the Recipient of receiving or using such Services or accessing such Facilities; provided that, to the extent that any such Change is reasonably likely to modify, substitute or otherwise alter the receipt or use of such Services or access to such Facilities, the Provider shall provide such Recipient with reasonable advance written notice to the applicable service manager and Contract Manager of the implementation of the Change.

(b) The Contract Manager, on behalf of a Party or its Affiliate that is a Recipient, may request in writing any Change to a Service or access to a Facility, which request shall include a description of the proposed Change requested and the associated business specifications (“Change Request”). The Provider shall have ten (10) Business Days from the date of receipt of the Change Request (unless otherwise mutually agreed in writing by the Parties) to provide the applicable Contract Manager with a written proposal (“Change Request Proposal”), prepared at the Agreed Price at such Recipient’s expense. The Provider, the Recipient and both Contract Managers shall then use commercially reasonable efforts to negotiate in good faith reasonably practicable terms for implementing the proposed Change, including the estimated time and price of implementing the proposed Change (including any Set-Up Costs and Third-Party Consents necessary to implement the proposed Change) and any potential impact of the proposed Change on then-existing Services or access to Facilities. If the Parties agree in writing upon a Change Request Proposal or a written variation thereof, the Schedules (if applicable) shall be deemed amended to include the terms and conditions of such agreed-upon Change Request (including the Agreed Price for such Change and any related Pass-Through Charges and any modifications to the Service Charge or to the Agreed Price and related Pass-Through Charges for such Service or access to such Facility on account thereof).

(c) Notwithstanding the foregoing, if a Change is required by applicable Law or is in response to a New Security Threat, a Provider shall make, at its own initiative or upon the request of the Contract Manager for the Party or its Affiliate that is the Recipient of the applicable Services or access to Facilities of such Provider, any and all changes to the Services or the access to the Facilities necessary to comply with applicable Law and any changes thereto

 

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or to respond to such New Security Threat (any such changes to the Services or access to the Facilities, a “Required Change”); provided that (i) such Provider shall provide reasonable advance written notice to the applicable service manager and Contract Manager for such Recipient of the implementation of any Required Changes, and (ii) any disputes arising in connection therewith shall be rapidly and timely escalated and resolved in accordance with Section 7.09(a)(i) on an expedited basis. The Recipient shall pay to the Provider the Agreed Price for such Required Change and any related Set-Up Costs and Pass-Through Charges incurred by such Provider in making any Required Changes and shall pay any incremental Agreed Price and related Pass-Through Charges incurred by such Provider in providing the Services or providing access to the Facilities after implementation of the Required Change. The Recipient shall receive the benefits of any incremental reduction in the Agreed Price enjoyed by the Provider in providing the Services or providing access to the Facility after implementation of the Required Change; provided that, with respect to a change in Law or New Security Threat that is applicable to the businesses of both Provider and Recipient, the Parties shall share on a pro rata basis in the Agreed Price and related Set-Up Costs and Pass-Through Charges incurred by the Provider in making any Required Change, the incremental Agreed Price and related Pass-Through Charges incurred by such Provider in providing the Services after implementation of the Required Change and the benefits of any incremental reduction in the Agreed Price enjoyed by such Provider in providing the Services after implementation of the Required Change. Each Party shall promptly notify the other Party in writing of any changes in applicable Law or New Security Threat that may relate to the provision or receipt of the Services or access to the Facilities.

(d) Notwithstanding the foregoing, Schedule 2.12(d) sets forth (1) the project based Changes that the Parties currently anticipate that MSS will need to make for the Company in 2017 relating to enabling functions to policy administration related Services, including policy administration systems, related systems and operations, (2) whether, for each Change thereon, such Change will be treated as a Required Change and (3) the anticipated actual spend for such Changes (the “Enabling Changes Anticipated Spend”). The actual charges will be determined using the existing MSS/MetLife full-time employee rates then in effect in addition to any applicable third-party costs. During the calendar year, the Company will be invoiced on a monthly basis in accordance with Section 3.01 at 1/12 of the Enabling Changes Anticipated Spend, unless the Parties mutually agree otherwise in writing. MSS shall provide monthly reports in a format mutually agreed to by the Contract Managers showing the actual spend as compared to the Enabling Changes Anticipated Spend. In the first month of the following calendar year, MSS and the Company will reconcile the Enabling Changes Anticipated Spend and the actual spend and any difference from the Enabling Changes Anticipated Spend shall be invoiced and paid by or credited to the Company as the case may be; provided that regardless of the actual spend, the Company must pay for (A) no less than 90%, and no more than 110%, of the IT component of the Enabling Changes Anticipated Spend and (B) no less than 100%, and no more than 110%, of the non-IT component of the Enabling Changes Anticipated Spend, in each case unless the Contract Managers otherwise agree in writing. For the avoidance of doubt, if the work that MSS performs is going to exceed 110% of the IT component of the Enabling Changes Anticipated Spend or 110% of the non-IT component of the Enabling Changes Anticipated Spend on an annual basis, then it will confer with the Company and shall (x) not undertake the work that will cause the maximum to be exceeded, (y) cease work once the maximum is equaled or (z) exceed the maximum only with the written approval of the Company and the Company

 

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will pay for any overage in excess of the maximum as may be agreed upon by the Contract Managers in writing.

(i) From time to time during a calendar year, the Parties may agree to modify the contents of Schedule 2.12(d) but in no event shall the annual amount that the Company is obligated to pay fall below 90%, of the IT component of the Enabling Changes Anticipated Spend and 100% of the non-IT component of the Enabling Changes Anticipated Spend. Such modification of Schedule 2.12(d) (A) will require the mutual consent of the Contract Managers and (B) may include the reallocation of the resources that would be used for such Changes for work in connection with data migration, the charges for which shall be calculated in the same manner as set forth in the second sentence of Section 2.12(d) and which charges shall count towards the Company’s fulfilment of the Enabling Changes Anticipated Spend. Any disputes in connection with such modification of Schedule 2.12(d), including whether a Change should be a Required Change, shall be timely escalated and resolved in accordance with Section 7.09(a)(i).

(ii) For each year that MSS will provide to the Company enabling functions to policy administration related Services hereunder, the Parties will meet and revise Schedule 2.12(d) for the such year by no later than September 1 of the previous year (including revising the Enabling Changes Anticipated Spend for the upcoming year) and the Contract Managers will approve the revisions; provided, that MSS will be required to provide Changes that constitute “BAU” (business as usual) enabling functions (e.g., functional maintenance, operational enhancements and regulatory requirements) for the duration of time that MSS provides policy administration related Services to the Company; provided further, that MSS will have no obligation to provide Changes that constitute “discretionary” enabling functions (e.g., anything other than BAU enabling functions, including any new product development work) after December 31, 2018.

(iii) Notwithstanding any other provision of this Agreement, including Section 6.01, the Company may only cease receiving the Changes under this Section 2.12(d) and cease paying the monthly portion of the applicable Enabling Changes Anticipated Spend upon the Company giving MSS six (6) months’ prior written notice of termination of receipt of such Changes (for the avoidance of doubt, the Changes may continue through such six (6) month period).

Section 2.13. Services and Access to Facilities Provided by Other Persons. Any Provider may cause any Person, including any Affiliate of such Provider, to provide any Service or access to any Facility or any portion thereof; provided, however, that such Person and all Services or access to Facilities provided by such Person shall be subject to confidentiality provisions substantially similar to those herein and to the terms and conditions set forth herein, including service standards, and that MSS or the Company, as the Provider, shall remain responsible for the performance by such Person of all of its obligations hereunder with respect to the Services or access to the Facilities provided by such Person so that such performance is in accordance with the terms and conditions hereof; provided, further, that such Provider shall provide the Recipient with reasonable advance written notice to the applicable service manager and Contract Manager of its intention to engage such Person to provide such Services or access to such Facilities, or any portion thereof; provided, further, that the engagement of any such Person shall be subject to the other Party’s prior written consent, which consent shall not be

 

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unreasonably withheld, conditioned or delayed, but no consent shall be needed if such Person (a) is an Affiliate of the Provider, either as of the date hereof or as of the date such engagement occurs, or (b) provided the same or similar Services or access to Facilities to either the Parent Group or the Company Group, as the case may be, during the Pre-Effective Date Period, or (c) is providing the Services or access to the Facilities after the Effective Date to a Recipient and concurrently providing similar Services or access to Facilities to an Affiliate of the Provider. MSS or the Company, as the case may be, shall cause any such Person that is an Affiliate of MSS or the Company, as applicable, to waive any existing restriction or constraint on its Work Product, any requirement for consent, and any other term of service or performance (and, if applicable, shall not impose such other new terms) that would prevent or impede such Person from providing the Services or the access to Facilities in accordance with the terms and conditions of this Agreement.

Section 2.14. Consents. Each Party shall obtain, or shall cause its Affiliates and Persons providing the Services or providing access to the Facilities on its behalf to obtain, any consents, licenses or approvals of any third party or Governmental Entity (“Third-Party Consents”) necessary for: (a) the Services to be provided to and received by the applicable Recipient; (b) the access to Facilities to be provided to and received by the applicable Recipient; and (c) the applicable Recipient to use any deliverables (including Work Product) provided in connection therewith. In connection with the foregoing, such Party shall, or shall cause its Affiliates or Persons to, use commercially reasonable efforts to obtain any such necessary Third-Party Consent from any Person that is not an Affiliate of such Party. In the event such Third-Party Consents are not obtained, such Party shall, or shall cause its Affiliates or Persons to, provide commercially reasonable alternative arrangements reasonably acceptable to the applicable Recipient for the provision of such Services or access to such Facilities consistent with existing service levels and the standards set forth in Section 2.09. MSS shall bear all out-of-pocket costs of Third-Party Consents with respect to the Scheduled Services and access to the Scheduled Facilities (other than Omitted Services and Omitted Facilities). All out-of-pocket costs of Third-Party Consents with respect to the Omitted Services and access to Omitted Facilities and of providing such acceptable alternative arrangements with respect to the Scheduled Services, access to the Scheduled Facilities, Omitted Services and access to Omitted Facilities shall be equally split between MSS and the Company except as otherwise set forth in Section 2.08. Notwithstanding the foregoing, the applicable Recipient shall bear the costs of any Third-Party Consents for Knowledge Transfer Services, Third-Party Vendor Services, Migration Services, Resumed Facilities, Resumed Services, Changes made pursuant to a Change Request, and term extensions pursuant to Section 6.01(a); and the cost of any Third-Party Consents for a Required Change shall be allocated in accordance with the second and third sentences of Section 2.12(c). The Parties shall use commercially reasonably efforts to cooperate in obtaining Third-Party Consents; provided that the Party with the relationship with the applicable vendor or Governmental Entity shall control all communications and negotiations with such vendor or Governmental Entity with respect to the Third-Party Consent sought to be obtained.

Section 2.15. Personnel.

(a) MSS or the Company, as the case may be, shall, and shall cause the Provider of any Service or access to any Facility to make available to the Recipient of such Service or access to such Facility such personnel as may be necessary to provide such Service or

 

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access to such Facility; provided, however, that, subject to Section 2.09, such Provider shall have the right, in its reasonable discretion, to (i) designate which personnel it will assign to perform such Service or provide access to such Facility and (ii) remove and replace such personnel at any time; provided, however, that any such removal or replacement shall not be the basis for any Service Charge payable hereunder or relieve the Provider of its obligations to provide any Service or access to any Facility hereunder. Subject to Section 2.09, nothing in this Agreement shall obligate a Provider (or MSS or the Company, as the case may be, to cause any Provider) to hire any additional employees or provide any incentives to employees in addition to those in effect immediately prior to the Effective Date or to retain the employment of any particular employee or retain the services of any particular consultant, contractor or agent.

(b) The Provider of any Service or access to any Facility shall be solely responsible for all (i) salary, employment and other benefits and liabilities; (ii) payroll, employment, social security, workers’ compensation, unemployment, disability and similar Taxes (including all withholding taxes on such payments or benefits) and (iii) compliance with all employment, immigration and any other applicable Laws, in the case of (i) through (iii) relating to the personnel of such Provider assigned to perform such Service or provide access to such Facility. In performing their respective duties hereunder, all such personnel of a Provider shall be under the direction, control and supervision of such Provider and, subject to Section 2.09, such Provider shall have the sole right to exercise all authority with respect to the employment (including termination of employment), assignment and compensation of such personnel. The Recipient of any Service shall not have the ability to request that any Service be performed by a particular employee of the Provider, and the Provider will use best efforts to ensure that any Service is not provided by any employee of Provider on a substantially full time basis.

Section 2.16. Cooperation.

(a) Each Party shall perform all obligations hereunder in good faith and to use commercially reasonable efforts to cooperate with the other in all matters relating to the provision and receipt of the Services and access to the Facilities. In furtherance of the foregoing: (i) each Party shall timely notify the other in writing as soon as practicable in advance of any circumstances that could have a material adverse effect on the Services or access to the Facilities or security and work with the other Party to minimize the effect of such circumstances; (ii) each Party shall timely provide information and documentation reasonably requested by the other Party to be used in the provision or receipt of the Services and access to the Facilities hereunder; and (iii) each Recipient and its Affiliates shall use commercially reasonable efforts to (A) cooperate with the applicable Provider and its Affiliates with respect to the provision of any Service and access to any Facility and (B) enable the applicable Provider and its Affiliates to provide the Services and access to the Facilities in accordance with this Agreement. Except as required by applicable Law, no Recipient or its Affiliates shall take any action that would interfere with or materially increase the costs of a Provider’s providing any of the Services or access to any of the Facilities without the consent of the Provider, such consent not to be unreasonably withheld, conditioned or delayed. In addition, each Recipient shall comply with any restrictions in the applicable licenses and agreements that the applicable Provider has with third parties that are used in the provision of Services of which the Recipient is made aware of by the Provider.

 

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(b) In furtherance of such cooperation, the Parties shall work together to create procedural documentation for those Services and such access to Facilities as requested by the applicable Recipient to assist such Recipient in receiving such Services and access to Facilities; provided that such documentation shall not establish service levels pursuant to Section 2.09(e) or otherwise under this Agreement; and provided further that if the creation of such documentation for a particular Service or access to a Facility exceeds 40 hours in the aggregate, such documentation will be provided as a Knowledge Transfer Service at the Agreed Price.

Section 2.17. Security; Electronic and Other Access.

(a) The Parties shall work together (i) to ensure that each Provider is able to maintain or exceed its current level of security during the term of this Agreement and (ii) to address any New Security Threat (including compliance with applicable Law related to such New Security Threat) or the security and protection of Personally Identifiable Information; provided, however, that the Provider shall not be required to take action with the foregoing (ii) for any Change requested by a Recipient other than a Required Change.

(b) As of the Disaffiliation Date, except as provided herein or agreed to in writing by the Parties, each Party and its affiliated Recipients shall cease to use and shall have no further access to, and the other Party and the Providers shall have no obligation to provide or otherwise make available, any Systems, whether owned, licensed, leased or used by such other Party and/or the Providers, whether or not such resources require a password or are available on a secured access basis or on a non-secured access basis.

(c) Notwithstanding anything to the contrary set forth herein (including in the Schedules) or in the Long-Term Data Access Agreement, to the extent that (i) the performance or receipt of the Services or access to the Facilities hereunder requires any Party or its affiliated or third-party Providers to have access to Systems owned, licensed, leased or used by the other Party or its Affiliates or (ii) the Parties mutually agree that a Party or one or more of its Affiliates otherwise has a business need for access to Systems owned, licensed, leased or used by the other Party or its Affiliates (such Systems described in (i) and (ii), “Required Technology”), the Party owning, licensing, leasing or using such Required Technology shall use its commercially reasonable efforts to provide, or to cause to be provided, access to such Required Technology in accordance with applicable Law and subject to its policies and procedures (including those related to security, use, access, Virus protection, disaster recovery, confidentiality, privacy, and Processing of Personally Identifiable Information), as they may be amended from time to time (the “Security Regulations”). The Party accessing such Required Technology shall, and shall cause its Affiliates and all of its and its Affiliates’ respective personnel having access to the Required Technology to (1) comply with all Security Regulations that are applicable to the relevant Service, Facility and/or Required Technology, provided that such Security Regulations were in effect at the time of such access and are made known to the Party seeking access prior to such access; (2) not tamper with, compromise or circumvent any security or audit measures employed by the Person whose Required Technology is being accessed; (3) execute separate access agreements and/or business associate agreements, upon commercially reasonable terms, with the Person whose Required Technology is being accessed; (4) ensure that only those users who are specifically authorized by the Person whose Required Technology is being accessed gain access to the Required Technology, and that each such user accesses only that information

 

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for which such user has a business need to access; and (5) use commercially reasonable efforts to prevent unauthorized destruction, alteration or loss of information contained therein by such users. The rights of access to the Required Technology granted hereunder shall be restricted to user access only, and shall not include privileged or higher level access rights or rights to functionality, unless otherwise agreed to in writing by the Parties.

(d) While the Services are being provided hereunder, each Party shall take commercially reasonable measures to ensure that, in connection with the provision or receipt of any Services or access to any Facilities, no Virus or similar items are coded or introduced into either its own (including its Affiliates’) or the other Party’s (including its Affiliates’) Systems. If, in connection with the provision of any Services or access to any Facilities, a Virus is found to have been introduced into such Systems, each Party shall use commercially reasonable efforts to cooperate and to diligently work together with the other Party, each at its own cost, to eliminate the effects of such Virus.

(e) The Parties shall, and shall cause their respective Affiliates and other Providers to, exercise commercially reasonable care or such higher standard that may be required by applicable Privacy Laws to prevent unauthorized Persons from accessing the Services, Facilities, Personally Identifiable Information, Required Technology or other Systems of the other Party and its Affiliates, including (i) promptly terminating the rights of any user under its control that has sought to circumvent or has circumvented the applicable Security Regulations, (ii) immediately notifying (verbally and then in writing) the other Party if it learns that an unauthorized Person has accessed or may access any Required Technology or other Systems of such other Party or that a Person has engaged in activities that may lead to the unauthorized access, destruction or alteration or loss of Personally Identifiable Information, or other data, information or software whether on such other Party’s Required Technology or other Systems, and (iii) immediately implementing the notification procedures and actions required by Section 7.02.

(f) Each Party shall cooperate, and shall cause its Affiliates and other Providers to cooperate, fully and in a timely way with any investigation relating to the security of Personally Identifiable Information, the Facilities, the Required Technology or other Systems that arises in connection with this Agreement, including providing any relevant information or material in its possession or under its control that is reasonably requested by the other Party.

(g) Subject to Section 7.02, the Contract Managers shall be advised promptly (both orally, if practicable, and in any event in writing) of any material breach of the provisions of this Section 2.17 or any breach of the Security Regulations or unauthorized access to Personally Identifiable Information, the Required Technology, Facilities or other Systems of the other Party used hereunder. If such breach has not been rectified or such unauthorized access has not been terminated within three (3) days from the notice to the Contract Managers, the matter shall be immediately escalated to the Contract Managers and resolved in accordance with Section 7.09(a)(i) on an expedited basis. On reasonable advance written notice to the applicable Contract Manager, and to the extent permitted by applicable Law, each Party may audit the other Party’s use of the Required Technology or other Systems used in providing or receiving the Services or access to the Facilities solely with respect to security and compliance with the

 

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applicable Security Regulations no more than once every calendar year, unless in connection with a Security Incident.

(h) Each Provider shall use the same level of effort and services as used or caused to be used, to recover or recreate such Provider’s own lost data prior to the Effective Date but in no event less than a commercially reasonable effort, to recover or recreate any data lost or destroyed in performing any Services or providing access to any Facility due to such Provider’s negligence, at such Provider’s cost. In addition, each Provider shall, at the reasonable request of the Recipient, use commercially reasonable efforts (or as otherwise required by applicable Law) to restore or procure the restoration of such Personally Identifiable Information to its state immediately prior to any corruption or loss.

Section 2.18. No Agency. Nothing in this Agreement shall be deemed in any way or for any purpose to constitute any Party acting as an agent of another unaffiliated Party in the conduct of such other Party’s business. A Provider of any Service or access to any Facility hereunder shall act as an independent contractor and not as the agent of any Recipient or its Affiliates in performing such Service or providing access to such Facility.

Section 2.19. Ownership of Intellectual Property.

(a) Except as otherwise expressly provided herein, each of MSS and the Company and their respective Affiliates shall retain all right, title and interest in and to their respective Intellectual Property (including Work Product, as provided for herein) and any and all improvements, modifications and derivative works thereof. No license or right, express or implied, is granted hereunder by MSS, the Company or their respective Affiliates in or to their respective Intellectual Property, except that, solely to the extent required for the provision or receipt of the Services or access to the Facilities in accordance with this Agreement, each of MSS and the Company, for itself and on behalf of their respective Affiliates, hereby grants to the other (and their respective Affiliates) a non-exclusive, fully paid up, royalty-free, world-wide, revocable (only as expressly set forth herein), non-transferable (except as provided in Section 7.06) license during the term of this Agreement to such Intellectual Property that is provided by the granting Party to the other Party (“Licensee”) in connection with this Agreement, but only to the extent and for the duration necessary for the Licensee to provide or receive the applicable Service or access to the applicable Facility as permitted by this Agreement. Upon the expiration of such time, or the earlier termination of such Service or access to such Facility in accordance with Section 6.01(d), the license to the relevant Intellectual Property shall terminate; provided, however, that all licenses granted hereunder shall terminate immediately upon the expiration or earlier termination of this Agreement in accordance with the terms hereof. The foregoing license is subject to any licenses granted by others with respect to Intellectual Property not owned by MSS, the Company or their respective Affiliates. For the avoidance of doubt, as of the Disaffiliation Date, the Company Group shall have no rights to use the Peanuts Characters.

(b) All right, title and interest (including Intellectual Property rights) in the results and proceeds of the Services performed hereunder and access to the Facilities, including all materials, products, reports, computer programs (source or object code), documentation, deliverables and inventions developed or prepared by the Provider in performance of such services (the “Work Product”) that is created exclusively on behalf of the Company or the

 

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Company Group (subject to Section 2.19(a)), including without limitation the results and proceeds from the Company Received Services and the access to Company Received Facilities (the “Company Work Product”) shall be owned exclusively by the Company (as between the Company and the other Company Group Members, on the one hand, and MSS and the other Parent Group Members on the other), in whatever stage of completion such Company Work Product may exist from time to time. All such Company Work Product shall be considered “works made for hire” (within the meaning of the United States Copyright Law) of the Company. In the event such Company Work Product is for any reason or in any jurisdiction determined not to be “works made for hire” or that title to any such Company Work Product may not vest in the Company or the other Company Group Members by operation of applicable Law or otherwise, then MSS hereby assigns and shall cause its Affiliates or applicable Providers to irrevocably assign all worldwide right, title and interest (including Copyrights) in such Company Work Product to the Company, and the Company shall reimburse MSS for its and the other Parent Group Members’ expenses related to such actions, including the Hourly Rate for time spent if more than a de minimis amount of time is spent on such actions. All such Company Work Product, where practicable, shall bear the Company’s Copyright and trademark notices, as specified by the Company, and the Company shall reimburse MSS for its and the other Parent Group Members’ expenses related to such actions, including Hourly Rate for time spent if more than a de minimis amount of time is spent on such actions. No rights to Company Work Product hereunder shall remain with the Parent Group following the end of the term.

(c) All right, title and interest (including Intellectual Property rights) in Work Product that is created for the exclusive use of MSS and the Parent Group (subject to Section 2.19(a)), including without limitation the results and proceeds from the MSS Received Services and the access to the MSS Received Facilities (the “MSS Work Product”) shall belong exclusively to MSS (as between MSS and the Parent Group, on the one hand, and the Company and the other Company Group Members on the other), in whatever stage of completion such MSS Work Product may exist from time to time. All such MSS Work Product shall be considered “works made for hire” (within the meaning of the United States Copyright Law) of MSS. In the event such MSS Work Product is for any reason or in any jurisdiction determined not to be “works made for hire” or that title to any such MSS Work Product may not vest in MSS or the other Parent Group Members by operation of applicable Law or otherwise, then the Company hereby assigns and shall cause its applicable Providers to irrevocably assign all worldwide right, title and interest (including Copyrights) in such MSS Work Product to MSS, and MSS shall reimburse the Company for its and the other Company Group Members’ expenses related to such actions, including Hourly Rate for time spent if more than a de minimis amount of time is spent on such actions. All such MSS Work Product, where practicable, shall bear MSS’s Copyright and trademark notices, as specified by MSS, and MSS shall reimburse the Company for its and the other Company Group Members’ expenses related to such actions, including Hourly Rate for time spent if more than a de minimis amount of time is spent on such actions. No rights to the MSS Work Product shall remain hereunder with the Company Group following the end of the term.

(d) All right, title and interest (including Intellectual Property rights) in Work Product that is created hereunder and that is neither Company Work Product nor the MSS Work Product shall belong to the Provider that created such Work Product (the “Provider Work Product”) (as between such Provider and its Affiliates, on the one hand, and the Recipient and its

 

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Affiliates on the other), in whatever stage of completion such Provider Work Product may exist from time to time, unless otherwise agreed to by the Parties in writing. In the event that in any jurisdiction ownership of the Provider Work Product does not vest in the Provider or its Affiliates by operation of applicable Law or otherwise, then each Party, as the Recipient hereby assigns and shall cause its Affiliates to assign all right, title and interest (including Intellectual Property rights) in such Provider Work Product to the applicable Provider, and such Provider shall reimburse the applicable Party or Parties for any and all expenses related to such actions, including Hourly Rate for time spent if more than a de minimis amount of time is spent on such actions. Each Recipient shall have a non-exclusive, fully paid-up, royalty-free, transferable, worldwide, perpetual and irrevocable license for the Recipient to copy, prepare derivative works of, distribute, display, perform and otherwise use such Work Product (including, in the case of Work Product that is software, any source code or executable or object code) in such Recipient’s business and that of such Recipient’s Affiliates.

(e) If a Provider hereunder that is not an Affiliate of either MSS or the Company entered into agreements with the Parent Group or the Company Group prior to the Effective Date, which agreements allocate title in work product to such Provider or another third-party, then MSS or the Company, as applicable, shall use commercially reasonable efforts to obtain for the applicable Recipient at such Recipient’s expense, (i) in the case of Work Product to be owned by such Recipient pursuant to Sections 2.19(b) or 2.19(c), a non-exclusive, fully paid-up, royalty-free, transferable, worldwide, perpetual and irrevocable license for such Recipient to copy, prepare derivative works of, distribute, display, perform and otherwise use such work product in such Recipient’s business and that of such Recipient’s Affiliates and (ii) in the case of Work Product to be owned by the Provider pursuant to Sections 2.19(b) or 2.19(c), a non-exclusive, fully paid-up, royalty-free, non-transferable, worldwide license to use the work product in accordance with Section 2.19(a). In the event that such licenses cannot be obtained, MSS or the Company, as applicable, shall use commercially reasonable efforts to obtain an alternative at the relevant Recipient’s expense.

(f) Each Party, as Provider, and its Affiliates shall, and shall take commercially reasonable steps to cause non-Affiliate Providers acting on such Party’s behalf to, (i) promptly provide each Recipient with written notice to the applicable service manager and the Contract Manager of any restrictions, terms and conditions on the Recipient’s rights in Work Product otherwise owned by such Recipient (arising solely from third-party rights, and not rights of the Provider or its Affiliates) and (ii) use commercially reasonable efforts, in consultation with such Recipient, to remove or minimize such restrictions, terms and conditions.

(g) During the term of this Agreement, the Provider shall make reasonable efforts to provide the Recipient, upon such Recipient’s request, with access to and delivery of the Work Product owned by such Recipient.

(h) Except as otherwise expressly provided herein or in any other Transaction Document, as of the Disaffiliation Date, no Party (or its Affiliates) shall have any rights or licenses with respect to any Intellectual Property (including software), hardware or facility of the other Party. All rights and licenses not expressly granted in this Agreement or in any other Transaction Document are expressly reserved by the relevant Party. Each Party shall from time

 

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to time, and shall cause its Affiliates to, execute any documents and take any other actions reasonably requested by the other Party to effectuate the intent of this Section 2.19.

Section 2.20. Divestitures.

(a) If a Party sells or divests any Affiliate that provides the Services or access to the Facilities hereunder or assets that are used to provide the Services or access to the Facilities hereunder, such Party shall use commercially reasonable efforts to provide, or cause the sold or divested Affiliate or another Person to provide, for the continuity of the Services and access to the Facilities on the same price, terms and conditions as are in effect immediately prior to such sale or divestiture, and in a manner which does not cause a degradation in any material respect in the service standards set forth herein and without requiring a material change to the Recipient’s business processes or operations.

(b) If a Party sells or divests any Affiliate that receives the Services or access to the Facilities hereunder, the other Party shall use commercially reasonable efforts to provide and shall cause its Affiliates to use commercially reasonable efforts to provide for continuity of the Services and access to the Facilities on the same price, terms and conditions as are in effect immediately prior to such sale or divestiture, and in a manner which does not cause a degradation in any material respect in the service standards set forth herein to the extent so requested by the transferee; provided that the Party providing, or causing to be provided, the Services or access to the Facilities shall not be required to incur any material additional costs or to make any material change to the manner in which such other Party provides such Services and access to such Facilities; provided, further, that the selling or divesting Party shall remain responsible for all payment and other obligations hereunder with respect to such Services and access to such Facilities.

Section 2.21. Reorganization. In the event that the Company Group internally restructure, reorganize or transfer the business receiving the Services or access to the Facilities hereunder to an Affiliate, MSS shall be obligated to continue to provide, or cause to be provided, the Services and the access to Facilities to such Affiliate on the same price, terms and conditions as are in effect immediately prior to such reorganization, and in a manner which does not cause a degradation in any material respect in the service standards set forth herein; provided that MSS shall not be required to incur any material additional costs or to make any material change to the manner in which MSS provides such Services or access to such Facilities. In the event that the Parent Group internally restructure, reorganize or transfer the businesses receiving the Services or access to the Facilities hereunder to an Affiliate, the Company shall be obligated to continue to provide, or cause to be provided, such Services or access to such Facilities to such Affiliate on the same price, terms and conditions as are in effect immediately prior to such reorganization, and in a manner which does not cause a degradation in any material respect in the service standards set forth herein; provided that the Company shall not be required to incur any material additional costs or to make any material change to the manner in which the Company provides such Services or access to such Facilities.

Section 2.22. Permits.

 

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(a) Each Party represents and warrants to the other Party that they and any of their Affiliates that are Providers through which they provide a Service have all material licenses, permits, rights and approvals of Governmental Entities (“Permits”) necessary to provide such Service.

(b) Each Party shall be responsible for and bear the costs of keeping in force all Permits necessary for such Party or its applicable Affiliates to provide the applicable Services until the expiration of the respective Scheduled Term or Extended Scheduled Term for such Service.

Section 2.23. Migration.

(a) The Parties shall use, and cause their respective Affiliates that are Providers or Recipients to use, their reasonable good faith efforts to cooperate with and assist each other in connection with the migration of the Company Group and their businesses from the Parent Group and their businesses, in each case and to the extent reasonably agreed by the Parties, taking into account the need to minimize both the cost of such migration and the disruption to the ongoing business activities of the Parties and their respective Affiliates (including minimizing the financial impact of any volume or other discounts with Third-Party Vendors). In furtherance thereof, to the extent that the Parties have not already done so prior to the Effective Date, the Parties shall (i) identify the respective tasks to be accomplished by each Party in connection with the orderly migration from the performance of any Service or provision of access to any Facility by a Provider to the performance of such Service and provision of access to such Facility by a Recipient, its Affiliates or a third Person (“Migration Services”), (ii) agree upon the terms of such Provider providing such Migration Services and (iii) agree to a schedule pursuant to which the Migration Services are to be completed. The Migration Services shall terminate on the date which is no later than three (3) months after the last date of any Scheduled Term or Extended Scheduled Term with respect to any Service or access to a Facility hereunder; provided that, upon request by the Recipient for an extension of such period, the relevant Provider shall use its commercially reasonable efforts to continue to provide such Migration Services for an additional period of time as mutually agreed between the Parties, but only to the extent such Provider continues to own or have access on commercially reasonable terms to the assets and resources necessary to provide such Migration Services. Any disputes between the Parties as to the identification of, terms of or schedule for Migration Services shall be rapidly and timely escalated and resolved in accordance with Section 7.09(a)(i) on an expedited basis.

(b) The Parties acknowledge that Migration Services may include the provision of services requested by a Contract Manager, on behalf of a Party or its Affiliate that is a Recipient, in connection with its migration to non-Provider Systems, including the transfer of records, segregation and migration of historical data, migration-specific enhancements and cooperation with and assistance to third-Person consultants engaged by such Recipient in connection with the foregoing.

 

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Section 2.24. Primary Points of Contact for this Agreement.

(a) Each Party shall appoint an individual to act as the primary point of operational contact for the administration and operation of this Agreement, as follows:

(i) The individual appointed by the Company as the primary point of operational contact pursuant to this Section 2.24(a) (the “Company Contract Manager shall have overall operational responsibility for coordinating, on behalf of the Company, all activities undertaken by the Company Group and their Representatives hereunder, including the performance of the relevant Company Group’ obligations, the coordination of the provision of the services and access to the facilities with the relevant Parent Group, acting as a day-to-day contact with the MSS Contract Manager, and making available to the Parent Group the data, facilities, resources and other support services from the Company Group required for the Parent Group to be able to provide the services and access to the facilities in accordance with the terms of this Agreement. The Company may replace the Company Contract Manager with an employee or officer with comparable knowledge, expertise and decision-making authority from time to time upon written notice to MSS pursuant to Section 7.03(b). The Company shall use commercially reasonable efforts to provide at least 30 days prior written notice of any such change, or for a shorter period of time, the amount of notice reasonable under the circumstances.

(ii) The individual appointed by MSS as the primary point of operational contact pursuant to this Section 2.24(a) (the “MSS Contract Manager” shall have overall operational responsibility for coordinating, on behalf of MSS, all activities undertaken by the Parent Group and their Representatives hereunder, including the performance of the relevant Parent Group’ obligations, the coordination of the provision of the services and access to the facilities with the relevant Company Group, acting as a day-to-day contact with the Company Contract Manager and making available to the Company Group the data, facilities, resources and other support services from the Parent Group required for the Company Group to be able to provide the services and access to the facilities in accordance with the terms of this Agreement. MSS may replace the MSS Contract Manager with an employee or officer with comparable knowledge, expertise and decision-making authority from time to time upon written notice to the Company pursuant to Section 7.03(b). MSS shall use commercially reasonable efforts to provide at least 30 days prior written notice of any such change, or for a shorter period of time, the amount of notice reasonable under the circumstances.

(iii) In addition to the responsibilities set forth in Section 2.24(a)(i) and Section 2.24(a)(ii) and Section 7.09(a), the Contract Managers shall have the authority to approve in writing modifications to the Services, access to the Facilities, the terms on which the foregoing are provided and the Schedules.

(b) Unless otherwise mutually agreed between the Contract Managers, the Parties shall ensure that the MSS Contract Manager and the Company Contract Manager meet at least weekly, in person or telephonically, during the term of this Agreement. In addition, at least once per quarter during the term of this Agreement, the Contract Managers and the senior executives designated by the Parties shall meet to discuss this Agreement and any issues arising hereunder.

 

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Section 2.25. TSA Records.

(a) During the term (including, if applicable, any extended term) of any Service or access to any Facility and for a period thereafter equal to the greatest of (i) any additional period required by applicable Law, (ii) any additional period required by the Provider’s record retention policies that are provided to the Recipient and (iii) six (6) months, MSS and the Company shall each maintain, and shall use commercially reasonable efforts to cause their respective Providers to maintain, true and correct records of all receipts, invoices, reports and other documents relating to the Services rendered and activities performed hereunder in accordance with applicable Law and its standard accounting and record management practices and procedures, consistently applied, which practices and procedures are employed by MSS, the Company or such Providers (as applicable) in their provision or receipt of services for themselves and their Affiliates.

(b) As and when so reasonably requested by the Contract Manager of a Recipient for the purpose of verifying invoices submitted to such Recipient and/or any Provider’s performance of Services, or by a Governmental Entity acting pursuant to applicable Law, the Party acting as the Provider shall cause each applicable Provider to permit at reasonable times and from time to time, but in no event more than one inspection per calendar year, by such Recipient and/or its external auditors (an “Inspection”) wherein such Provider shall (i) make books and records concerning the calculation of any fees or Taxes, the performance of the Services or access to the Facilities provided pursuant to this Agreement (including IT infrastructure and general IT controls) and/or the invoices submitted to MSS or the Company or its Affiliate which is a Recipient, available for inspection by such Person(s) as such Recipient designates as its authorized Representative(s) and (ii) give such Representatives reasonable access during regular business hours to facilities, officers, employees and other representatives of such Provider, including attorneys, accountants and others, in connection with such Inspection without disruption in any material respect of the business operations of such Provider. There shall only be one Inspection per year calendar, unless additional inspections are necessary to respond to a regulatory or court demand, or are required under applicable Law; provided that if an Inspection begun in a calendar year continues into the next calendar year, such Inspection shall not count as the Inspection for the second year. The Provider shall reasonably cooperate with the Recipient in terms of providing access to information and people as is necessary for the Recipient to meet its audit obligations, including the Recipient’s obligations to comply with a request from a Governmental Entity. Notwithstanding the foregoing, the right of Inspection under this Section 2.25(b) is subordinate to the Scheduled Services for internal audit services and neither Party shall be entitled to an Inspection to the extent that the same audit service has been conducted as a Scheduled Service in the year at issue.

(c) Following the Separation Date, if it is determined pursuant to the dispute resolution process in Section 7.09 or any arbitration proceeding between the Parties, or the Parties otherwise agree (in mediation or otherwise), (i) that an Inspection has revealed that a Provider has overcharged a Party or its Affiliates for the Services or access to the Facilities, the Party acting as Provider shall credit (or, if the applicable Provider has ceased providing the Services or access to the Facilities, shall refund) promptly, the Party acting as the Recipient or its Affiliate which is a Recipient for the amount of the overcharge plus interest thereon calculated from the date of payment of the overcharge using the applicable Interest Rate and (ii) that an

 

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Inspection has revealed that a Provider has undercharged a Party or its Affiliates for the Services or access to the Facilities, the Party acting as the Recipient or its Affiliate which is a Recipient for the amount of the undercharge shall promptly pay the difference between the undercharge and the amount that should have been charged. The costs and expenses incurred by the Recipient, Provider and their respective Affiliates in connection with an Inspection shall be borne by such Recipient.

(d) Following the Separation Date, to the extent that an Inspection identifies any material deficiencies or issues (other than in connection with overcharges or undercharges, which are addressed in Section 2.25(c)), such deficiencies or issues shall be referred to the Contract Managers and, if necessary, resolved pursuant to Section 7.09.

(e) Following the Disaffiliation Date, any issues with respect to the migration and delivery of records under this Section 2.25 shall be handled in accordance with the provisions of the Master Separation Agreement regarding Records and Non-Records (as those terms are defined therein).

ARTICLE III

COSTS AND DISBURSEMENTS

Section 3.01. Costs and Disbursements.

As consideration for providing the Services and access to the Facilities:

(a) Scheduled Service Charges: Except as otherwise set forth on the applicable Schedule, (i) the Company shall cause the Recipient of any Service set forth in Schedule 2.01-1 or access to any Facility set forth in Schedule 2.02-1 to pay to the applicable Provider the monthly portion of the annual amount specified next to such Service or Facility in the applicable Schedule, and (ii) MSS shall cause the Recipient of any Service set forth in Schedule 2.01-2 or access to any Facility set forth in Schedule 2.02-2 to pay to the applicable Provider the monthly portion of the annual amount specified next to such Service or Facility in the applicable Schedule (with respect to a Service or Facility, the “Scheduled Service Charge” for such Service or Facility) and any charges in connection with any Changes thereto (including, for clarity, any minimum spend agreed to pursuant to Section 2.12(d)); provided, however, that beginning on January 1, 2018, and each subsequent January 1 thereafter during the term of this Agreement, the Scheduled Service Charges (exclusive of any Pass-Through Charges included therein) will be increased by 3% for the then-upcoming twelve (12)-month period.

(b) Other Service Charges: For each Knowledge Transfer Service, Third-Party Vendor Service, Migration Service, Resumed Facility, and Resumed Service, MSS or the Company, as applicable, shall cause the Recipient to pay to the applicable Provider an amount equal to the Agreed Price for such service or facility (such amounts, together with Scheduled Service Charges, “Service Charges”); provided, however, that there shall be no charge for de minimis Knowledge Transfer Services (which, by way of example, includes meetings (without travel by the Provider) or phone calls, in each case of thirty (30) minutes or less in duration).

 

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(c) Pass-Through Charges: Except as otherwise set forth on the applicable Schedule, in addition to any Service Charges, MSS or the Company, as applicable, shall cause the Recipient to pay to the Provider actual out-of-pocket costs and expenses paid to any unaffiliated third Person (less any Sales Tax recoverable by such Provider or any of its Affiliates), incurred by a Provider or its Affiliates in the provision of any Service or access to any Facility (collectively, “Pass-Through Charges”) including Pass-Through Charges specified on Schedule 2.01-1, Schedule 2.01-2, Schedule 2.02-1 or Schedule 2.02-2 (if any) or otherwise agreed to in writing by the Parties; provided that (a) any such cost that is materially inconsistent with historical practice and applicable only to the Recipient (as compared with a cost applicable to both Provider and Recipient) shall not be incurred without the prior written approval of the applicable Recipient and (b) all travel expenses that are included as a Pass-Through Charge shall only be reimbursed in accordance with such Recipient’s travel policies previously provided in writing to the Provider. Pass-Through Charges in excess of $50,000 for a single expense shall not be incurred without the prior written approval of the applicable Recipient (but excluding any Pass-Through Charges that are variable charges already included in Schedule 2.01-1, Schedule 2.01-2, Schedule 2.02-1 or Schedule 2.02-2, for which approval is deemed given); provided that if such Recipient does not approve the incurrence of such expense, MSS and the Company shall discuss in good faith commercially reasonable alternatives to the incurrence of such expense; and provided, further that if MSS and the Company do not agree to a commercially reasonable alternative to the incurrence of such expense and such Recipient still does not approve the incurrence of such expense, then the applicable Provider may terminate the Service related to such Pass-Through Charge within fifteen (15) Business Days of delivering a written notice to such effect to the Company or MSS in accordance with Section 7.03(b), as the case may be, and the applicable Contract Manager, unless, during such fifteen (15) Business Day period, such Recipient approves the incurrence of such expense.

(d) Invoices: Invoices for Service Charges and Pass-Through Charges for each Recipient shall be invoiced to the Party that is such Recipient’s Affiliate (e.g., all charges for an Affiliate of the Company shall be invoiced to the Company). Each month’s Service Charges and Pass-Through Charges for each Recipient shall be set forth in an invoice (which invoice or related documentation shall provide reasonable detail regarding the calculation of the amount set forth in the invoice unless such amount is a fixed amount set forth in a Schedule) from the applicable Party on behalf of all of its Providers that are Affiliates and submitted in electronic format to the Person at MSS or the Company, as the case may be, designated to receive such invoices, with copies of all such invoices sent simultaneously in electronic format to the applicable Contract Manager, and with all amounts due calculated and payable in U.S. dollars, unless otherwise required by applicable Law, otherwise designated in the applicable Schedule, or otherwise agreed to by the Parties in writing. The applicable Party issuing the invoice shall do so by the fifth (5th) Business Day following the end of a month and the Party receiving the invoice shall pay all amounts set forth in such invoice and not disputed pursuant to Section 3.02 via electronic funds transfer (instructions to be separately provided), by the last Business Day in the month in which its Contract Manager received the invoice. The Parties acknowledge that there may be a lag with respect to charges from third-party vendors that provide or support a Service or access to a Facility; the applicable Party issuing the invoice shall use commercially reasonable efforts to include such third-party vendor charges promptly on the next invoice to the applicable Party following receipt of documentation from the third-party vendor of such charges.

 

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(e) Sales Tax Matters:

(i) Notwithstanding any provision to the contrary, all consideration paid hereunder is exclusive of any sales, transfer, goods or services tax, or similar gross-receipts-based Tax (including any such Taxes that are required to be withheld, but excluding all other Taxes, including Taxes based upon or calculated by reference to net income, gain or capital) imposed against or on services provided (“Sales Taxes”) by a Provider hereunder and such Sales Taxes shall be added to the consideration to be paid to a Provider where applicable. The Parties shall cooperate in good faith to determine and to minimize the amount of such Sales Taxes, including either Party providing reasonable documentation that is necessary to evidencing an exemption from or reduced liability for such Sales Taxes. To the extent practicable, the relevant invoice submitted to the Recipient shall (a) state such Sales Taxes separately and (b) state the taxable services separately from the non-taxable services. In addition, the separately stated Sales Taxes shall not be charged in any case more than six months after the end of the tax year of the date in which the relevant invoice for the provision of services was sent; provided however, to the extent the amount of such Sales Taxes is in dispute between the Parties or with a taxing authority, the amount of such Sales Taxes shall be invoiced as soon as practicable after the dispute is resolved.

(ii) To the extent such Sales Taxes are payable by the Provider to the relevant taxing authority, the Recipient shall remit an amount equal to such Sales Taxes to the Provider. Where the Law is unclear or the Law provides that either Party may remit such Sales Taxes, the Person responsible for remitting the Sales Tax to the tax authority shall be determined by the Provider under the same methodologies Provider uses to determine taxation on services in its standard administrative services agreements it enters into with customers.

(iii) Notwithstanding any other proviso, the Recipient shall not be required in any case to indemnify the Provider for any (x) penalties, interest or additions to tax imposed with respect to a Sales Tax to the extent such amounts are imposed due to a failure by the Provider to timely collect or remit any such taxes to a taxing authority or timely file any tax return relating to such taxes except where such failure was directly due to the Recipient’s breach of any obligation herein or if the amount of such Sales Tax was timely and properly contested or (y) Taxes other than Sales Taxes and, to the extent that any tax other than a Sales Tax is required to be withheld or deducted by the Recipient, the Recipient has the right to withhold or deduct the amount of such tax from any consideration hereunder and such amount shall be treated as paid to the Provider for purposes of this Agreement. For purposes of this Agreement, the amount required to be remitted by or with respect to Sales Tax shall be reduced by (and if necessary, reimbursed by) the amount of any such Sales Tax that is recoverable, refundable or creditable to the Provider or for which the Provider is reimbursed or held harmless against by another party (other than an indemnity set forth hereunder). For purposes of this subsection, any reference to the Provider or Recipient includes MSS or the Company on behalf of the Provider or Recipient, as the case may be.

Section 3.02. No Right to Set-Off; Disputed Invoice Amounts. Each applicable Party shall pay or cause the applicable Recipient that is its Affiliate to pay to the other Party or the applicable Provider in full all undisputed Service Charges and other amounts due and payable hereunder and, except as permitted by this Section 3.02 or as otherwise agreed to by the Parties,

 

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shall not set-off, counterclaim or otherwise withhold any amount owed or claimed to be owed hereunder on account of any obligation owed by or on behalf of a Provider, whether or not such obligation has been finally adjudicated, settled or otherwise agreed upon in writing. Notwithstanding the foregoing, in the event a Party or its applicable Recipient disputes any specific amount on an invoice, such Party shall notify the other Party and the applicable Provider in writing and describe in detail the reason for disputing such specific amount and shall have no obligation to pay such amount during the pendency of the dispute with respect to such amount. The Parties shall use, and shall cause the respective Recipient and Provider to use, their commercially reasonable efforts to reach an agreement with respect to such specific disputed amount. If the respective Recipient and Provider or the employees or their designees at MSS and the Company responsible for preparing and reviewing the invoices are unable to reach an agreement about any such specific disputed amounts within ten (10) Business Days after such written notification has been received, the matter shall be rapidly and timely escalated and resolved in accordance with Section 7.09(a)(i) on an expedited basis. Upon resolution of the dispute, the Party shall promptly pay, or cause its Affiliate that is the applicable Recipient to promptly pay, the applicable amount, if any, as determined by the process used in Section 7.09(a)(i).

ARTICLE IV

WARRANTIES AND COMPLIANCE

Section 4.01. Disclaimer of Warranties. Except as expressly set forth herein, each Party (on behalf of itself and its Affiliates) acknowledges and agrees that the Services and access to the Facilities are provided as-is, that each Party (on behalf of itself and its Affiliates) assumes all risks and liabilities arising from or relating to its use of and reliance upon the Services and access to the Facilities and that each Party (on behalf of itself and its Affiliates) makes no additional representation or warranty with respect thereto. EXCEPT AS EXPRESSLY SET FORTH HEREIN, EACH PARTY (ON BEHALF OF ITSELF AND ITS AFFILIATES) HEREBY EXPRESSLY DISCLAIMS ALL REPRESENTATIONS, WARRANTIES AND CONDITIONS REGARDING THE SERVICES AND THE FACILITIES, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY REPRESENTATION OR WARRANTY IN REGARD TO QUALITY, PERFORMANCE, NONINFRINGEMENT, COMMERCIAL UTILITY, MERCHANTABILITY OR FITNESS OF THE SERVICES AND THE FACILITIES FOR A PARTICULAR PURPOSE.

Section 4.02. Compliance with Laws and Regulations. Each Party shall be responsible for its own compliance with any and all Laws applicable to its performance hereunder.

 

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ARTICLE V

LIMITED LIABILITY AND INDEMNIFICATION

Section 5.01. Indemnification.

(a) MSS, on behalf of itself, any Person that is a Provider on behalf of MSS hereunder and the other Parent Group Members (the “MSS Indemnitors”), shall indemnify the Company, the other Company Group Members and their Representatives (the “Company Indemnified Parties”) against, and defend and hold the Company Indemnified Parties harmless from, any and all Losses (including Losses resulting from Third-Party Claims) imposed on, sustained, incurred or suffered by, or asserted against any Company Indemnified Party arising from or resulting out of any of the following: (i) any breach or non-fulfillment by a MSS Provider of any of its obligations hereunder or under any agreement for the provision of TPA Services or TSA Broker-Dealer Services; (ii) infringement, misappropriation or other violation of or conflict with any Intellectual Property right of any third-party claimed or threatened against a Company Indemnified Party resulting from a MSS Provider’s provision of, or the Company’s or any Company Group Member’s receipt of, the Services or access to the Facilities hereunder, except to the extent such claim of infringement, misappropriation or other violation or conflict arises from a Company Indemnified Party’s failure to obtain a necessary consent from a third-party to the extent required by this Agreement; or (iii) a MSS Provider’s bad faith (other than allegations of a third party in connection with the administration of products of a Company Group Member under this Agreement or under any agreement for the provision of TPA Services or TSA Broker-Dealer Services), fraud, gross negligence or willful misconduct; provided, in the case of each of clauses (i) — (iii) of this Section 5.01(a) that no MSS Provider shall have any obligation to indemnify any Company Indemnified Party to the extent that such Loss results from any claim for which any MSS Indemnified Party is entitled to indemnification under Section 5.01(b).

(b) The Company, on behalf of itself, any Person that is a Provider on behalf of the Company hereunder and the other Company Group Members (the “Company Indemnitors”), shall indemnify MSS, the other Parent Group Members and their Representatives (“MSS Indemnified Parties”) against, and defend and hold harmless the MSS Indemnified Parties from, any and all Losses arising from third-party claims imposed on, sustained, incurred or suffered by, or asserted against any MSS Indemnified Party arising from or resulting out of any of the following: (i) any breach or nonfulfillment by a Company Provider of any of its obligations hereunder or under any agreement for the provision of TPA Services or TSA Broker-Dealer Services; (ii) infringement, misappropriation or other violation of or conflict with any Intellectual Property right of any third-party claimed or threatened against a MSS Indemnified Party resulting from a Company Provider’s provision of, or a MSS Indemnified Party’s receipt of, the Services or access to the Facilities hereunder, except to the extent such claim of infringement, misappropriation or other violation or conflict arises from a MSS Indemnified Party’s failure to obtain a necessary consent from a third-party to the extent required by this Agreement; or (iii) a Company Provider’s bad faith (other than allegations of a third party in connection with the administration of products of a Parent Group Member under this Agreement or under any agreement for the provision of TPA Services or TSA Broker-Dealer Services), fraud, gross negligence or willful misconduct; provided, in the case of each of clauses (i) — (iii) of

 

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this Section 5.01(b) that no Company Provider shall have any obligation to indemnify any MSS Indemnified Party to the extent that such Loss results from any claim for which any Company Indemnified Party is entitled to indemnification under Section 5.01(a).

Section 5.02. Additional Limitations on Liability.

(a) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, NO PARTY, NOR ANY OF ITS AFFILIATES OR ITS OR THEIR REPRESENTATIVES (NOR ANY SUCCESSORS OR ASSIGNS OF SUCH PERSONS) SHALL BE LIABLE FOR ANY INCIDENTAL, SPECIAL, INDIRECT, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF PROFIT OR LOSS OF REVENUE) OF THE OTHER PARTY, ITS SUCCESSORS, ASSIGNS OR THEIR RESPECTIVE AFFILIATES AND REPRESENTATIVES, IN ANY WAY DUE TO, RESULTING FROM OR ARISING IN CONNECTION WITH THIS AGREEMENT, REGARDLESS OF WHETHER SUCH LIABILITY ARISES IN TORT (INCLUDING NEGLIGENCE), CONTRACT, BREACH OF WARRANTY, STRICT LIABILITY, OR OTHERWISE AND REGARDLESS OF WHETHER ANY SUCH DAMAGES ARE FORESEEABLE OR WHETHER AN INDEMNIFIED PERSON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES, EXCEPT TO THE EXTENT (I) SUCH DAMAGES ARE AWARDED TO AN UNAFFILIATED THIRD-PARTY AND ARE SUBJECT TO A CLAIM FOR INDEMNITY HEREUNDER PURSUANT TO SECTION 5.01, OR (II) SUCH DAMAGES ARE AWARDED TO A PARTY IN CONNECTION WITH THE OTHER PARTY’S BAD FAITH (OTHER THAN ALLEGATIONS OF A THIRD PARTY IN CONNECTION WITH THE ADMINISTRATION OF PRODUCTS OF A SERVICE RECIPIENT UNDER THIS AGREEMENT OR UNDER ANY AGREEMENT FOR THE PROVISION OF TPA SERVICES OR TSA BROKER-DEALER SERVICES), FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, EXCEPT AS MAY BE OTHERWISE SET FORTH IN SECTIONS 5.02(c) AND 5.02(d).

(b) (i) The liability of the Company (for itself and its Affiliates) pursuant to this Agreement, whether in contract, tort or otherwise, shall not exceed $50,000,000.

(ii) The liability of MSS (for itself and its Affiliates) pursuant to this Agreement, whether in contract, tort or otherwise, shall not exceed the following:

 

  (A) From the Effective Date until the day prior to the first anniversary of the Effective Date: $125,000,000;

 

  (B) From the first anniversary of the Effective Date until the day prior to second anniversary of the Effective Date: $100,000,000;

 

  (C) From the second anniversary of the Effective Date until the day prior to the third anniversary of the Effective Date: $75,000,000; and

 

  (D) Thereafter $50,000,000.

 

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By way of clarification, in all cases, the overall liability limit does not reset at each point in time and if the aggregate amount that MSS (on behalf of itself and its Affiliates) has paid to the Company Indemnified Parties in connection herewith exceeds the applicable liability limit in subsections (B)-(D) above, MSS (on behalf of itself and its Affiliates) shall have no further liability hereunder except as set forth in Sections 5.02(b)(iii) and 5.02(b)(iv).

(iii) Except as otherwise provided in Section 5.02(c)(i) and Section 5.02(c)(ii), and subject to Section 5.02(d), notwithstanding the foregoing, MSS shall have liability up to $25,000,000 with respect to any Losses imposed by any self-regulatory organization, or any federal, state, or local agency, in connection with a Service or access to a Facility relating to administration of Recipient’s insurance products hereunder by a Party regardless of when the Loss is incurred; provided that if such Losses are incurred during the period between the Effective Date and the first anniversary of the Effective Date, then the amount in Section 5.02(b)(ii)(A) for limitation of liability for any other claims shall be reduced by the Losses incurred for such period (i.e., the aggregate limit of liability in the first year of this Agreement for MSS is $125,000,000 and the overall limit of liability for MSS shall not exceed $125,000,000 except for such liability that is excluded pursuant to Section 5.02(b)(iv)); and provided further that if such Losses exceed $25,000,000 at any point, the Party as Recipient may seek to collect any excess subject to the liability limitation in Section 5.02(b)(ii)(A) through Section 5.02(b)(ii)(D), but with respect to the amount of limitation in effect when such a claim is made. For purposes of this subsection, MSS’s liability includes Losses arising from putative class actions based on substantially the same set of facts or circumstances that led or could lead to a Loss imposed by any self-regulatory organization, or any federal, state, or local agency.

(iv) A Party’s limitation of liability under this Section 5.02(b) shall not apply in the case of (x) Third-Party Claims with respect to a Party’s negligence resulting in death or personal injury, (y) amounts owed pursuant to Section 3.01 or (z) a Party’s bad faith (other than allegations of a third party in connection with the administration of products of the other Party under this Agreement or under any agreement for the provision of TPA Services or TSA Broker-Dealer Services), fraud, gross negligence or willful misconduct, including with respect to a Party’s obligations pursuant to Section 2.17(c) and Section 7.01, but excluding Section 5.02(c)(ii) with respect to willful misconduct. The Parties agree that any indemnification payments made under any agreement for TPA Services and TSA Broker-Dealer Services between Parent Group Members and Company Group Members shall be applied against the relevant Party’s limitation of liability set forth under this Section 5.02(b).

(c) In connection with any with any claim or demand for benefits, and related extra-contractual damages, under a policy or contract issued by a Company Group Member:

(i) the applicable Company Group Member remains liable for the contract benefits for the applicable products in all cases;

(ii) the applicable Company Group Member remains liable for any extra-contractual payments paid to a claimant pursuant to a settlement or judgment, including amounts in excess of the contract limits, awards of bad faith, punitive damages and the claimant’s attorneys’ fees and costs, except in the event that any extra-contractual payment is attributable to

 

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MSS’s willful misconduct, in which case MSS shall have liability up to an annual cap of $1,500,000;

(iii) the applicable Company Group Member has the right to assume the initiation or defense of all litigations, arbitrations or other formal dispute resolution proceedings with respect to any applicable products, and is responsible for all defense costs and attorneys’ fees;

(iv) any extra-contractual payments as set forth in Section 5.02(c)(ii) borne by MSS shall constitute a liability of MSS as a Provider that is subject to the liability limitations of Section 5.02(b) in effect on the day the amount of extra-contractual payments or method of calculating such payments are set, whether by settlement, adjudication or otherwise; the outside counsel fees and costs shall be subject to the liability limitations in effect on the day such fees and costs are incurred; and

(v) Other than as permitted in Section 5.02(b)(iii) with respect to regulatory fines and penalties incurred, neither MSS nor the Company shall have liability for any claim or demand, or other circumstance or state of facts that could give rise to any claim or demand under Section 5.02(c) made after the day that is the three (3) year anniversary of the date the Service or the access to the Facility giving rise to such claim or demand or other circumstance was terminated.

(d) For the period of time that MSS or its Providers provide Services for the administration of Company Group Member products under this Agreement or under any agreement for the provision of TPA Services or TSA Broker-Dealer Services, MSS shall use commercially reasonable efforts to deliver, within 30 days of the end of each quarter starting with the quarter ending March 31, 2017, a statement showing (i) with respect to variable Insurance Contracts, the net amount of all Breakage during the prior calendar year for the variable Insurance Contract of the Company Group Members arising from the Services and the TPA Services during such calendar year and (ii) the net EP Amount for the Company Group Members taking into account any recovery of overpayments by MSS or its Providers or their Affiliates in connection with the applicable Insurance Contracts during such calendar year. The Company shall be liable for all such amounts up to $2,500,000 annually, with any excess of that amount constituting an indemnifiable claim hereunder, subject to the limitations of liability set forth in Section 5.02(b) in effect for the year in which the Breakage and EP Amount occurred.

(e) Any claim for indemnification by an Indemnified Person must be made in writing to MSS or the Company pursuant to Section 5.04 or 5.05, as applicable, and, other than as permitted in Section 5.02(c)(iii) with respect to regulatory fines and penalties incurred, the limitation on liability applicable to such claim pursuant to Section 5.02(b) shall be the limitation in effect on the day of receipt by MSS or the Company of such Notice of Claim or other written notice. Other than as permitted in Section 5.02(b)(iii) with respect to regulatory fines and penalties incurred or as permitted in Section 5.02(c)(v), all claims for indemnification must be made before the day that is the eighteen (18) month anniversary of the date the Service or the access to the Facility giving rise to such claim was terminated; provided, that where such claim is made in connection with the last Services or access to Facilities terminated under this

 

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Agreement, the applicable limitation of liability pursuant to Section 5.02(b) shall be the one in effect as of the date of the termination of such Services or access to Facilities.

(f) Any claim for indemnification hereunder and any liability of MSS pursuant to Section 5.02(c) or Section 5.02(d) shall be limited to Services or access to Facilities provided on or after the Effective Date.

(g) In connection with Services for commission payments to third parties, the Provider will use commercially reasonable efforts to collect any overpayments. If attempts to collect the overpayment are unsuccessful, the Provider shall be liable for the overpayment and such overpayment shall be subject to the limitations of liability set forth in Section 5.02(b); provided, that if the Recipient of such Service directs the Provider to forego collection efforts for an overpayment, in which case the Recipient shall be liable for the overpayment, and such overpayment shall not be subject to any limitation on liability in Section 5.02(b).

(h) At or prior to the transfer of laptop or desktop computers from MSS or its Affiliates to the Company or its Affiliates, MSS or its Providers may scan such computers to identify software that was not downloaded by means of the “MetLife SCCM” and shall identify all such software to the Company. MSS shall remove all such software for which MSS or its Affiliates or the Company Group does not has a license or consent unless otherwise directed by the Company and, in such case, the Company shall indemnify MSS and its Providers for any Losses arising from a Third-Party Claim related to the software that was not removed due to the direction by the Company, subject to the limitation of liability in Section 5.02(b)(i).

(i) A Party and its Providers shall have no liability for Losses arising from Services hereunder or under any agreement for the provision of TPA Services or TSA Broker-Dealer Services to the extent that such Losses (including regulatory fines and penalties) arise from a direction by the Recipient as to (i) how to make a Change, (ii) a change to a TPA Services or TSA Broker-Dealer Service, (iii) training (whether on a new product or process or a modification of an existing product or process) or (iv) whether the Provider should act or not act, in each case solely to the extent that such Losses result from such direction, and the Recipient shall indemnify such Party and its Providers against any Third-Party Claim resulting from such direction, subject to the limitations of liability set forth in Section 5.02(b).

(j) Each Party indemnified hereunder shall use commercially reasonable efforts to mitigate and otherwise minimize its respective Losses, whether direct or indirect.

Section 5.03. Insurance. Notwithstanding anything to the contrary contained herein, no Party indemnified under this ARTICLE V shall be indemnified or held harmless hereunder to the extent such Losses are covered by insurance provided by a third Person.

Section 5.04. Procedures for Third-Party Claims.

(a) In the event that any claim or demand, or other circumstance or state of facts that could give rise to any claim or demand, for which an Indemnitor may be liable to an Indemnified Party hereunder is asserted or sought to be collected, in each case, in writing, by a third-party (“Third-Party Claim”), the Indemnified Party shall promptly, but in no event more than ten (10) days following such Indemnified Party’s receipt of a Third-Party Claim, notify the

 

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Indemnitor in writing of such Third-Party Claim (“Notice of Claim”); provided, however, that a failure by an Indemnified Party to provide timely notice shall not affect the rights or obligations of such Indemnified Party other than if the Indemnitor shall have been actually prejudiced as a result of such failure. The Notice of Claim shall (i) state that the Indemnified Party has paid or properly accrued Losses or anticipates that it will incur liability for Losses for which such Indemnified Party is entitled to indemnification pursuant to this Agreement, and (ii) specify in reasonable detail each individual item of Loss included in the amount so stated, the date such item was paid or properly accrued, the basis for any anticipated Loss and the nature of the misrepresentation, breach of warranty, breach of covenant or claim to which each such item is related and the computation of the amount to which such Indemnified Party claims to be entitled hereunder. The Indemnified Party shall enclose with the Notice of Claim a copy of all papers served with respect to such Third-Party Claim, if any, and any other documents evidencing such Third-Party Claim.

(b) The Indemnitor shall have the right, but not the obligation, to assume the defense or prosecution of such Third-Party Claim and any litigation resulting therefrom with counsel of its choice and at its sole cost and expense (a “Third-Party Defense”). If the Indemnitor assumes the Third-Party Defense in accordance herewith, (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third-Party Claim, but the Indemnitor shall control the investigation, defense and settlement thereof, (ii) the Indemnified Party shall not file any papers or consent to the entry of any judgment or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnitor and (iii) the Indemnitor shall not consent to the entry of any judgment or enter into any settlement with respect to the Third-Party Claim to the extent such judgment or settlement provides for equitable relief or includes an admission of liability or fault without the prior written consent of the Indemnified Party, such consent not to be unreasonably withheld, conditioned or delayed. The Parties shall act in good faith in responding to, defending against, settling or otherwise dealing with such claims. The Parties shall also cooperate in any such defense and give each other reasonable access to all information relevant thereto. Whether or not the Indemnitor has assumed the Third-Party Defense, such Indemnitor shall not be obligated to indemnify the Indemnified Party hereunder for any settlement entered into or any judgment that was consented to without the Indemnitor’s prior written consent.

(c) If the Indemnitor does not assume the Third-Party Defense, the Indemnified Party shall be entitled to assume the Third-Party Defense, at the expense of the Indemnitor, upon delivery of notice to such effect to the Indemnitor; provided that (i) the Indemnitor shall have the right to participate in the Third-Party Defense at its sole cost and expense, but the Indemnified Party shall control the investigation, defense and settlement thereof, (ii) the Indemnitor may at any time thereafter assume the Third-Party Defense, in which event the Indemnitor shall bear the reasonable fees, costs and expenses of the Indemnified Party’s counsel incurred prior to the assumption by the Indemnitor of the Third-Party Defense and (iii) the Indemnitor shall not be obligated to indemnify the Indemnified Party hereunder for any settlement entered into or any judgment that was consented to without the Indemnitor’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed.

Section 5.05. Indemnification Procedure other than for Third-Party Claims. An Indemnified Party shall notify the Indemnitor in writing promptly, of its discovery of any matter

 

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that does not involve a Third-Party Claim; provided that a failure by a Party to provide timely notice shall not affect the rights or obligations of such Party other than if the other Party or its Affiliates shall have been actually prejudiced as a result of such failure. Such notice shall (a) state that the Indemnified Party has paid Losses or anticipates that it shall incur liability for Losses for which such Indemnified Party is entitled to indemnification pursuant to this Agreement and (b) specify to the extent practicable in reasonable detail each individual item of Loss included in the amount so stated, the date such item was paid, the basis for any anticipated liability and the nature of the misrepresentation, breach of warranty, breach of covenant or claim to which each such item is related and the computation of the amount to which such Indemnified Party claims to be entitled hereunder. The Indemnified Party shall reasonably cooperate and assist the Indemnitor in determining the validity of any claim for indemnity by the Indemnified Party and in otherwise resolving such matters. Such reasonable assistance and cooperation shall include providing reasonable access to and copies of information, records and documents relating to such matters, furnishing employees to assist in the investigation, defense and resolution of such matters and providing legal and business assistance with respect to such matters.

Section 5.06. Exclusive Remedy. Each Party acknowledges and agrees that, following the Effective Date, other than (a) in the case of actual fraud by the Company or MSS or any of their respective Affiliates or Representatives, (b) as expressly set forth in this Agreement, and (c) with respect to equitable relief available hereunder including Section 7.09(b), the indemnification provisions of this Article V shall be the sole and exclusive remedy of such Party for any Third-Party Claims arising from or related to this Agreement. Any first party claims arising from or related to this Agreement, whether in contract, tort or otherwise, shall be subject to Section 5.02.

ARTICLE VI

TERM AND TERMINATION

Section 6.01. Term and Termination.

(a) Each Scheduled Service and access to each Scheduled Facility shall be provided for a term (the “Initial Scheduled Term”) commencing and ending, in each case, on the dates set forth for such Scheduled Service or such Scheduled Facility in Schedule 2.01-1 and Schedule 2.01-2 (in the case of the Services) or Schedule 2.02-1 and Schedule 2.02-2 (in the case of access to the Facilities), respectively, or such shorter term if earlier terminated pursuant to the terms of this Agreement. As Recipients, the Parties agree to use, and to cause their Affiliates to use, their reasonable best efforts to avoid extending the Initial Scheduled Terms; however, upon the provision of written notice to the applicable service manager and the Contract Manager of the Provider at least three (3) months prior to the end of the Initial Scheduled Term where such Initial Scheduled Term ends in 2017 and at least four (4) months prior to the end of the Initial Scheduled Term where such Initial Scheduled Term ends in 2018 or later, in each case with respect to any such Scheduled Service or Scheduled Facility, the Recipient may request the Provider to extend such Initial Scheduled Term up to two separate three (3) month terms (the “Extended Scheduled Term”, and together with the Initial Scheduled Term, the “Scheduled

 

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Term”) on terms as shall be mutually agreed to in writing by the Parties, (i) with the Scheduled Service Charge for such Scheduled Service or Scheduled Facility increasing by 10% (i.e., 1.1 times the Scheduled Service Charge then in effect, which, by way of clarification, includes any increases contemplated in Section 3.01(a)) from and after the last day of the Initial Scheduled Term for such Scheduled Service or Scheduled Facility and (ii) with the Scheduled Service Charge for such Scheduled Service or Scheduled Facility increasing by an additional 10% (i.e., 1.1 times the Scheduled Service Charge then in effect (which, by way of clarification, includes any increases contemplated in Section 3.01(a) and in sub-clause (i) above) from and after the date that is the three (3) month anniversary of the last day of such Initial Scheduled Term, unless otherwise specified in the relevant Schedule for such Service or Facility. A Provider will have no obligation to provide a Service or access to a Facility beyond the Scheduled Term unless otherwise agreed in writing, including as to an increase in Service Charges, if any, for providing such Service or access to a Facility. For any Service or access to a Facility for which the Initial Scheduled Term is twenty-four (24) months or more, a Recipient shall not be entitled to an Extended Scheduled Term for such Service or access to a Facility if the plan for Migration Services in connection with such Service or access to such Facility has not been completed in all material respects six (6) months prior to the end of the Initial Scheduled Term or the Parties have agreed that such plan cannot be completed at such time. Notwithstanding the foregoing or any other provision herein to the contrary, to the extent either Party’s (i) failure to complete Knowledge Transfer Services in accordance with the time frames agreed to by Parties and the standards set forth herein or (ii) failure to provide a Scheduled Service or Scheduled Facility in accordance with the standards set forth herein prohibit or materially diminishes the ability of a Recipient to terminate a Service or access to a Facility during the Initial Scheduled Term or Extended Scheduled Term (the “Agreed Term”), as applicable, such Agreed Term, as well as the term for any related Knowledge Transfer Services, Third-Party Vendor Services, Migration Services, Resumed Facility, and Resumed Services shall be extended, without penalty to the Recipient, for a reasonable amount of time, to be agreed to by the Parties, to enable such Recipient to terminate such Service or access to a Facility. If the Parties are unable to agree upon the length of such extension, the dispute shall be rapidly and timely escalated and resolved in accordance with Section 7.09(a)(i) on an expedited basis.

(b) Notwithstanding the term for providing any Service or access to any Facility as set forth in Schedule 2.01-1, Schedule 2.01-2, Schedule 2.02-1 or Schedule 2.02-2, respectively, (i) a Service or access to a Facility may be terminated earlier by MSS if the Company is in material breach of the terms of this Agreement related to such Service or access to such Facility and the Company fails to cure such breach within thirty (30) days of MSS delivering a written notice of such breach to the Company in accordance with Section 7.03 (it being understood and agreed that the failure of the Company or a Recipient that is an Affiliate of the Company to pay any outstanding Scheduled Service Charge or other amount due, and not subject at the time of termination to a dispute pursuant to Section 3.02, to MSS or the applicable Provider shall be a material breach of the terms of this Agreement with respect to the Service or Facility for which the Company has not paid such Scheduled Service Charge); (ii) a Service or access to a Facility may be terminated earlier by the Company if MSS is in material breach of the terms of this Agreement related to such Service or access to such Facility and MSS fails to cure such breach within thirty (30) days of the Company delivering a written notice of such breach to MSS in accordance with Section 7.03 (it being understood and agreed that the failure of MSS or a Recipient that is an Affiliate of MSS to pay any outstanding Scheduled Service Charge or other

 

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amount due, and not subject at the time of termination to a dispute pursuant to Section 3.02, to the Company or the applicable Provider shall be a material breach of the terms of this Agreement with respect to the Service or Facility for which MSS has not paid such Scheduled Service Charge); (iii) the Company may terminate this Agreement if MSS or Parent commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors or shall take any corporate action to authorize any of the foregoing; and (iv) MSS may terminate this Agreement if the Company or BHF commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors or shall take any corporate action to authorize any of the foregoing.

(c) (i) With respect to any Service or access to any Facility (but excluding Changes set forth in Section 2.12(d)), a Party in its capacity as, or on behalf of its Affiliate which is, a Recipient may terminate such Service or access to such Facility, in whole, or in part (in accordance with Section 6.01(d)): (A) for any reason or no reason upon its Contract Manager providing at least thirty (30) days’ prior written notice to the applicable service manager and the Contract Manager of the Provider of such Service or access to such Facility (unless a longer notice period is specified in the Schedules), in each case, subject to the obligation to pay any applicable termination charges pursuant to Section 6.02 including Section 6.02(b); provided, that in the event that such termination of a Service or access to a Facility is likely to cause the applicable Provider to provide notices to affected employees under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101–2109, or applicable state law acts, then the Contract Manager of the Recipient shall provide the Contract Manager of the Provider with prior written notice of termination at least as long as the sum of (1) the longest applicable time period under the applicable acts for the Provider to provide notices to affected persons under those acts plus (2) one month (e.g., a 60 day WARN Act requirement for one affected location and a 90 day WARN Act requirement for a second affected location would require termination notice from the Contract Manager of the Recipient at least 90 days + one month before the last date of a Service or access to a Facility); (B) at any time if a related Service or access to a Facility has been terminated; provided that the Service or access to such Facility does not provide a dependency for non-terminating Services or access to Facilities; and (C) upon mutual agreement of the Parties. Any Party in its capacity as, or on behalf of a third-party or Affiliate that is, a Provider may terminate any Service or access to any Facility pursuant to Section 2.08, subject to Recipient’s obligation to pay any applicable termination charges pursuant to Section 6.02.

(ii) If a Service or access to a Facility is terminated, the relevant Schedule, if applicable, shall be updated to reflect such termination. The effective date for termination of any Service (other than Knowledge Transfer) or access to any Facility shall be the last day of a

 

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calendar month. Within ten (10) Business Days following receipt of a notice of termination in accordance with Section 6.01(c), the applicable Contract Manager, on behalf of such Provider, shall send to the applicable service manager and the Contract Manager for the Recipient a written notice that either (x) states that the Service or access to the Facility for which termination is requested has no dependencies and can be terminated on the requested date or (y) to the extent that such Party’s ability to provide or cause to be provided a Service or access to a Facility, as the case may be, is dependent on the continuation of another Service or access to another Facility that the Recipient seeks to terminate, describes any such dependency to such Recipient, in which case the Service or access to a Facility sought to be terminated shall not terminate and the Parties shall work in good faith to determine how and when such Service or access to such Facility can be terminated.

(d) A Contract Manager, on behalf of a Party or its Affiliate that is a Recipient, may from time to time request a reduction in part of the scope or amount of any Service or access to any Facility or the partial termination thereof by providing at least thirty (30) days’ prior written notice to the applicable service manager and Contract Manager for the Provider of such Service in access to such Facility, in which case the Parties shall cause the applicable Provider and Recipient to discuss the feasibility of such a reduction or partial termination in good faith and the appropriate reductions in scope or amount to the relevant Service Charges or other applicable charges in light of all relevant factors, including the costs and benefits to the Provider of any such reductions and the applicable charges pursuant to Section 6.02(b). If the applicable Recipient, Provider, and Contract Managers agree on the terms of such reduction or partial termination, which terms shall be in writing and approved by the Contract Managers, then the relevant Schedule, if applicable, shall be updated to reflect any such reduced Service or access to such Facility and the Provider shall provide the reduced or partially terminated Service or access to Facility in accordance with the agreed to terms.

(e) Notwithstanding the foregoing in this Section 6.01, the Parties acknowledge and agree that there are certain Services on Schedule 2.01-1 related to policy administration systems, some of which are the subject of an outsourcing agreement known as “Project Panorama” (all such Services, whether or not related to Project Panorama, are the “Panorama Related Services” and are designated as such on Schedule 2.01-1) and all such Services are currently expected to have an Initial Term of at least 36 months, although the scope and amount of such Services may vary over the 36 months in accordance with Section 6.01(d). By the end of 2018, the Parties will evaluate the duration of the Initial Term for each of the Panorama Related Services and decide whether to extend or modify the Initial Term, taking into account the progress on the implementation of Project Panorama and the migration of certain systems to a third-party vendor and the migration plans of BHS.

(f) In the event that the Parties or their Affiliates elect to outsource one or more of the policy administration systems not already a part of the outsourcing transaction commonly known by the Parties as “Project Panorama” as it exists on the Effective Date (e.g., the Parties enter into “Project Panorama II”), both Parties will work in good faith to find a solution for Services and Facilities impacted by such outsourcing transaction. As part of such a solution, the Parties shall consider the timing of the termination of such Services and Facilities and the allocation between the Parties, if any, of (i) costs to decommission systems, (ii) direct and indirect costs of the administration of the subject policies, (iii) costs to eliminate stranded

 

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assets (other than allocated corporate overhead) and (iv) other related expenses in connection with ceasing such Services and Facilities. Neither Party shall have any obligation to enter into such an outsourcing transaction. If the Company or its Affiliates enter into such an outsourcing transaction but MSS or its Affiliates do not, then migration assistance, if any, to be provided by MSS and its Affiliates shall be determined in accordance with Section 2.23.

Section 6.02. Termination Charges.

(a) Upon early termination of any Scheduled Service or Scheduled Facility pursuant to Section 6.01(c), the Recipient shall reimburse the Provider the following amounts of all “kill” fees and other similar fees actually paid by such Provider or any of its Affiliates to unaffiliated third-parties that were engaged solely in order to provide such Scheduled Service or Scheduled Facility, which fees were incurred in connection with the early termination of the Scheduled Service or Scheduled Facility and to the extent such “kill” fees and similar fees would not have been incurred had the Recipient continued to receive the applicable Scheduled Service or Scheduled Facility for the originally contemplated Scheduled Term thereof: (i) during the Initial Scheduled Term – fifty percent (50%) of all such fees; and (ii) during the Extended Scheduled Term – one hundred percent (100%) of all such fees. In addition, upon early termination of any Scheduled Service or Scheduled Facility pursuant to Section 6.01(c), the Recipient shall reimburse the Provider for any costs that would not have been incurred had the Recipient continued to receive the applicable Scheduled Service or Scheduled Facility for the originally contemplated Scheduled Term or Extended Scheduled Term thereof, as the case may be. Each Provider shall use commercially reasonable efforts to minimize the existence and amount of such early termination charges, “kill” fees and other amounts otherwise due and payable under this Section 6.02. All termination charges, “kill” fees and other amounts due and payable under this Section 6.02 shall be due and payable to the Provider in accordance with Article III.

(b) If all or a portion of the Scheduled Service Charge for a Scheduled Service or access to a Scheduled Facility is a Pass-Through Charge or includes a payment to an unaffiliated third-party, which payment can be reduced by the early reduction or early termination of the Scheduled Service or access to the Scheduled Service, then if a Recipient reduces or terminates such Scheduled Service or access to a Scheduled Facility pursuant to Section 6.01(c)(i) and the notice period for reduction or termination by the Provider or its Affiliate of such unaffiliated third party is greater than 30 days but less than 181 days, then (i) the Recipient shall provide a notice of termination pursuant to Section 6.01(c)(i) that is greater than such notice period for termination by Provider or (ii) the Recipient shall pay the difference in Pass-Through Charges or payments to the unaffiliated third-party attributable to the difference in notice that the Recipient provided to the Provider and the amount of notice that the Provider or its Affiliate would need to give to the third party so as to attain the reduction or cancelation. For example, if a vendor of a Pass-Through Service requires the Provider to provide 90 days’ prior notice to reduce or terminate a service that Recipient receives hereunder, then Recipient would either need to give 91 days’ advance notice to terminate such Service and bear no additional Pass-Through Charge for such Service upon termination or the Recipient could provide 30 days’ prior notice of termination and would pay 61 additional days of Pass-Through Charges after termination of the Service.

 

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Section 6.03. Effect of Termination.

(a) Upon termination of any Service or access to any Facility in accordance with this Agreement and subject to Section 6.02, the Provider of such terminated Service or access to the applicable Facility shall have no further obligation to provide such terminated Service or access to the applicable Facility, and the Recipient of such terminated Service or access shall have no obligation to pay any Service Charges, Pass-Through Charges and other amounts thereto; provided that such Recipient shall remain obligated to the Provider for any and all amounts due and payable in respect of such terminated Service or access provided prior to the effective date of termination. Any and all licenses to Intellectual Property granted to a Recipient and/or Provider hereunder in connection with the provision of a terminated Service or terminated access to a Facility shall immediately cease upon such termination, except to the extent such Intellectual Property is needed for the relevant Recipient to fulfill its obligations under, or obtain the benefits under, this Agreement or the other Transaction Documents.

(b) As promptly as practicable upon termination of this Agreement, or, if applicable, upon earlier termination of any particular Service or access to a Facility (i) each Party shall deliver, or shall cause to be delivered to the other Party, all materials and property in its possession or control (or the possession or control of an Affiliate) that are owned by or licensed to the other Party or its Affiliates (including any Work Product owned by such Party or its Affiliates in whatever state of completion as well as any data and Confidential Information owned, licensed or leased by such Party), and (ii) subject to any Transaction Document to the contrary, each Party shall make a good faith effort to delete from its Systems (and use commercially reasonable efforts to cause Providers that are not its Affiliates to delete from their Systems) all Work Product, data and Confidential Information owned, licensed or leased by the other Party or its Affiliates that are no longer needed for such Party to fulfill its obligations under, or obtain the benefits under, this Agreement or the other Transaction Documents. Notwithstanding the foregoing, nothing herein shall require either Party to delete any Confidential Information data or Work Product from any back-up or disaster recovery media; provided that such Work Product data and Confidential Information is not accessed or used for any purpose other than restoration of information and data of such Party commingled with such Work Product and Confidential Information; provided, further, that such back-up or disaster recovery media is securely disposed of or recycled in accordance with the Party’s policies and practices, which in all cases shall be commercially reasonable and meet industry standards.

(c) In the event that a Provider or its Affiliates have purchased any resources in the name of or on behalf of the Recipient or its Affiliates and has fully charged such purchase as a Pass-Through Charge or if a Provider has licensed any resources solely in connection with the provision of the Services or access to the Facilities for the Recipient or its Affiliates and fully charged such license as a Pass-Through Charge (each, an “Acquired Resource”), then upon payment of such Pass-Through Charge, the Provider shall: (i) transfer to the Recipient all right, title and interest that such Provider holds in such Acquired Resource, including any necessary documentation to evidence transfer of ownership, and (ii) deliver such Acquired Resource to such Recipient at no additional charge, except for any charges, if any, incurred by such Provider in transferring such Acquired Resource, which shall be paid by such Recipient, upon the

 

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termination of the last Service or termination of access to the last Facility hereunder for which such Acquired Resource is necessary; provided, however, that for any Acquired Resource that is a license for Intellectual Property, the Provider shall be obligated to transfer and deliver such Acquired Resource to the Recipient only if it has licensed such Acquired Resource in the name of or on behalf of such Recipient or its Affiliates. The Provider shall exercise its commercially reasonable efforts to license any Acquired Resource in the name of or on behalf of the Recipient or its Affiliates and, in the event it is unable to do so or reasonably believes it will not be able to do so, it shall so notify such Recipient in writing prior to acquiring or attempting to acquire such license and such Provider and Recipient shall discuss in good faith commercially reasonable alternatives that could be licensed in the name of or on behalf of such Recipient or its Affiliates; provided, however, that if such Provider and Recipient do not agree to a commercially reasonable alternative within fifteen (15) days of commencement of such good faith discussions, the Recipient shall provide written notice to the Provider that either (x) states that the Provider may license such Acquired Resource in the name of the Provider or (y) provides notice, under Section 6.01(c), of termination of the Service for which the Intellectual Property is required. The Provider shall not be liable for any delay in the provision of a Service or access to Facility that occurs during the fifteen (15) day discussion period between the Parties solely to the extent that such delay is caused by the inability to obtain the Acquired Resource in the name of the Recipient. Each Party shall from time to time, and shall cause its Affiliates to, execute any documents and take any other actions reasonably requested by the other Party to effectuate the intent of this Section 6.03(c), and the Recipient shall reimburse the Provider or its Affiliates the Agreed Price related to such actions.

(d) In connection with the termination of this Agreement, Article I, Article V, Article VII, Section 2.19, Section 6.02, this Section 6.03 and Section 6.04, and liability for all amounts due and payable under this Agreement shall continue to survive indefinitely.

Section 6.04. Force Majeure.

(a) No Party (or any Person acting on its behalf) shall have any liability or responsibility for any interruption, delay or other failure to fulfill any obligation (other than a payment obligation) hereunder so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of a Force Majeure, provided that such Party (or such Person) shall have exercised commercially reasonable efforts to minimize the effect of a Force Majeure on its obligations, including, if applicable, implementing its disaster recovery and/or business continuity plans. In the event of an occurrence of a Force Majeure, the Party whose performance is affected thereby shall give notice (orally or in writing) to the applicable service manager and Contract Manager of any suspension of the Services or access to the Facilities as soon as reasonably practicable to the other stating the date and extent of such suspension and the cause thereof, and such non-performing Party shall resume the performance of such obligations as soon as reasonably practicable upon the cessation of such Force Majeure and its effects.

(b) During the period of a Force Majeure affecting the Provider, the Recipient shall be entitled to seek an alternative service provider with respect to the Services affected or access to the Facilities affected and the incremental cost increase for any such alternative service provider shall be split equally by such Provider and Recipient during the Initial Scheduled Term

 

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and shall be paid by such Recipient during any Extended Scheduled Term. If a Force Majeure shall continue to exist for more than fifteen (15) consecutive days during an Initial Scheduled Term, the Recipient shall be entitled to permanently terminate the Services affected or access to the Facilities affected upon notice in accordance with Section 7.03 and with no termination charges due pursuant to Section 6.02 or otherwise in connection with such termination; if a Force Majeure shall continue to exist for more than fifteen (15) consecutive days during an Extended Scheduled Term, either Party shall be entitled to permanently terminate the Services affected or access to the Facilities affected upon notice in accordance with Section 7.03 and, if Recipient terminates the Services or access to the Facilities, Recipient shall pay the termination charges due pursuant to Section 6.02. The Recipient shall be relieved of the obligation to pay any Service Charges, Pass-Through Charges and other amounts for the provision of the affected Services or access to the affected Facilities that accrued for the period that such Services and access were suspended.

ARTICLE VII

GENERAL PROVISIONS

Section 7.01. Treatment of Confidential Information.

(a) Each Party shall not, and shall cause other Persons under its control (including Affiliates and Representatives) that are providing or receiving the Services or access to the Facilities or that otherwise have access to information of the other Party that is confidential or proprietary, including Personally Identifiable Information and Work Product (“Confidential Information”), not to, disclose to any other Person or use, except for purposes of this Agreement, any Confidential Information of the other Party that after the Effective Date (other than such Confidential Information that is generated between the Effective Date and the Disaffiliation Date which is known to the other Party because of their status as Affiliates and which relates to such status) is provided or that becomes known or available pursuant to or as a result of the carrying out of the provisions of this Agreement; provided, however, that each Party may disclose (subject to applicable Law) Confidential Information of the other Party to the Providers and the Recipients and their respective Representatives, in each case who (x) require such information in order to perform their duties in connection with this Agreement and (y) have agreed to maintain the confidentiality of such information consistent with the terms hereof; and provided, further, that each Party may disclose (subject to applicable Law) Confidential Information of the other Party (other than Personally Identifiable Information) if (i) any such Confidential Information is or becomes generally available to the public other than (A) in the case of the Company, as a result of disclosure by MSS or the other Parent Group Members or any of their respective Representatives and (B) in the case of MSS, as a result of disclosure by the Company, any other Company Group Member (after the Effective Date) or any of their respective Representatives, (ii) any such Confidential Information (including any report, statement, testimony or other submission to a Governmental Entity) is required by applicable Law, Governmental Order, professional standard of an organization to which the Person is a member (such as FINRA), legal process (including, without limitation, by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) or such Governmental Entity to be disclosed, after prior notice in accordance with Section 7.03(b) has been given to the other Party to the extent such notice is permitted by applicable Law, provided that no such notice is required

 

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if prohibited by applicable Law, (iii) any such Confidential Information was or becomes available to such Party on a non-confidential basis and from a source (other than a Party to this Agreement or any Affiliate or Representative of such Party) that is not known to you to be subject to a contractual, legal, fiduciary or other obligation of confidentiality with respect to such information, (iv) any such Confidential Information is independently developed after the Effective Date without reference information that is to be kept confidential under this Article VII or (v) the other Party has provided prior written consent that the disclosing Party may disclose such Confidential Information.

(b) Notwithstanding anything to the contrary contained herein, regardless of whether the Company is still an Affiliate of the Parent, the Parties acknowledge and agree that the Parent Group and their respective Representatives may, without notifying the Company or any other Person, share any information relating to or obtained from the Company Group (or any Affiliates of the Company Group) with (1) the Federal Reserve Bank of New York and its Representatives, (2) the Board of Governors of the Federal Reserve System and its Representatives, (3) the Federal Deposit Insurance Corporation and its Representatives and (4) the Financial Stability Oversight Council and its Representatives, (5) the Internal Revenue Service or any other US taxing authority ((1), (2), (3), (4) and (5) collectively, the “Government Recipients”), in each case as MSS or the other Parent Group Members deem may be reasonably necessary or advisable in its good faith judgment; provided that MSS shall, to the extent permitted under applicable law, request or cause to be requested confidential treatment of any of information (the “Company Confidential Information”) relating to or obtained from the Company Group (or any Affiliates of the Company Group) which is Confidential Information. Subject to applicable Law, MSS shall promptly notify the Company in the event MSS learns that any Government Recipient has been requested or required to disclose any Company Confidential Information or has taken any action that, if taken by MSS or the other Parent Group Members, would be deemed a breach of this Section 7.01.

(i) Each Party shall, and shall cause its Affiliates to, (A) comply with any applicable Laws, its respective internal policies and any commitments in writing in its respective privacy policies, agreements with or notices to its applicable past, present or prospective customers, claimants, beneficiaries, employees or agents, or with respect to privacy or data security relative to Personally Identifiable Information (including with respect to its applicable past, present or prospective customers, claimants, beneficiaries, employees or agents), including its use and transfer; (B) take appropriate technical and organizational measures to protect Personally Identifiable Information against accidental or unlawful destruction or accidental loss, alteration or processing; and (C) implement and maintain adequate administrative, technical and physical safeguards and measures in conformity with commercial standards, including a written information security program to protect the security and confidentiality of such Personally Identifiable Information in compliance with all applicable Privacy Laws and other applicable Laws.

(ii) The Parties shall cooperate to obtain all such consents, registrations and notifications as may be required to enable the applicable Providers to Process the Personally Identifiable Information to the extent necessary to provide the Services or access to Facilities hereunder.

 

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(iii) Upon or at any time after the termination of a Service or access to a Facility or upon the written request of a Recipient that has provided Personally Identifiable Information to a Provider, the Provider shall return to such Recipient any Personally Identifiable Information in such Provider’s possession in connection with the provision of the terminated Service or access to a Facility as requested by such Recipient, except to the extent that such Provider is required to retain such Personally Identifiable Information in accordance with applicable Laws or such Provider’s own data retention policies.

(c) To the extent that a Provider receives, creates, has access to, uses or maintains Protected Health Information of a Recipient regarding individuals who are applicants for, owners of, or eligible for benefits under certain health insurance products and optional riders offered by or through a Recipient or its Affiliates in accordance with requirements of HIPAA and related regulations, as may be amended from time to time, such Provider agrees to the following requirements:

(i) Provider shall not use or disclose PHI except (i) to perform functions, activities, or Services for, or on behalf of, such Recipient as specified in this Agreement and consistent with applicable Law, or (ii) for proper management or administration of Provider or its Affiliates, to the extent that such use or disclosure is permitted or required by applicable Law.

(ii) Provider shall use appropriate safeguards to prevent use or disclosure of PHI other than as permitted by this Agreement, and to implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of the electronic PHI that Provider creates, receives, maintains, or transmits on such Recipient’s behalf. Provider shall comply with all applicable privacy and security provisions of 45 C.F.R. part 164.

(iii) Provider shall promptly report to such Recipient any use or disclosure of, or any security incident relating to PHI not permitted by this Agreement of which Provider becomes aware and, to the extent caused by Provider’s breach, cure the breach and end the violation.

(iv) Provider shall ensure that any vendor who may receive or have access to such Recipient’s PHI agrees to the same restrictions and conditions that apply to Provider with respect to PHI hereunder and agrees to implement reasonable and appropriate safeguards to protect it.

(v) Provider shall promptly, upon such Recipient’s request, provide such Recipient with any PHI or information relating to PHI, as is necessary to provide individuals with access to, amendment of, and an accounting of disclosures of their PHI.

(vi) Provider shall make internal practices, books, and records (including policies and procedures) about the use and disclosure of such Recipient’s PHI available to the Secretary of the Department of Health and Human Services, in a time and manner mutually agreed to or designated by the Secretary of the Department of Health and Human Services, to determine such Recipient’s compliance with the HIPAA Privacy Rule (located at 45 C.F.R. Part 160 and Subparts A and E of Part 164).

 

50


(vii) Upon termination of this Agreement, at such Recipient’s direction, Provider will either return or destroy all of such Recipient’s PHI that Provider maintains in any form and retain no copies. If such return or destruction is not feasible, Provider shall extend the confidentiality protections of this Agreement to the PHI beyond such termination, in which case any further use or disclosure of the PHI will be solely for the purposes that make return or destruction infeasible. Destruction without retention of copies is deemed “infeasible” if prohibited by applicable Law or if not practicably removed from backup media.

Section 7.02. Security Incidents.

(a) In the event that either Party discovers a (i) any material breach of its security safeguards or measures or the Systems used to provide the Services or access to the Facilities including any incidents that are the subject of Section 2.17(g) or (ii) any breach or threatened breach of its security safeguards or measures that involves or may reasonably be expected to involve unauthorized access, disclosure or use of the other Party’s Confidential Information, including Personally Identifiable Information (each of (i) and (ii), a “Security Incident”), such Party shall, at its cost, (x) promptly (both orally, if practicable, and in any event in writing) notify the other Party of said Security Incident and (y) fully cooperate with the other Party (I) to take commercially reasonable measures necessary to control and contain the security of such Personally Identifiable Information, (II) to remedy any such Security Incident, including using commercially reasonable best efforts to identify and address any root causes for such Security Incident and (III) to keep such other Party advised of all material measures taken and other developments with respect to such Security Incident.

(b) Each Provider shall take all reasonable and appropriate steps, in consultation with the applicable Recipient, to protect the Systems and Confidential Information and to remediate unauthorized access to, disclosure of or use of any Systems or Confidential Information arising from a Security Incident or otherwise. Each modification requested by a Recipient to protect its System and/or Confidential Information shall be deemed a Change subject to the provisions of Section 2.12; provided, however, that any such approved modification request implemented to remediate a Security Incident shall be implemented at the sole cost of the Provider that experienced the Security Incident.

(c) Subject to requirements of applicable Law, the Party whose Personally Identifiable Information is subject to a Security Incident shall have the exclusive right, to provide notice of any Security Incident as applicable to its past, present or prospective customers, claimants, beneficiaries, employees or agents or any other individuals whose Personally Identifiable Information was subject to the Security Incident, and any law enforcement authority or Governmental Entity at the sole cost of the Provider that experienced the Security Incident; provided that if requirements of applicable Law prohibit the Party whose core information is subject to the Security Incident from having the exclusive right to provide such notice, the Parties shall cooperate to the fullest extent permitted by requirements of applicable Law to provide a mutually acceptable notice.

(d) Any disputes arising under this Section 7.02 shall be rapidly and timely escalated and resolved in accordance with Section 7.09(a)(i) on an expedited basis.

 

51


Section 7.03. Notices. Except as otherwise expressly provided herein, all notices, requests, claims, or demands provided for hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service or by registered or certified mail (postage prepaid, return receipt requested) to the relevant Persons at the applicable address(es) below (or at such other address as shall be specified in a notice given in accordance with this Section 7.03), along with a copy via e-mail to [TBD]@metlife.com (in the case of notices, requests, claims, or demands to MSS and/or the Parent) and [TBD]@brighthousefinancial.com (in the case of notices, requests, claims, or demands to the Company and/or BHF) and with optional courtesy copies to such Persons and the Contract Managers by e-mail; provided, however, that the following shall not be deemed “notices” under this Section 7.03: (i) communications concerning a disputed amount pursuant to Section 3.02, other than the initial written notice of such disputed amount and (ii) communications concerning a Dispute pursuant to Section 7.09(a) other than the Notice of Dispute).

 

  (i) if to MSS:

MetLife Services and Solutions, LLC

200 Park Avenue

New York, NY 10166

Attention: Joseph Cohen, Senior Vice President

with a copy to:

MetLife

200 Park Avenue

New York, NY 10166

Attention: General Counsel

 

  (ii) if to the Parent:

MetLife

200 Park Avenue

New York, NY 10166

Attention: Adam Hodes, Executive Vice President, Mergers & Acquisitions

with a copy to:

MetLife

200 Park Avenue

New York, NY 10166

Attention: General Counsel

 

52


  (iii) if to the Company:

Brighthouse Services, LLC

Gragg Building

11225 North Community House Road

Charlotte, NC 28277

Attention: Eric T. Steigerwalt, Chief Executive Officer

with a copy to:

Brighthouse Services, LLC

Gragg Building

11225 North Community House Road

Charlotte, NC 28277

Attention: Christine M. DeBiase, Senior Vice President and Secretary

 

  (iv) if to BHF:

Brighthouse Financial, Inc.

Gragg Building

11225 North Community House Road

Charlotte, NC 28277

Attention: Eric T. Steigerwalt, President and Chief Executive Officer

with a copy to:

Brighthouse Financial, Inc.

Gragg Building

11225 North Community House Road

Charlotte, NC 28277

Attention: Christine M. DeBiase, General Counsel and Secretary

Section 7.04. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the greatest extent possible.

Section 7.05. Entire Agreement. Except as otherwise expressly provided herein, this Agreement, any agreement for the provision of TPA Services or TSA Broker-Dealer Services, and the other Transaction Documents constitute the entire agreement of the Parties with respect to the subject matter of this Agreement and supersede all prior agreements and

 

53


undertakings, both written and oral, between or on behalf of MSS and/or its Affiliates, on the one hand, and the Company and/or its Affiliates, on the other hand, with respect to the subject matter of this Agreement.

Section 7.06. Assignment. This Agreement shall not be assigned, in whole or in part, by operation of law or otherwise without the prior written consent of the Parties; provided, however, that either Party may assign any or all of its rights and obligations hereunder to any of its Affiliates so long as such assignment does not release such Party from any liability hereunder incurred prior to such assignment. Any attempted assignment in violation of this Section 7.06 shall be void. This Agreement shall be binding upon, shall inure to the benefit of, and shall be enforceable by the Parties and their successors and permitted assigns.

Section 7.07. No Third-Party Beneficiaries. Except as set forth in Article V with respect to MSS Indemnified Parties and Company Indemnified Parties, this Agreement is for the sole benefit of the Parties and their successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person (including any policyholder of the Parent Group or the Company Group) any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 7.08. Amendment; Waiver. No provision of this Agreement may be amended, supplemented or modified except by a written instrument signed by all the Parties. No provision of this Agreement may be waived except by a written instrument signed by the Party against whom the waiver is to be effective. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 7.09. Dispute Resolution.

(a) Any dispute, controversy, or claim arising from, relating to, or in connection with this Agreement, the transactions contemplated by this Agreement and all claims and defenses arising out of or relating to any such transaction or this Agreement or the formation, breach, termination, or validity thereof (a “Dispute”) other than indemnity claims which are addressed in Section 5.04 and Section 5.05 shall be resolved as follows: the service managers of the Parties most immediately responsible for the issue giving rise to the Dispute shall seek to resolve such Dispute through informal good faith negotiation. If the Dispute is not resolved at that level of management, then the Dispute shall be escalated to the MSS Contract Manager and the Company Contract Manager for resolution in good faith. In the event such Contract Managers fail to meet or, if they meet, fail to resolve the Dispute within ten (10) Business Days (or such longer time as the Contract Managers may agree), then the claiming Party shall provide the other Party with a written “Notice of Dispute”, describing the nature of the Dispute, and the Dispute shall be escalated to the members of senior management of the Parties for resolution in good faith. In the event such members of senior management fail to meet, or if they meet, fail to resolve the Dispute within ten (10) Business Days after such Dispute has been escalated to them by the Contract Managers, then the Dispute shall be escalated to the Executive Vice President and Head of Global Technology and Operations for Parent and the Chief Executive Officer and President for BHF, or their respective designees for resolution in a

 

54


good faith. If such executives or their respective designees fail to resolve the Dispute within five (5) Business Days, the Parties shall retain all rights under applicable Law and this Agreement with respect to such Dispute. Except as otherwise set forth in Section 7.09(b), the procedures set forth in this Section 7.09(a) must be satisfied as a condition precedent to a Party commencing any dispute resolution procedures pursuant to Section 7.09(c), and a Party’s failure to comply with such procedures shall constitute cause for the dismissal without prejudice of any such proceeding.

(i) Notwithstanding the foregoing, in the event of a Dispute arising under Section 2.03(b), Section 2.11(a), Section 2.12(c), Section 2.12(d), Section 2.17(g), Section 2.23, Section 3.02, Section 6.01(a) or Section 7.02(d), or as otherwise agreed to by the Parties in writing, the Dispute shall be immediately referred to the Contract Managers, who shall have five (5) Business Days to resolve the Dispute (or such shorter time if the Contract Managers agree that they cannot resolve the Dispute) before escalation to the senior management along with the applicable Notice of Dispute. Thereafter, the procedures and time frames set out beginning in the fourth sentence of Section 7.09(a) shall apply.

(ii) Each Party may replace the designated member of senior management or executive level administrative officer with an employee or officer with comparable knowledge, expertise and decision-making authority from time to time upon written notice to the other Party pursuant to Section 7.03(b). The applicable Party shall use commercially reasonable efforts to provide at least thirty (30) days prior written notice of any such change.

(b) Notwithstanding any other provisions herein to the contrary, each Party hereby acknowledges that money damages may be an inadequate remedy for a breach or anticipated breach of this Agreement because of the difficulty of ascertaining the amount of damage that will be suffered in the event that this Agreement is breached. Therefore, in the event of a breach or anticipated breach of this Agreement by the other Party or its Affiliates, and notwithstanding anything to the contrary contained herein, each Party may, in addition to any other remedies available to it, seek an injunction, on written notice to the other Party in accordance with Section 7.03(b) in a state or federal court located in the county of New York to prohibit such breach or anticipated breach. Each Party acknowledges and agrees that an injunction is a proper, but not exclusive, remedy available to each Party and that the harm from any breach or anticipated breach of the covenants set forth in this Agreement would be irreparable and immediate.

(c) Except as provided by Section 7.09(b), and subject to complying with Section 7.09(a), the provisions of Sections 6.3 and 6.4 of the Master Separation Agreement shall apply mutatis mutandis to this Agreement.

Section 7.10. Governing Law. This Agreement, all transactions contemplated by this Agreement and all claims and defenses arising out of or relating to any such transaction or this Agreement or the formation, breach, termination or validity of this Agreement, shall in all respects be governed by, and construed in accordance with, the Laws of the State of New York without giving effect any conflicts of Law to the extent such principles or rules would require or permit the application of the Laws of another jurisdiction.

 

55


Section 7.11. Rules of Construction. Interpretation of this Agreement shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include any other gender as the context requires; (b) references to the terms Preamble, Recital, Article, Section, paragraph, Schedule and Exhibit are references to the Preamble, Recitals, Articles, Sections, paragraphs, Schedules and Exhibits to this Agreement unless otherwise specified; (c) references to “$” means U.S. dollars; (d) the word “including” and words of similar import when used in this Agreement means “including without limitation,” unless otherwise specified; (e) the word “or” shall not be exclusive; (f) the words “herein,” “hereof”, “hereunder” or “hereby” and similar terms are to be deemed to refer to this Agreement as a whole and not to any specific section unless expressly stated otherwise; (g) the headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (h) this Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting or causing any instrument to be drafted; (i) if a word or phrase is defined, the other grammatical forms of such word or phrase have a corresponding meaning; (j) references to any statute, listing rule, rule, standard, regulation or other law include a reference to (1) the corresponding rules and regulations and (2) each of them as amended, modified, supplemented, consolidated, replaced or rewritten from time to time; (k) references to any section of any statute, listing rule, rule, standard, regulation or other law include any successor to such section; and (l) for the avoidance of doubt, the Separation Date and Disaffiliation Date may be the same day or may be two distinct days.

Section 7.12. Obligations of Parties. Each obligation of a Provider hereunder to take (or refrain from taking) any action hereunder shall be deemed to include an undertaking (a) if the Provider is not the Company or any of its Affiliates, by MSS to, and to cause such Provider to, take (or refrain from taking) such action and (b) if the Provider is not MSS or any of its Affiliates, by the Company to, and to cause such Provider to, take (or refrain from taking) such action. Each obligation of a Recipient or any of its Affiliates hereunder to take (or refrain from taking) any action hereunder shall be deemed to include an undertaking (i) if the Recipient is not MSS or any of its Affiliates, by the Company to, and to cause such Recipient or such Affiliate to, take (or refrain from taking) such action, and (ii) if the Recipient is not the Company or any of its Affiliates, by MSS to, and to cause such Recipient or such Affiliates to, take (or refrain from taking) such action.

Section 7.13. Counterparts. This Agreement may be executed in one or more counterparts, and by each Party in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other means of electronic transmission shall be as effective as delivery of a manually executed counterpart of this Agreement.

 

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ARTICLE VIII

OBLIGATIONS OF PARENT AND BHF

Section 8.01. Obligations of Parent. Parent shall cause each Parent Group Member to take all necessary actions (a) for such Parent Group Member to perform its obligations hereunder to the extent that MSS is unable to cause such Parent Group Member to do so or (b) to perform MSS’s obligations to the extent MSS is unable to do so, in either case, including requiring such Parent Group Member to make payments due from any Parent Group Member pursuant to Articles III and V hereunder.

Section 8.02. Obligations of BHF. BHF shall cause each Company Group Member to take all necessary actions (a) for such Company Group Member to perform its obligations hereunder to the extent that the Company is unable to cause such Company Group Member to do so or (b) to perform the Company’s obligations to the extent that the Company is unable to do so, in either case, including requiring such Company Group Member to make payments due from any Company Group Member pursuant to Articles III and V hereunder.

 

 

[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.

 

METLIFE SERVICES AND SOLUTIONS, LLC
By:    
Name:
Title:
FOR PURPOSES OF ARTICLE VIII ONLY
METLIFE, INC.
By:    
Name:
Title:

 

Signature Page of

Transition Services Agreement

 


BRIGHTHOUSE SERVICES, LLC
By:    
Name:
Title:
FOR PURPOSES OF ARTICLE VIII ONLY
BRIGHTHOUSE FINANCIAL, INC.
By:    
Name:
Title:

 

Signature Page of

Transition Services Agreement

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF BRIGHTHOUSE FINANCIAL, INC.

 

Name of Subsidiary

  

Jurisdiction of
Incorporation or
Organization

Brighthouse Assignment Company

                                            Connecticut

Brighthouse Connecticut Properties Ventures, LLC

                                            Delaware

Brighthouse Holdings, LLC

                                            Delaware

Brighthouse Investment Advisers, LLC

                                            Massachusetts

Brighthouse Life Insurance Company

                                            Delaware

Brighthouse Life Insurance Company of NY

                                            New York

Brighthouse Reinsurance Company of Delaware

                                            Delaware

Brighthouse Renewables Holding, LLC

                                            Delaware

Brighthouse Securities, LLC

                                            Delaware

Brighthouse Services, LLC

                                            Delaware

Daniel/Brighthouse Midtown Atlanta Master Limited Liability Company

                                            Delaware

ML1065 Hotel, LLC

                                            Delaware

Euro TI Investments LLC

                                            Delaware

Euro TL Investments LLC

                                            Delaware

Greater Sandhill I, LLC

                                            Delaware

New England Life Insurance Company

                                            Massachusetts

The Prospect Company

                                            Delaware

TIC European Real Estate LP, LLC

                                            Delaware

TLA Holdings LLC

                                            Delaware

TLA Holdings II LLC

                                            Delaware

1075 Peachtree, LLC

                                            Delaware
EX-99.1
Table of Contents

Exhibit 99.1

 

LOGO

[●], 2017

Dear MetLife Shareholder:

Last year, we announced our plan to pursue the separation of MetLife into two independent, industry-leading companies that will be well-positioned to capture growth opportunities by operating with greater focus on their respective businesses and strategic priorities.

The first, MetLife, will continue to be the market leader in the employee benefits business in the U.S., and will drive value-creating growth in its insurance, annuities and employee benefits businesses in the 44 global markets where it competes.

The second, Brighthouse Financial, will be a major provider of individual life insurance and annuity products in the U.S. with a strategic focus on cost optimization and developing innovative products to meet the needs of its target markets and distribution partners.

When the separation is complete, we believe investors will be better able to value MetLife and Brighthouse Financial on their respective financial, operational and risk characteristics.

Our goal is for MetLife to be a simpler company that can perform well in a variety of macroeconomic environments. We expect our exposure to market risk will materially diminish and our free cash flow will be more predictable. We also expect our earnings will be more diversified between our U.S. and international operations.

We intend for the separation to take the form of a pro rata distribution of at least 80.1 percent of the shares of Brighthouse Financial, Inc.’s common stock to the holders of MetLife, Inc. common stock. We expect the distribution will be tax-free to MetLife’s U.S. shareholders for U.S. federal income tax purposes, except for cash that shareholders receive in lieu of fractional shares.

Each MetLife shareholder on the record date of [●] will receive shares of Brighthouse Financial (and cash for fractional shares). You do not need to take any action to receive shares of Brighthouse Financial common stock to which you are entitled as a MetLife shareholder. You do not need to pay any consideration or surrender or exchange your MetLife shares.

I encourage you to read the attached Information Statement, which MetLife is making available to all shareholders who held shares as of []. It describes the separation in detail and provides important business and financial information about Brighthouse Financial.


Table of Contents

I am confident the separation will create two dynamic companies poised to win in the marketplace. We remain committed to working on your behalf to continue to build long-term shareholder value.

 

Sincerely,

Steven A. Kandarian

Chairman, President and Chief Executive Officer

MetLife Inc.

Forward-Looking Statements

This letter may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “will,” “expect,” “become,” “remain,” “believe,” “plan,” and other words and terms of similar meaning, or are tied to future periods, in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results.

Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of MetLife, Inc., its subsidiaries and affiliates. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements. Risks, uncertainties, and other factors that might cause such differences include the risks, uncertainties and other factors identified in MetLife, Inc.’s most recent Annual Report on Form 10-K (the “Annual Report”) filed with the U.S. Securities and Exchange Commission (the “SEC”), any Quarterly Reports on Form 10-Q filed by MetLife, Inc. with the SEC after the date of the Annual Report under the captions “Note Regarding Forward-Looking Statements” and “Risk Factors,” and other filings MetLife, Inc. makes with the SEC. MetLife, Inc. does not undertake any obligation to publicly correct or update any forward-looking statement if MetLife, Inc. later becomes aware that such statement is not likely to be achieved. Please consult any further disclosures MetLife, Inc. makes on related subjects in reports to the SEC.


Table of Contents

LOGO

[●], 2017

Dear Future Brighthouse Financial Shareholder:

I am honored to welcome you as a future shareholder of Brighthouse Financial, Inc. Established by MetLife, we are on a mission to help people achieve financial security by offering annuity and life insurance solutions that work in tandem with their portfolios to protect what they’ve earned and ensure it lasts.

From our first day as an independent company, Brighthouse Financial will be a major provider of life insurance and annuity solutions in the U.S., with more than $223 billion of total assets and 2.8 million insurance policies and annuity contracts in force as of March 31, 2017.

Building on our foundation as a former MetLife segment, we bring with us a seasoned management team focused on delivering transparent client solutions, consistent experiences for the advisors we work with, and sustained value creation for our clients, partners and shareholders.

We seek to be a financially disciplined and focused product manufacturer with an emphasis on independent distribution. We aim to leverage our large block of in-force life insurance policies and annuity contracts to operate more efficiently, and we believe our strategy of offering a targeted set of products will enhance our ability to invest in our business and distribute cash to our shareholders over time.

I encourage you to read more about Brighthouse Financial in the attached information statement. We are excited about our future, and look forward to having you as a shareholder.

 

Sincerely,

Eric T. Steigerwalt

President and CEO, Brighthouse Financial, Inc.


Table of Contents

Forward-Looking Statements

This letter may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “will,” “seek,” “intend,” “over time,” “aim,” “believe,” and other words and terms of similar meaning, or are tied to future periods, in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results.

Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of Brighthouse Financial, Inc., its subsidiaries and affiliates. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements. Risks, uncertainties, and other factors that might cause such differences include the risks, uncertainties and other factors identified in Brighthouse Financial, Inc.’s disclosures filed with the U.S. Securities and Exchange Commission (the “SEC”). Brighthouse Financial, Inc. does not undertake any obligation to publicly correct or update any forward-looking statement if Brighthouse Financial, Inc. later becomes aware that such statement is not likely to be achieved. Please consult any further disclosures Brighthouse Financial, Inc. makes on related subjects in reports to the SEC.


Table of Contents

 

Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

 

Preliminary Information Statement

(Subject to completion, dated June 2, 2017)

Information Statement

Distribution of Common Stock of

BRIGHTHOUSE FINANCIAL, INC.

 

 

We are sending you this information statement in connection with the separation of Brighthouse Financial, Inc. from MetLife, Inc. To effect the separation, MetLife will distribute at least 80.1% of the shares of Brighthouse’s common stock on a pro rata basis to the holders of MetLife common stock. We expect that the distribution of Brighthouse common stock will be tax-free to MetLife’s U.S. shareholders for U.S. federal income tax purposes, except for cash that shareholders receive in lieu of fractional shares.

If you are a record holder of MetLife common stock as of 5:00 p.m., New York City time on [●], 2017, which is the record date for the distribution, you will be entitled to receive [●] shares of Brighthouse common stock for every [●] shares of MetLife common stock you hold on that date. MetLife will distribute the shares of Brighthouse common stock in book-entry form, which means that we will not issue physical stock certificates. The distribution agent will not distribute any fractional shares of Brighthouse common stock. Instead, the distribution agent will aggregate fractional shares into whole shares, sell, or cause to be sold, the whole shares in the open market at prevailing market prices and distribute the aggregate cash proceeds of the sales, net of brokerage fees and other costs, pro rata, to each holder (net of any required withholding for taxes applicable to each holder) who would otherwise have been entitled to receive fractional shares in the distribution.

The distribution will be effective as of 5:00 p.m., New York City time, on [●], 2017. After the distribution becomes effective, we will be a separate, publicly traded company.

MetLife’s shareholders are not required to vote on or take any other action in connection with the distribution. We are not asking you for a proxy, and you are requested not to send us a proxy.

MetLife’s shareholders will not be required to pay any consideration for the shares of Brighthouse common stock they receive in the distribution, surrender or exchange their shares of MetLife common stock or take any other action in connection with the separation.

MetLife currently owns all of the outstanding shares of Brighthouse common stock. Until the distribution occurs, MetLife will have the sole and absolute discretion to determine and change the terms of the distribution, including establishing the record date for the distribution and the distribution date, as well as to reduce the number of shares of common stock it will retain, if any, following the distribution.

No trading market for Brighthouse common stock currently exists. We have applied to list Brighthouse common stock on The NASDAQ Stock Market LLC (“NASDAQ”) under the symbol “BHF”. Assuming the Brighthouse common stock is approved for listing, we anticipate that a limited trading market for Brighthouse common stock, commonly known as a “when-issued” trading market, will develop on or shortly before the record date for the distribution and will continue up to and including the date of the distribution. We anticipate “regular-way” trading of Brighthouse common stock will begin on the first trading day after the distribution date.

 

 

In reviewing this information statement, you should carefully consider the matters described in the section entitled “Risk Factors” beginning on page 31 of this information statement.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

This information statement is not an offer to sell, or a solicitation of an offer to buy, any securities.

The date of this information statement is [], 2017.

MetLife first mailed a Notice of Internet Availability of Information Statement Materials containing instructions on how to access this information statement to its shareholders on or about [●], 2017.

 


Table of Contents

TABLE OF CONTENTS

 

Section    Page  

Summary

     1  

Risk Factors

     31  

The Separation and Distribution

     79  

Formation of Brighthouse and the Restructuring

     90  

Recapitalization

     98  

Dividend Policy

     100  

Selected Historical Combined Financial Data

     101  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     104  

Quantitative and Qualitative Disclosures About Market Risk

     211  

Business

     221  

Regulation

     271  

Management

     284  

Compensation of Executive Officers and Directors

     291  

Beneficial Ownership of Common Stock

     296  

Certain Relationships and Related Person Transactions

     297  

Description of Capital Stock

     312  

Shares Eligible for Future Sale

     315  

Where You Can Find More Information

     316  

Glossary

     317  

Index to Financial Statements, Notes and Schedules

     F-1  

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This information statement may contain information that includes or is based upon forward-looking statements. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning, or are tied to future periods, in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, statements regarding the separation and distribution, including the timing and expected benefits thereof, the formation of Brighthouse and the recapitalization actions, including receiving required regulatory approvals and the timing and expected benefits thereof, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results.

Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of Brighthouse, its subsidiaries and affiliates. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others:

 

    risks relating to the formation of Brighthouse and our recapitalization;

 

    the timing of the separation and the distribution, whether the conditions to the distribution will be met, whether the separation and the distribution will be completed, and whether the distribution will qualify for non-recognition treatment for U.S. federal income tax purposes and potential indemnification to MetLife if the distribution does not so qualify;

 

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    the impact of the separation on our business and profitability due to MetLife’s strong brand and reputation, the increased costs related to replacing arrangements with MetLife with those of third parties and incremental costs as a public company;

 

    whether the operational, strategic and other benefits of the separation can be achieved, and our ability to implement our business strategy;

 

    our degree of leverage following the separation due to indebtedness incurred in connection with the separation;

 

    differences between actual experience and actuarial assumptions and the effectiveness of our actuarial models;

 

    higher risk management costs and exposure to increased counterparty risk due to guarantees within certain of our products;

 

    the effectiveness of our proposed exposure management strategy, and the timing of its implementation and the impact of such strategy on net income volatility and negative effects on our statutory capital;

 

    the additional reserves we will be required to hold against our variable annuities as a result of actuarial guidelines;

 

    a sustained period of low equity market prices and interest rates that are lower than those we assumed when we issued our variable annuity products;

 

    the effect adverse capital and credit market conditions may have on our ability to meet liquidity needs and our access to capital;

 

    the impact of regulatory, legislative or tax changes on our insurance business or other operations;

 

    the effectiveness of our risk management policies and procedures;

 

    the availability of reinsurance and the ability of our counterparties to our reinsurance or indemnification arrangements to perform their obligations thereunder;

 

    heightened competition, including with respect to service, product features, scale, price, actual or perceived financial strength, claims-paying ratings, credit ratings, e-business capabilities and name recognition;

 

    changes in accounting standards, practices and/or policies applicable to us;

 

    the ability of our insurance subsidiaries to pay dividends to us, and our ability to pay dividends to our shareholders;

 

    our ability to market and distribute our products through distribution channels; and

 

    our ability to attract and retain key personnel.

For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements included and the risks, uncertainties and other factors identified elsewhere in this information statement, including in the section entitled “Risk Factors.” Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.

 

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MARKET DATA

In this information statement, we present certain market and industry data and statistics. This information is based on third-party sources which we believe to be reliable. Market ranking information is generally based on industry surveys and therefore the reported rankings reflect the rankings only of those companies who voluntarily participate in these surveys. Accordingly, our market ranking among all competitors may be lower than the market ranking set forth in such surveys. In some cases, we have supplemented these third-party survey rankings with our own information, such as where we believe we know the market ranking of particular companies who do not participate in the surveys.

TRADEMARKS, SERVICE MARKS AND COPYRIGHTS

We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business. In addition, our names, logos and website names and addresses are our service marks or trademarks. Other trademarks, service marks and trade names appearing in this offering memorandum are the property of their respective owners. We also own or have the rights to copyrights that protect the content of our products. Solely for convenience, the trademarks, service marks, tradenames and copyrights referred to in this offering memorandum are listed without the ©, ® and symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and tradenames.

 

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SUMMARY

This summary highlights selected information from this information statement and provides an overview of Brighthouse, our separation from MetLife and MetLife’s distribution of our common stock to MetLife’s shareholders. For a more complete understanding of our business and the distribution, you should read the entire information statement carefully, particularly the discussion of “Risk Factors” beginning on page 31 of this information statement, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the audited historical combined and unaudited historical interim condensed combined financial statements of the MetLife U.S. Retail Separation Business (defined below) and the notes to those financial statements appearing elsewhere in this information statement.

We use the following terms to refer to the items indicated:

 

    the Company,” “we,” “our” and “us” refer to Brighthouse, the entity that at the time of the distribution will hold, through its subsidiaries, the assets (including the equity interests of certain MetLife subsidiaries) and liabilities associated with MetLife’s Brighthouse Financial segment;

 

    Brighthouse” refers to Brighthouse Financial, Inc., a Delaware corporation, and, where appropriate in context, to one or more of its subsidiaries, or all of them taken as a whole;

 

    MetLife” refers to MetLife, Inc., a Delaware corporation, and, where appropriate in context, to one or more of its subsidiaries, or all of them taken as a whole;

 

    the term “separation” refers to the separation of MetLife’s Brighthouse Financial segment from MetLife’s other businesses and the creation of a separate, publicly traded company, Brighthouse, to hold the assets (including the equity interests of certain MetLife subsidiaries) and liabilities associated with MetLife’s Brighthouse Financial segment from and after the distribution;

 

    the term “distribution” refers to the distribution of at least 80.1% of the shares of Brighthouse common stock outstanding immediately prior to the distribution date by MetLife to shareholders of MetLife as of the record date;

 

    the term “distribution date” means the date on which the distribution occurs, and we expect the separation to occur on such date as well.

For definitions of selected financial and product-related terms used within this information statement, refer to the Glossary beginning on page 317 of this information statement.

Prior to MetLife’s distribution of the shares of our common stock to its shareholders, MetLife will undertake a series of transactions described under “Formation of Brighthouse and the Restructuring” and “Certain Relationships and Related Person Transactions” (the “restructuring”). In the third quarter of 2016, MetLife reorganized its businesses into six segments: U.S.; Asia; Latin America; Europe, the Middle East and Africa (“EMEA”); MetLife Holdings; and Brighthouse Financial. In addition, MetLife will continue to report certain of its results of operations in Corporate & Other. Following the restructuring:

 

    MetLife will conduct the following businesses:

 

   

the remaining portions of MetLife’s former Retail segment, which MetLife does not plan to separate and include in Brighthouse, which will include the life and annuity business sold through Metropolitan Life Insurance Company (“MLIC”), General American Life Insurance Company (“GALIC”) and Metropolitan Tower Life Insurance Company (“MTL”), including the MLIC pre-demutualization closed block. These businesses are reflected in its MetLife Holdings segment that consists of operations relating to products and businesses no longer actively marketed by MetLife in the United States. The MetLife Holdings segment also includes the long-term care business, previously reported as part of MetLife’s former Group, Voluntary & Worksite Benefit (“GVWB”)

 



 

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segment, and the reinsurance treaty relating to MetLife’s former Japan joint venture, previously reported in Corporate & Other;

 

    the Property & Casualty business, the Retirement & Income Solutions business (formerly known as MetLife’s Corporate Benefit Funding segment) and the Group Benefits business (consisting of the remaining components of the GVWB segment, including the individual disability insurance business previously reported in MetLife’s former Retail segment), which are reflected in its U.S. segment;

 

    the U.S. Direct business, previously reported as part of MetLife’s Latin America segment, which was disaggregated and is reported in its U.S. segment and in Corporate & Other; and

 

    its Asia and EMEA segments.

 

    We will conduct our business principally through the following life insurance company subsidiaries of MetLife as well as several other legal entities which support the issuance, sale and marketing of our life insurance and annuity products:

 

    Brighthouse Life Insurance Company (“Brighthouse Insurance”), formerly known as MetLife Insurance Company USA (“MetLife USA”), our largest insurance operating company, domiciled in Delaware and licensed to write business in 49 states;

 

    New England Life Insurance Company (“NELICO”), domiciled in Massachusetts and licensed to write business in all 50 states; and

 

    Brighthouse Life Insurance Company of NY (“Brighthouse Insurance NY”), formerly known as First MetLife Investors Insurance Company (“FMLI”), domiciled in New York and licensed to write business in New York, which is a subsidiary of Brighthouse Insurance.

We refer to the audited historical combined financial statements of these entities as those of the “MetLife U.S. Retail Separation Business.”

In addition, certain specified assets and liabilities will be allocated between MetLife and us as described under “Formation of Brighthouse and the Restructuring” and “Certain Relationships and Related Person Transactions.”

Our Company

We are a major provider of life insurance and annuity products in the United States with $223 billion of total assets, total shareholder’s net investment of $15.1 billion, including accumulated other comprehensive income (“AOCI”), as of March 31, 2017, and approximately $653 billion of life insurance face amount in-force, as of December 31, 2016. Our in-force book of products consists of approximately 2.8 million insurance policies and annuity contracts as of March 31, 2017, which includes variable, fixed, index-linked and income annuities, universal life, term life, variable life and whole life insurance policies. We offer our products solely in the United States through multiple independent distribution channels and marketing arrangements with a diverse network of distribution partners.

Our Background and Overview

Prior to the distribution, the companies that will become our subsidiaries were wholly owned by MetLife, a global insurance holding company with a corporate history beginning in 1868. Brighthouse Insurance, which will be our largest operating subsidiary, was formed in November 2014 through the merger of three affiliated life insurance companies and a former offshore, internal reinsurance subsidiary that mainly reinsured guarantees associated with variable annuity products issued by MetLife affiliates. The principal purpose of the merger was

 



 

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to provide increased transparency relative to capital allocation and variable annuity risk management. In order to further our capabilities to market and distribute our products, prior to the distribution, MetLife will contribute to us (i) several entities including Brighthouse Insurance, NELICO and Brighthouse Insurance NY, (ii) a licensed broker-dealer, (iii) a licensed investment advisor and (iv) other entities which are necessary for the execution of our strategy. See “Formation of Brighthouse and the Restructuring — Our History.”

In 2012, MetLife changed the organizational structure of its Retail segment, of which we formed the principal part, to implement an integrated operating model with dedicated management. Consistent with this restructuring, over the succeeding four years MetLife has implemented certain actions with respect to its former Retail segment, including the establishment of a centralized office campus in Charlotte, North Carolina, and further bolstering the management team. This team, which has been responsible for managing MetLife’s retail business prior to the distribution, will continue to manage our business as a separate company.

We will seek to be a financially disciplined and, over time, cost-competitive product manufacturer with an emphasis on independent distribution. We aim to leverage our large block of in-force life insurance policies and annuity contracts to operate more efficiently. We believe that our strategy of offering a targeted set of products to serve our customers and distribution partners, each of which is intended to produce positive statutory distributable cash flows on an accelerated basis compared to our legacy products, will enhance our ability to invest in our business and distribute cash to our shareholders over time. We also believe that our product strategy of offering a more tailored set of new products and our recent agreement to outsource a significant portion of our client administration and service processes, is consistent with our focus on reducing our expense structure over time.

Risk management of both our in-force book and our new business to enhance sustained, long-term shareholder value is fundamental to our strategy. Consequently, in writing new business we intend to prioritize the value of the new business we write over sales volumes. We assess the value of new products by taking into account the amount and timing of cash flows, the use and cost of capital required to support our insurance financial strength ratings and the cost of risk mitigation. We will remain focused on maintaining our strong capital base and we have established a risk management approach which will be implemented in connection with the separation that seeks to mitigate the effects of severe market disruptions and other economic events on our business. See “Business — Description of our Segments, Products and Operations — Variable Annuity Risk Management,” “Business — Description of our Segments, Products and Operations — Run-off — ULSG Market Risk Exposure Management” and “Risk Factors — Risks Related to our Business — Our proposed variable annuity exposure management strategy may not be fully implemented prior to the distribution, may not be effective, may result in net income volatility and may negatively affect our statutory capital.”

We believe that general demographic trends in the U.S. population, the increase in under-insured individuals, the potential risk to governmental social safety net programs and the shifting of responsibility for retirement planning and financial security from employers and other institutions to individuals will create opportunities to generate significant demand for our products. We also believe our transition to an independent distribution system will enhance our ability to operate most effectively within the emerging requirements of the April 6, 2016 Department of Labor (the “DOL”) fiduciary rule (“Fiduciary Rule”) that sets forth a new regulatory framework for the sale of insurance and annuity products to Employee Retirement Income Security Act of 1974 (“ERISA”) qualified plans, which is a significant market for annuity products.

For the three months ended March 31, 2017, we had a net loss of $349 million and generated $280 million of operating earnings, as compared to net income of $407 million and $340 million of operating earnings for the three months ended March 31, 2016. The net loss for the three months ended March 31, 2017 was driven by derivative losses, primarily as a result of our variable annuity exposure management program, including the impact of our legacy macro hedge resulting from the equity market rise in the current period. For the year ended December 31, 2016 we had a net loss of $2.9 billion and generated $686 million of operating earnings.

 



 

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The 2016 net loss was driven by reserve strengthening including the effect of our annual review of actuarial assumptions for our variable annuities business, our second quarter refinement in the actuarial model which we use to calculate the reserves for our in-force book of ULSG products and the loss recognition, mostly in the form of a write down of deferred acquisition costs, triggered by the move of our ULSG products into the Run-off segment in the fourth quarter. In addition to reserve strengthening, derivative losses on our economic hedges of certain liabilities also contributed to the net loss, primarily due to the impact of the large fourth quarter rise in interest rates without an offset from the liabilities being hedged due to the insensitivity of those GAAP liabilities to changes in interest rates. See Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Combined Results for the Three Months Ended March 31, 2017 and 2016” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Combined Results for the Years Ended December 31, 2016, 2015 and 2014.” Operating earnings is a non-GAAP financial measure. For a reconciliation of operating earnings to net income (loss), see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations.”

Our Segments

For operating purposes, the Company has established three new reporting segments: (i) Annuities, (ii) Life and (iii) Run-off. Our Run-off segment consists of operations related to products which we are not actively selling and which are separately managed. In addition, the Company reports certain of its results of operations not included in the segments in Corporate & Other. We provide an overview of our reporting segments and Corporate & Other below.

Annuities

We are a major provider of annuity products in the United States, with $150.4 billion and $152.1 billion in total annuity assets as of March 31, 2017 and December 31, 2016, respectively. Our annuity product offerings include variable, fixed, index-linked and income annuities designed to address contract holders’ needs for protected wealth accumulation on a tax-deferred basis, wealth transfer and income security. We earn various types of fee revenue based on the account value, fund assets and guaranteed benefit base of our variable annuity products, as well as the investment spread which we earn on the general account assets supporting our annuity products. Based on $136.5 billion of assets under management (“AUM”) as of December 31, 2015, which we define as our general account investments and our separate account assets, we believe we would have ranked fifth among U.S. life insurers in annuity AUM as of such date, which is the most recent date for which ranking data is available. As of December 31, 2016, we had AUM of $143.6 billion.

We seek to manage changes in equity market and interest rate exposures to our existing book of annuity business through our strong statutory capitalization and our selection of derivative instruments, which will be driven in part by our goal of preserving our ability to benefit from positive changes to equity markets and interest rates. See “Business — Description of our Segments, Products and Operations — Variable Annuity Risk Management.” With respect to new business, we intend to be disciplined in our risk selection, innovative in our product design and we intend to seek to diversify our product mix. Beginning in 2013, we began to shift our new annuity business towards products with diversifying market and contract holder behavioral risk attributes and improved risk-adjusted cash returns. Examples of this include transitioning from the sale of variable annuities with guaranteed minimum income benefits (“GMIB”) to the sale of variable annuities with guaranteed minimum withdrawal benefits (“GMWB”), and our increased emphasis on MetLife Shield Level SelectorSM Annuity (“Shield Level Selector”), a single premium deferred index-linked annuity product for which we had new deposits of approximately $0.5 billion and $1.7 billion for the three months ended March 31, 2017 and the year ended December 31, 2016, respectively.

 



 

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Life

We are also one of the largest life insurance companies in the United States based on ordinary and term life insurance issued, with approximately 1.4 million policies in-force and approximately $653 billion of life insurance face amount in-force as of December 31, 2016. Our in-force book of life insurance includes variable life, term life, universal life and whole life policies. Our life insurance product offerings are designed to address our policyholders’ needs for financial security and protected wealth transfer, which may be provided on a tax-advantaged basis. In addition to contributing to our revenues and earnings, mortality protection-based products offered by our Life segment permit us to diversify the longevity and other risks in our Annuities segment.

Beginning with the first quarter of 2017 we have focused on term life and universal life without secondary guarantees and therefore suspended new sales of ULSG as well as participating whole life. We seek to be innovative in introducing new life products that meet the needs of our target markets and distribution partners and increase value for our shareholders. For example, starting in 2013, we significantly scaled back our sales of ULSG products with lifetime guarantees. In 2015, we introduced a universal life policy with levelized commissions over time that provides clients with death benefit protection with a cash value that may increase over time and no secondary guarantees. Consistent with our strategy of prioritizing the value of the new business we write over sales volume, we expect our total face amount of life insurance policies to decline, but, over time, for our new life insurance business to provide better shareholder value creation. With the suspension of all new ULSG sales, we moved results associated with ULSG products from our Life segment into our Run-off segment in the fourth quarter of 2016 retrospectively for all periods presented. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Summary — Certain Business Events — ULSG Re-segmentation.”

Run-off

This segment consists of operations related to products which we are not actively selling and which are separately managed, including structured settlements, company-owned life insurance (“COLI”) policies, bank-owned life insurance (“BOLI”) policies, funding agreements and ULSG. With the exception of ULSG, these legacy business lines were not part of MetLife’s former Retail segment, but were issued by certain of the legal entities that are now part of Brighthouse. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Summary — Overview.”

Corporate & Other

Corporate & Other contains the excess capital not allocated to the segments, the results of part of MetLife’s ancillary international operations and U.S. direct business sold directly to consumers, which were written out of our insurance entities prior to the separation, and interest expense related to the majority of our outstanding debt, as well as expenses associated with certain legal proceedings and income tax audit issues. Additionally, Corporate & Other includes certain assumed reinsurance and the elimination of intersegment amounts.

Market Environment and Opportunities

We believe the shift away from defined benefit plans and the concern over government social safety net programs, occurring at a time of significant demographic change in the United States, as baby boomers transition to retirement, present an opportunity to assist individuals in planning for their long-term financial security. We believe we are well positioned to benefit from this environment and the changes and trends affecting it, including the following:

 

  Largest individual insurance market in the world. The U.S. life insurance market has $2.75 trillion1 net assets in annuities and approximately $11.9 trillion of individual life insurance face amount in-force. This

 

1  Insured Retirement Institute, IRI Fact Book 2017.

 



 

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represents a large opportunity pool for the Company from which we expect to benefit because of the scale and scope of our life and annuity products, risk management and distribution capabilities, and our ability to operate nationally.

 

  Shifting of responsibility for retirement planning and life time income security from employers and other institutions to individuals. The shift away from traditional defined benefit plans, together with increased life expectancy, has increased the burden on individuals for retirement planning and financial security and created a significant risk that many people will outlive their retirement assets. The Employee Benefit Research Institute estimates that participation in an employment-based defined benefit plan among private sector workers declined from 38% in 1979 to 13% in 2013. Fifty-one percent of households have no retirement savings in a defined contribution plan or IRA,2 and Social Security provides an average of 40% of the retirement income of retired households.3 According to the U.S. Government Accountability Office, among the 48% of households age 55 and older with some retirement savings, the median amount is approximately $109,000.4 The individual life insurance and retirement industry has traditionally offered solutions that address this underserved need among consumers, such as annuities, which represent an alternative means of generating pension-like income to permit contract holders to secure guaranteed income for life. We believe our simplified suite of annuity products will be attractive to consumers as a supplement to Social Security or employer provided pension income.

 

  Favorable demographic trends. There are several demographic trends that we believe we can take advantage of, including:

 

    The ongoing transition of baby boomers into retirement offers opportunities for the accumulation of wealth, as well as its distribution and transfer. According to the Insured Retirement Institute, each day 10,000 Americans reach the age of 65 and this is expected to continue through at least 2030.5 One of the market segments we target, the Secure Seniors, includes individuals from the baby boomer demographic and is projected to grow by 15% between 2015 and 2025.6 See “— Our Business Strategy — Focus on target market segments.”

 

    The emergence of Generation X and Millennials as a larger and fast growing, potentially ethnically diverse segment of the U.S population. Many of these individuals are in their prime earning years and we believe they will increase their focus on savings for wealth and protection products. As Generation X and Millennials continue to age into the Middle Aged Strivers and Diverse and Protected segments that we target, we believe we have an opportunity to increase our share of the industry profit pool represented by these groups. See “— Our Business Strategy — Focus on target market segments.”

 

  Underinsured and underserved population is growing. According to a recent survey, 41% of U.S. households believe that they need more life insurance.7 Close to six in 10 Americans have life insurance,8 but ownership of individual coverage has declined over a 50-year period.9 We believe the products and solutions we offer will address the financial security needs of the under-insured portion of the U.S. population, which are our target segments.

 

2  LIMRA, The Retirement Income Reference Book, 2015.
3  LIMRA, The Retirement Income Reference Book, 2015.
4  U.S. Government Accountability Office, “Retirement Security: Report to the Ranking Member, Subcommittee on Primary Health and Retirement Security, Committee on Health, Education, Labor, and Pensions, U.S. Senate,” May 2015.
5  Insured Retirement Institute, IRI Fact Book 2017.
6  MetLife Accelerating Value Consumer Survey, June 2015; Census projections.
7  LIMRA, The Facts of Life and Annuities, 2016 Update.
8  LIMRA, 2017 Insurance Barometer Study.
9  LIMRA, The Facts of Life and Annuities, 2016 Update.

 



 

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  Regulatory changes. Regulatory and compliance requirements in the insurance and financial services industries have increased over the past several years and resulted in new regulation and enhanced supervision. For example, the DOL issued new rules on April 6, 2016 that, if not delayed or repealed, would raise the standards for sales of variable and index-linked annuities into retirement accounts to a fiduciary standard, meaning that sales must consider the customer’s interest above all factors. The DOL has released its final rule delaying the original applicable date for 60 days from April 10, 2017 to June 9, 2017. See “Regulation — Insurance Regulation — Department of Labor and ERISA Considerations.” These rules are expected to require meaningful changes to distribution practices and disclosures and affect sales of annuity products from providers with proprietary distribution. We believe our history of navigating a changing regulatory environment and our transition to independent distribution may present us with an opportunity to capture market share from those who are less able to adapt to changing regulatory requirements.

We believe these trends, together with our competitive strengths and strategy discussed below, provide us a unique opportunity to increase the value of our business.

Our Competitive Strengths

We believe that our large in-force book of business, strong balance sheet, risk management strategy, experienced management team and focus on expense reduction will allow us to capitalize on the attractive market environment and opportunities as we complete our separation from MetLife and develop and grow our business on an independent basis.

 

  Large in-force book of business. We are a major provider of life insurance and annuity products in the United States, with approximately 2.8 million insurance policies and annuity contracts as of March 31, 2017. We believe our size and long-standing market presence position us well for potential future growth and margin expansion following the completion of our transition to a separate company.

 

    Our size provides opportunities to achieve economies of scale, permitting us to spread our fixed general and administrative costs, including expenditures on branding, over a large revenue base, resulting in a competitive expense ratio.

 

    Our large policyholder base provides us with an opportunity to leverage underlying data to develop risk and policyholder insights as well as implement operational best practices, permitting us to effectively differentiate ourselves from our competitors with the design and management of our products.

 

    Our in-force book of business was sold by a wide range of distribution partners to whom we continue to pay trail commissions on the policies and contracts sold by them. For the year ended December 31, 2016, over 1,000 distribution firms or general agencies of our distributors received trail commissions. We believe this enhances our ability to maintain connectivity and relevance to those distributors.

 

  Strong balance sheet. As of March 31, 2017, we had total assets of $223 billion; total policyholder liabilities and other policy-related balances, including separate accounts, of $189 billion; and total shareholder’s net investment of $15.1 billion, including AOCI. Following the separation, we intend to maintain and improve the strong statutory capitalization and financial strength ratings of our insurance company subsidiaries, as well as the diversity of invested asset classes.

 

   

Our insurance company subsidiaries had combined statutory total adjusted capital (“Combined TAC”) of approximately $5.4 billion resulting in a combined company action level risk-based capital (“Combined RBC”) ratio of approximately 525% as of December 31, 2016. After giving effect to the formation of Brighthouse Reinsurance Company of Delaware (“BRCD”) and other restructuring and separation related transactions, including an expected capital contribution to Brighthouse Insurance at the time of separation, Combined TAC would have increased by approximately $2 billion in the insurance company subsidiaries, resulting in a Combined RBC ratio in excess of 650%. See

 



 

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“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Unaudited Pro Forma Condensed Combined Financial Statements.” We intend to support our variable annuity business with assets consistent with a CTE95 standard (defined as the average amount of assets required to satisfy contract holder obligations across market environments in the worst five percent of 1,000 capital market scenarios over the life of the contracts (“CTE95”), consistent with guidelines promulgated by the National Association of Insurance Commissioners (the “NAIC”)). As of December 31, 2016, assuming the transactions to be executed in connection with the separation had occurred on such date, we estimate that we would have held approximately $2.3 billion of assets in excess of CTE95 to support our variable annuity book, which would be equivalent to holding assets at approximately a CTE98 standard as of such date (defined as the average amount of assets required to satisfy contract holder obligations across market environments in the worst two percent of 1,000 capital market scenarios over the life of the contracts (“CTE98”), consistent with guidelines promulgated by the NAIC).

 

    We have strong financial strength ratings from the rating agencies that rate us. Financial strength ratings represent the opinions of the rating agencies regarding the ability of our insurance company subsidiaries to meet their financial obligations to policyholders and contract holders and are not designed or intended for use by investors in evaluating our securities.

 

    We have a diversified, high quality investment portfolio with $79.3 billion of general account assets as of March 31, 2017, comprised of over 76% fixed maturity securities, of which over 95% were investment grade and 58% were U.S. corporate, government and agency securities.

 

    Following MetLife’s policyholder assumption review of variable annuities issued by its U.S. insurance companies we have updated our actuarial assumptions and strengthened the GAAP reserves of our insurance company subsidiaries based on a range of possible market scenarios and expected policyholder behavior.

 

  Proven risk management and capital management expertise. We will bring to Brighthouse the strong risk management culture which we inherited as part of MetLife as demonstrated by our product decisions in recent years and our focused risk and capital management strategies for our existing book of business. We believe we have initially capitalized our insurance company subsidiaries with capital which is sufficient to maintain our financial strength ratings notwithstanding modest fluctuations in equity markets and interest rates in any given period. Further, over time by increasing the proportion of non-derivative, income-generating invested assets compared to derivative instruments supporting our variable annuity book of business, we believe our capital profile will be stronger and more able to mitigate a broader range of risk exposures.

 

  Experienced senior management team with a proven track record of execution including producing cost savings. Our senior management team has an average of 20 years of insurance industry experience. They have worked together to manage our business and reduce the cost base prior to this distribution and will continue to manage our business as a separate and focused individual life insurance and annuity company. The senior management team has taken significant actions over the last four years, including the following:

 

    In 2012, MetLife announced a multi-year $1 billion gross expense savings initiative, which was substantially completed in 2015. This management team delivered approximately $200 million of expense savings with respect to MetLife’s former Retail segment under that initiative.

 

    The merger of three affiliated life insurance companies and a former offshore, reinsurance company affiliate that mainly reinsured guarantees associated with variable annuity products issued by MetLife affiliates to form our largest operating subsidiary, Brighthouse Insurance.

 

    The consolidation of MetLife’s former Retail segment in Charlotte, North Carolina, which, in addition to generating expense savings noted above, permitted our management to work together collaboratively at the same geographic location.

 



 

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    The sale of MetLife’s former Retail segment’s proprietary distribution channel, MetLife Premier Client Group (“MPCG”), to Massachusetts Mutual Life Insurance Company (“MassMutual”), completing our transition to a more efficient acquisition cost distribution model through independent, third-party channel partners. As part of the sale, MetLife reduced its former Retail segment employee base by approximately 3,900 advisors and over 2,000 support employees, which we estimate will result in a net reduction in our annual expenses of approximately $125 million. The sale of the proprietary distribution channel will also enable us to pursue a simplified, capital efficient product suite and reduce our fixed expense structure.

 

    On July 31, 2016, MetLife entered into a multi-year outsourcing arrangement for the administration of certain in-force policies currently housed on up to 20 systems. Pursuant to this arrangement, at least 13 of such systems will be consolidated down to one. We expect this arrangement to result in a phased net reduction in our overall expenses for policyholder and contract holder maintenance over the next three to five years. We intend to pursue similar opportunities to take advantage of technology and systems improvements and flexible, modular operating models to reduce costs.

Summary Risk Factors

Our business generally and the separation and distribution in particular is subject to a number of risks that could materially and adversely affect our financial condition and results of operations. The following high-level summary of these risks is not exhaustive and should be read in conjunction with the information in the section captioned “Risk Factors,” for a more thorough description of these and other risks, and the other sections of this information statement.

 

  Risks related to the separation and distribution

 

    MetLife’s plan to separate into two independent publicly traded companies is subject to various risks and uncertainties and may not be completed in accordance with the expected plans or anticipated timeline, or at all, and will involve significant time and expense, which could disrupt or adversely affect our business.

 

    Our separation from MetLife could adversely affect our business and profitability due to MetLife’s strong brand and reputation.

 

    The terms of our arrangements with MetLife may be more favorable than we would be able to obtain from an unaffiliated third party and we may be unable to replace the services MetLife provides to us in a timely manner or on comparable terms.

 

    After the distribution, we will have a very large number of shareholders which may impact the efficacy of shareholder votes and will result in increased costs.

 

    We have no history of operating as an independent company and we expect to incur increased administrative and other costs following the separation by virtue of our status as an independent public company. Our historical combined financial data are not necessarily representative of the results we would have achieved as a separate company and may not be a reliable indicator of our future results.

 

    If the distribution were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then MetLife, we and our shareholders could be subject to significant tax liabilities.

 

    We may be unable to achieve some or all of the benefits that we expect to achieve from the separation and the cost of achieving such benefits may be more than we estimated.

 

    We will incur substantial indebtedness in connection with the separation, and the degree to which we will be leveraged following completion of the distribution and separation may materially and adversely affect our results of operations and financial condition.

 



 

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    After the distribution, certain of our directors and officers may have actual or potential conflicts of interest because of their MetLife equity ownership or their former MetLife positions.

 

  Risks related to our business

 

    Differences between actual experience and actuarial assumptions and the effectiveness of our actuarial models may adversely affect our financial results, capitalization and financial condition.

 

    Guarantees within certain of our products may decrease our earnings, decrease our capitalization, increase the volatility of our results, result in higher risk management costs and expose us to increased counterparty risk.

 

    Our proposed variable annuity exposure management strategy may not be fully implemented prior to the distribution, may not be effective, may result in net income volatility and may negatively affect our statutory capital. Our proposed ULSG asset requirement target may not ensure we have sufficient assets to meet our future ULSG policyholder obligations and may result in net income volatility.

 

    We may be required to hold additional statutory reserves against our variable annuities as a result of Actuarial Guideline 43 (“AG 43”), which could impair our ability to make distributions to our shareholders.

 

    A sustained period of low equity market prices and interest rates that are lower than those we assumed when we issued our variable annuity products, could have a material adverse effect on our results of operations, capitalization and financial condition.

 

    Elements of our business strategy are new and may not be effective in accomplishing our objectives.

 

    A downgrade or a potential downgrade in our financial strength ratings, which are important to maintaining public confidence in our products and our competitive condition, could result in a loss of business and materially adversely affect our financial condition and results of operations.

 

    Reinsurance may not be available, affordable or adequate to protect us against losses. If the counterparties to our reinsurance or indemnification arrangements or to the derivatives we use to hedge our business risks default or fail to perform, we may be exposed to risks we had sought to mitigate, which could materially adversely affect our financial condition and results of operations.

 

    We may not be able to take credit for reinsurance, our statutory life insurance reserve financings may be subject to cost increases and new financings may be subject to limited market capacity.

 

    Factors affecting our competitiveness may adversely affect our market share and profitability.

 

    The failure of third parties to provide various services that are important to our operations could have a material adverse effect on our business.

 

    If difficult conditions in the capital markets and the U.S. economy generally persist or are perceived to persist, they may materially adversely affect our business and results of operations. Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs and our access to capital. We are exposed to significant financial and capital markets risks which may adversely affect our results of operations, financial condition and liquidity, and may cause our net investment income and net income to vary from period to period.

 

    Our insurance businesses are highly regulated, and changes in regulation and in supervisory and enforcement policies may materially impact our capitalization or cash flows, reduce our profitability and limit our growth. A decrease in the risk-based capital (“RBC”) ratio (as a result of a reduction in statutory surplus and/or increase in RBC requirements) of our insurance subsidiaries could result in increased scrutiny by insurance regulators and rating agencies and have a material adverse effect on our results of operations and financial condition.

 



 

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    We are subject to U.S. federal, state and other securities and state insurance laws and regulations which, among other things, require that we distribute certain of our products through a registered broker-dealer; failure to comply with those laws, including a failure to have a registered broker-dealer, or changes in those laws may have a material adverse effect on our operations and our profitability.

 

    Litigation and regulatory investigations are increasingly common in our businesses and may result in significant financial losses and/or harm to our reputation.

 

    As a holding company, Brighthouse Financial, Inc. will depend on the ability of its subsidiaries to pay dividends. We cannot assure you that we will pay dividends on our common stock, and our indebtedness could limit our ability to pay dividends on our common stock.

 

    Changes in accounting standards issued by the Financial Accounting Standards Board (“FASB”) or other standard-setting bodies may adversely affect our financial statements.

Our Business Strategy

Our objective is to leverage our competitive strengths, to distinguish ourselves in the individual life insurance and annuity markets and over time increase the amount of statutory distributable cash generated by our business. We will seek to achieve this by being a focused product manufacturer with an emphasis on independent distribution, while having a competitive expense ratio relative to our competitors. We intend to achieve our goals by executing on the following strategies:

 

    Focus on target market segments. We intend to focus our sales and marketing efforts on those specific market segments where we believe we will best be able to sell products capable of producing attractive long-term value to our shareholders.

In 2015 we conducted a survey of 7,000 U.S. customers with the goal of understanding our different market segments. Ultimately, the study revealed seven distinct segments based on both traditional demographic information including socio-economic information and an analysis of customer needs, attitudes and behaviors. Our review of the customer segmentation data resulted in our focusing product design and marketing on the following target customer segments:

 

    Secure Seniors. This segment represents approximately 15% of the current U.S. population. Because the customer segments are designed to reflect attitudes and behaviors, in addition to other factors, this segment includes a broad range in age, but is composed primarily of individuals between the ages of 55 to 70 about to retire or already in retirement, of which a majority have investible assets of greater than $500,000. Secure Seniors have higher net worth relative to the other customer segments and exhibit a strong desire to work with financial advisors. The larger share of assets, relative to the other segments, may make Secure Seniors an attractive market for financial security products and solutions.

 

    Middle Aged Strivers. This segment represents approximately 23% of the current U.S. population and is the largest customer segment of those identified by our survey. There is more diversity in this segment compared to the Secure Seniors in terms of amount of investible assets, age, life stage and potential lifetime value to us. The study indicates that these individuals tend to be in the early to later stages of family formation. Almost half of the population in this segment is between the ages of 40 and 55. They are focused on certain core needs, such as paying bills, reducing debt and protecting family wealth. We believe Middle Aged Strivers are an attractive market for protection products and many of these individuals will graduate to wealth and retirement products in their later years.

 

   

Diverse and Protected. This is the most diverse segment of the population, but is also the smallest constituting only 8% of the current U.S. population. While this segment has lower

 



 

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income and investible assets than Secure Seniors and Middle Aged Strivers, our study indicates that they are active purchasers of insurance products. We believe that a portion of this segment, as they become older and more affluent, may purchase our annuity products in addition to our insurance products.

We believe that these three customer segments represent a significant portion of the market opportunity, and by focusing our product development and marketing efforts to meeting the needs of these segments we will be able to offer a targeted set of products which will benefit our expense ratio thereby increasing our profitability. Our study also indicates that Secure Seniors, Middle Aged Strivers and Diverse and Protected customer segments are open to financial guidance and, accordingly, will be receptive to the products we intend to sell and we can share our insights about these segments to our distribution partners to increase the targeting efficiency of our sales efforts with them.

 

  Focused manufacturer, with a simpler product suite designed to meet our customers’ and distributors’ needs. We intend to be financially disciplined in terms of the number of products which we offer and their risk-adjusted return profile, while being responsive to the needs of our customers and distribution partners.

 

    We seek to manage our existing book of annuity business to mitigate the effects of severe market downturns and other economic effects on our statutory capital while preserving the ability to benefit from positive changes in equity markets and interest rates through our selection of derivative instruments.

 

    We intend to offer products designed to produce statutory distributable cash flows on a more accelerated basis than those of some of our legacy in-force products. We will also focus on offering products which are more capital efficient with lower RBC requirements than our pre-2013 generation of products. Our product design and sales strategies will focus on achieving long-term risk-adjusted distributable cash flows, rather than generating sales volumes or purchasing market share. We believe this approach aligns well with long-term value creation for our shareholders.

 

    Shield Level Selector and our latest generation life insurance products, represent examples of products which we believe are responsive to our customers’ and distributors’ needs while allowing us to generate statutory distributable cash flows on a more accelerated basis than our pre-2013 generation of products. Shield Level Selector is an individual-customer, single-premium, deferred index-linked annuity that provides contract holders with a specified level of market downside protection, sharing the balance of market downside risk with the contract holder, along with offering the contract holder tax-deferred accumulation. In addition, we believe Shield Level Selector permits us to more effectively manage the market risk exposure inherent in our variable annuities with living benefit riders. Since its state-by-state phased introduction beginning in 2013, Shield Level Selector has received positive market acceptance and has been a meaningful contributor to our sales. In addition, a recent example of our latest generation life insurance products is a universal life policy with levelized commissions over time and no secondary guarantees. We expect these products to produce attractive risk-adjusted margins and product level cash flows.

 

  Independent distribution with enhanced support and collaboration with key distributors. We believe that the completion of our transition from a captive sales force to an independent and diverse distribution network will enhance our distribution focus and improve our profitability and capital efficiency.

 

    We have proactively chosen to focus on independent distribution, which we believe aligns with our focus on product manufacturing. We believe distributing our products through only the independent distribution channel will enhance our ability to control our fixed costs, target our resources more appropriately and increase our profitability because we will be better able to leverage our product development and wholesale distribution capabilities.

 

   

Since 2001 we have successfully built third-party distribution relationships. Following the sale of MPCG to MassMutual, we are dedicated to supporting and expanding these relationships. These

 



 

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relationships have been strengthened by a focus on fulfilling customer needs and better alignment with our distribution partners on product development and sales support. We therefore seek to become a leading provider of insurance and annuity products for our leading distribution partners by leveraging our marketing strengths which include customer segmentation, distribution servicing and sales support as well as our product management competencies. We believe that our distribution strategy will result in deeper relationships with these distribution partners.

 

    We will also pursue a collaborative approach with key distributors and leverage our product design expertise to seek to provide white label type product arrangements for their distribution systems. An example of this collaborative approach is the recent agreement with MassMutual pursuant to which we are exploring the joint development of certain annuity products that may be distributed through the thousands of agents in the MassMutual career agency channel, including agents formerly affiliated with MetLife.

 

  Maintain strong statutory capitalization through an exposure management program intended to be effective across market environments.

 

    The principal objective of our exposure management programs is to manage the risk to our statutory capitalization resulting from changes to equity markets and interest rates. This permits us to focus on the management of the long-term statutory distributable cash flow profile of our business and the underlying long-term returns of our product guarantees. See “Business — Description of our Segments, Products and Operations — Variable Annuity Risk Management.”

 

    Our variable annuity exposure management program has four components:

 

    We intend to support our variable annuities with assets consistent with those required at a CTE95 standard. As of December 31, 2016, assuming the transactions to be executed in connection with the separation had occurred as of such date, we estimate that we would have held approximately $2.3 billion in assets in excess of CTE95, which would be equivalent to holding assets at approximately a CTE98 standard as of such date. We believe these excess assets will permit us to absorb modest losses, which may be temporary, from changes in equity markets and interest rates without adversely affecting our financial strength ratings.

 

    We will continue to enter into derivative instruments to offset the impact on our statutory capital from more significant changes to equity markets and interest rates.

 

    We believe the earnings from our large and seasoned block of in-force business will provide an additional means of increasing and regenerating our statutory capital organically to the extent it has been eroded due to periodic changes in equity markets and interest rates.

 

    We intend to invest a portion of the assets supporting our variable annuity asset requirements in income-generating investments, which we believe will provide an additional means to increase or regenerate our statutory capital.

 

    We have a large in-force block of life insurance policies and annuity contracts that we intend to more actively manage to improve profitability, prudently minimize exposures, grow cash margins and release capital for shareholders in the medium to long-term.

 

  Focus on operating cost and flexibility. A key element of our strategy is to leverage our infrastructure over time to be a lean, flexible cost competitive operator.

 

    We will continue our focus on reducing our cost base while maintaining strong service levels for our policyholders and contract holders. As part of separating our business processes and systems from MetLife, we are taking a phased approach to re-engineering our processes and systems across all functional areas. This phased transition is expected to occur through 2020. We are planning on run-rate operating cost reductions as part of this initiative. See “Business — Select Financial Targets.”

 



 

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    We have identified and are actively pursuing several initiatives that we expect will make our business less complex, more flexible and better able to adapt to changing market conditions. Consistent with this strategy, MetLife recently sold MPCG to MassMutual, completing our transition to a more efficient acquisition cost distribution model and reducing its former Retail segment employee base by approximately 5,900 employees.

 

    We intend to leverage emerging technology and outsourcing arrangements to become more profitable. An example of this is our senior management team’s recent agreement to outsource the administration of certain in-force policies housed on up to 20 systems. Pursuant to this arrangement at least 13 of such systems will be consolidated down to one.

Select Financial Targets

We intend to manage our businesses with a focus on statutory financial results in order to improve cash flow, allowing us to reinvest in our businesses and distribute cash to shareholders over time. We have established targets for select financial metrics that we believe best measure the execution of our business strategy and align with our shareholders’ interests. It is our goal to achieve or surpass the following targets:

 

    Cash flow to shareholders: 50%-70%+ of operating earnings by approximately 2020;

 

    Growth in operating earnings per share (Operating EPS): Mid- to high- single digit annual growth; and

 

    Operating return on equity (Operating ROE): Approximately 9%.

These targets assume our baseline business plan scenario, which we refer to as our “Base Case Scenario.” Our Base Case Scenario assumes 6.5% annual separate account returns, the 10 year U.S. Treasury rate rising ratably over 10 years to 4.25% and our current best estimate actuarial assumptions. Actual results related to these targets may vary depending on various factors, including actual capital market outcomes, changes in actuarial models or emergence of actual experience, changes in regulation, as well as the other risks and factors discussed in “Business — Select Financial Targets,” “Note Regarding Forward-Looking Statements” and “Risk Factors.” Operating EPS and Operating ROE are performance measures that are not based on GAAP. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP and Other Financial Disclosures” and “Business — Select Financial Targets” for definitions of and further information on these measures and cash flow to shareholders.

Our Corporate Information

Prior to the distribution, we have been a wholly owned subsidiary of MetLife, Inc., a global provider of life insurance, annuities, employee benefits and asset management. Brighthouse is a holding company incorporated in Delaware on August 1, 2016.

Our principal executive office is located at the Gragg Building, 11225 North Community House Road, Charlotte, North Carolina 28277 and our telephone number is (980) 365-7100. Our website address is www.brighthousefinancial.com. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this information statement.

 



 

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We operate our businesses through a number of direct and indirect subsidiaries. The following organizational chart presents the ownership of our principal subsidiaries following the distribution:

LOGO

The Distribution

Overview

To effect the separation, first, MetLife will undertake the restructuring described under “Formation of Brighthouse and the Restructuring” and “Certain Relationships and Related Person Transactions — Agreements Between Us and MetLife — Master Separation Agreement.” Following the restructuring, MetLife, Inc. will distribute at least 80.1% of Brighthouse’s common stock to MetLife’s shareholders, and Brighthouse will become a separate, publicly traded company.

Prior to the distribution, we intend to enter into a Master Separation Agreement and several other agreements with MetLife related to the distribution. These agreements will govern the relationship between MetLife and us up to and after completion of the distribution and allocate between MetLife and us various assets, liabilities, rights and obligations, including employee benefits, intellectual property and tax-related assets and liabilities. See “Certain Relationships and Related Person Transactions” for more detail.

In addition, we will incur substantial indebtedness in connection with the separation, and we will use a significant portion of the proceeds of this indebtedness to make a distribution to MetLife as partial consideration for MetLife’s transfer of assets to Brighthouse. The amount of indebtedness will allow us to achieve the following goals at the time of the distribution: (i) adequate liquidity at the Brighthouse holding company level;

 



 

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(ii) a debt-to-capital ratio of approximately 25%; and (iii) $2.0 billion to $3.0 billion of assets in excess of CTE95 to support our variable annuity contracts.

The distribution described in this information statement is subject to the satisfaction or waiver of a number of conditions. In addition, MetLife has the right not to complete the distribution if, at any time, MetLife’s board of directors (the “MetLife Board”) determines, in its sole and absolute discretion, that the distribution is not in the best interests of MetLife or its shareholders or is otherwise not advisable. See “The Separation and Distribution — Conditions to the Distribution” for more detail.

Questions and answers about the distribution

The following provides only a summary of the terms of the distribution. You should read the section entitled “The Separation and Distribution” in this information statement for a more detailed description of the matters described below.

Q: Why am I receiving this information statement?

A: MetLife is delivering this document to you because you were a holder of MetLife common stock on the record date for the distribution of shares of our common stock. Accordingly, you are entitled to receive [●] shares of our common stock for every [●] shares of MetLife common stock that you held on the record date. No action is required for you to participate in the distribution.

Q: What is the distribution?

A: The distribution is the method by which we will separate from MetLife. In the distribution, MetLife will distribute to its shareholders at least 80.1% of the shares of our common stock. Following the distribution, we will be separate from MetLife and publicly traded. MetLife will retain no more than 19.9% ownership interest in us.

Q: What will be the relationship between MetLife and Brighthouse after the distribution?

A: MetLife and Brighthouse will each be separate, publicly traded companies. MetLife and Brighthouse are entering into several agreements to govern their relationship after separation. See “Certain Relationships and Related Person Transactions — Relationship with MetLife Following the Separation.”

Q: Will the number of MetLife shares I own change as a result of the distribution?

A: No, the number of shares of MetLife common stock you own will not change as a result of the distribution.

Q: What are the motivations for the separation?

A: The separation is motivated in whole or in substantial part by the following corporate business purposes:

 

    To facilitate investors’ ability to independently value Brighthouse and MetLife based on their respective operational and financial characteristics.

 

    To enable MetLife to address certain regulatory issues, including MetLife’s potential redesignation as a non-bank systemically important financial institution, as well as the DOL Fiduciary Rule.

 

    To increase the predictability of distributable cash flows for MetLife over time as part of MetLife’s Accelerating Value strategic initiative and allow Brighthouse to make the necessary decisions and investments to serve the U.S. retail marketplace.

 



 

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    To enable Brighthouse to take advantage of a retail dedicated platform to increase responsiveness to the needs of our customers and distribution partners.

Q: Why is the separation of Brighthouse structured as a spin-off?

A: MetLife believes that a distribution of our shares is the most efficient way to separate our business from MetLife in a manner that will achieve the above objectives and permit MetLife’s shareholders to make their own investment decisions going forward as to whether or not they wish to retain their exposure to the retail life and annuity business, independent of their exposure to the continuing operations of MetLife.

Q: What is being distributed in the distribution?

A: MetLife will distribute approximately [●] shares of our common stock in the distribution, based on the approximately [●] shares of MetLife common stock outstanding as of [●], 2017. The actual number of shares of our common stock that MetLife will distribute will depend on the number of shares of MetLife common stock outstanding on the record date. For more information on the shares being distributed in the distribution, see “Description of Capital Stock — Authorized Capital Stock — Common Stock.”

Q: What will I receive in the distribution?

A: As a holder of MetLife common stock, you will receive [●] shares of our common stock for every [●] shares of MetLife common stock you hold on the record date. The distribution agent will distribute only whole shares of our common stock in the distribution. See “— How will fractional shares be treated in the distribution?” for more information on the treatment of the fractional shares you would otherwise have been entitled to receive in the distribution. Your proportionate interest in MetLife will not change as a result of the distribution. For a more detailed description, see “The Separation and Distribution — Treatment of Fractional Shares.”

Q: What is the record date for the distribution?

A: MetLife will determine record ownership as of the close of business on [●], 2017 (the “record date”).

Q: When will the distribution occur?

A: The distribution will be effective as of 5:00 p.m., New York City time, on [●], 2017 (the “distribution date”). On or shortly after the distribution date, the whole shares of our common stock will be credited in book-entry accounts for shareholders entitled to receive the shares in the distribution. We expect the distribution agent to distribute promptly to MetLife shareholders any cash in lieu of the fractional shares they would otherwise have been entitled to receive. Trust beneficiaries of the trust established under the plan of reorganization of MLIC (the “MetLife Policyholder Trust”) will receive their shares in the distribution and cash in lieu of any fractional shares from the custodian of the MetLife Policyholder Trust in accordance with the terms of the trust agreement. See “— How will MetLife distribute shares of our common stock?” for more information on how to access your book-entry account or your bank, brokerage or other account holding the Brighthouse common stock you receive in the distribution.

Q: Can MetLife decide to cancel the distribution of Brighthouse common stock, even if all the conditions have been satisfied?

A: Yes. Until the distribution has occurred, the MetLife Board has the right, in its sole discretion, to terminate the distribution, even if all the conditions have been satisfied. See “The Separation and the Distribution — Conditions to the Distribution” included elsewhere in this information statement.

 



 

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Q: How will MetLife vote any shares of our common stock it retains?

A: MetLife has agreed to vote any shares of our common stock that it retains in proportion to the votes cast by our other shareholders and will grant us a proxy with respect to such shares. For additional information on these voting arrangements, see “Certain Relationships and Related Person Transactions — Relationship with MetLife Following the Separation.”

Q: What does MetLife intend to do with any shares of our common stock it retains?

A: MetLife currently plans to dispose of all of our shares as soon as practicable following the distribution, but in no event later than five years after the distribution, while seeking to maximize overall value to its shareholders, pursuant to a dividend distribution or one or more public offerings of its remaining shares of our common stock or an offer to the MetLife shareholders to exchange all or a portion of their MetLife shares for Brighthouse shares.

Q: What do I have to do to participate in the distribution?

A: You are not required to take any action, but we urge you to read this document carefully. Shareholders of MetLife common stock on the record date will not need to pay any cash or deliver any other consideration, including any shares of MetLife common stock, in order to receive shares of our common stock in the distribution. In addition, no shareholder approval of the distribution is required. We are not asking you for a vote and are not requesting that you send us a proxy card.

Q: If I sell my shares of MetLife common stock on or before the distribution date, will I still be entitled to receive shares of Brighthouse common stock in the distribution?

A: If you hold shares of MetLife common stock on the record date and decide to sell them on or before the distribution date, you may choose to sell your MetLife common stock with or without your entitlement to our common stock. You should discuss these alternatives with your bank, broker or other nominee. See “The Separation and Distribution — Trading Prior to the Distribution Date” for more information.

Q: How will MetLife distribute shares of our common stock?

A: Registered shareholders: If you are a registered shareholder (meaning you hold physical MetLife stock certificates or you own your shares of MetLife common stock directly through an account with MetLife’s transfer agent, Computershare Inc.), our transfer agent will credit the whole shares of our common stock you receive in the distribution by way of direct registration in book-entry form under the Direct Registration System (the “DRS”) to your DRS book-entry account on or shortly after the distribution date. Registration in book-entry form refers to a method of recording share ownership where no physical stock certificates are issued to shareholders, as is the case in the distribution. The transfer agent will keep a record of your shares of common stock on our record of owners. You will be able to access information regarding your DRS account holding the Brighthouse shares at Computershare Trust Company, N.A. using the following website www.computershare.com/brighthouse or via our transfer agent’s interactive voice response system at (888)-670-4771. If you are entitled to receive whole shares of our common stock in the distribution, promptly after the distribution date, the distribution agent will mail you a DRS account statement that reflects the number of whole shares of our common stock you own, along with a check for any cash in lieu of fractional shares you would otherwise have been entitled to receive.

Street name” or beneficial shareholders: If you own your shares of MetLife common stock beneficially through a bank, broker or other nominee, the bank, broker or other nominee holds the shares in “street name” and

 



 

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records your ownership on its books. In this case, your bank, broker or other nominee will credit your account with the whole shares of our common stock you receive in the distribution on or shortly after the distribution date. Please contact your bank, broker or other nominee for further information about your account.

Trust beneficiaries: If you are a beneficiary of the MetLife Policyholder Trust established in connection with the demutualization of MLIC in April 2000, the trustee of the MetLife Policyholder Trust is the record owner of the shares of MetLife common stock to which you are beneficially entitled consistent with your beneficial interests, or “trust interests,” in the MetLife Policyholder Trust. In this case, the trustee will transfer any whole shares of our common stock you receive in the distribution to the custodian of the MetLife Policyholder Trust, which in turn will transfer shares to our transfer agent. The transfer agent will issue such shares electronically to you by way of direct registration in book-entry form under the DRS. Registration in book-entry form refers to a method of recording share ownership where no physical stock certificates are issued to shareholders, as is the case in the distribution. The transfer agent will keep a record of your shares of our common stock on our record of owners. You will be able to access information regarding your DRS account holding the Brighthouse shares at Computershare Trust Company, N.A. using the following website www.computershare.com/brighthouse or via our transfer agent’s interactive voice response system at (888)-670-4771. If you are entitled to receive whole shares of our common stock in the distribution, promptly after the distribution date, the distribution agent will mail to you a DRS account statement. The DRS account statement will indicate the number of whole shares of our common stock that have been registered in book-entry form under the DRS in your name, and will be accompanied by a check for any cash in lieu of any fractional shares you would otherwise have been entitled to receive.

The distribution agent will distribute only whole shares of our common stock. See “— How will fractional shares be treated in the distribution?” for more information about the treatment of fractional shares you would otherwise have been entitled to receive in the distribution.

We will not issue any physical stock certificates to any shareholders, even if requested. See “The Separation and Distribution — When and how you will Receive Brighthouse Shares” for a more detailed explanation.

Q: How will fractional shares be treated in the distribution?

A: The distribution agent will not distribute any fractional shares of our common stock to you in connection with the distribution. Instead, the distribution agent will aggregate all fractional shares into whole shares and sell, or cause to be sold, the whole shares in the open market at prevailing market prices on behalf of MetLife shareholders entitled to receive fractional shares. The distribution agent will then distribute the aggregate cash proceeds of the sales, net of brokerage fees and other costs, pro rata, to these holders (net of any required withholding for taxes applicable to each holder). We anticipate that the distribution agent will sell, or cause to be sold, these aggregated fractional shares commencing on the first trading day after the distribution date. See “The Separation and Distribution — Treatment of Fractional Shares” for a more detailed explanation of the treatment of fractional shares.

Q: What are the U.S. federal income tax consequences of the distribution to me?

A: The distribution is conditioned on the receipt and continued validity of (i) a private letter ruling from the U.S. Internal Revenue Service (the “IRS”), which MetLife requested, regarding certain significant issues under the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) the receipt and continued validity of a tax opinion of a nationally recognized accounting firm (“tax counsel”) to the effect that, among other things, the distribution will qualify for non-recognition of gain or loss to MetLife and MetLife’s shareholders pursuant to Sections 355 and 361 of the Code, except to the extent of cash received in lieu of fractional shares, each subject to the accuracy of and compliance with certain representations, assumptions and covenants.

 



 

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As described more fully in “The Separation and Distribution — Material U.S. Federal Income Tax Consequences of the Distribution,” a U.S. holder (as defined in that section) generally will not recognize any gain or loss, and will not include any amount in income, for U.S. federal income tax purposes, upon receiving our common stock in the distribution, except for any gain or loss recognized with respect to cash the shareholder receives in lieu of fractional shares. In addition, each U.S. holder’s aggregate basis in its MetLife common stock and our common stock received in the distribution, including any fractional shares to which the U.S. holder would otherwise have been entitled, will equal the aggregate basis the U.S. holder had in its MetLife common stock immediately prior to the distribution, allocated in proportion to MetLife’s and our common stock’s fair market value at the time of the distribution. See “The Separation and Distribution — Material U.S. Federal Income Tax Consequences of the Distribution” for information regarding the determination of fair market value for purposes of allocating basis.

Tax matters are complicated. The tax consequences to you of the distribution depend on your individual situation. You should consult your own tax advisor regarding those consequences, including the applicability and effect of any U.S. federal, state and local, as well as foreign, tax laws and of changes in applicable tax laws, which may result in the distribution being taxable to you. See “Risk Factors — Risks Relating to the Distribution — If the distribution were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then MetLife, we and our shareholders could be subject to significant tax liabilities,” “Risk Factors —Risks Relating to the Distribution — We could have an indemnification obligation to MetLife if the distribution does not qualify for non-recognition treatment or if certain other steps that are part of the separation do not qualify for their intended tax treatment, which could materially adversely affect our financial condition” and “The Separation and Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.”

Q: Does Brighthouse intend to pay cash dividends?

A: As a separate company, we do not currently anticipate declaring or paying regular cash dividends on our common stock in the near term. Any future declaration and payment of dividends or other distributions of capital will be at the discretion of our Board of Directors and will depend upon our financial condition, earnings, cash needs, regulatory constraints, capital requirements (including requirements of our subsidiaries) and any other factors that our Board deems relevant in making such a determination. See “Dividend Policy” for more information.

Q: How will Brighthouse common stock trade?

A: Currently, there is no public market for our common stock. We have applied to list our common stock on NASDAQ under the symbol “BHF”.

We anticipate that trading in our common stock will begin on a “when-issued” basis as early as two trading days prior to the record date for the distribution and will continue up to and including the distribution date. When-issued trading in the context of a spin-off refers to a sale or purchase made conditionally on or before the distribution date because the securities of the spun-off entity have not yet been distributed. When-issued trades generally settle within four trading days after the distribution date. On the first trading day following the distribution date, any when-issued trading of our common stock will end and “regular-way” trading will begin. Regular-way trading refers to trading after the security has been distributed and typically involves a trade that settles on the third full trading day following the date of the trade. See “The Separation and Distribution —Trading Prior to the Distribution Date” for more information. We cannot predict the trading prices for our common stock before, on or after the distribution date.

Q: Will the distribution affect the trading price of my MetLife common stock?

A: Assuming no significant intervening events, we expect the trading price of shares of MetLife common stock immediately following the distribution to be lower than immediately prior to the distribution because the

 



 

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trading price will no longer reflect the value of Brighthouse. Furthermore, until the market has fully analyzed the value of MetLife without Brighthouse, the trading price of shares of MetLife common stock may fluctuate. There can be no assurance that, following the distribution, the combined trading prices of the MetLife common stock and the Brighthouse common stock will equal or exceed what the trading price of MetLife common stock would have been in the absence of the distribution.

It is possible that after the distribution, the combined equity value of MetLife and Brighthouse will be less than MetLife’s equity value before the distribution.

Q: Will my shares of MetLife common stock continue to trade following the distribution?

A: Yes. MetLife common stock will continue to be traded on the New York Stock Exchange (“NYSE”) under the symbol “MET”.

Q: Do I have appraisal rights in connection with the distribution?

A: No. Holders of MetLife common stock are not entitled to appraisal rights in connection with the distribution.

Q: Who is the transfer agent and registrar for Brighthouse common stock?

A: Following the distribution, Computershare Trust Company, N.A. will serve as transfer agent and registrar for our common stock. In addition, Computershare, Inc. has the following two roles in the distribution:

 

    Computershare, Inc. currently serves and will continue to serve as MetLife’s transfer agent and registrar.

 

    In addition, Computershare, Inc. will serve as the distribution agent in the distribution and will assist MetLife in the distribution of our common stock to MetLife’s shareholders.

Q: Are there risks associated with owning shares of Brighthouse common stock?

A: Yes. Our business faces both general and specific risks and uncertainties. Our business also faces risks relating to the separation. Following the separation, we will also face risks associated with being a separate, publicly traded company. Accordingly, you should read carefully the information set forth in the section entitled “Risk Factors” in this information statement.

Q: Where can I get more information?

A: If you have any questions relating to the mechanics of the distribution, you should contact the distribution agent at:

Before the separation, if you have any questions relating to the distribution, you should contact MetLife at:

Investor Relations

MetLife, Inc.

200 Park Avenue

New York, New York 10166-0188

Phone: (212) 578-7888

Email: john.a.hall@metlife.com

 



 

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After the distribution, if you have any questions relating to Brighthouse, you should contact us at:

Investor Relations

Brighthouse Financial, Inc.

Gragg Building, 11225 North Community House Road

Charlotte, North Carolina 28277

Phone: (980) 365-7100

Email: Investor.relations@brighthousefinancial.com

After the distribution, if you have any questions relating to MetLife, you should contact MetLife at:

Investor Relations

MetLife, Inc.

200 Park Avenue

New York, New York 10166-0188

Phone: (212) 578-7888

Email: john.a.hall@metlife.com

Summary of the Distribution

 

Distributing Company

MetLife, Inc., a Delaware corporation that holds all of our common stock issued and outstanding prior to the distribution. After the distribution, MetLife will retain no more than 19.9% of our common stock.

 

Distributed Company

Brighthouse Financial, Inc., a Delaware corporation and a wholly owned subsidiary of MetLife. At the time of the distribution, we will hold, directly or through our subsidiaries, the assets and liabilities of MetLife’s Brighthouse Financial segment. See “Formation of Brighthouse and the Restructuring” and “Certain Relationships and Related Person Transactions” for more detail. After the distribution, we will be a separate, publicly traded company.

 

Distributed Securities

At least 80.1% of the shares of our common stock owned by MetLife. Based on the approximately [●] shares of MetLife common stock outstanding on [●], 2017, and applying the distribution ratio of [●] shares of Brighthouse common stock for every [●] shares of MetLife common stock, approximately [●] shares of Brighthouse common stock will be distributed.

 

Record Date

The record date is the close of business on [●], 2017.

 

Distribution Date

The distribution date is 5:00 p.m., New York City time, on [●], 2017.

 

Restructuring

Brighthouse will own, directly or indirectly, certain subsidiaries of MetLife including Brighthouse Insurance, Brighthouse Insurance NY, NELICO and Brighthouse Investment Advisers, LLC (“Brighthouse Advisers”), formerly known as MetLife Advisers, LLC (“MetLife Advisers”), and an affiliated reinsurance company and other entities. Prior to the distribution, these entities were, directly or indirectly, wholly owned by MetLife, Inc.

 



 

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  In order to position Brighthouse to effectively compete as a focused product manufacturer of retail life insurance and annuity products with national distribution, MetLife will undertake several actions including an internal reorganization involving its former Retail segment and certain affiliated reinsurance companies, predominantly through equity transfers, mergers and the sale or assignment of certain assets and liabilities among applicable companies within Brighthouse and MetLife, as well as the unwinding of several intercompany reinsurance transactions. The objective of these actions is to both create the desired post-distribution structure for Brighthouse as well as reduce ongoing affiliation and interdependencies between MetLife and Brighthouse.

See “Formation of Brighthouse and the Restructuring” and “Certain Relationships and Related Person Transactions” for a description of the restructuring.

 

Distribution Ratio

Each holder of MetLife common stock will receive [●] shares of our common stock for every [●] shares of MetLife common stock it holds on the record date. The distribution agent will distribute only whole shares of our common stock in the distribution. See “The Separation and Distribution — Treatment of Fractional Shares” for more detail. Please note that if you sell your shares of MetLife common stock on or before the distribution date, the buyer of those shares may in some circumstances be entitled to receive the shares of our common stock issuable in respect of the MetLife shares that you sold. See “The Separation and Distribution — Trading Prior to the Distribution Date” for more detail.

 

The Distribution

On the distribution date, MetLife will release the shares of our common stock to the distribution agent to distribute to MetLife shareholders. Our transfer agent will credit the whole shares of our common stock you receive in the distribution by way of direct registration in book-entry form. We will not issue any physical stock certificates. Our transfer agent, or your bank, broker or other nominee, will credit your shares of our common stock to your book-entry account, or your bank, brokerage or other account, on or shortly after the distribution date. You will not be required to make any payment, surrender or exchange your shares of MetLife common stock or take any other action to receive your shares of our common stock.

 

Fractional Shares

The distribution agent will not distribute any fractional shares of our common stock to MetLife shareholders. Instead, the distribution agent will first aggregate fractional shares into whole shares, then sell, or cause to be sold, the whole shares in the open market at prevailing market prices on behalf of MetLife shareholders who would otherwise have been entitled to receive a fractional share, and finally distribute the aggregate cash proceeds of the sales, net of brokerage fees and other costs, pro rata, to these holders (net of any required withholding for taxes applicable to each holder). If you receive cash

 



 

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in lieu of fractional shares, you will not be entitled to any interest on the proceeds. Your receipt of cash in lieu of fractional shares generally will, for U.S. federal income tax purposes, be taxable as described under “The Separation and Distribution — Material U.S. Federal Income Tax Consequences of the Distribution” and “The Separation and Distribution — Treatment of Fractional Shares.”

 

Conditions to the Distribution

The distribution is subject to the satisfaction of the following conditions or the MetLife Board’s waiver of the following conditions. MetLife may waive, subject to applicable law, any of the following conditions, unless otherwise noted:

 

    the MetLife Board, or a committee thereof, will, in its sole and absolute discretion, have authorized and approved (i) the restructuring (as described under “Formation of Brighthouse and the Restructuring” and “Certain Relationships and Related Person Transactions”), (ii) any other transfers of assets and assumptions of liabilities contemplated by the Master Separation Agreement and any related agreements and (iii) the distribution, and will not have withdrawn that authorization and approval;

 

    the MetLife Board will have declared the distribution of shares of our common stock to MetLife’s shareholders;

 

    the U.S. Securities and Exchange Commission (the “SEC”) will have declared the registration statement on Form 10, of which this information statement is a part, effective under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), no stop order suspending the effectiveness of the registration statement will be in effect, no proceedings for that purpose will be pending before or threatened by the SEC and notice of internet availability of this information statement will have been mailed to MetLife’s shareholders; MetLife may not waive this condition;

 

    NASDAQ will have accepted our common stock for listing, subject to official notice of issuance;

 

    the restructuring (as described under “Formation of Brighthouse and the Restructuring” and “Certain Relationships and Related Person Transactions”) will have been completed;

 

    the change of control of Brighthouse Insurance and NELICO as a result of the distribution will have been approved by the insurance regulatory authorities in Delaware and Massachusetts, the states of domicile of Brighthouse Insurance and NELICO, respectively; MetLife may not waive this condition;

 

    MetLife will have received a private letter ruling from the IRS, in form and substance satisfactory to MetLife in its sole and absolute discretion, regarding certain significant issues under the Code, subject to the accuracy of and compliance with certain representations, assumptions and covenants and that the private letter ruling will remain in effect as of the distribution date;

 



 

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    MetLife will have received an opinion from tax counsel, in form and substance satisfactory to MetLife in its sole and absolute discretion, to the effect that, subject to the accuracy of and compliance with certain representations, assumptions and covenants, the distribution will qualify for non-recognition of gain or loss to MetLife and MetLife’s shareholders pursuant to Sections 355 and 361 of the Code, except to the extent of cash received in lieu of fractional shares;

 

    no order, injunction or decree that would prevent the consummation of the distribution will be threatened, pending or issued (and still in effect) by any governmental entity of competent jurisdiction, no other legal restraint or prohibition preventing the consummation of the distribution will be in effect, and no other event outside the control of MetLife will have occurred or failed to occur that would prevent the consummation of the distribution; MetLife may not waive this condition;

 

    no o