NET WORTH MAINTENANCE AGREEMENT
This agreement ("Agreement"), made and entered into as of August 30, 1996
(the "Effective Date"), by and between Metropolitan Life Insurance Company
("MetLife"), a mutual life insurance company domiciled in the State of New York,
and New England Life Insurance Company ("NEL"), a stock life insurance company
domiciled in the Commonwealth of Massachusetts.
WHEREAS, MetLife indirectly owns 100% of the outstanding common stock of
NEL;
WHEREAS, although NEL is a company with operations that are distinct and
separate from those of MetLife, its operations (particularly in the high-end
individual insurance market and the variable life insurance market) are integral
to MetLife's strategic direction;
WHEREAS, MetLife and NEL recognize the importance in a competitive
insurance industry of obtaining the highest possible ratings for financial
strength; and
WHEREAS, MetLife and NEL desire to take certain actions to enhance and
maintain the financial strength of NEL as herein set forth;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree as follows:
1. Capital End Surplus. MetLife agrees that it shall cause NEL to
have at all times during the term of this Agreement the greater of:
(a) A minimum capital and surplus of $10 million; or
(b) The amount of capital and surplus necessary to prevent a
Company Act/on Level Event from occurring with respect to NEL under the
risk-based capital ("RBC") laws of Massachusetts (or, if none in
Massachusetts, the NAIC model RBC law).
2. Liquidity. If during the term of this Agreement NEL and MetLife
conclude that NEL does not have the liquidity necessary to enable it to
meet its current obligations on a timely basis, MetLife shall (in a
mutually satisfactory manner) provide to NEL the liquidity needed to enable
NEL to meet its obligations on a timely basis; provided, however, that such
liquidity shall be provided in accordance with, and only to the extent
permitted by, applicable law.
3. Waivers. MetLife hereby waives any failure or delay on the part of
NEL (but not of any other person or entity) in asserting or enforcing any
of its rights or in making any claims or demands hereunder.
4. Termination. MetLife shall have the absolute right to terminate
this Agreement upon thirty (30) days' written notice to NEL; provided,
however, that MetLife agrees not to terminate this Agreement unless any of
the following events occur:
(i) NEL attains a financial strength rating from ▇▇▇▇▇'▇ Investors
Service, Inc. ("Moody's"), without giving weight to the support of this
Agreement, that is the same as or better than its ▇▇▇▇▇'▇ rating with
such support;
(ii) MetLife sells NEL; or
(iii) NEL's entire book of business is transferred to an entity
with at least MetLife's then current ▇▇▇▇▇'▇ rating or NEL's then
current ▇▇▇▇▇'▇ rating as supported by this Agreement, whichever is
lower;
5. Restriction on Sale of Interest in Nel. MetLife agrees not to sell
or otherwise transfer NEL or a majority interest in NEL unless the
acquiring entity has at least MetLife's then current ▇▇▇▇▇'▇ rating or
NEL's then current ▇▇▇▇▇'▇ rating as supported by this Agreement, whichever
is lower.
6. Right to Enforce. Any creditor of NEL (including, but not limited
to, its employees, policyholders and trade creditors) shall have the right
to enforce the provisions of this Agreement through the Insurance
Commissioner of Massachusetts or the state insurance regulator of such
creditor's state of residence in the event that NEL fails or refuses to
take timely action to enforce its rights under Paragraphs 1 and 2 of this
Agreement or if NEL defaults on any claim or other payment owed to such
creditor when due, and such insurance regulator may at the request of such
creditor, made in accordance with and subject to the conditions of this
Agreement, proceed directly against MetLife to enforce NEL's rights under
Paragraphs 1 and 2 of this Agreement; provided, however, that no creditor
of NEL may take any action authorized under this Paragraph unless and until
(a) such creditor has given MetLife written notice that NEL has failed to
enforce its rights under this Agreement or has defaulted in any claim or
other payment owed to such creditor, which notice shall
specify in reasonable detail the nature of and basis for the creditor's
complaint and (b) MetLife has failed to comply with this Agreement within
sixty (60) days after such notice is given.
7. Fee. (a) NEL shall pay MetLife a fee for the undertakings of
MetLife under this Agreement. The initial fee shall be Fifty Thousand
Dollars ($50,000) and shall cover the period from the Effective Date
through December 31, 1997. For each calendar year thereafter (or portion
thereof) during which this Agreement remains in effect, the fee shall be
paid annually and shall be equal to the product of (i) ten(10) basis points
multiplied by (ii) the mean of NEL's general account policy reserves net of
policy loans for the calendar year immediately preceding the year for which
the fee is due and payable, except as modified in accordance with
subparagraph (b) of this Paragraph. The initial fee is due and payable
within 15 days after this Agreement is executed by the parties hereto. The
annual fee for each calendar year starting with calendar year 1998 shall be
due and payable not later than March 1 of such calendar year; provided,
however, that in the event this Agreement is terminated by MetLife in any
calendar year after MetLife has received the fee for such calendar year,
MetLife shall refund the portion of the annual fee which is allocable
(based on the number of days in such calendar year) to the portion of such
calendar year following such termination.
(b) At the request of either party hereto not later than January 15 of
any calendar year starting with calendar year 1998, the formula for
calculating the fee shall be reviewed by the parties hereto in light of the
past and anticipated year-to-year changes in NEL's general account policy
reserves net of policy loans, the financial risks inherent in the
operations of NEL, and such other factors as the parties deem relevant, and
shall be subject to change not later than February 15 of such calendar by
mutual consent of the parties hereto.
8. Not a Guarantee. This Agreement is not, and nothing herein
contained and nothing done pursuant hereto by MetLife shall constitue be
construed or deemed to constitute, an evidence of indebtedness or an
obligation or liability of MetLife as guarantor, endorser, surety or
otherwise in respect of any obligation, indebtedness or liability, of any
kind or character whatsoever, of NEL, and this Agreement does not provide,
and is not intended to be construed of deemed to provide, any creditor of
NEL with recourse to or against any of the assets of MetLife.
9. Applicable Law and Forum. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of laws.
10. Assignment. No party hereto shall assign this Agreement or any
rights or obligations hereunder, and no other person or entity entitled to
take any action under this Agreement shall assign the right to take such
action, without the prior written consent of the parties hereto (other than
the party proposing to make such assignment), and any such attempted
assignment without such prior written consent shall be void and of no force
or effect.
11. Communications. All notices, requests, demands and other
communications -- under this Agreement (whether from MetLife, NEL, or any
other person or entity) shall be in writing and shall be deemed to have
been duly given: (a) on the date of service if served personally on the
party to which such notice is to be given; (b) on the date of transmission
if sent via facsimile transmission to the telefax number given below, and
telephonic confirmation of transmission is obtained promptly after
completion of transmission; (c) on the day after delivery to Federal
Express or similar overnight carrier or the Express Mail Service maintained
by the United States Postal Service; or (d) on the fifth day after mailing,
if mailed to the party to which such notice is to be given, by first class
mail, registered or certified, postage prepaid and properly addressed, to
the party as follows:
If to MetLife, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Senior Vice-President and Treasurer
Metropolitan life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telefax No. (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Executive Vice-President and General Counsel
Telefax No. (▇▇▇) ▇▇▇-▇▇▇▇
If to NEL, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice-President
New England life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telefax No. (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: H. ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Executive Vice-President and General Counsel
Telefax No. (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may change its address or telefax number for the
purpose of this Paragraph by giving the other party notice of its new
address in the manner set forth above.
12. Publicity. No party hereto may, directly or indirectly, disclose
this Agreement or the terms hereof, other than to any regulatory agency or
rating agency, except with the permission of the other party hereto and
then only as permitted by law.
13. Severability. If any provision of this Agreement shall be
declared null, void or unenforceable in whole or in part by any court,
arbitrator or governmental agency, said provision shall survive to the
extent it is not so declared and all the other provisions of this Agreement
shall remain in full force and effect unless, in each case, such
declaration shall serve to deprive any of the parties hereto of the
fundamental benefits or rights of this Agreement.
14. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized representatives as of the day and
year above written.
METROPOLITAN LIFE INSURANCE COMPANY NEW ENGLAND LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By:/s/ H. ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ H. ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Senior Vice-President and Executive Vice-President and
Treasurer General Counsel
November 19, 1996 November 20, 1996